Seminar in Global Supply Chain Management Essay
This paper was done to cover the DDBA-8510-1 Seminar Global Supply Chain Management final seminar research paper. Supply chain management, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible (Handfield, 2011).
Global Supply Chain Management involves a business or a company’s worldwide interests and suppliers rather than simply a local or national orientation. Companies have used enhanced technological advancement to improve their global supply chain. There are various advantages and disadvantages of global supply chain. Increasing globalization and companies willing to market and do business globally are facing some issues in regard to effective business productivity. With an increase in technology and most company going global for price reduction supplier relationships and management has been essential to productivity.
Supplier relationships and management has a vital impact on the future direction of global supply chain management research. This paper analysis and explores global supply chain management and supplier relationships. Global Supply Chain Management Supply Chain Management includes all the activities that must take place to get the right product into the right consumer’s hands in the right quantity and at the right time – from raw materials extraction to consumer purchase.
SCM focuses on planning and forecasting, purchasing, product assembly, moving, storage, distribution, sales and customer service (Texas A&M University, 2013). Global Supply Chain Management involves a business or a company’s worldwide interests and suppliers rather than simply a local or national orientation. Global supply chain management involves various amounts of interaction between different companies in various countries. Global supply chain originated when companies migrated to looking for expensive part and labor globally for effective cost savings.
The mean focus of companies participating in global supply chain management is cost. Companies focus on cost because it is a primary factor of dealing with local or overseas suppliers. According to Epiqtech (2012) while local labor cost may be significantly lower, companies must also focus on the costs of space, tariffs, and other expenses related to doing business overseas. In regard to cost, time is also an issue and factor when dealing with global supply chain management.
The productivity of employees’ overseas and rickety shipping times can cause a negative or positive affect on the company’s lead time into product production. Effective supplier selection is also essential to global supply chain. According to Texas A&M University (2013) for efficient supply chain management companies must make decisions about the number of suppliers to use. Fewer supplies may be easier to manage but could also lead to potential problems if one vendor is unable to deliver as expected or if one vendor tries to leverage its supply power to obtain price concessions.
The main factors of company’s transformation to a global supply chain as we know is having external supplier globally to enhance supplier’s diversity which reduces cost and increase revenue while improving reliability. According to Nahla (2003) manufacturers typically set up foreign factories to benefits from tariff and trade concessions, low cost direct labor, capital subsidies, and reduced logistics cost in foreign markets. Companies have used enhanced technological advancement to improve their global supply chain.
According to Nahla (2013) global supply chain management trend is evolving as new technologies emerge. Instead of vendors mailing their products and assuring its delivery, companies are now able to track the products exact location through GPS tracking devices. These devices are imperative for global supply chains. The farther the goods are from the final endpoint, the riskier its arrival. Before RFID scans, supply chain managers took inventory weekly or monthly to track sales and supplies. Now, many companies like Wal-Mart track their products with RFID technology.
The RFID readers’ purpose is to cross-examine RFID. Advantages and Disadvantages of GSCM Some advantages of global supply chain management for businesses are to increase profit and sales, globalization increases sales because various market options are open, reduces the pressure of relying on local business, competitive advantage, enhance speed and efficiency, product cycle time reduction, and lowers supply chain cost. Some disadvantages of going global in regard to supply chain management is investment of money, time and resources, supplier selection and relationships can become very challenge.
The norm disadvantage is as companies go global cooperating within groups and organizations could be very challenge. With cultural barriers, foreign tax laws and regulations companies going global should understand it may take years for supply chain to gain rewards and increase sales. According to Nahla (2013) the greatest benefits of global supply chain management are 1. As opposed to a poorly organized supply chain a global supply is extremely competitive and so you can obtain a really good price for supplies that will all be produced to excellent standards, without even having to search widely; 2.
If you have sufficient contacts and suppliers internationally, then you can really reduce the amount of stock that you have to retain, which means that you will save costs in terms of storage/thefts/transporting goods etc; 3 The global supply chain really does operate on a 24/7 basis, simply because of the time differences in different countries; and 3. One of the most interesting factors of the global supply chain is that we can learn from others!
Business is done differently in different parts of the world and we are able to learn new ways of doing business, new production methods and new distribution methods, if we keep an open mind and have a willingness to learn. Emerging Issues in GSCM Current challenges in the global supply chain are sustainable supply chain, resiliency in supply chain, shift toward multilocal operations, increase uncertainty and volatility, increased complexity, extended lead time, unnecessary cost, risk management, improved responsiveness, and integrated and empowered supply chain.
Increase complexity; in coming year’s complexity of supply chains are predicted to grow, companies are expected to maximize complexity in locations of customers and product variations and decrease number of supplier and manufacturing locations. Extended lead times; company lead times are now highly effected by extended shipping times and foreign employee production. Unnecessary cost; reason companies are bearing unnecessary cost are poor infrastructure, inefficient stocking practices, inefficient transportation and poor monitoring of currency exchange rates.
Risk management; supply chain risk consist of environment, process, culture, legal, political, demand, control, and supply risk which needs to be high maintain and controlled for effective production. Sustainability; key sustainability issues facing the global supply chain are working conditions, low wages, human rights, child labor, ethics, recycling, waste, air pollution and environmental green issues (Irshad, Lee, 2012).
According to Irshad and Lee ( 2012) supply chains are shifting toward multilocal operations for balancing the trade-off in designs of supply and demand for local responsiveness and global economies of scale leading organizations are in favor of multilocal design, supply and support and furthermore companies are moving from a centralized model, towards a regionalized approach. Current Dilemma GSCM According to Industry Week (2013) many U. S. manufacturers are experiencing talent shortages in part because of an aging baby boomer generation that has begun its exodus from the U.
S. workforce. In contrast to this issue there is a lack of students aspired to work in manufacturing. The loss of older knowledge employees and lack of manufacturing students enrolling in the manufacture field will cost major dilemma in companies supply chain management in the upcoming future. Another dilemma in GSCM is ethics. Ethic in the supply chain is essential when keeping track of supplier’s compliance history, selecting suppliers, assigning management to manage supplier relationships.
According to Industry Week (2013) ethical challenges in the supply chain represent a huge issue impacting a company’s market share, based in part on customers’ perceptions of a product’s integrity and thus affect revenue. Important Issues GSCM Increasing globalization and companies willing to market and do business globally are facing some issues in regard to effective business productivity. According to Advance Distribution Services (2013) even though most companies do realize that better supply chain management can benefit their bottom line, too many of them are leery about pursing modernization and efficiency fully.
Report shows that companies that have managed and adapted to supply chain innovations have been lowering cost and increasing profits by millions. The top 5 organizations with the best global supply chain are McDonald’s, Amazon, Apple, P&G, and Dell. All four of these companies are effective in their global supply chain because they have implemented and focused on supply chain integration of product design, end to end approaches for managing its supply chain, effective customization, used cloud computing technological supply chain advancement, and all 5 companies focused on total supply chain cost and management.
Research Topic (Suppliers Relationships) Background Supplier Relation Management (SRM) is the discipline of strategically planning for and managing, all interactions with third party organization that supply goods and/or services to an organization in order to maximize the value of those interactions. In practice, SRM entails creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value and reduce risk (Esourcing. com, 2012). Most businesses and organizations usually address the idea that in dealing with suppliers and customers the best types of relationships are arm lengths.
The closer your relationships are to your customers and suppliers the more control of your operations and business you have. Integrating a exemplary supplier relationship through partnerships, similar values, and trust leads to effective cooperation and product productivity. The relationships between suppliers are essential to any organization. According to Ameifo. com (2004) suppliers can directly impact the financial performance and profitability of a buying enterprise, as they influence product development cost, manufacturing schedules, inventory levels, and the timelines of delivery of goods and services.
During the supply chain management process supplier relationships are essential to the buying organization during the production development process. If parts, materials, or services cannot meet required design deadline of production then the production process is usually tarnished and repeated. The six levels of supplier relationships through effective partnering are conduct joint improvement activities, share information intensively by selectively, develop supplier’s technical capabilities, supervise your suppliers, turn supplier rivalry into opportunity and finally understand how your supplier work.
In order to incorporate a sustainable supply chain building strong relationships with partners and suppliers is essential to business operation globally. Strong lasting relationship with supplier on the global supply chain scale must focus on open communications consistent processes and requirements. Figure 1 shows the financial value scale of effective supplier relationship. From the diagram you can concur that financial value goes up when basic, core, strategic suppliers are in unison. Financial Value Scale of Effective Supplier Relationship:
Figure 1: financial value scale of effective supplier relationship Supplier Relationship Areas of Debate Two current theories and debates hunting supplier relationships are, can companies answer the two questions; effective supplier relationship management can provide step change impact to a business or cannot provide step change impact to a business. The main factor in regard to the current debate is the key strategies of supplier selection that builds trust and maximizes value for companies. Theory proves that sustaining relationship with supplier goes further than management.
If companies focus on supplier relationship through proper implementation it can provides essential competitive advantage. According to 4C Associates (2013) there are several reasons for the gap between the actual and theoretical benefits of SRM. Firstly it is difficult to reconcile the conflicting goals of two organizations. This is further complicated by the complex structure which frames many businesses. However, the key setback for the implementation of an effective SRM program remains the need for long term investment and the challenge of demonstrating tangible benefits. Suppliers Relationship, Management Technology Impact.
Technology and innovations has really impacted supplier’s relationships in regard to SRM. In recent years companies have really moved to more technological advanced strategies and software to manage supplier relationships. Companies are investing significant resources in managing suppliers and the use of supplier relationship software is becoming more common place. Supply chain managers are increasingly using the web to collaborate and to communicate with supply chain partners (The Supply Chain Lab, 2009). All industries with supply chains operations will be affected and impacted by technological advancement in SRM.
Companies need to evaluate if future suppliers meet their core standards, because with advance technology supplier selection is not just restricted to procurement departments in organizations. The impact of technology has a positive impact on SRM and this impact can be maximized by strategic implementation of effective SRM innovations. For maximization companies must act consistently act with a relationship mindset? Cloud technology has evolved and is changing how business is being done today. Cloud computing is design to and is changing the way companies use technology to service its suppliers and partners.
CloudSRM is a cloud system build for supplier relationship management. In Figure 2 the CloudSRM program is described more detailed. The program evaluates supplier performance, collaborates between supplier and buyers through document sharing. The technological cloud system has proven to improve operational performance and produced procurement savings. Figure 2: CloudSRM integrates ERP applications (csc. com, 2013) Supplier Relationship and Management (Future Directions) One of the key advantages of supplier relationship is cost reduction.
Cost reduction is essential to any organization. I believe an area for further research in this topic that would be beneficial is focusing on relationships to enhance cost reduction and better collaboration in the supply chain process. According to The Supply Chain Lab (2009) ccompanies should work together to solve supply chain problems and learn from one another. Better collaboration and communication will lead to increased sales. Improved collaboration can also lead to better demand planning and route scheduling. In regard to supply chain management global technology enhancement is orcing companies to require supplies that are result orientated. Another area of further research is organizations outsourcing to unknown countries. According to The Supply Chain Lab (2009) many companies have been burned when outsourcing manufacturing to countries such as India and China. Management practices that worked in one country are not necessarily going to work in another country and companies need to change the way they think and work in other markets. Supplier relationships and management has a vital impact on the future direction of global supply chain management research.
According to Lambert (2008) Customer relationship management and supplier relationship management provide the critical linkage throughout the supply chain. For each supplier in the supply chain, the ultimate measure of success for the customer relationship management process is the change in profitability of an individual customer or segment of customers. Conclusion As analyzed in the above contexts supplier relationships and management has a vital impact on the future direction of global supply chain management research.
Global supply chain originated when companies migrated to looking of expensive part and labor globally for effective cost savings. Integrating a exemplary supplier relationship through partnerships, similar values, and trust leads to effective cooperation and product productivity in organization going global, in regard to supply chain management.