Supply Chain Opportunity in an Uncertain Economic Recovery
Authors Statement of Purpose
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.
Background
America is not the only country that is recovering from an economic recession. The global marketplace is experiencing the same struggles that the recession has brought to countries across the world. Many companies have been impacted in a negative way from the recession, causing them to make some difficult decisions to survive during these turbulent times. When it comes to supply chain management, “it is remarkable how rapidly many businesses have successfully scaled back their supply chain operations in order to sustain profitability during difficult times” (Article p1)
The recession is slowly coming to an
A supply chain is a net work of firms. Thus, each firm in the chain should build its own supply chains to support the competitive priorities of its services or products. Two distinct designs used to competitive advantage are efficient supply chains and responsive supply chains. Efficient supply chains work best in environments where demand is highly predictable. The focus of the supply chain is on efficient flows of services and materials keeping inventories to a minimum. The firm’s competitive priorities are low-cost operations, consistent quality, and on-time delivery. Responsive supply chains designed to react quickly in order to hedge against uncertainties in demand. Work best when firms offer a great variety of services or products and demand predictability is low. Typical competitive priorities are development speed, fast delivery times, customization, variety, volume flexibility, and top quality. Tables below show the environments and design features that best suit each design.
Auto manufacturers have extremely complicated supply chains that are increasingly focused on flexibility and lean operations. Implied demand uncertainty for auto manufacturers varies considerably by target market and manufacturer. Automotive supply chains among the big three in the United States have made great progress in the last decade and recognize that they must be responsive from a time and flexibility standpoint.
The business world nowadays is very different from the past. It is fast changing, challenging and full of opportunities. In order to sustain the business, the companies need to minimize costs, maximize profits and make the business environmentally sustainable. The management of the organization achieve these goals through supply chain management has recently focused (Fawcett, et al., 2007).
resource-based perspective of supply chain resilience and robustness. Journal of Supply Chain Management, 50(3), 55-73. Retrieved from Business Source Complete Database.
The LEGO Group is recently experiencing a problematic phase, which has situated the organization with a deficit of 1.8 billion DKK. The problems experienced by The LEGO Group can be attributed to not being able to manage as well as stabilize a strategic supply chain. Successful SCM is crucial for a manufacturing firm in order to harmonize the production process and internal information with demand for the product. When considering the importance of supply chain management, organizations need to study its effect on other major business processes as well as how it will influence the organization as a whole. Supply chain management may directly or indirectly influence major process such as inventory, capital investments, distribution
Recent years have brought several changes in business practices, technologies, increase of demands, and environmental trends. For businesses these changes represent vast challenges especially for supply chain and purchasing managers, demanding special attention to key issues related to contract management practices, lean supply chains, ethics and laws, purchasing of services, performance measurement and new trends in the field. Below is a summary identifying six purchasing and supply chain management key issues, supply chain and purchasing managers are required to identify future and actual key issues within these elements and how to manage it effectively in order to stay competitive and maintain the good performance of the company.
Flexibility will create a supply chain that is resilient to cost volatility. For the optimal usage of resources, the supply chain should employ intelligent modelling capabilities. Cost structures should be variable and should be capable of catering to fluctuating market demand. Shared decision making with partners, outsourcing non-differentiating functions to share risks and scenario based operational analysis are some of
Organizations having supply chain world-wide face more risks such as supply disruptions, longer lead times etc. caused by global customs, foreign policy regulations, port delays, political instability, recession in a specific region’s economy etc.
The need to emphasize on all aspects of a supply chain is necessary, especially innovativeness, information, resources, outputs and flexibility, because their performance, which is based upon their management and processes, directly influences the competitive advantage of a company. Therefore, improving the performance of a supply chain is very critical for achieving competitive advantage. Improving the performance of a supply chain is not a one-time process rather, it’s a continuous process for the company and its supply chain network to sustain and gain further competitiveness (Cai et al., 2009).
Commodities like oil, gas, etc. have volatile prices thus making procurement in the market difficult.
The importance of the supply chain hasn’t always been so critical. It wasn’t until the railroad industry in the early 20th century that we first started to see real focus given to the supply chain. World War II put an even greater focus on the importance of a good supply chain and that emphasis was felt on a global scale. In the 1970s the oil embargo and shortages of other raw materials brought the attention of purchasing and supply management to a new level, once again. As more companies began competing on a global scale, innovative strategies arose. In the 1980s
The last 20 years have seen the emergence of the supply chain as a critical competitive force in today’s increasingly
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.
Demand management performance, referring to the extent to which a firm is capable to fulfill its customer’s orders efficiently and effectively, has become one important indicator of a firm’s overall performance (Cachon and Fisher 2000; Heikkila 2002; Xu et al.2003). The demand management process is concerned with balancing the customer’s requirements with the capabilities of the supply chain. This includes forecasting demand and synchronizing it with production, procurement, and distribution capabilities (Croxton et al. 2002). A good demand management process can enable a company to be more proactive to unanticipated demand and more reactive to unanticipated demand. Supply chain risk, vulnerabilities, and uncertainties have become topical issues of interest among academics and practitioners in the last few years (Oke and Gopalakrishnan 2009). Supply chains are vulnerable to risks or disruption that arise from problems in coordinating supply and demand, including both high-likelihood, low-impact and high-impact, low-likelihood risks, both of which affect organizations in a major way (Chopra and Sodhi 2004; Kleindorfer and Saad 2005). Thus, for firms, having the ability to respond effectively to the demand disruption is crucial. Although there is growing interest in exploring ways to manage these disruptions (e.g., Chopra and Sodhi 2014; Yu et al. 2009), little prior research examines the types of organizational capabilities that help a firm manage demand disruptions. Our
Fundamental to any business organisation is the need to have an effective supply chain strategy (Aronsson, Hakan & Maria, 2006). This is achieved mainly by how an organisation can develop and implement its supply chain strategy. Development and implementation of these strategies may differ from one institution to another, but the general idea is the same across all organisations (Brewer, & Thomas, 2001). This article, therefore, shows the general importance of supply chain strategy to any organisation.