Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and …show more content…
In addition to increase risks, there is also a potential huge impact to supply chain disruption. In a study of more than 800 companies that experienced supply chain disruption between 1989 and 2000, there was a 33 to 40 percent lower stock return relative to industry peers (Bosman, 2006). Companies were also impacted by price volatility, lower sales growth and higher costs. Recent events highlight the unpredictability and severity of events that could cause supply chain disruption. The earthquake off the coast of Japan serves as a sobering reminder of this reality. As a country positioned as a global center of commerce and trade, Japan has provided a sweeping example of supply chain disruption. Although it is impossible to predict every natural disaster, act of terrorism or other supply chain contingency, a consideration for such disruptions must be a foundation for the strategic planning process from manufacturing all the way to the store shelf (Burnson, 2011). The disaster in Japan is already affecting companies around the world in the automotive industry, aerospace industry and the high tech industry (Chu, 2011). The complexity of global supply chains makes it difficult to fully understand all the impacts. It has been one month after the earthquake and ships are still at sea with products dispatched before the earthquake (Chu, 2011). A company will need to be well in tune with it’s supply chain due to
Changes within the supply chain can disrupt the normal flow of goods and services because each change hasn’t been fully scrutinized. A firm can plan and speculate that a change with have a certain effect on the supply chain, but until those processes have been measured it is impossible to know the true cause and effect of any disruption.
Supply Chain Disruption – The firm will have to keep a close watch on the risk management due natural disasters the supply chain gets
Supply Chain Opportunity in an Uncertain Economic Recovery, by Eric G. Olson, discusses the advantages the supply chain has in a struggling economic recovery, when most other companies are dealing with uncertainty. The authors’ intention contained in this article is to discuss opportunities that businesses have to grow their operations despite coming out of a severe recession. The author identifies to take advantage of these opportunity, companies must be willing to be more flexible and that scalability is much easier to implement coming out of a severe recession. The author provides a design, methodology, and approach to implement these changes, highlighting the scalability and flexibility benefits, mitigation if multiple risks, identification supply chain opportunities.
Supply Chain Management: An International Journal, Volume 7, Number 5, 2002, pp. 271 – 282;
Today’s global supply chain has been shaped by the past decades of focus and strategies based on achieving the lowest operational costs coupled with a push towards market expansion and supplier outsourcing. The expansion of global supply chains combined with the increasing number of joined connections to external business partners has significantly raised the possibility for supply chain disruptions (Poirier, Quinn, & Swink, 2010). In today’s global business environment, the importance of risk management continues to grow daily.
Finally, there are those costs that are common to both global and domestic sourcing. Direct labor and materials costs, lead-time costs, transportation costs and inventory costs are a part of both domestic and offshore sourcing. Transportation costs, inventory costs, and lead-time costs tend to be higher when sourcing globally. On the
resource-based perspective of supply chain resilience and robustness. Journal of Supply Chain Management, 50(3), 55-73. Retrieved from Business Source Complete Database.
Hence, Sheffi concludes that Wal-Mart supply chain risk management could be seen as one of the best among the retail (Sheffi, 2015). Wal-Mart understood that, fundamental of resilience is its ability to take control of disruption and recovery from it. In order for this to happen, the company’s disaster recovery plan includes Emergency Operations Centre (EOC) that has four activation levels. What made Wal-Mart so resilient is the company’s supply chain resilience which is the operational ability that enables a disrupted supply chain to reconstruct itself and bounce back into operation even stronger than before (Brusset, X & C. Teller,
(What do you think the author is trying to demonstrate or bring out in the case?)
At the same time, modern supply chain management practice faces the variety of challenges predetermined by the continuously changing economic environment. The global economic downturn characterized by high fuel costs, credit crunch, reduced consumers’ purchasing power, and depression fears (LTD Management, 2012), revealed the low efficiency and competiveness of ‘traditional’ supply chain, involving supply management specialists into the process of search and the introduction of new supply chain alternatives.
(Handfield, 2007) Code C should cultivate supply chain strategies that plainly deliberate two parameters that “intensify” the negative influence of interruptions on customer and brand performance: globalization and product/process complexity. Second, Code C should plan strategies with countermeasures that diminish the impact of these things, that is: better visibility to strategic supply chain nodes that can rapidly identify disruptions. They should also have well-positioned resources that allow rapid short-range retrieval plans. They need to have in place long-range cooperative methods to remove disruptions in the future. Research also recommends that companies with a great exposure to global supply chain risk invest more in improved inventory and capacity visibility
Prepare Contingency Plans: Supply chain risks must be identified and planned for. It is important to consider supply chain disruptions such as natural disasters, terrorism, security threats, piracy, supplier’s financial collapse, and infrastructure or process failure and there are other risks that all businesses face such as demand volatility and compliance issues. (book, p.241). Developing back up processes and plans takes considerable time yet preparation can be the difference between business continuity and end.
The single most important issue is the author presents a direct understanding concerning current supply chain within today’s corporations during an economic recession. With the need to scale back supply chain operations during the recession, many companies are trying to find ways to revamp their strategies, re-build relationships and gear towards a more cost effective perspective. There have been numerous tools and resources implemented that will allow them to flourish. More so the author believes that businesses should look outside of labor operations and more towards a
The supply chain management basically involves processes and activities which are involved in the planning, organising, controlling and implementing the cost effective flow of goods from the point of origin to the point of consumption. The whole process will have different players like the supplier, manufacturer, distributor, retailers and the customers themselves as the end point of consumption. The supply chain has changed drastically over the years. This days they are very global in nature. Involving various complex interactions and flow of goods, data and funds between companies which are situated in different countries and continents. Even though the companies are spread across the world the manufacturing plants generally follow a similar structure which normally comprises of the suppliers, manufacturing plants, distributors, retailers, inbound and outbound logistics providers. There were a lot of challenges which arose because of the
According to our class text Supply Chain Management’s goal is to create fast, efficient, and low-cost network of business relationships to get a company’s product from concept to market. In order to understand the goal we must know that the supply chain is the process the raw materials of a product go through in order to be available to the consumer. The relationships that the business creates are needed in order to create the product, each process the product goes through creates value, the supply chain is often called the value chain. Internet technologies are increasingly making the supply chain management process much more efficient and worth the initial investment. The supply chain management life