Supply Chain Strategic Management - Research Paper Example

Supply Chain Strategic Management Introduction Supply chain management can be considered as the important management process of the flow of goods and services. This specific business management process can be defined as the developing, designing, planning, processing, executing, monitoring and controlling of various supply chain processes with the aim of leveraging worldwide logistics, developing competitive infrastructure, creating net value, measuring global performance and harmonizing supply with appropriate demand. Supply chain management activities include sourcing and storage of necessary raw materials, inventory management, and distributing finished goods from the origin point to consumption point. Supply chain strategy can be considered as one of the important business strategies. A business strategy includes several organizational functioning strategies, such as supply chain management strategy, production strategy, marketing strategy, human resource management strategy and financial strategy. These all are equally important for an organization to achieve significant business growth rate. Several leading manufacturing and distributing organizations used to focus on effective supply chain and logistics management strategies, as these strategies help an organization to maintain efficient flow of goods and services that can help the organization to meet market demand. This research paper will critically analyze the adopted and implemented supply chain management strategies of Tesco Plc. Tesco Plc. is one of the leading multinational retail chains. The organization implemented several unique strategies in the supply chain and logistics management strategy. This report will analyze each and every aspect of the organization’s logistics and supply chain strategies and activities. Finally the study will recommend some activities and practices to Tesco Plc to improve its supply chain management. Opportunities to Improve Supply chain Activities Global business environment is becoming highly competitive as several leading global organizations are trying to develop and implement unique business operation strategies in order to meet current market demand and achieve competitive advantages. Tesco Used to adopt different unique strategies in the business operation processes in order to meet business goals and corporate objectives. The organization always develops customer and employee centric business strategies to attain sustainable business growth rate. Maintaining sustainability in each and every business operation processes can help an organization to maintain effective business performances. Tesco Plc. always tries to maintain sustainability in business operation processes to develop effective relationship with the shareholders and stakeholders. The organization is strongly focusing on the implementation of CSR and sustainable activities across the supply chain network in order to accomplish the strategic plan. The strategic plan of the organization is to maintain environmental, social and economic sustainability through ethical business operation activities. Sustainable supply chain activities are helping the shareholders of the organization to take interest in the business strategies of Tesco several organizations are trying to capitalize on the potential opportunities to improve supply chain activities. High carbon emission level in logistics and supply chain due to high consumption of fossil fuel and energy sources are creating major concerns for the global retail chain organizations. Therefore, Tesco can grab the opportunity to use effective energy resources to maintain low carbon emission level so that the organization can justify its corporate goals and strategic plan. In addition to this, the organization can try to engage employees in the logistics and supply chain strategy development process in order to bring efficiency in the supply chain management process. Capitalization on this opportunity will help the organization to improve supply chain activities. Integration of Supply chain with Logistics Business integration process is important for several leading retail organizations. Effective integration of supply chain and logistics process can help several retail organizations to maintain effectiveness and efficiency in the movement of products and services. Innovation is important for the business organizations to maintain effective supply chain management process. Logistics can be considered as an important part of supply chain management process. Supply chain management process includes sourcing of raw materials and delivering of final products to the end customers. The logistics strategy of Tesco Plc. involves four important methods of distribution and warehousing of products. It is important for the organization to improve the efficiency of the logistics and supply chain management by integrating several key approaches. Upstream and downstream supply chain management model can be integrated in the logistics management process through the implementation of just in time approach in the business operation process. (Source: Harrison & Van, 2011) Tesco Pl. effectively integrated upstream and downstream supply chain management model in its logistics activities to enhance effective flow of goods or end products. It is important for the organization to make effective relationship with the existing suppliers and motivate these suppliers to follow the corporate values and business culture of Tesco. This process will help the upstream strategic management process to source the raw materials and manufacture products accordingly. In addition to this, the organization should focus on own distribution network activities. Integration of advanced technology, sustainability and strong procurement process in the product delivering process to the consumption point will help the organization to enhance effective downstream supply chain model. Effective integration of these processes in logistics will help the organization to improve the efficiency in warehousing, inventory management, stock control and distribution system (Branch, 2008). Therefore, it is important for Tesco Plc. to develop effective relationship with suppliers, integrate advanced technology and procurement process, and sustainability in the each and every supply chain processes will help to encourage the stakeholders. The quality of supply chain network can be enhanced through these integrations. Agility in terms of Supply chain and logistics to improve Products’ Movement Quick and efficient movement of goods or products in supply chain network help an organization to meet with market demand and maintain effective business performances. It is important for Tesco Plc. to bring agility in the supply chain and logistics management processes to maintain effective business performances. First of all, it is important for an organization to review each and every developed supply chain and logistics management strategy. Then the organization has to consider the aspect of the development of strategic plans in order to accomplish the developed and assigned task (Waters, 2010). Agility in sourcing raw material process is quite important for an organization to maintain the short operation life cycle. Long operational life cycle has several negative impacts on the business performances, such as high lead time, high supply chain operational cost and conflict of ideas without any acceptable reason. Maintain strong relationship with suppliers is also important for Tesco as it will help to bring effectiveness across the supply chain communication process (Schaub, 2009). This effective communication process between the suppliers, manufacturers and logistics executives will help the organization to complete the entire operational life cycles within a quick period of time. Integration of advanced technology and valuable procurement process can help an organization to reduce the lead time across the logistics and supply chain network which can help the organization to clear inventory in quick period of time. Low lead time, reduced inventory, efficient supply of raw materials and quick distribution of stocks can help the organization to bring agility in its logistics and supply chain management process. These above mentioned aspects can help Tesco Plc to improve the movement of products in its supply chain network. Interaction of Manufacturers and Suppliers Creates Challenges in Logistics Management There are two types of integration methods that are generally used by organizations in order to enhance effective supply chain management performances, such as vertical integration and horizontal integration. In vertical integration process, the responsibility of the suppliers used to get increased as they have to follow each and every developed organizational policy. In addition to this, this particular integration aspect can affect the entire communication process across the supply chain network. Sourcing, manufacturing and distributing considered as major supply chain management functions (Chen, 2007). Sometime the suppliers do not agree to follow the models, strategies and policies as the organizations generally have limited control over the external suppliers. In manufacturing, the employees of the organization have to maintain each and every developed rule and regulation. Integration of manufacturers and suppliers can affect the tier structure. It can create several conflicts of ideas and can affect the internal communication process. Cross-functional issues are also can be created through this integration process. Integration in vertical method creates more problems and complexities for the organization in supply chain management process. Conflict of ideas and in adequate co-operation and collaborative performances can increase the lead time of entire logistics management process (Sehgal, 2009). It is known to all that Tesco is the leading and popular retail chains and the organization has strong business presence in several potential global markets. In addition to this, the organization is considered as one of the leading organizations in terms of large customer and business client base. However, high lead time and in adequate communication can create delay in raw material sourcing, product manufacturing and order delivering system. Therefore, it is highly important for the management of the organization to review and monitor each and every aspect to overcome the integration issues. Increase Value for the Customer Nature of global business environment is highly changing due to rapid change in market demand and customers’ needs. In addition to this, the global retail chain industry has become highly saturated and competitive as the organizations within the industry are trying to focus on effective customer value. Customers are considered as real king for the organizations. The organizations generally develop customer centric business strategies to gain competitive advantages. Demand for various unique differentiated products and services are forcing the business organizations to implement effective business operation strategies. It is discussed earlier that supply chain process are considered as important business operation functions that help an organization to maintain effective business performance. The customer values generally drive improvements and changes in the supply chain management process. First of all, it is important for an organization to improve customer relationship management aspect in order to improve the supply chain management process. Tesco is using big data in supply chain management processes in order to determine the buying or purchasing behaviors of consumers. Only manufacturing quality products cannot help an organization to achieve business growth rate. It is also important for an organization to determine the actual demand and preferred purchasing point of target customers. Major responsibility of a retail chain is to supply the stocks according to the demand of the customers at preferred price level based on the economic environment of the country and purchasing power of people. Customer service and effective customer values are important to achieve supply chain objectives. An organization should determine the requirements of target customers and determine the real market segment as it can help the organization to communicate with effective suppliers. Last but not the least; the organization needs to implement advanced technology in the supply chain and logistics management process to betterment the communication between the customers’ demand and supply of products. Impact of Supply Chain Management on Organizational Functions There are several valuable impacts of effective supply chain management process on the business performance of the organization. There are three major functions in an organization, such as marketing, human resource management and finance. In terms of marketing, efficient and quick supply chain activities help a marketing manager to develop effective marketing plans. For an example, an organization cannot develop new marketing plan if the supply chain management cannot ensure just in time approach. Just in time approaches helps an organization to source effective raw materials from the suppliers. Manufacturing, processing, warehousing and delivering of goods are other important supply chain activities. Lower supply chain operational life cycle helps an organization to develop effective product or service marketing strategy. Inefficiency in the supply chain management process can affect the strategy development process. In addition to this, it increases marketing cost of an organization due to long lead time. Human resource management is another important function of an organization. It is highly important for an organization to develop effective human resource management strategies to maintain effective workplace environment within an organization. Effective supply chain performances help the human resource management team of the organization to develop effective human resource strategies for future. The functions of human resource management include recruiting, selecting, training, performance management and rewarding. It is important for the employees to perform effectively to make themselves eligible for reward or promotions. In addition to this, the organizational management used to give high recognition to each and every supply chain executives as the efficiency of this supply chain management department enhances organizational profitability. The performance of logistics and supply chain management departments help to determine the performance of each and every employee. This process helps the logistics and supply chain managers to evaluate the performance of employees. In case of low performance level, human resource department can motivate the underperformed employees to perform effectively through several motivational tools. It is clear from these discussions that there is a significant impact of supply chain management performances on the human resource management strategy development process. Effective supply chain management performances help an organization to improve its financial stability. Efficient logistics and supply chain activities help to reduce the lead time and supply chain management cost. In addition to this, quick logistics management activities help an organization to minimize the inventory. It actually helps an organization to avoid the threat of oversupply. Appropriate supply of goods according to current market demand and maintaining sustainability in entire supply chain management process helps to maintain significant financial profitability. Being one of the leading retail chains, Tesco Plc. always tries to maintain sustainability, transparency and corporate value in each and every logistics and supply chain management activities. Therefore, the organization can significantly handle the effectiveness of all the three organizational functions. Financial Implication to Improve Supply Chain Tesco Plc. always tries to minimize the lead time and inventory and flow of stocks across the supply chain network. Ethical consideration and sustainability in the logistics and supply chain management process helps Tesco to avoid several legal, social and environmental challenges in the supply chain management. The profit margin of Tesco is increasing day-by-day as the management of the organization is constantly trying to minimize the supply chain operation cost. The efficiency of a supply chain network of an organization always can be measured through the lead time eff8iciency, cost efficiency, integration of advanced technology and innovation. The retail giant considered all these aspects to increase the profit maximization of the organization. It is discussed earlier that the organization maintained an effective relationship with the existing suppliers to source raw materials in competitive cost. In addition to this, integration of advanced technology in the manufacturing, warehousing, inventory management and distribution process helped the organization to minimize the business operational cost (Sadler, 2007). This cost reduction process helped Tesco to implement several discounted and competitive pricing strategies for the available differentiate product lines. It can be considered as one of the financial implications of Tesco’s improving supply chain management. In addition to this, the organization is focusing on environmental sustainability throughout the logistics and supply chain network (Christopher, 2012). Tesco is trying to adopt several green business operation strategies in the supply chain in order to motivate its stakeholders and shareholders. This business process is helping the organizations to take the attraction of government, public bodies, shareholders and key stakeholders. These aspects are improving the financial stability of the organization. Conclusion It is clear from above discussions that leading multinational organizations are trying to focus on the developed business strategies. In addition to this, the organizations are significantly trying to align their logistics and supply chain management strategies with the developed corporate goals and business objectives to ensure high profit maximization. Tesco Plc. is one of the leading multinational retail chains highly depends on the efficiency of logistics and supply chain network. The organization used to develop employee and customer centric business operation strategies as the organization believes that the customers are real king and employees are business growth drivers. In addition to this, implementation of several sustainable and green strategies in supply chain network helps Tesco to maintain effective relationship with the stakeholders. In addition to this, the organization effectively integrated upstream and downstream supply chain model with the logistics activities to bring pace in supply chain and reduce the operational lead time. Tesco effectively implemented competitive pricing strategy by reducing the supply chain lead time and operational cost. It is true that, limited supply chain operational cost and time will help other organizational functions to develop and implement their strategies accordingly. The organization succeeded to overcome several challenges associated with the supply chain network by integration of effective business models, and maintaining value and sustainability across the supply chain network. Recommended Practices Global retail chain industry is facing high legal barriers regarding environmental and social sustainability. This particular industry is becoming highly saturated. Therefore, the organizations within it are trying to adopt aggressive business operation strategies. Following recommendation plans will help Tesco Plc. to meet its developed business objectives and corporate goals. Havoc consumption of fossil fuel as energy sources in the transpiration logistics is increasing the carbon emission level. Therefore, it is important for Tesco Plc. to implement change strategy in this function as early as possible in order to achieve sustainable business and corporate goals (Agarwal, 2006). Use of hybrid electronics vehicle can help the organization to reduce the percentage of carbon foot print. In addition to this, it will help the organization to reduce business operation cost as constant hike in fossil fuel process is affecting the profitability of several organizations. The organization should depend on skilled manpower along with adopted advanced technological process across the supply chain network. It is important for the organization to recruit skilled employees and giving them valuable training to control technological tools. The organization needs to adopt decentralization strategy in supply chain management process. This process will help the organization to bring efficiency in the flow of raw materials and end products. Thus the relationship with several business clients and suppliers can get improved. References Agarwal, D. (2006). Textbook of Logistics and Supply Chain Management. London: Macmillan. Branch, A. (2008). Global Supply Chain management and International Logistics. London: Routledge. Chen, S. (2007). A Study of Four Network Problems in Transportation, Telecommunication and Supply Chain management. London: ProQuest. Christopher, M. (2012). Logistics and Supply Chain Management. New Jersey: Pearson. Harrison, A., & Van, R. (2011). Logistics management and Strategy: Competing through the Supply Chain. 4th ed. London: Prentice hall. Sadler, I. (2007). Logistics and Supply Chain Integration. London: Sage. Schaub, R. (2009). Stochastic Programming Solutions to Supply Chain management. London: ProQuest. Sehgal, V. (2009). Enterprise Supply Chain Management. London: Sage. Waters, D. (2010). Global Logistics: New Directions in Supply Chain Management. London: Kogan Page. Read More