Global Supply Chain Management – Strategies, Innovations, And Risk Management

Global Supply Chain Management

Write an essay on Global Supply Chain Management.

The global supply chain of management refers to a function performed by the global supply chain management professionals, who attempt to ensure that the consumers in almost all the countries receive the products and services that they are in need of within proper time and also the quality standards of the and cost concerns are met or satisfied effectively. The global supply chain of management and the individuals related to this field play very significant role in serving the ends of the healthcare, non-profit agencies and several business and government agencies, by contributing towards their proper functioning and thereby fulfilling the needs of the consumers across the world.

Any supply chain denotes the collaboration of all the procedures that remain involved, as and when a company initiates the process of production of final product with the help of the raw materials and then finally is delivered or delivered to the customers. Thus, the supply chain refers to this entire process; it does not mean only the supply of the final good, rather the entire process of manufacturing a good or service. Thus, it obviously requires critical professional skills for the management of the movement of raw materials into a company, processing of the materials into finished product and finally distributing or supplying the same. Thus, the global supply chain management personnel supervise or manage this entire cycle or flow of processed goods and services.

The supply chain of a business organization depends upon various factors or practices that govern both the production and supply of the goods and services. They can probably be the following:

The framework of Industry: The framework of an industry refers to the total collection and interaction of various factors, such as the customers, technological and economic factors, demand variation of the consumers, the lifecycle of the products, and other such factors related to the operation of an industry define and influence the framework of the industry.

Unique value proposal: Secondly, there should be a clear understanding of an organization’s position or reputation in the market in terms of its supply chain. This is because the unique value proposal enable the organization to shape and structure all the processes and factors of production accordingly that can fulfil the needs of the customers and meet the criteria of the company’s value proposal.

Managerial Focus: The managerial functions of a company become very important for maintaining a balance between an organization’s position, its competitive advantage in the market and the procedures involved in the supply chain. If balance between these two aspects are maintained then the company can easily aim towards its progress.

Supply Chain Management Strategies

Internal Processes: The internal processes refer to the activities that together make up the supply chain process, these processes need proper orientation of these internal processes, especially there should be a proper interaction between the utilization of the assets and the location of the decoupling point. When there is a perfect organization between these two factors then all the other factors can be governed easily.          

The management of the supply chain is an intensely complicated process because it involves various functions right from the procurement of raw materials, processing of goods from and the supply or distribution of those finished products from the manufacturing plant to the end points in order or satisfy the customers. Thus, this entire chain is a highly knowledge intensive process too.

Therefore, if RFID technology is implemented in the management of the supply chain, then it can easily ensure the improvement and reliability of the supply chain, thereby reducing the extraneous complexities present in the supply chain and management. The introduction of the RFID tags and barcode readers enable easy and much faster operations in terms of authentication of goods. The conventional methods involve manual counting of the goods and services which is a highly time consuming process. As for instance, in the case of the FMCG manufacturing companies, the manual counting of the processes, during almost every stage such as, during the procurement of the raw materials, production of the finished goods and services, sorting and packing of the final products; results in a huge consumption of time. While if such industries incorporate the methodology of RFID, then it becomes possible for the company or the manufacturing, industry to undertake the counting processes in just a few seconds. This is because the RFID tags can be scanned very promptly and multiple tags can be scanned. It becomes easy for the manufacturers to keep records about the production processes with the help of the RFID technology. When the labour cost is reduced, then it leads to the reduction in the cost of production as the labour intensive tasks can be performed easily within short period by the RFID technology. It ensures a firm of less manual work and cost of production therefore, accuracy in keeping records and thereby the entire planning and decision making within the firm become much more advanced. The management of the firm can easily approve of the keep track of the accurate movement of the raw materials , finished goods, time needed for production steps, and the extent of the maintenance of the machinery and equipment. As the speed of the process of producing the goods and services is accelerated, therefore, the delivery costs are reduced, and as a result, the profitability of the firm is augmented.

Innovations in the Supply Chain Management

The application of the lean management principles to the supply chain has enabled the firms in reducing the waste generation during the production process.  As and when the waste generation is reduced, it automatically reduces the cost of production. In accordance to this particular process of lean management, a continuous improvement is done in the process of undertaking those activities that will help in the reduction of the waste. Therefore, the focus is placed only upon the creation of the finished goods that will ultimately add value to the customer service. Goods, which have high demand in the market, should be taken into consideration.

The strategies that can be followed for the effective implementation of the lean management practices may range from the visual workplace, workplace organization, proper interaction of the internal processes, ongoing training, total productive maintenance and batch size reduction. To make a proper commencement of the entire process, both the customer and the production unit should be aware of the nature of the waste. Over processing and overproduction, transportation, inventory, waiting, defects are the activities that add to the waste related activities. The moment these are reduced through lean management practices, the progress of the firm can be easily enhanced. 

Risk management is necessary to mitigate any uncertainties related to quick operation, particularly in context of supply chain management in order to reduce to the chances of failure, with respect to transhipment of goods from one point to another and proper storage of the same. The techniques used for risk management are based on various probabilities that help to estimate the occurrence of failure and divert the risks involved. 

The risk management in supply chain management involves implementation of various techniques. Two of the important techniques are discussed below:

• Risk Management through Decision Tree:

This technique is particularly useful when a whole seller buys a particular quantity of materials and offers them to the retailer at some other price. The various constraints (nodes) involved in the decision tree consider various offers from the competitive whole sellers. It helps to simplify the decision making process by assuming the whole seller who is providing the materials at the lowest price. Thus, in the way the retailer can mitigate the risk by avoiding the cost involved in buying materials from the whole sellers are who are operating at high rates.

• Risk Management through Monte Carlo Simulation in supply chain management:

            The conceptualization of Monte Carlo relies on random sampling and computational algorithms to obtain favourable results by reducing the chances of uncertainties. Monte Carlo Simulation is a more sophisticated technique that is being adopted by many industries instead of the conventional processes.  It refers to a quantitative risk analysis procedure, based on computerized mathematical technique.MCS, once implemented in an organization enables the proper assessment of the probable risks and the techniques that can be adopted in order to mitigate the same. The modeler helps the management to choose from conservative, most likely and optimum cases of occurrence of risks. The probability distribution of the simulation helps to estimate the minimum, maximum and most likely cases of uncertainties.           

Continuous Improvement in the Supply Chain Management

A company is able to incorporate the sustainable management in the supply chain management through the prudent management and improvement of the economic, social and economic strategies of the organization. This in turn will assist the organization to conserve the resources, make an optimized use of the resources, increased productivity and thereby help in the preservation of the environment. Many research reports have shown that the sustainability in the global supply chain is growing in case of many businesses. Thus, as the supply chain involves different steps of the production process, therefore, if a firm uses the resources in a very sustainable manner for the production of its products then it will be able to reduce the impact upon rather adverse impact upon the natural environment (Fernie & Sparks, 2014).

In order to achieve sustainability in the supply chain, some of these following steps can be followed:

1. Companies should reduce the wastage of raw materials during the procurement.
2. Employment of some individuals should be done who will be able to perform the treatment of the products before packaging in order to deliver the finished product without the generation of waste.
3. Environment friendly methods need to be adopted while procuring the raw materials, so that environment friendly goods can be produced.

The companies nowadays are very much interested in undertaking collaborations or joint initiative with other companies in order to improve the entire system of delivery in the recent years and to reduce the additional costs that are incurred on the supply side, to reduce inventories and make developments in speed in the entire process, thereby resulting in customer level satisfaction.

            The strategies that can actually adopted by the companies to ensure successful collaboration are the following:

1. A company while collaborating must be well aware of the company it is collaborating with. Both of them should be rest assured of the investments to be made, right infrastructure and planning.
2. The collaboration should be of a long tenure, so that both the companies can understand each other, their needs and long term perspectives. There arises then, a greater understanding of each other’s potential and thereby taking steps in accordance with that.
3. The companies merging together must remain assured that both of them possess the similar performance management system.
4. The infrastructure of the companies involved in the collaboration process must have a very stable and better infrastructure along with robust and enthusiastic individuals who can make the entire process a success by allocating proper resources and defining vision for the collaboration(Lee & Ng, 1997).
5. Both the companies that collaborate with each other must be aware of the fact that they should work upon a benefit sharing model so that both of them procure from the business similar profits.

Innovation, Sustainable management of the resources, collaboration of the companies for the better management of the processes involved in the supply chain, proper follow up of the risk management plans and methods and finally the continuous improvement of the supply chain, right from the collection of the raw materials till the delivery of the finished goods, all together constitute the five important or crucial strategies of the Global Supply Chain Management (Gunasekaran et al.2001).

According to Obizhaeva & Wang (2013), the five strategies namely innovation, continuous improvement, risk management, sustainability and collaborative strategy are interlinked with one another. The innovation strategy such as implementation of RFID technology in fleet vehicles is directly related to continuous improvement. In today’s global supply chain management RFID tags in vehicles as well entry point of a logistics distribution hub has an impact on the day to day functioning of a business (Hervani et al.2005). As we have discussed earlier RFID provides an edge over conventional methods of counting. This has a direct overall impact on the aspect of “Continuous Improvement”. The innovation strategy is also associated to “collaborative strategies” by lowering down the costs, improvement in speed of service and customer contentment. We can further relate the strategy of risk management with sustainability of the supply operations. The various techniques used for risk evaluation is done in order to select the favorable probability scenario and improve the decision making process sustained supply chain management (Fernie & Sparks 2014).

Risk Management and the Strategies Involved

With the expansion in the world economies and increasing globalization, the business interests of the organizations are also undergoing a change and expansion. The demands for a variety of goods and services across the world due to the fluctuating tastes of the consumers and their lifestyle led to the increase in dependence over the maritime logistics, that became a major means now of transportation now.

The maritime supply chain refers mainly to the transportation of goods and services between two or more ports. The ever evolving needs of the customers has intensified and enhanced the importance of the maritime logistics. Logistics or the supply chain management ensures and aims at the ultimate satisfaction of the customers. Thus, in the same way the Maritime transport and the liner transport aim at the customer satisfaction by delivering the goods at the right place and at the right time.  Maritime logistics has made the process of the transportation of goods and services from one port to another port very smooth with the use of liner shipping service instead of tramp shipping situation which carries a bulk of cargoes. The introduction of Maritime logistics has thus achieved the goals of logistics that are timelessness, low cost or cost effectiveness and reliability.

The Port Of Singapore is an economic need for the people living there as Singapore lacks the natural or land resources. Therefore, PSA has proved to be a boon for the upliftment of the economic conditions of the place. It is at present the World’s second busiest and the most competitive port. It provides various facilities and terminals to conduct smooth trade handling. It helps in the transhipment of more than half of the world’s annual supply of crude oil and also ranks high in the transport of cargo. The exclusive geographical location and the technology implemented made the port the most vital one (Vidal & Goetschalckx, 1997).           

1. Resources at the port- The availability of immense natural resources, especially the resources at the port is a great advantage to the shipping industry in Singapore, namely its large protected harbor, its location at major trade routes and well-educated workforce (Power, 2005). Thus, it is one of the geographical advantages that help in the progress of the shipping industry at Singapore.
2. Key Operations conducted at PSA: As the port is located at a very advantageous position, it has become the choice for most of the exporters and importers across the world. However, it is not only the importance of strategic location, but also because of its efficient port operations and cost effectiveness. There is a well-defined co-ordination among all the operations at the PSA. CITOS or the Computer Integrated Terminal Operations System manages the entire operation system at the PSA, right from the arrival of the ships to the unloading and loading of goods.

The world has turned to be a very complex place to operate in terms of logistics, because of the increasing change in the consumer demands, which again has posed a major challenge in the near future. Therefore, the approach of the supply chain should follow the following step for better management:

1. Expectations of the consumers: The most important motive of the logistics and the supply chain management operation should be to act according to the needs of the customers and the satisfaction of the same within the right time with right quality standards.
2. Maintenance of cost effectiveness: It is a common trend that although the customers remain apprehensive about their expectations of the goods and services, they aspire them at a very low cost. However, it becomes impossible to keep the costs always at a low level. Thus, in accordance to the present situation, the logistic costs play a very vital role in determining the ultimate costs of the products and moreover the logistics costs have helped in reducing the overall costs of production, which is required to be maintained.
3. Globalization: The logistics and the supply chain management should develop the knowledge and infrastructure which will help in dealing with the rising globalization, customer requirements and the emerging market conditions.
4. Pressure of sustainability: The concept of sustainability and maintaining the same became very important in today’s world. It has turned to be one of the corporate social responsibilities.
5. Increased risk and challenges: Research and development, procurement, production and sales are some of the strategies that can be used by the logistics to mitigate the risk.
6. Use of new technology: Most of the companies are looking forward to incorporate new technology, like the big data analysis tools that will help in better planning and controlling the results. 

In terms of volumes of trade in shipping PSA is one of the busiest ports in the world. Some of the key performing indicators of this port are:

• Planning of orders
• Sourcing
• Production
• Delivery of the shipments

Bai & Sarkis  (2014)

The planning of orders includes demand forecast for each individual shipments arriving at PSA. Planning strategy also deals with planning the cycle time from receiving of an order for a shipment to delivery time for the same. The planning of inventory is important for proper maintenance of the bulk cargo and reducing the amount of wastage for perishable items. The total influx at PSA port amounted to 30.62 million twenty foot equivalent unit of containers in the year 2015. Through appropriate planning strategy the total order vs. the forecasted order can be evaluated for an increased efficiency (Gopal & Thakkar 2012).

The sourcing strategy plays a crucial role in assessing vendor lead time and minimizing the same. The general KPI for sourcing is supplier fill rate, which gives a report of the reliability of the suppliers. The step is to measure the fill rate as per individual items, secondly the simple way to measure the suppler fill is done by comparison of the actual date of delivery with the requested date of delivery. The ideal measure is to incorporate the allowance limit in the computation process, as each line product is having a different order lead time. Another important component is receiving of accurate purchase requisites, which contains information related to quantity of materials and due date for the same. In order to effectively implement the strategy Material Requisite Planning needs to be emphasized due to increasing complexities in the material planning process (MPP) (Schöggl et al., 2016).

The KPI for production recognizes changes in the present situation for time departure and arrival of ships at the port, to ensure timely production from the manufactures and order of fill rate. The various production measures to improve the potential metrics include production lead time and capacity utilization. The primary KPI of manufacturing takes into consideration on time departure of an item from the port. Each subsidiary is aided with a shipment plan. The second strategy involves timely production which is also known as (OTP), it is an analysis of the planned production and the actual production. Since most of shipping companies use ERP the monitoring of release of items for daily production becomes easy (Riexinger et al., 2015).

PSA is committed to deliver quick and trustworthy service to all the respective customers. But due to increasing competition in the global supply chain the timely delivery of the shipments is becoming a challenge than before. The metrics based on assumptions involves considering primary time less the timely departure from the sales subsidiary. While calculating the expected time of arrival of the shipment the information is available before the delivery of the products by different supplier oversees the entire demand planning to designing of supply networks (Marron et al., 2015)

According to Wisner et al., (2015).The tradeoff between the supply chain strategies mentioned above uses a feedback system for continuous adaptation. The primary role of the KPI shows the loopholes between the planned tradeoff and the executed trade off. Thus monitoring of the KPI’s becomes important. The above mentioned design guidelines and performance metrics are based on industry standards and in accordance with the best practices in measurement of performance (Chaabane et al, 2012).

2.7 Conclusion:

Thus, it is quite evident how the Global supply chain management enables the integrated production and supply or the flow of materials across the world. Through various processes, as mentioned -above the supply chain management is maintained at all the levels in the industrial sectors around the world. 

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