Supply Chain Management Essay Sample
Supply Chain for Milk
Milk can be divided into two distinct categories, including manufacturing milk and liquid milk. Liquid milk refers to the milk used for the direct consumption by humans. It is also referred to as drinking milk. On the other hand, manufacturing milk refers to the milk used in producing milk products such as milk powders, yoghurts and cheese among others (Chopra & Meindl, 2007).
Purchasing involves the activities involved in the buying of the milk by organizations from the buyers. These activities can include bargaining, payments for milk, direct farmer payments and payment agreements. Purchasing links the suppliers, the farmers, and the operations to ensure that the product reaches the consumers.
Distribution of milk involves the physical distribution of the products to retailers or logistics. Common distribution methods of milk are by roads (Christopher, 2009).
Production involves the farmer’s activities of ensuring the availability of milk produced. Production involved factors such as the type of milk produced such as cow milk or goat milk, the dairy aspects associated in the production such as the animal feeds and the factors influencing the production of milk. These factors can include diseases and parasites, demand and policies among others.
Management of materials
Management of the materials is concerned with the flow of information and materials throughout the supply chain, especially with the firsts tier supplier, the manufacturer and the first tier customer (Mason & Lalwani, 2004).
Supplier management involves the supplier assessment, changes and risks, tradeoffs with farmers, and decisions of having one or multiple suppliers. The supplier management encompasses the evaluation of the flexibility, reliability, and accountability of the farmers. It also involves the supply dependability, responsiveness, volume and delivery flexibility, and the capacity of the farmers to supply milk in required quantities.
Customer management involves the establishment of effective relationship between the customers and mainly the retailers. Effective and efficient relationship affects the functions and activities of the whole supply chain. For instance, bad relationships with the customers reduce their preferences for the product, which in turn reduces the demand for the milk.
Relationship with Traditional Supply Chain Model
Milk relates directly to the traditional supply chain model. In this model, the first element is the supplier. The supplier in the case of milk is the farmer. The farmer ensures that milk produced is supplied to the next relevant party, the manufacturer, who is the second element in the traditional model. The manufacturer then refines the product and produces other related commodities such as cheese and yoghurt. The manufacturer then uses the distributors, the next element of the traditional supply chain model to ensure the availability of the milk and its products to the next party in the chain, the retailers.
The retailers make sure that the milk and its products are in the required quantities about the customer preferences (Mentzer, 2001). The retailers then avail the milk and its products such as cheese, yoghurt and milk powders to the end customers. The flow of information starts with the end consumers and ends with the suppliers. For instance, if the end consumers complain about inadequate milk, the retailers will pass the information to the distributors to provide more milk. The information will flow through the manufacturers and finally the suppliers. As such, the farmers will produce more milk to satisfy the wants and needs of the consumers.
Key Challenges within the Supply
The key challenge within the supply of milk is in production. That is, the production of milk is influenced by the weather and environmental conditions such as parasites and diseases. These aspects are out of control by any party in the chain. For instance, diseases, despite the fact that they can be treated, reduce production.
Another key challenge within the supply of milk is the issue of delayed payments for milk supplied. Some of the manufacturers delay the payments of the milk supplied by the farmers, killing their morale to supply more milk. As the farmers reduce their capacity of supplying milk, it reduces the amount of milk and milk products supplied and availed to the customers. Consequently, there is an increase in the price of the products leading to a reduction in the demand.
Another challenge is mastering the traceability in the supply chain of milk. The traceability always has been significant to the dairy cooperative. Traceability is a great challenge in the milk supply chain, especially liquid milk, which requires following it from the farms all the way to the consumers.
Possible Area of Improvement
The possible area of improvement along the chain is the storage facilities at the suppliers, manufacturers and retailers’ stage. Improper storage can lead to spoilage because milk is perishable, which leads to losses. Another possible are of improvement in the milk supply chain is the distribution channels. Distribution channels and mediums have to be diversified and many to increase the amount of milk and milk products delivered to the retailers, and reduce the time spent during distribution.
The supply chain of milk involves various activities including purchasing, distribution, production, management of materials, supplier management and customer management. These activities influence the flow of the product from the farmers to the consumers. The chain has some challenges, including the traceability, diseases and delayed payment that affect the entire chain. Possible improvement areas include the distribution channels and storage facilities.
Chopra, S., & Meindl, P, (2007), Supply chain management: Strategy, planning, and operation. Upper Saddle River, NJ: Pearson Prentice Hall.
Christopher, M, (2009), Logistics and Supply Chain Management.
Mason, R., & Lalwani, C, (2004), Integrating Transportation into the Supply Chain to Improve Supply Chain Performance.
Mentzer, J. T, (2001), Supply chain management. Thousand Oaks, CA: Sage Publications.