Supply Chain Management in the Argri Foods Sector within UK and Northern Ireland - Research Paper Example

? Changing trends in Supplier relationship management in the Retail Supply Chain for competitive advantage Changing trends in Supplier relationship management in the Retail Supply Chain for competitive advantage Introduction Today’s retail supply chain has evolved to become highly multi-tiered networks of suppliers and consumers in a manner that fresh insight is required in order to remain competitively relevant in the market place. Increasingly retail companies outsource some of their supply chain processes, and try to find more effective ways to manage their relationships with their suppliers through coordination, collaboration, and cooperation in order to enhance cost cutting and ensuring competitive advantage (Leeman , 2010). Indeed Olurunniwo et al (2011:159) elucidate that due to the essence of the multi-tier relationships in the supply chain, most businesses are faced with challenges on how to competitively manage these supplier relationships. While a wide array of research have been carried out to examine how to effectively manage supplier relationships for effective competitive advantage, the changing trends in retail supply chains either due to increased online retailing, outsourcing of some key supply chain processes by the retailers or even the recent has impacted the way relationships are managed within retail supply chains necessitates further study on how such factors impact relationships within the supply chain. This paper seeks to investigate these trends in supplier relationship management within the Retail Supply chain, and how retailers have adjusted their practices to be more competitive in the market place. Background to the Study Retail supply chains have overtime evolved and developed into complex multi-tier chains. With the retail industry being the largest private sector in the global economy, its supply chain needs to be as effective as possible, and this, mainly relies on the relationships within the supply chain that play a key role in delivering value to the end customers in the supply chain (Jambulingan, Kathuria and Nevin, 2011:39). The number of suppliers that one retailer has determines the level and quality of relationship that such a retailer would have with the suppliers. Over the past few years, companies having been focusing on reducing the number of suppliers that they have so as to harness effective relationships that is build more on collaboration (Ponce-Cueto, Garcia-Sanchez, and Ortega-Mier, 2010: 111). Indeed supplier relationship which had in the past been ignored is presently growing to be an influential aspect of the retail supply chain and businesses as well. Lintukangas and Kahkonen (2010:107) show that supplier relationship which essential in connecting a business to the supplier network, is critical in increasing a firm’s competitiveness as the company is able to exploit synergies from such relationships. This increases the effectiveness of supplier relationship management thereby increasing business performance. Such views are also shared by Jiang, Henneberg and Naude (2012) who note that supplier relationship management which thrive in trusting and dependent environments are critical for the enhancing business objectives where the quality of such relationships determine level of trust. Problem Statement Though there have a wide array of research on how best to manage relationships within the supply in order to enhance the performance of an organizational (Olurunniwo et al, 2011; Leeman, 2010; Croxton et al, 2001), the evolving nature of the retail supply chain necessitates constant change in the way it is managed. Such changes that have over the recent past been impacting the supply chain include changes into multi-tier network of relationships, the increasing practice of outsourcing key supply chain processes within the retail sector and the impacts of the recession in the way the way that retailers carry their business and relate to the suppliers. This necessitates a study in this area into how such relationships within the supply chain are being managed in the face of such changes. Indeed Olurunniwo et al (2011:159) note that some of the key challenges that businesses face in supplier relationships currently are the impact of the economic recession on both businesses and suppliers, the need for a more diverse supplier base (outsourcing), continuity of supply and the financial viability of suppliers. Despite these challenges, the strategic importance of effective relationships and collaboration though acknowledged by retailers, have not been completely understood (Thomas, Esper, & Stank, 2010:394-395). Retailers continually need to get past evolving supply chain challenges and recognize effective supply chain strategies that would present competitive advantages to the business (Unipart Logistics Report, 2012:2). Past research studies have analysed the challenges that face supplier relationships in retail supply chain due to the impacts of the recession and increase in outsourcing activities (Aberdeen Group Report, 2009; Wang, Heng and Chau, 2007; Thomas, Esper, & Stank, 2010; Olurunniwo et al, 2011; Johnson and Mena, 2008), and few studies have looked at how such changes are managed (Aberdeen Group Report, 2009; Ponce-Cueto, Garcia-Sanchez, and Ortega-Mier, 2010), no known study to the researcher has evaluated the changing trends in such supplier relationships especially over the past three years. It is in view of this that this research seeks to understand how retailers are tackling the evolving challenges in supplier relationships in order to remain competitive; thereby understanding the changing trends in supplier relationship management. Research Question and objectives of the study The purpose of this study is to investigate and examine the changing trends in supplier relationship management within the retail supply chain taking into account the changes that have increasingly been taking root in the global economy and within the retail sector that have impacted the way business is done. Such things included outsourcing within the retail sector, the impact of the economic recession on businesses and suppliers, and the increasing level of online retailing for businesses that requires a different strategy in inventory management and an even more integrated relationship with the suppliers. in view of this, the research questions that the paper seeks to answer are: what supplier relationship management strategies have retailers adopted in view of the impact that recessions had on businesses and suppliers; how do the retailers manage supplier relationships when outsourcing some supply chain processes; In what ways have retailers adjusted their supplier relationships since 2008 to remain competitive in the industry; and how do they manage effectively the supply of online traded commodities. Significance of the Study This study is very important both to business practitioners especially retailers and scholars as well. The conclusions from the research would serve as a base for further research in the area and would also provide a point of reference for scholars. In addition, this paper seeks to increase knowledge in the area of supplier relationship management in supply chains where it provides knowledge on changing practices within the field. Indeed where upon there are a wide array of literature in this study, few have focused on the manner in which businesses have modified their supplier relationships in view of recent trends in the retail supply chain practices. In addition it is also important to the retail practitioners as it provides a best practice list of what is currently being done in view of the changing economic climate and environment to ensure that retail supply chains are effective and efficient and also to ensure that retailers remain competitive in the market place. Literature review There have been a wide array of literature that have that have examined relationships within a supply chain and how they need be managed. First and foremost supply chain management has been defined differently by different scholars. Koprul and Albayrakoglu (2007:2) define it as the management of how goods flow from suppliers to consumers while Singh et al (2010:173) define it as set of activities that competitively link up organizational entities and ensure the flow of goods from their point of origin to the end consumer. A much more globally acceptable definition though is one provided by the Global Supply Chain forum where it is defined as key business processes that are integrated from the end users of products to flowing to the suppliers in a manner that provides critical information, products and services that add value to the customers of such products or services (Wang, Heng and Chau, 2007:136; Duffy and Fearne, 2009). Supplier relationship management is just one of the strategic processes within the supply chain management model. It mainly entails businesses developing, maintaining and managing strategic supplier relationships with the key suppliers in a manner that ensures flexible collaborations and cooperation in important facets of the business such as delivery of products in the retail stores or changes in product development (Leeman, 2010:189). Retail supply chain management is encompassed with a wide array of relationships to be managed from the getting products from the vendors to the end user customers. While at the same time minimising transportation, warehousing, and inventory costs, a retailer needs to understand just the right levels of inventories to hold to minimise cost while at the same time avoid stock outs. Aberdeen Group Report (2009:4) notes that the key issues faced retailers within the supply chain mainly include high delivery lead times, high inventory costs, higher distribution and transportation costs, high levels of stock outs and low inventory turns. While issues such as inventory costs can be lowered by lowering inventory, a problem of stock outs or higher delivery lead times ensues. Such problems can easily be resolved using stronger integrated relationships between the retailers and the suppliers of such products lead time deliveries, reduces transactional costs and inventory costs (Leeman, 2010:71-72). Within the upstream supply chain, a retailer may have to deal with both first tier and second tier suppliers as all these impact on the quality of the product they sell to consumers. Managing how information and products flow within the supply change from suppliers to retailers and to consumers and back again requires that organisation relationships be fostered through strategic sharing of both information and technologically efforts between the retailers and the various tiers of suppliers (Wang, Heng and Chau, 2007:137). The supplier-retailer relationship is critical as it greatly impacts the proper functioning of the retail sector and ensures effective distribution of merchandise. Indeed Lambert (2008:54) and Croxton et al (2001: 26) have noted that developing efficient supplier relationships is critical for a business not only because of the ever rising competitive pressures in the global economy, but also as a cost efficiency measure where product service agreements can reached in order to enhance flow of such goods at lower costs. Such relationships are as they enable closer collaboration with suppliers who have the expertise on how to improve the product that they offer to the retailers. This supplier relationship management model is shown in the model below where there exists two sets of sub processes. Those concerned with strategic planning on how the relationship would be managed, and the other one concerned with exactly how the relationship would be operationalised to make it work effectively ranging from how to segment the suppliers to developing product or service agreements with the suppliers (Croxton et al, 2001:25; Lambert et al, 2005) Source: Adapted from Croxton et al, 2001, pp. 25 In a recent study by Johnson and Mena (2008:32) analyzing the supply chains for servitised products, the authors found that within the supplier relationships of the firms being studied, the two companies under study, TransCo and AerCo, relied heavily on their supplier bases for competent distribution framework within their businesses such as effective delivery systems, design responsibility of the products they sold, and packaging responsibilities. This implied that the suppliers were more than just suppliers but key integrators within these businesses. In addition, a third firm CraneCo was noted to include within its strategies incentivisation techniques with its suppliers so as to remain competitive and receive high quality products. Such strategies point to the companies increasing outsourcing key components that determine their end products to key suppliers, and therefore reflect a change in such relationships especially where a supplier who performs poorly or is a subject of bad press may grossly impact a retailers products or services if key customised products are sourced from such suppliers (Jayaram, Tan, and Nachiappan, 2010:6838). Indeed various factors outside the supply chain such as policies put in place or safety standards impact the supply chain (Lindagreen & Hingley, 2003), and therefore also impacts any outsourcing supplier relationships within the supply chain that may influence the competitiveness of a company. Johnson and Mena’s (2008) study though was limited as it focused on the practises within the supply chain relationships rather than the changing conditions for effectiveness of such relationships. Rising outsourcing even in small retail firms and the complexity of such supplier relationships requires that firms coordinate their internal processes with those external to it (Handfield and Nichols, 2002). This calls for integration of the supply chain with the suppliers and also requires an effective relationship management be put in place to ensure that such processes are able to take place effectively. Indeed Jayaram, Tan and Nachiappan (2010) in their study examining how firms integrate various of their processes and how it impacts supply chain management efforts, note that the degree by which firms within a supply chain are integrated are often predicted by the efforts of supply chain management, which mainly include developing effective supplier relationships which ensure effective coordination along the supply chain in a manner that adds value to the products and services and minimises costs for businesses. Long term supplier relationships have especially been noted to be imperative for any business as it cultivates trust and efficiency especially in a critical moment such as the recent recession when various firms and suppliers sought to lower their costs of doing business and adopt a lean approach to business processes (Jayaram, Tan and Nachiappan, 2010). Cox (1999:167-168) supports such views noting that an effectively, efficient and lean supply chain would be one aside from eliminating waste in processes and acknowledging the value that all stakeholders within the supply chain add, often focuses on enhancing collaborative, trusting and close relationships with suppliers on a win-win basis, integrating processes with suppliers to ensure lean processes are achieve and to enhance longevity of relationships with key supply partners while reducing the number of unstable short term suppliers. Jayaram, Tan and Nachiappa (2010) though did not seek to study the performance consequences of supply chain integration due to changing supply chain practises. This study seeks to partly fulfil this. Fabbes-Costes and Jahre (2008:149-150) in their study report that longer term established and integrated supplier retailer relationship were found to be positively related to higher business performance. With the changing globalised environment and increasing information technology capabilities, there has been a drive towards higher integration of the supply chain processes beyond just the supplier and retailer, but also including the other tier suppliers. While information technology such as RFID technology is critical in enabling and facilitating efficient relationships and enabling an environment where movement of products can be traced to understand the inventory levels within all levels of the supply chain and what needs to be replenished, the integration of such systems across the supply chain can only be achieved through effective and strong relationships among retailers and suppliers. Canavari, Centone, Hingley and Spadoni (2010) research on various fruit and vegetable products are traced within the retail supply chain clearly show the significance of managing relationships within a supply chain as it is through such effective management that information exchanges can be effectively coordinated between different suppliers in the supply chain to enable effective tracing that provide accurate strategic data for the supply chain players. The number of suppliers that one retailer has determines the level and quality of relationship that such a retailer would have with the suppliers. Over the past few years, companies having been focusing on reducing the number of suppliers that they have so as to harness effective relationships that is build more on collaboration (Ponce-Cueto, Garcia-Sanchez, and Ortega-Mier, 2010: 111). Such relationships enhance sharing of information and lasting relationships. Ponce-Cueto, Garcia-Sanchez, and Ortega-Mier (2010: 111-113) notes that the recent recession has impacted supplier relationships with such relationships tending more towards strategic importance, emphasizing relationship building with a focus on cost cutting and cost minimisation. In addition Jayaram, Tan and Nachiappan (2010) point out in their study that the rising outsourcing even in small retail firms and the complexity of such supplier relationships requires that firms be able to integrate their operations in a way that ensures effective coordination along the supply chain in a manner that adds value to the products and services and minimises costs for businesses. Such views raise the question as to whether retailers have changed their supplier relationship strategies given such trends. This study report seeks to investigate any such trends in supplier relationship management Methodology Research Design and Data Collection This research study will follow Saunders and Lewis (2007:8-10) flow in carrying out the research process. In view of this, this research will use a qualitative methodology in carrying out the research and seeking to answer the research questions and objectives. This research design is essential for this topic as the topic rather than testing a theory, seeks to bring forth new knowledge as to changing practises in the supplier relationship management due to changing trends in the industry and seeks to get the point of view of business practitioners in this regard (Bryman and Bell, 2003:302). The key method by which data will be collected will be through interviews in order to get deep rich data and information on the essence of how businesses respond to changing business climate and practises (Bryman and Bell, 2003:302). In completing this research study, data will be gathered through semi structured interview approach from supplier relationship management executive such as persons responsible for procurement, logistics, and operations flow. Olorunniwo, Jolayemi, Fan, and Li, (2011:160) in their research study evaluating challenges faced by companies in supplier relationship management found the use of interview as most effective for getting in-depth rich data on the challenges faced. Philosophical underpinnings Having established a problem that needs to be researched, it is important that the right method for collecting data be established in a way that it will be able to effectively respond to the question under research and provide high quality research results (Newman et al, 2003). This research which seeks to understand the changing trends in the manner that business manage their supplier relationships given recent impacting factors such as recession and outsourcing of major processes within retail chains, clearly show a continuous revision and reconstruction of the retailer’s experiences. The implications of this, is that retailers undergo continues processes of reconstructing experiences and methods in a strategic way that would enable mitigation of challenges brought about by the changing nature of business. This implies that the paradigm in the research would have to take into account how various retailers shape each other and business practises in order to understand changing trends and to be able to answer the question under research (Carson and Coviello, 1996). In essence, this research study works under the assumption that what different retailers practise across the board impact overall changing trends that define future business methods. Thus this researcher’s value system, beliefs and worldview are philosophically underpinned by interpretivism as the philosophical basis that guide this research preferring to address the research question using the constructivist ideology that collective participant meaning and views gives meaningful data to draw conclusive interpretivist viewpoint. Thus the contention of this research study is based on the view that research will benefit from methodological eclecticism using intrepretivist narrative method of research. Participants of the study The study aims to interview supplier relationship management executives from eighteen retailers both large and small from the discount and variety stores sector, retail restaurant sector, internet ecommerce companies, and automotive sectors within [place the area you prefer] region. These sectors have been chosen due to the potential of high level of supplier relationships that they have due to the nature of the products they deal in. The number of retailers to be interviewed though was reached based on Olorunniwo, Jolayemi, Fan, and Li, (2011:160) study where they used fifteen retailers to understand the challenges faced by retailers in their supplier relationships. In essence interviewing executives from eighteen retailers will ensure that both the sample used is effective in achieving results, and also enables the researcher to fall within budget. Each retailer company can provide more than one executive if they so wish. The fifteen companies though will not be selected randomly, but rather through stratified sampling method where each sector within the retail industry will be carefully considered and included (Saunders and Lewis, 2007), based on size of the retailers and types of business or products that they deal in. to enable is stratification, the study will use excel spreadsheets for stratification. Access to the companies will be obtained in three key ways: networking where the researcher networks with people already known to get access to companies and get access to an interview; through attending of fairs and exhibitions and getting to interact with company representatives; and through direct approach to a targeted company and requesting for an appointment. Materials and Procedure of the study Materials used in this study will be both interview questions consisting of ten key interview questions, writing pads, and also a video recorder where with the consent of the interviewee, information can be captured for clarity. For those interviewees not able to give face to face interviews, Skype will be used for the interviews. For each interviewee, a semi structured interview will be carried out based on a set of question guides. Some key questions on the interview list would include: How has your company responded to the way it manages its supplier relationships in view of the recent recession? Do you outsource any of your business operations? What is the relationship like between the company and suppliers to whom such work is outsourced? And how have you had to modify the way you manage relationships with such suppliers?, among other questions. Since the interview would not be fully structured, the interviewees can provide deeper analysis and even give examples out of the topic to prove the point they bring across. Prior appointments will be obtained for the interviews from the fifteen firms with each interview lasting thirty minutes. Data for each company though would be collected on different days. Afterwards, a review of the information will be carried out and point that requires clarification would be followed up with a phone call to the particular interviewee from whom clarification may be required. Data analysis The data collected will be analysed qualitatively. The qualitative data analysis will mainly be based on constant comparison and narrative analysis where data is analysed and key themes from the data identified and compared (Strauss, 1987:165: Balnaves & Caputi, 2001:157), followed by an analytical induction which seeks to make sense of the comparisons deducted and linking them to the research questions and hypothesis to find the answers to the questions (Katz, 1983:231: Walter, 2010). In analyzing data in this research study, repeated themes and ideas gathered from the interview answers will be identified in order to give meaning to the data collected. The data gotten will be constantly compared both with the reviewed literature and with other respondent’s answers in order to determine a pattern and meaning. First and foremost various responses with regard to how the company has responded towards the impacts of the recession in managing their supplier relationships will be evaluated across the board, with various responses analysed and compared, and with common elements in the answers of each identified. In addition, common elements within the smaller retailers will also be analysed and identified in order to understand what these have in common, while common elements, themes and ideas from the large retailers will also be analysed in order to be able to understand what these share. From these common themes, a comparison will be carried between the two companies, and also a comparison will be done with past practices in supplier relationship management both as identified from the interviews and also from past scholarly literature. Most of these analysis and comparisons will be carried out using narrative analysis and inductive approach in order to add new knowledge to existing theory as to whether retailers have changed their supplier relationship strategies given trends in the economic climate, outsourcing patterns and rising online sales. Tables will also be used to present clear themes from the research study that explains the trends in a clear and coherent manner to enable easier understanding. Actions that businesses have taken that differ from the way they managed supplier relationships before, and based on available literature that enumerates the various strategies that businesses use to management supplier relationship management, and then key changing trends will be identified and discussed further in the research study. Ethical considerations of the Research study In carrying out this research study, a number of ethical considerations will be put in mind. First and foremost the confidentiality of both the companies interviewed and the persons interviewed will be upheld with key important data that may draw attention to a given company only held within the research paper discussions with no mention of the companies that took place in the research or the executives interviewed. In addition, the use of video recording during the interview may have its own ethical implications, therefore the use of such devices will only be used if the interviewee consents to being recorded, otherwise notes would only be taken from the interview should the interviewee feel uncomfortable at being recorded. In addition, as this research will mainly entail the researcher interpretation what other people have said based on what is understood from the interview, a more objective stance will be taken in order to produce correct results that are valid. These are the key ethical considerations that impact this study ad which will be incorporate ion the research study. In this manner the research study will be ethical. Timeline for the Research Time Action March 2012 conducting a literature reviews April 2012 making a draft of literature reviews May 2012 seeking for approaches for the research study June 212 seeking of businesses accessibility through primary data collection July2012 Designing of Interview questions August 2012- September 2012 interviewing respondents October 2012 Data analysis November 2012 Research report writing Limitations of the study It is not possible to explore and reach out to all the retail supply players and to relevant business entities since there are quite many businesses with different business operations. This follows the fact that the research focuses on retail supply chain which is crowded with diverse businesses. The research will therefore have some bias in a way as regards reaching out to particular relevant businesses. In addition, the research will cover only one specific geographic region and therefore may not be representative of all geographic regions and especially the global environment. In addition, getting access to some executives in some companies may need a lot of dedicated efforts in order to get an appointment set. Though the study is limited by these constraints, the results could have important practical implications to the retail industry. References Aberdeen Group Report 2009, “The 21st Century Retail Supply Chain: Three Key imperatives for Retailers,” Aberdeen Group: A Harte-Hanks Company, at: http://www.redprairie.com/uploadedFiles/ResourceCenter/Resources/IndustryReports/Aberdeen_21stCentury_RetailSC_Sept09.pdf, accessed 10 May 2012. 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