Effective Supply Chain Practices for Computer and Phone Repair Shop

Introduction

The purpose of the given study is to identify effective supply chain practices, which can be integrated in phone and computer repair shop business in order to improve the overall procedures. Increasing competition in the market poses new, more complex challenges for enterprises, one of the solutions of which is to optimize key processes such as supply, production, and sales, using supply chain management. Supply chain management is an idea, a way of organizing, managing individual business processes in an enterprise. The primary reason for conducting the study is to create a defined overview and map for small and medium service businesses. Resulting data and conclusive statements will be applicable to not only repair shops, but also for similarly structured firms.

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This study is done in order to identify the operational framework to reduce the cost of movement of the flow of raw materials, work in progress, finished products, services, information from the point of origin of the application to the point of consumption.

Thus, the given strategic approach will fully satisfy customer requirements. Supply chain management (SCM) refers to a business strategy that provides effective management of material, financial and information flows to ensure their synchronization in distributed organizational structures. In addition, supply chain management is a set of approaches that helps the effective integration of suppliers, manufacturers, distributors and sellers. SCM, taking into account the service requirements of customers, allows people to ensure the availability of the right product at the right time in the right place with minimal cost.

Literature Review

The industry of computer and phone repair shops is dominated by providing service rather than products. Customers’ malfunctioning devices are either repaired with using solely tools for repair or certain components of devices are replaced by a new one. However, the latter allows repair shops to sell products as well in terms of parts. The supply chain in a repair shop business represents many links connected by information, cash and commodity flows. These links are suppliers, manufacturers, consumers, various types of intermediaries (Touboulic & Walker, 2016). However, some links may belong entirely to one organization, others to counterparty companies such as customers, suppliers and distributors (Frankel, 2013). Therefore, as a rule, several organizations are included in the chain.

Supply chain management covers logistics operations and a complex of logistics subsystems throughout the entire product life cycle. This includes processes from the purchase of raw materials, production and distribution of goods to its after-sales service. Five areas of focus on supply chain management are identified, such as planning, procurement, production, sales, and return (Shovityakool, Jittam, Sriwattanarothai, & Laosinchai, 2019). From the point of view of the process approach, supply chain management is a sequence of stages of planning, execution and control (Goldsby, Iyengar, & Rao, 2014).

Usually compares the traditional and logistic approaches to material flow management and emphasizes the specifics of the latter on the allocation of a single management function of previously disparate material flows, on the integration of individual parts of the material-conducting chain into a single system of effective management of through material flows. The participation of individual units in the formation and management of material flow within a single enterprise using the example of an engineering plant is shown in the figure (Yao & Chen, 2018). If we consider supply chain management as a process, we can distinguish five main stages: planning, procurement, production, sales or distribution, and after-sales service.

At the planning stage, consumer demand is studied, production volumes, inventories are planned. A decision is also made on the sources and volumes of supplies of raw materials, materials, finished products, and requirements for a distribution product distribution system are formed (Gibson, Hanna, Defee, & Chen, 2013). In the procurement process, the main points in the supply management are identified, suppliers are evaluated and selected, the quality of supplies is checked, and contracts with suppliers are concluded.

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At the stage of production or service, production is directly carried out, control over technological changes, management of production capacities, production cycles, and quality control of products (Benson & Chau, 2019). In the sales process, the central place is occupied by the procedures of order management, warehouse, transportation management, and after-sales service (Min, 2015). All of these processes should be brought into line with planned or current demand, each optimized in its parameters.

Based on this, it can be concluded that the evolution of logistics has formed the prerequisites for enhancing its strategic importance in the management system of a modern enterprise. At the strategic level, two main areas of influence of this subsystem can be distinguished, such as ensuring revenue growth and eliminating losses.

The supply chain management system directly interacts with both payers and other subsystems of the company, which provides an opportunity to analyze internal business processes from the standpoint of creating service value for the client. Comparison of the created added value with the needs and expectations of the client allows, on the one hand, the development of products and processes that customers require. And on the other hand, reduce costs by eliminating unnecessary attributes and imaginary value from processes and products, that is, eliminating losses. In turbulent business conditions, timely and relevant information on customer needs is one of the key factors for survival.

Problem Statement

At different stages of the material flow management process, various models can be used that reflect particular parameters and indicators of supply chains. However, there is a need for such an assessment tool for an integrated model or a set of models that would allow one to evaluate the influence of each parameter separately and comprehensively consider the influence of a number of parameters both at individual stages of supply chain management and the entire process as a whole. Therefore, the problem statement is based on finding and defining the critical supply chain management approaches in order to increase the overall efficiency of the repair shop businesses, which currently are not present.

The difficulty in creating such models lies in the fact that the individual components of the supply chain management process are both well-structured formalized optimization problems and weakly and unstructured decision-making tasks. For example, at the first stage of planning, among others, methods and models for forecasting demand are used.

When forecasting sales, there are two approaches depending on the type of consumer – calculating sales based on the final use of their product for consumer enterprises and the market share of the enterprise for end consumers. Methods for forecasting sales can be divided into two groups, which are based on expert estimates and statistical. These methods are applied in practice in various fields, and they involve the study of the opinions of specialists of manufacturers and consumers of products, intermediary retailers, and consulting. Based on them, three types of forecast of sales of repair services, such as optimistic, pessimistic and rational, are determined by expert means.

Research Questions

In traditional logistics, material flows act as the main input and output parameter in the business management system. In this case, the task of the logistics subsystem is to provide production with the necessary resources at its minimum cost. However, in the modern understanding of logistics processes, information flows that cover the totality of all business processes of a company become priority. In this regard, the new approach to logistics management under consideration is to create a supply chain management subsystem. The purpose of this subsystem is to form stable channels of communication with external agents such as suppliers and customers, and internal agents such as other company subsystems.

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  • The main hypothesis is that it allows not only to reduce the costs of transportation by material flows, but also to minimize the time lag or delay and losses in the information exchange system?
  • How in contrast to the auxiliary functions of traditional logistics, such as transportation and storage, the supply chain management subsystem assumes the role of a center that coordinates the process of creating product value for customers?

As part of this task, the supply chain management subsystem accumulates two types of information such as strategic and operational. The latter includes inventory management, product and process quality management, and short-term demand planning. In the four-tier supply chain model of the type “supplier – producer – distributor or service provider – consumer”, from the perspective of the manufacturer, the supply chain subsystem maintains direct contact with suppliers and distributors. This allows the supply chain management subsystem to modernize business processes to meet new customer needs, as well as use the untapped potential of suppliers to create product innovations.

  • How the incoming information is processed by the supply chain management subsystem to improve and adapt the functional strategies of the repair enterprise, taking into account changing business conditions?
  • Since the activities of the supply chain management subsystem are inextricably linked with three types of flows such as information, material and financial, when it becomes an active element in the development of a modern repair business?

Design and Research Methods

Supply chain optimization is unthinkable without the application of scientific approaches and methods. The research techniques will involve the detailed analysis of the current data on repair shop sales and its relation to its supply chain management practices. In addition, the existing approaches will be adjusted by applying the hypothesis of increasing the effectiveness. The empirical method of research will also be conducted in order to gather essential data. The functioning of the supply chain management subsystem is based on the accumulation and analysis of information flows generated by the company subsystems based on the results of research on the external and internal environment.

Therefore, it is necessary to integrate the supply chain subsystem into the product or service innovation development process. In this regard, it is important to consider the following mechanism for the interaction of the supply chain subsystem with other functional subsystems of the repair company when developing product innovations. For example, the supply chain management subsystem receives a signal from the marketing subsystem about changes in industry trends and information from customers about new needs (Seth, Goyal, & Kiran, 2015).

First stage will involve attracting intellectual and creative resources, the effective analysis subsystem and strengthening the organizational and technological potential of the production subsystem creates the necessary conditions for the development of product and service innovations. Second stage will revolve around designing a subsystem of supply chain management for local repair shops. The data will be collected by studying and analyzing cases in the relevant industries.

In addition, local repair shop businesses will be thoroughly researched through official documents and surveys. The sample will include local repair businesses and online documents of other relevant repair shops. The supply chain management subsystem transforms signals about customer needs to create products and services with specific characteristics and brings them to the process improvement subsystem.

Subsystems for improving efficiency form a set of requests to the resource base of the company and the production subsystem that will ensure the creation and launch of an innovative product. After that, in the supply chain management subsystem, the requests of the functional subsystems and existing offers from suppliers will be correlated. Such an approach will make it possible to fully utilize the resource potential and coordinate the company’s efforts to develop product innovations, reduce costs and accelerate the launch of new products on the market. Third stage will be based on the fact that the financial and supply chain management subsystems evaluate the return on investment required to develop an experimental model of an innovative product and launch it into mass production, for example, using the method of net discounted income.

The study’s completion date will be six months where two months will be allocated for each stage. The considered mechanism demonstrates the difference between the approaches of traditional logistics and supply chain management, which ensures increased revenue and competitiveness of the company in the long term. The use of the supply chain management subsystem allows you to significantly accelerate the process of entering the company into new markets such as local or international by planning the location of new production complexes and logistics nodes, solving the transportation problem and actively participating in the redistribution of existing capacities and material flows.

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In addition, entering a new market is associated with the formation of a new system of information and material flows between suppliers, enterprises, distributors and end consumers. The construction of such a system is a strategic task of the supply chain subsystem, and its solution will reduce investment costs and time to market.

Data Analysis

The study will include both quantitative and qualitative data analysis, where the former will be based on key variables of the supply chain, such as monthly ordered parts, number of customers, and revenue. The latter will include the analysis of supply chain management practices which can improve the overall effectiveness of the operational procedures. Business development, the creation of service innovations and access to new markets are inextricably linked with investments in the modernization and expansion of the company’s production and logistics complex.

Since the supply chain management subsystem has both information about the capabilities of other subsystems of the company and about the ability of suppliers to meet resource requirements, together with the financial subsystem it determines the direction for investment. The coordination of the chain management subsystem activity with the financial subsystem for planning investments in strategic objects is extremely important for improving efficiency. For example, this may include an automated warehouse storage system (Sarkar, 2017). Determining the needs and location of warehouse complexes will reduce the likelihood of errors in underutilization or overuse of capacity in the enterprise.

The supply development subsystem takes an active part in the development and implementation of such innovative management technologies as the lean manufacturing concept. For this, ANOVA will be applied in order to identify the variance among such technologies. Creation of process innovations based on these technologies allows eliminating losses in the form of excess inventory and complaints, reducing lead time and reducing transaction costs.

For the successful implementation of an innovative product, its added value from the position of customers is of primary importance. Therefore, the business should be interested in minimizing the gap between the expected value of the product and the actual offered.

The production of a product and the provision of a service that does not have the expected characteristics, and the mismatch of the parameters of the supply chain management subsystem destroy the company’s value. In order to prevent such a negative impact, it is necessary to organize close interaction of the subsystem with partners, which will allow management to improve overall efficiency. The transformation of logistics processes into a concept of supply chain management provides entrepreneurs with the opportunity to create new competitive advantages and find modern ways to grow their business. In the long run, from the perspective of a cost approach to the management of a repair company, this will make it possible to use the potential of the supply chain management subsystem to increase the market value of a business.

References

Benson, G. E., & Chau, N. N. (2019). The supply chain management applied learning center: A university–industry collaboration. Industry and Higher Education, 33(2), 135-146.

Frankel, R. (2013). The definitive guide to supply chain best practices: Comprehensive lessons and cases in effective SCM. Upper Saddle River, NJ: Pearson FT Press.

Gibson, B. J., Hanna, J. B., Defee, C. C., & Chen, H. (2013). The definitive guide to integrated supply chain management: Optimize the interaction between supply chain processes, tools, and technologies. Upper Saddle River, NJ: Pearson FT Press.

Goldsby, T. J., Iyengar, D., & Rao, S. (2014). The definitive guide to transportation: Principles, strategies, and decisions for the effective flow of goods and services. Upper Saddle River, NJ: Pearson FT Press.

Min, H. (2015). The essentials of supply chain management: New business concepts and applications. Upper Saddle River, NJ: Pearson FT Press.

Sarkar, S. (2017). The supply chain revolution: Innovative sourcing and logistics for a fiercely competitive world. New York, NY: Amacom.

Shovityakool, P., Jittam, P., Sriwattanarothai, N., & Laosinchai, P. (2019). A flexible supply chain management game. Simulation & Gaming, 50(4), 461-482.

Seth, M., Goyal, D. P., & Kiran, R. (2015). Development of a model for successful implementation of supply chain management information system in Indian automotive industry. Vision, 19(3), 248-262.

Touboulic, A., & Walker, H. (2016). A relational, transformative and engaged approach to sustainable supply chain management: The potential of action research. Human Relations, 69(2), 301-343.

Yao, B., & Chen, G. (2018). Stochastic simulation and optimization in supply chain management. SIMULATION, 94(7), 561-562.

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