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Organizational Global Supply Chain

In business production, the slowest step of the supply chain process is called bottleneck, which is the most limiting constraint on the system. A global supply system depicts the process of distribution of a service or a product. It is built a certain way to cut the cost and resources usage and enhance competitiveness. During production, the manufacturer can use an effective model of Constraints Theory and Lean concept to minimize the throughput and wastage, and the business strategies that use modern technologies and digital tools to predict an unexpected shift in demand.

According to Goal by Dr. Aliyahu Goldratt, the Theory of Constraints is a five-step thinking process that aids a firm to achieve optimal throughput and the maximum output rate by identifying the bottleneck and coordinating the system around the bottleneck’s capacity (Medjaoui, 2021). In addition, it assists in identifying the ways to overcome and eliminate the bottleneck step, which is the slowest and longest process, thus unprofitable and disadvantageous. One of the good and successful implementations of Constraints Theory was done by multinational aircraft and rocket engines, aerospace and defense company, the Safran. By throughput accounting and applying Goldratt’s strategy, the company reduced the cost of the aeronautical equipment manufacturer. The theory was involved in two general steps: increase the bottleneck output and minimize work in progress with the “2 for 1” rule. In a short period of time, the company was able to increase the mechanical workshop production and reduce the assembly delays connected to the lack of mechanical parts. In addition, the WIP (Work-In-Progress) reduced, making a company successful and bringing huge profits.

Nonetheless, the Theory of Constraints is still a theory proposed by an academic rather than a manufacturer. Still, this theory has lots of similarities with the Lean approach of efficient manufacturing. Both methods concentrate on throughput accounting as a whole process rather than the performance of individual stations or process steps. The Theory of Constraints is able to do that by identifying and focusing on increasing the throughput of the bottleneck. The manufacturer concentrates on matching the throughput and the customer’s delivery time and development in the Lean approach. For the Lean concept, the even and equal rate of each step of the process guarantee more successful outcomes and identifying of the bottleneck. Both strategies use work center scheduling to meet the due dates assigned by the customer. In general, the Lean concept is the best way to ensure minimal wastage, high reliability and quality of the product or service, reduction of the production cycle, and operating costs.

To achieve higher income and ensure marketability, the manufacturer can use a supply chain strategy to improve organizational performance and help the company remain competitive in the business field. One of the best ways to do it is to adopt a demand-driven approach. The ability of the manufacturer to predict the demand capability by utilizing up-to-date information and digital technologies to meet the customer’s needs will grant effective and profitable outcomes. Another strategy to enhance a company’s performance is to adopt emerging technologies to make predictions and prognosis. According to Stiles, “by improving demand accuracy, new technology can reduce inventory requirements and speed reaction times, creating a nimbler and more reliable supply network” (Stiles, 2020, para. 17). Those technology-based strategies will allow the business to grow and meet the fast-changing demands and needs of the general public.

To conclude, the global supply chain is a complex and multitiered network between a company and suppliers whose objective is to manufacture and deliver products. In the Theory of Constraints, monetary success is prioritized as the throughput grows continuously. The Lean approach focuses on the customer’s lead and fulfilling their requirements and needs. In the network of processes that are involved in manufacturing, the precise calculation of possible risks and demand prediction is essential to ensure high material income and minimal wastage of the inventory cost.

References

Medjaoui, M., Wilde, E., Mitra, R., & Amundsen, M. (2021). Continuous API management. (2nd ed.). O’Reilly Media.

Stiles, J. (2020). Six top supply chain strategies. Supply Chain Brain. Web.

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StudyKraken. 2022. "Organizational Global Supply Chain." November 23, 2022. https://studykraken.com/organizational-global-supply-chain/.

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StudyKraken. (2022) 'Organizational Global Supply Chain'. 23 November.

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