Changes in Supply Chain Management

Table of contents

What is supply chain management?

According to the Council of Supply Chain Management Professionals (CSCMP) “Supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management”.


Having achieved significant improvements in manufacturing, many firms are now focusing their attention on their supply chains. With increased globalization, supply chains for most products have become longer both on the input as well as the output sides.

This, combined with the trend towards proliferation of products makes management of the supply chain a very challenging task. SO in order to produce quality products with less cost & supplying it at less time many innovations & development has been made in the management of manufacturing supply chains. In the management of product flows, the innovations include concepts such as modularisation, postponement, mass customisation and flexible automation, time-based logistics, and cross docking.

In the management of information flows, the innovations include the use of information technologies and strategic partnerships to improve the transparency of information. There are some W&H questions that will prove that innovations are relevant to SCM. Today Companies cannot grow through cost reduction and reengineering alone. Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results.

What are the changes required?

Changes in thinking, products, processes, or services are required in SCM. The goal is positive change, to make something better or improve efficiency, productivity, quality, competitive positioning, market share, etc.

How the change can be achieved?

The most successful innovation occurs at the boundaries of organizations and industries where the problems and needs of users, and the potential of technologies can be linked together in a creative process. Now take a tour of developments in supply chain:

  • Creation Era – This era of supply chain management include the need for large scale changes, reengineering, and downsizing driven by cost reduction programs.
  • Integration Era – The development of Electronic Data Interchange (EDI) systems in the 1960s & introduction of Enterprise Resource Planning (ERP) systems.
  • Globalization Era – Characterized by the attention towards global systems of supplier relations and the expansion of supply chain over national boundaries and into other continents
  • Specialization Era – Phase One – In the 1990s industries began to sold off non-core operations & Outsourced Manufacturing and Distribution.
  • Specialization Era – Phase Two – Supply Chain Management as a Service & Outsourced technology hosting for supply chain solutions.

Supply Chain Management 2. 0

SCM 2. 0 results the combination of the processes, methodologies, tools and delivery options to guide companies to their results quickly. Innovation, Recent trends and changes in supply chain management: In the last one decade supply chain management has changed rapidly.

There has been lot of involvement of new ideas. Few of them are described below:

Shifting focus from manufacturing to outsourcing: 25 years ago, most manufacturers owned their own factories and controlled their own production. They had complete, detailed knowledge of the capacity, schedules, and costs of manufacturing. Companies could adapt quickly to changes in the marketplace and restore the supply/demand balance more easily.

With complete visibility into their own factories and sales offices, companies could easily find the status of inventory, work in progress, and customer orders currently in the supply chain. In the years since, a fundamental shift has taken place. More and more design, marketing, and sales take place on home shores, while parts manufacturing and final assembly are outsourced to offshore suppliers. In fact, a 2006 AMR Research study of contract manufacturing trends found that 92% of companies outsourced some of their production with 40% projecting they will outsource more in the next two years.

Emergence and proliferation of Information Technology

Information technology, even taken as an independent environmental factor and its adoption in professionally run businesses and firms has led to fundamental changes in supply chain behavior and further to the changes in governance structures. Virtually all sectors of industry in the developed and in the developing regions have witnessed the following major trends over the past two decades:

  • Data storage costs have gone down in the past few years, while the volume of data gathered for business analysis purposes has increased dramatically. The cost per business transaction as well as the networking and communication costs within supply chains has been greatly reduced. Simultaneously, the capabilities and the content involved in the communications and the number and relevance of IT enabled business transactions have also increased.
  • With greater analytical capabilities and design technologies, new product introductions have increased, in part as a response to the need for greater product variety. As a consequence, product life-cycles have been shrinking, as documented for many industry sectors.

The role of IT in the handling and communication of product design information is also well chronicled. These changes in IT (in particular business communication technologies) have played a critical role in enabling firms and supply chains to operate on a global scale. Without IT being the enabler, the disintegrated supply network cannot be managed effectively.

In the 1990s industries began to focus on “core competencies” and adopted a specialization model. Companies sold off non-core operations, and outsourced those functions to other companies.

The specialization model creates manufacturing and distribution networks composed of multiple, individual supply chains specific to products, suppliers, and customers, who work together to design, manufacture, distribute, market, sell, and service a product.

Emergence of Retail Powerhouses

The consolidation or convergence of retail channels, as in the case of the retail chains such as Wal-Mart and the accompanying phenomena of smaller stores and chains being replaced by larger discount stores, not only have ad a profound impact on the supply channels, it has also changed the traditional roles defined for the manufactures, the retailers, the wholesalers and distributors. With the emergence of retail powerhouses, the large manufacturers of consumer items have seen incentives to outsource the cost and asset intensive operations to contract manufacturers, while focusing on creating and sustaining brand values through design and marketing activities. For retailers, the competition is now based on cost, logistics, and speed of innovation.

These basic tenets of retail competition coupled with the change in the retail landscape have an enormous impact on the supply channels that feed the growing retail channels. These supply channels, both large and small, have to respond quicker and more efficiently to customer demand patterns. As a result, retail companies have attempted to change their business models and to dictate broad strategic and operating requirements to their vast supply base – thus there is pressure even on large and established suppliers to conform to the specific practices and the needs of the retail channels.

In order to compete in the new landscape, retailers are taking on influential role in the design of products, they are also ready to reach in the second tier to develop market and distribute products that in some cases compete directly with their own suppliers. In short we can define latest trends in SCM as:

  • Demand plan sets the tone: Critical to the success of any Demand Plan is having all stakeholders, including sales, marketing, finance, product development and supply chain agrees upon a consensus Demand Plan. It is important for all participants to discuss factors affecting customer demand patterns, such as new or deleted products, competitors or market conditions, the aggregate demand plans and associated revenue plans. Once all demand for products and services is recognized, the information is consolidated into one Demand Plan. We have found that companies with dedicated resources focused around demand planning and forecasting yield stronger results and  drive more value to their company. Organizations that focus part time on demand planning and forecasting efforts yield substandard results.
  • Globalization: The right Supply Chain Design is critical to managing the changes brought about by rapid globalization. A well thought-out Supply Chain Network Design can optimize the network and the flow of materials through the network. In doing so, network design captures the costs of the supply chain with a “total landed cost” perspective, and applies advanced mathematical technology to determine optimal answers to both strategic and tactical questions.
  • Sales and operations planning
  • Transportation/distribution management
  • Improved product lifecycle management
  • Improved strategic sourcing and procurement

Suppliers can differentiate themselves in a number of ways as well as provide value, additional services and capabilities to their customers. The differentiating factors include:

  • Vendor Managed Inventory (VMI)
  • RFID
  • Labeling and packaging
  • Dropshipping
  • Collaboration

Establishment of control mechanisms to proactively monitor the various components of the supply chain and, Information systems to connect and coordinate the supply chain as seamlessly as possible. A failure to excel at any one of these components can result in breakdowns affecting the entire supply chain.

As the economy becomes more global, labeling and compliance to packaging requirements and regulations have become critical to success. Without adherence to local packaging and labeling regulations a product may violate local requirements, preventing it from being distributed and sold in that market.

Product lifecycle management technology and processes can help ensure that products being produced and targeted for specific markets are well-managed and are compliant.

Recent examples of collaboration have emerged in the expansion of Sales and Operations Planning (S&OP) processes that include upstream and downstream value chain partners as regular participants. S&OP processes help maintain a well-coordinated and valid, current operating plan in support of customer demand, a business plan and a strategy.

The improved resulting operating plan provides the management of each partner with a complete picture of forecasted demand, supply capacity, corresponding financial information with financial implications and allows them to make informed, critical decisions. We have visited some companies to show the Innovations and Development they have applied in their SCM for the last 10 years.

Company Profile

DTDC Courier & Cargo Ltd. (DTDC) was incorporated in the year 1990. Within a p of 20 years, through its business associates DTDC expanded its delivery network across the length & breadth of the country, thereby creating the nation’s Largest Domestic Delivery Network. Today DTDC is the second largest Indian company in the Express industry. DTDC can also be credited with pioneering the franchisee concept for the courier industry in India, and today has the largest franchisee network.

Headquartered at Bangalore, with 4 of its Zonal Offices at Delhi, Kolkata, Chennai & Mumbai, DTDC currently serves around 10, 000 pincode areas and has over 3700 franchised outlets supported by 176 offices which includes its Regional Offices, Area Offices, Branch Offices, Operational Hubs and Sub-Branches. DTDC has extended its service network to the overseas market and provides services to worldwide destinations using its own branches and international associates at prime gateways like USA, UK, Singapore, UAE, Nepal, Bhutan, Bangladesh, SriLanka & Hong Kong.

Thanks to its strong IT infrastructure, the company is able to deliver 10. 5 million parcels a month to customers across the world. To support its ambitious growth plans; DTDC has entered into an association with Reliance ADAG Group, and has on its Board, a Director from Reliance. Innovations and development they have taken in SCM for last 10 years.

V Express for Business Delivery: DTDC has lunched of V express, its new product which assures delivery of documents on the next business day. The product carries a unique feature of 100% money back if at all there is any service failure.

The service shall be available in the 6 metros of Mumbai, Delhi, Bangalore, Chennai, Kolkata and Hyderabad in select princode areas. There will also be SMS Alert on delivery as avalue added service.

SMS Courier Limited for Speedy Delivery of Intra-City Consignments: DTDC has launched SMS Courier Ltd., its subsidiary for the purpose of speedy intra-city deliveries and mass mailing activities. SMS Courier will be useful to organizations dealing in large volumes of intra-city consignments like the banks, financial institutions, insurance companies and cellular operators.

The newly-formed subsidiary will ensure timely deliveries even to the remotest areas of the city. This service is available in the six metros and has made its entry into Pune as well.

Tie-Up with Reliance Money For Distribution Of Financial Services

To support their ambitious growth plans DTDC India’s leading Air Express & Cargo Company and Reliance Money Limited entered into a strategic alliance wherein DTDC will be acting as a distributor for Reliance Money’s financial products and services. DTDC already has a tie up with Reliance Capital and they would be happy to be associated with Reliance Money also.

With DTDC’s distribution network, Reliance Money will be able to reach out to the smallest of investors in the remotest parts of India thereby achieving its objective of providing safe and secure financial services at a retail investor’s doorstep.

DTDC uses IT as its virtual vehicle: But what made the courier delivery system so efficient? IT (information technology) of course. The operations, efficiency and customer satisfaction were all enhanced with the application of IT and this is the secret behind the success of DTDC.

The company uses IT as its virtual vehicle to provide timely and accurate information on the movement and delivery status of consignments. This is accessible through various digital modes like the DTDC website, mobile telephony (SMS) or its in-house developed track and trace facility. IT is the backbone of the entire operational and customer service process and e-mail is the lifeline of the company’s communications system.

By 1988, DHL was already present in 170 countries and had 16,000 employees. At the beginning of 2002, Deutsche Post World Net became the major shareholder in DHL. By the end of 2002, DHL was 100% owned by Deutsche Post World Net. In 2003, Deutsche Post World Net consolidated all of its express and logistics activities into one single brand, DHL. The world’s largest express and logistics Network DHL is the global market leader in international express, overland transport and air freight. It is also the world’s number 1 in ocean freight and contract logistics.

Supply Chain Management services are delivered across industry sectors and provide expertise, knowledge and resources in terms of personnel and supply chain tools. All services are targeted at optimizing logistical operations in both process and strategy, and are aligned to the client’s commercial expectations The services are as follows:

  • Strategic Logistics Consulting
  • Lead Logistics Provider
  • Consulting and providing
  • Transport optimization
  • Route-Pro and Trans-Pro
  • Consulting and providing Supply Chain Design
  • Consulting and providing Transportation
  • Engineering, optimization and re-engineering Implementation and Project Management
  • Process Management
  • Outsourcing DHL’s consulting services also offer re-organization of customer facilities, project management for customers, implementation of new IT Systems, creation of tender documents and tender processing.

Supply Chain Re-engineering

DHL works with customers to review supply chain efficiencies. One of the main tasks is to evaluate cost efficiency to ensure that costs are being driven down throughout the contract duration. Data analysis allows DHL to provide customers with ‘what if modeling’ or the impact of changing the business rules. Distribution to Stores Management DHL’s distributions to store solutions are focused on helping retailers create efficient and flexible supply chains to deliver product to retail outlets at high levels of service. These solutions are built from several core services including reverse logistics:

  • logistics network strategy
  • warehouse design and simulation
  • Transport modeling.
  • After Sales Optimisation Optimising return logistics and spare parts logistics as well as maintenance and repair services.
  • Vehicle Management Services

Our vehicle management services focus on the management of sales and marketing support programmes for automotive manufacturers. Combining a range of services and systems to deliver a global response, we help you overcome challenges at the end of the automotive supply chain.

Samtel Color Group Company Profile

Samtel Group’s journey began in 1973, with a vision to create a world-class organization. Today, Samtel Group is India’s largest integrated manufacturer of a wide range of displays for television, avionics, industrial, medical and professional applications, TV glass, components for displays, machinery and engineering services.

The group employs 6000 people in nine world-class factories and has an annual turnover of Rs 12 billion (USD 300M) Samtel Group has strong design and development skills and is a dependable player with excellent technological capabilities and a long-term commitment to the display industry. Its products are known for ruggedness and reliability and conform to the latest relevant quality standards. The group has excellent relationships with suppliers of key components and the ability to design new products as well as set up hi-tech manufacturing facilities.

BHEL was founded in 1950s. Its operations are organised around three business sectors: Power, Industry – including Transmission, Transportation, and Telecommunication & Renewable Energy – and Overseas Business. Today, BHEL has a wide-spread network comprising 14 manufacturing divisions, 8 service centers, 4 power sector regional centers, 18 regional offices, and a large number of project sites spread all over India and abroad. BHEL is one of the largest exporters of engineering products & services from India.

BHEL has established its references in around 60 countries of the world, ranging from the United States in the West to New Zealand in the Far East. Its export range include: individual products to complete power stations, turnkey contracts for power plants, EPC contracts, HV/EHV Sub-stations, O services for familiar technologies, specialized after-market services like Residual Life Assessment (RLA) studies and retrofitting, refurbishing & overhauling, and supplies to manufacturers & EPC contractors.

BHEL’s product range include: Steam turbines and generators of up to 500MW capacity for utility and combined-cycle applications; Steam turbines for CPP applications; Gas turbines of up to 260MW (ISO) rating; Custom-built conventional hydro turbines of Kaplan, Francis and Pelton types with matching generators, pump turbines with matching motor-generators; Spherical, butterfly and rotary valves and auxiliaries for hydro station; HSD, LDO, FO, LSHS, natural-gas/biogas based diesel power plant; Industrial turbo-sets of ratings from 1. to 120MW; Steam generators for utilities, ranging from 30 to 500MW capacity, using coal, lignite, oil, natural gas or a combination of these fuels; Pulverized fuel fired boilers; Stoker boilers; Atmospheric fluidized bed combustion boilers; Circulating fluidized bed combustion boilers; Waste heat recovery boiler; Boiler Auxiliaries; Heat Exchangers & Pressure Vessels; Pumps; Power Station Control Equipment; Switchgears; Bus Ducts; Transformers; Insulators; Capacitors; Energy Meters etc.

Classification of Materials

The materials for procurement can be classified in two categories: Direct Materials: Materials, which go directly into the Project/ Product/ Site/ Systems. Indirect Materials: Materials other than above, such as consumables/ packing etc which are used in manufacture of despatchable products and materials such as coal, cement, kerosene, oil etc which are used to run the essential services/ machine tools/ office establishment. Supplier registration is one of the primary and important activities of MM functions. This is the entry point of supplier in BHEL.

A carefully chosen supplier will be an asset to the organizationABC analysis and EOQ methods. JIT does not work for BHEL as most of the procured items are long cycle items and Inventories have to be maintained to avoid any production hold ups. Normally inventories sufficient for 3 month requirements are maintained.

How orders are placed?

BHEL quotes against the tender requirements (normally global) published in all the national newspapers and also made available on the web sites of respective customers.

After evaluation of all the received bids by the customer, if the BHEL’s bid is found to be technically acceptable and financially the lowest then the customer places a Work order on BHEL.

Supply Chain Management For BHEL, Company Profile

Blue Dart Express Ltd. , India’s premier integrated air express carrier and logistics-services provider, has been one of the largest Global Service Participants of Federal Express Corporation, the world’s eading air express transportation company, since 1984. From 1984, Blue Dart represented all FedEx interests, under a principal to principal arrangement, in India. Blue Dart-Federal Express Relationship: Blue Dart and FedEx have determined a new agreement in October 1997 to coincide with the introduction by FedEx of its first round-the-world flight touching Mumbai, as well as its direct entry into the country. Under this agreement, Blue Dart is the exclusive provider of transportation, pickup and delivery, customs and related services for FedEx’s International Priority shipments, as well as the sole preferred consolidator of FedEx services. The Alliance seeks to leverage the strengths of both organisations for mutual benefit. While FedEx focuses solely on the development of its international business, with its link to the vibrant economy of the Sub-Continent, Blue Dart continues to consolidate its dominant domestic position, and service and enhance its international customer base as a licensee of FedEx, to support FedEx’s international growth.

The new agreement is designed to stimulate the development of India’s international express market by combining the competitive advantages of FedEx’s global reach with Blue Dart’s domestic coverage to increase the market share of both companies. Innovations and development they have taken in SCM for last 10 years: TrackDartTM: You can track the status of shipment by using the TrackDartTM box, which is available on the upper left panel of every page on our website. You may track shipments sent on Blue Dart services within India or to Nepal, Bangladesh or Bhutan.

You may also track international shipments sent on Federal Express to/from India. Shipments under single or multiple waybills may be tracked using either the waybill number or the reference number given at the time of shipping. MailDartTM: You may either use the Waybill Number or the Reference Number to track the status of your shipments. This feature helps you to track Single or Multiple shipments. To track the status of your shipments by Waybill Number enter the waybill numbers either in `Subject’ or in the text of the mail, each Waybill number seperated by a comma.

To track the status of your shipments by Reference/Order Number. Enter the reference/order numbers in `Subject’ of the mail, each reference or order number seperated by a comma. Find the service locations of Blue Dart and the Blue Dart counter or franchisee located closest to you. You may search by city, street name or pin code to find one of over 11,558 locations serviced in India, or in 211 countries worldwide.

You can check the transit times for your domestic and international shipments, and for the various services offered by Blue Dart to help you identify the service that meets your requirements. You can calculate your shipping costs for your domestic and international shipments by using their Price Finder. The Online Waybill generation tool helps the credit customer to generate a waybill for a consignment. The user has to enter the details of the consignment and the waybill will be generated in a PDF format.

Address Book

This feature comes with the online waybill generation module. The Address Book can be accessed by all credit customers of Blue Dart. You can create a new address list and modify or delete the addresses at any point of time. Nikon Focuses on Supply Chain Innovation— And Makes New Product Distribution a Snap Top consumer goods manufacturers now recognize that success requires more than just making market-leading products.

Having the right distribution network is just as critical. Nikon Inc. is the world’s leader in precision optics, 35mm and digital imaging technology. So it’s no surprise that when the company saw the next big trend in photographic technology—digital cameras—they were ready to deliver with some of the most advanced product designs in the marketplace. But to ensure that retailers could meet the demand of tech-hungry consumers and professional photographers, Nikon, with the help of UPS Supply Chain Solutions, reengineered its distribution network to keep them well supplied.

Client Challenge

To support the launch of its new digital cameras, Nikon knew that customer service capabilities needed to be completely up to speed from the start and that distributors and retailers would require up-to-the-minute information about product availability. While the company had previously handled new product distribution in-house, this time Nikon realized that burdening its existing infrastructure with a new, demanding, high-profile product line could impact customer service performance adversely. In our business, it’s not enough just to produce leading-edge products,” said Arnold Kamen, Nikon’s Vice President of Operations and Customer Service. “Having the ability—and visibility—to predict how much merchandise is  available and when it can be distributed makes the difference in staying ahead of customers’ needs. ” For Nikon, that meant applying its well-known talent for innovation to creating an entirely new distribution strategy and taking the rare step of outsourcing distribution of an entire consumer electronics product line.

With UPS Supply Chain Solutions on board, Nikon was able to quickly execute a synchronized supply chain strategy that moves product to retail stores throughout the United States, Latin America and the Caribbean, and allows Nikon to stay focused on the business of developing and marketing precision optics. Our Solution: Starting at Nikon’s manufacturing centers in Korea, Japan and Indonesia, UPS Supply Chain Solutions manages air and ocean freight and related customs brokerage.

Nikon’s freight is directed to Louisville, Kentucky, which not only serves as the all-points connection for UPS’s global operations, but also is home to the UPS Supply Chain Solutions Logistics Center main campus. Here, merchandise can either be “kitted” with accessories such as batteries and chargers, or repackaged to in-store display specifications. Finally, the packages are distributed to literally thousands of retailers across the U. S. , or shipped for export to Latin American or Caribbean retail outlets and distributors, using any of UPS’s worldwide transportation services to provide the final delivery. With the UPS Supply Chain Solutions system in place, the process calibrates the movement of goods and information by providing SKU-level visibility within complex distribution and IT systems. UPS also provides Nikon advance shipment notifications throughout the U. S. , Caribbean and Latin American markets. The result: a “snap shot” of the supply chain that rivals the performance of a Nikon camera. Nikon has already seen the results of its innovation in both digital technology and product distribution. The consumer digital camera sector is one of Nikon’s fastest growing product lines.

In addition, supply chain performance and customer service are measurably improved. Products leaving Nikon manufacturing facilities in Asia can now be on a retailer’s shelf in as few as two days. While products are en route, Nikon also has the ability to keep retailers informed of delivery times and to adjust them as needed, so that no retailer needs to miss sales opportunities due to lack of product availability. UPS Supply Chain Solutions is forging a broad spectrum of creative solutions to support the Nikon supply chain, including logistics, transportation, freight and customs brokerage services.

Synchronizing those pieces to work together gives Nikon a significant advantage in leveraging the competitive strengths of UPS Supply Chain Solutions. “Through a combination of UPS services, we have been able to greatly shorten our supply chain,” Kamen said. “Although we are achieving greater speeds, we have better visibility of our products, which enables us to provide a higher level of service to retailers and ultimately, the final customer. ” Once again, Nikon leads the market in leveraging the latest developments in technology.

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