Strategic role of services in global supply chains

  • Category:
    Business
  • Document type:
    Research Paper
  • Level:
    Undergraduate
  • Page:
    4
  • Words:
    2901

3Strategic Global Supply Chain

Strategic Global Supply Chain

Location

Strategic Global Supply Chain

Introduction

Supply chain strategies have evolved over the past decades and different management practices have been put in place to realize the success in different industries. Profit making organizations have evolved and practiced different methods to ensure that they remain relevant as well as conquer the market in terms of supply and demand (Ballou 2007). The front group in the process of evolution and making of the supply chain work best is the private and profit driven sectors which ensures that there is continuous income within the organization. The different actions of the management have ensured that there is constant flow in the evolution of the strategies to ensure that there is none of the steps and challenges ignored in the introduction of the new strategy. The paper will look at the evolution of the supply chain strategies for the last decades through evolution of its process of evolution as well as providing the reasons for the evolution. It will go further to explain the roles of three different strategies in the supply chain and their importance in dealing with the changes in the global business. The three strategies that will be analyzed in the paper include; the multiplicity of suppliers strategy, procurement strategy and the distribution strategy. This will be done through the provision of different companies that uses different strategies in the advancement of their supply for the goods and services in the global market.

Evolution of the supply chain strategies for the last decades

The supply chain strategies have evolved for the last decades and the mega changes could be accounted for up to end November 2013 when the changes became minimal for the companies (Spillan et al. 2013). The following are the major evolution stages that these strategies of supply have gone through to reach the current efficiency being realized in the supply industry. First is the early years of supply which took place from 1940-1960s (La Londe and Masters 1994). At this time the main focus for the supply and its strategies was to ensure that there was logistic supply in the mechanization to improve the very labor intensive processes of material handlings with the materials in question being pallets and pallet lifts. The main aim for the supply strategies at this moment was to take advantage of space using racking and better warehouse design and layout. The use of the pallets became widespread and its usage was extended to the transport management which involved containers together with ships, trains, and trucks to handle the containers. The concept was introduced to the warehouse as a prerequisite for supply chain globalization that was to come much later to replace the labor intensive operations. The trend by 1960s evolved to more time–dependent freight transportation to truck rather than rail creating joint consideration of warehouse under the National Council of Physical Distribution Management (NCPDM). The operation did not work to the need of the management and there was need for a more improved means of supply in the industry.

After the early stage, the supply chain management proceeded to the logistics comes of age which took place during the 1980s (Christopher & Holweg 2011). This period was characterized by the emergence of the personal computers which provided tremendous better computer access to planners and new geographical environment planning. This period ensured that there was flexible spreadsheet and map-based interfaces through the use of technology to facilitate planning for conquering the market. The evolution was to ensure that the mapping of the distribution centers were brought into book to ensure that there was planned distribution method for better supply. This was done through combining of map interface with optimization models for supply chain design and distribution planning. Due to the previous issue with the airplane scheduling problems, the strategy was to ensure that there was tractable airline through the use of computational optimization center development for scale optimization algorithms to facilitate supply. The complexity of the strategy was realized in this era as most industry considered it expensive through training of the personnel to work with the new technology (Mellat-Parast & Spillan 2014).

After the success of the era, there was need to improve in the supply industry and different enterprises were operating on the Enterprise Resource Planning (ERP) systems (Tan 2001). The evolution was motivated by the success achieved by Material Requirements Planning system developed in the 1970s and 1980s, as different organizations wanted multiple database that could connect and exist in most companies. This was to ensure that there was constant feedback and communication among the companies to ensure share of information and market features. The strategy was to ensure data availability and accuracy for better planning and integration among logistic components. The result for the era was the introduction of the new generation of Advanced Planning software and Scheduling (APS) software which was to help in the analysis of the market and its demand (Tan 2001).

The era evolved and resulted to the globalization and Supply chains strategies which took place within the era of 2006. This method was developed due to the globalization of manufacturing which started in 1990s especially from the growth of manufacturing industry in China (Carter & Liane 2011). The imports were growing and different states needed to establish their ways through which goods could easily be exported and imported. The focus of this ere was to accent the need for logistics strategies to deal with complex networks including multiple entities which were growing in different countries. There was the introduction of the coordination of the traditional business function and the tactics across these business functions taking into account the particular company and across the businesses. The main aim of these ere was to increase and improve the long-term performance of the individual companies and the supply chain as a whole (Carter & Liane 2011).

Currently, different supply chain strategies are used and they have advanced at the phenomenal rate, which ensures good strategies for the businesses. The communication capabilities have increased and most of the supplies are done on communication with the evolution of the customer’s needs through communication and different agreements. Information sharing through communication as well as technological appreciations has changed the supply chain and logistics planning which are based on the models of distributions developed from the personal computers. The distribution as well as variation in the models has made every operation of supply to be done on software basis with planning and market identification being done at one end of the organization (Spillan et al. 2013).

Importance of different supply strategies for the future of the businesses

The multiplicity of suppliers’ strategies

This strategy involves purely the use of the internet and electronic commerce to ensure better auctioning of the products. This strategy involves the distribution of goods through auctioning from upper-echelon producers to the lower-echelon dealers and consumers in any arrangement of the organization and location of the parties (Singh et al. 2012). The bidding made by the companies through auctions created by the organization ensures that the best bidder as well as the best auctioneer gets the opportunity to win the market and distribute the product. Mostly, the buyer is encouraged to buy from the second price auction which only admits a symmetric equilibrium for bidding strategies. As the second price is taken by the buyer, he or she sets up the reverse price which eliminates the multiplicity bidding strategies which makes the forward and reverse auctions mathematically equivalent.

The strategy ensures that there is uniform distribution of cost in the supply chain to avoid any unnecessary sales and extortion of the parties which makes it to easily adapt to the trends and changes in the industries (Sucky & Durst 2013). The reverse process ensures that there is increased demand for the goods as most of the people in the market share ensure that they receive goods at cheaper prices. The companies uses this strategy to ensure that most of their products are shared in the market as well as supplied to ensure that they sell more products at lower profit but in bulk guaranteeing the market win irrespective of the trends. The principle of operation here ensures that the company receives little profit per product but large profit due to the large quantity sold in the market.

An example of the company that has used this strategies to ensure that it increase and remain relevant in the market is the Floral Industry (Aboutflowers.com 2016). The company uses the strategy to ensure that it develops and finds the market share through the internet as well as find the different pricing that is needed by the consumers. It helps in the display of the products as auctioning is done to facilitate the success and competition winning in the market. The company also ensures that the reverse pricing is determined which ensures that fear of risk is reduced on the side of the consumers.

Procurement Strategy

This is the supply chain strategy which defines a plan that optimize external spend procurement operations together with its value contribution in a manner that helps to support the overall corporate agenda (Zare et al. 2011). The strategy aims at the organization identifying a gap that exists within the global market and realization of the best ways to fill it. The company ensures that it analyses the gap that is within the market and evaluates the available resources that it has in filling the gap. The company through its resources identifies the way to engage in the supply by organizing and developing strategic plank roadmaps to be followed in the supply. The targets are identified and the organizations only get involved into the business operation which they can work with without investing the resources in areas with little profit.

According to Umar et al.(2013) the strategy is important for the organization to adapt to changes and trends in the global market and profit making. This will be ensured through the principle that the company will only work in relation to the companies’ goals and objectives. Also the investment of the resources will only take place after the evaluation of the trends within the market ensuring that the company does not blindly invest in the market. The purchase will only be possible after the convincing the industry that the material is purchased for a particular reason. The strategy also helps the company to adapt to the system through the creation of the good relationship with the suppliers and other global demand as they operate on less loss business. The more the operation the higher the trust being developed in the economy and irrespective of the changes in the market, the trust will still keep the business going. The strategy provides the mechanism through which evaluation and measurements are made in the business and this ensures that challenges are quickly realized and solved in the business in relation to the goals of the business (Zare et al. 2011).

Some of the companies that use the strategy for their global supply chain include; the Bain and Company organization which uses the strategy to ensure that it helps the healthcare remains relevant and supplied all the time (Bain.com 2016). Secondly, Detecon International also uses the strategy in ensuring that there supply for the information and communication technology services and equipment are constant to the consumers. Lastly is the Deloitte Company which has conquered the market through the use of the technology (Deloitte Ethiopia 2016).

Distribution strategy

This is the written plan by the management in the manufacturing business that specifies the ways through which the organization will transfer its products from the manufacturing sector to the intermediaries, retailers, and end consumers (Paksoy, Pehlivan & Kahraman 2012). In order for the organization to succeed in the business, it must design a business strategy which suits its specific products especially if it has variety of the products. The distribution strategy has been employed by different organizations and its success only depends on the ability of the management and the producers to define a well-organized path that the products can follow to achieve the best products demand at lower prices.

The distribution strategy helps the organizations to cope with the changes in the business through identification of the specific root for a specific product in the market by following the market structure and the market need. This strategy will help the organization, as it will be able to map the products used to the end-user without losing track on the demand. The strategy ensures that changes in the competitors’ strategies are analyzed and compared in terms of their effectiveness and the best strategy and path selected to be used by the organization in the changing market. The strategy also ensures constant interview with the distribution partners who ensure that changes are easily realized and a good distribution strategy developed for the success of the organization (Berthon et al. 2012).

Some of the companies that are using the distribution strategy include; the Coca-Cola industry which uses the distribution strategy to reach its customers all over the world through the smallest units of retail. The company ensures that wholesale distribution take place at the States or countries level with the final retailer being at the door step of the consumer (Company et al. 2016). Also other companies that use the distribution strategy to reach and remain relevant to the company are the Autodesk Company which ensures that the software are designed as per the need of the consumers and supplied directly to the consumer.

Conclusion

From the discussion, it is clear that every strategy that has been used by the organization is important in relation to the market share and the type of product that is produced by the company. It is also clear that the supply chain strategies as evolved through the past years of operation through its management to ensure success in the global economy. Despite all this changes, the economy and the global market is still changing towards ensuring that the market is well served as taken good care of to facilitate conducive environment. Different industries and organizations should therefore identify different strategies which will best fit their business towards the success and market gain. It is necessary that the organizations remain relevant and focused towards evolving the strategies towards a success business in the world.

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