Discuss About The Logistics Performance Management Textiles.
This business report is divided into two parts. In first part of the report, highlight the supply chain risk faced by the organization Primark. The issues, challenges, expected future and benefits of the global supply chain will be discussed for obtaining four important key performance indicators- cost efficiency, global access, green operations and quality products. Additionally some recommendations are also suggested followed by the discussion of the barriers and risks faced if the organization were to implement these strategies.
The second part of the business report highlights five themes related to global logistic supply chain management system. These five themes are related with the global logistics and supply chain management. The five identified themes are- just-in-time management, total quality management, lean management, green supply chain management and risk management.
In this section, the details about the current issues faced by the Primark in terms of cost efficiency, global access, green operations and quality products is highlighted. Moreover, the complementation or conflictions in achieving these four key performance indicators have also been addressed. Lastly, the discussion is followed with the information of the barriers and risks faced if intends to implement the identified strategies.
The current issue that is faced by the organization regarding the cost-efficiency for Primark is that the stores are always loaded with apparels. The problem that is faced by the organization is not all the stock can be sold which leads to the wastage of the apparels once it becomes out of fashion (The Guardian 2018). This problem leads to the further wastage of the products and more cost allocation for the resources for the next lot of fashion apparels. Another issue that represents the problem of global access is that Primark do not provide any customer assistance reading the products. Issues related to the quality of the materials, loose stitches of the apparels and the difference in size for the same design are the issue regarding the quality issue in Primark (The Guardian, 2018). There is also lesser implementation of the information technology and IoT in this fashion industry. Additionally, lesser use of greener operations also witnessed through high carbon emission rate through the vehicles they use and from the manufacturing procedures. In terms of implementing the greener supply chain management can be witnessed through the packaging material and the synthetic material of the clothes that cannot be recycled. Lastly, the quality of the materials is poor and this is the reason that Primark can sell their products in lesser amount compared to the other fashion apparel industry (New Statesman, 2018).
Cost efficiency- In order to enhance the cost efficiency of the supply chain, Primark should involve the concept of Just-in-Time (JIT). The JIT should be pull JIT so that the cost of the inventory can be diminished. The utilization of the RFID technology is utilized for maintaining the record of the utilization of IoT in the supply management process also reduces the manual cost for performing the operations which results in the consistency of the supply chain procedure in all the countries the company operates the business (Tu, 2018). The barrier occurred in this case is lack of knowledge of the people; who will maintain the supply chain process. Taken for instance, the employees employed for supply chain process are not much educated as a result the newer technology for supply chain management takes much time for those workers.
Global Access- The supply chain collaboration can be utilized by the organization to acquire position in the global market. This collaboration can be horizontal collaboration with the other companies to share their supply chain assets (Sanchez Rodrigues et al., 2015). Total quality management can also be integrated with supply chain management so as to integrate the participation and partnership in all internal functions can be obtained along with collaboration with all the external partners (Talib et al., 2011). This will improve the supplier relationship and boost the supply chain process (Vanichchinchai & Igel, 2009). The barrier arises in this case is the interest of conflict due to the different perception of the external partners. The communication gap is the main reason for the occurrence of this barrier.
Green operations- The models of the Lean method should be utilized in supply chain process for reducing the waste. Pui-Yan Ho and Choi (2012) argued that apart from lead management, the utilization of the 5-R model should also be considered for implementing green supply chain management (GSCM). The five R model comprised of five processes- recycle, reuse, reduce, re-design and re-imagine (Pui-Yan Ho & Choi, 2012). The recycle process help the fashion company to focus more on the water recycling and steam power generation for recycling steam to generate renewable energy. The sewing thread cones can be returned to the supplier in the reusing process. The barrier in this case is high cost of investment to change the existing process into the newer one. This take more time in changing the organizational structure which furthermore need knowledge among the employees to utilize the technology for performing the organizational goals.
Quality products- The model of Cost of poor quality (COPQ) can be utilized in order to identify the origin of the production line and external services issues employed. The Total Quality Management can also be implemented in this section as it highlighted the regulations a company has to follow for marinating the quality through supply chain. ISO 9000 registration is applied by the organization to increase the inventory turnover, improving supplier relations, loyalty and repeated purchase, decreasing complaints, decreased nonconformities, increasing sale and market share (Casadesus & de Castro, 2005). Casadesus and de Castro (2005) also segregate the characteristics of the companies that are ISO 9000 certified and they are- prioritizing product quality, periodical auditing, and collaboration with technical aspects, concerted quality system and surveying the customers. These aspects represent the quality maintenance of the products through the supply chain management. Partnership with the government and the standard boards are necessary in this aspect. Problem arises when the government of the host country is corrupted. These governing bodies need more cost not only for developing the business agreements but also ask for high commission from the profit gained for the business.
Thus, it can be sated that the model of TQM helps the Primark Company to collaborate with the suppliers to maintain relationship with them and also maintain the quality of the products that is provided to them. Thus, global access and partnership model can be considered as complementary aspect with the model of TQM. Moreover, the utilization of the JIT and lean method also help in enhancing the quality of the products but conflicts the model for cost effectiveness as the greener solution can be applied, the cost of the products will be higher. The prime reason is that the recycling and waste management department need more cost to do the operations but the cost invested in the process impacts on the price of the product. However, the technology utilized for the JIT and IT technology like RFID need more electricity that on one aspect complement the model of green supply chain (GSM) but the high use of power consumption conflicts with the same model by increasing the problem of heat generation.
The risk faced by the company in implementing these models is to make adaptable change in the existing business plans and operations. All the vendors and suppliers are also communicated regarding the changed policies and business processes. Otherwise, the problem of synchronization arises and ineffective manufacturing process arises (). The TQM standards are not same in all the countries and hence complying with all these legislations for maintaining the same process of supply chain is also hard to achieve (Vanichchinchai & Igel, 2009). In addition to that, all the employees of the organization have to provide with enough knowledge base to utilized greener techniques used for the manufacturing of products and they transferring it through the supply chain management.
Filippini and Forza (2016) represented that Zara utilizes the technique of JIT supply chain in order to optimize the cost of the inventory. Raw materials are kept in the inventory in order to fulfill the sudden customer’s demands. ZARA also keeps reserve 85 percent of their capacity in the factories for fulfilling the demand of the in-season adjustments (Forbes.com., 2018). This results in able to be flexible in amounts, high frequency for production and developing variety of new products every time. Additionally, the fabric sourcing company department along with sewing facilities should be near to the headquarters so that the progress of the manufacturing process can be assessed regularly. Another process is to produce the maximum percentage like 50% to 60% of the clothes in the middle of the season so that in-demand style can be satisfied (Forbes.com 2018).
Moreover, Ptak and Schragenheim, (2016) highlighted that Dell also leveraged JIT principles and include suppliers to obtain the JIT goals. The important factors for the Dell success is- dependable suppliers to meet the demanding lead time requirements, willingness of suppliers to maintain inventory on hand and seamless system for transmitting component requirements (Lai and Cheng, 2016).
Zimon (2015) highlighted some of the principles of the supply chain management that are focusing on customer needs, leadership, involvement of people, Process management, System management, Continual improvement and decision making. Thus, from core business management aspects to customer management, total quality management addresses all the factors. Some of the quality management tools are ISO 9001, ISO 14000, ISO 9004, ISO 10000, OHSAS 18001, INDUSTRY STANDARDS, QFD, KAIZEN, FMEA, SERVQUAL, KANO, POKA-YOK (Zimon, 2015). The product design and technical preparation of the products can be obtained by structural, technological and organizational preparation of production (Zimon, 2015).
Company like Toyota and Zara have implemented communication plan for clear understanding of the requirement in the supply chain process (Monczka et al., 2015). Retail companies utilize the TQM principles of ISO9000 in their supply chain process in order to enhance the competition ability and operation efficiency of the whole supply chain system (Ptak & Schragenheim, 2016).
Agarwal and Sharma (2016) highlighted that companies obtain lean management by waste elimination, effective plant layout, reduction of production cost and reducing the risk of late delivery. Tortorella (2018) also stated that the tools used for implementing the lean management are just in time, Kanban and Kaizen. Company can use Kanban process which uses signal cards that comprises of instructional card, visible record and signboard for getting clear vision of status of production, monitor inventories and number of ordered placed by customers (Schonsleben, 2016). The Kanban card is attached with the unit throughout production and the entire system is relying on the bar codes details, electronic database for tracking the inventory and the management procedures.
Tortorella (2018) moreover, highlight that Kaizen process is more focused on the waste management of the supply chain process. Toyota utilizes the concept of the kaizen and identifies seven wastes in their manufacturing process- overproduction, waiting process, processing, motion, inventory, transportation and defects (Schonsleben, 2016). Thus, in order to diminish the waste production, every organization should focus on the value stream mapping for identifying the issues in the manufacturing process for the improvement of supply chain, understand the sources of waste and the process of information flow. Supplier associations are also important to formulate for improving communication and knowledge among the supplier for managing the supplier management (Schonsleben, 2016). Apple on the other hand aims for closed-loop supply chain so that they do not have to mine the raw products from where they develop the products for the users. Thus, the process of recycling can also be utilized.
Tachizawa et al. (2015) stated that through green supply chain management, a company should focus on dematerialization, detoxification and de-carbonization. There are many activities that can be implemented for obtaining the green supply chain management are following green procurement practices, using energy efficient products, reduces gas emissions and water wastage, using biodegradable packaging and recycle the product and packaging. Famiyeh et al. (2018) furthermore found an argument that companies with offices more than one location found monitoring and managing green SCM practices is a matter of high cost that hampers their annual profit.
MAS Holdings and Marks and Spencer establish eco-factories, which is designed as carbon neutral combined with energy saving devices and waste reduction processes (Independent.co.uk, 2018). This result in consumption of 40% less electricity compared to similar factories. Ford Motor Company on the other hand increased the use of recovered materials in their car manufacturing process and the amount found out to be utilization of four billion pounds of recycled materials for vehicle designing (Auto.economictimes.indiatimes.com, 2018). Maersk Line additionally, reviews their 2,000 suppliers out of which 1,500 of them signed for Responsible Procurement for using green technology.
Fan and Stevenson (2018) highlighted that supply chain risk management- risk identification, risk assessment, risk treatment and risk monitoring. Companies include some components in the risk identification process that are identifying drivers and sources of supply chain risks along with list and categorize risk in every manufacturing process. Petersen and Lemke (2015) moreover stated that the process of risk assessment comprised of risk prioritization, risk inter-relationship, applied and proposed strategies for assessing the obtained risk. Additionally, risk treatment process is evaluated through risk acceptance, risk avoidance, risk transfer, risk mitigation and risk sharing (Fan and Stevenson, 2018). Prakash et al. (2017) furthermore depict that risk management in the company can be obtained through innovation and efficiency with contractors for legalese contracts. Through procurement contract portfolios, the legal risk of the supply chain can be avoided. In fashion industry, the supply chain risk factors are comprised of market driven orientation risk, cost reduction risk, brand internationalization and market expansion risk (Prakash et al., 2017). The factors for market driven orientation risk are forecasting process, classification of inefficient items in the process, market heterogeneity, unstable demand and historical data for fashion items. On the other hand, the cost reduction risk factors comprised of inefficient interaction styling, delays in closing sales, forecasting error, process misalignment, poor virtual integration, longer production lead time, wrong delivery scheduling, inefficient item division in warehouse and poor management of Electronic Data Interchange (EDI) system (Petersen and Lemke, 2015).
In Marsh, which is a professional insurance and risk management for supply chain, utilizes supplier and distribution relationships, supply chain risk management strategies like risk resilient, agile and risk intelligent and risk management investments to plan for risk management (Marsh.com 2018). They developed supply chain risk management program through data, analytics, and mapping and examining the supply chain of the company through a value-driven lens and segregate the key services and products to identify the risk. In supply chain resiliency business analytics is utilized for to allocate risk resources and evaluate return on risk investment (RORI) (Marsh.com 2018).
Conclusion
The company that is taken into consideration is Primark which is a member of the Sustainable Apparel Coalition and operating their organizational functionalities in 325 locations. The current issues that are identified in the organization are partnership with unethical contractors, lesser implementation of the information technology and IoT in this fashion industry and lesser use of greener operations. The recommended strategies for enhancing the cost efficiency is to utilize the Just-in-Time (JIT) process; whereas, the global access can be obtained from supply chain collaboration and implementing total quality management. Moreover the green operations can be acquired through lean method and 5-R model. The quality products KPI can be accomplished through the implementation of Cost of poor quality (COPQ). In this case, the barriers and risks faced by the company is identified as making changes in the existing business plans and operations, effective communication regarding changed policies and business processes and complying with all TQM standards.
The second report highlighted that through Just-in-Time Management the raw materials are kept in the inventory for fulfilling the demand of the in-season adjustments. The Total Quality Management can be obtained through focusing on customer needs, leadership and involvement of people, Process management, System management, continual improvement and decision making. Moreover, the Lean Management should be implemented mainly for waste elimination, effective plant layout, reduction of production cost and reducing the risk of late delivery. The theme Green Supply Chain Management mainly focused on dematerialization, detoxification and de-carbonization; however, the risk management highlights risk identification, risk assessment, risk treatment and risk monitoring.
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Complementation or confliction in achieving KPI
Responsible Procurement for using green technology.
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