Supply-Chain Flow Management - Case Study Example

Part Literature Review Introduction In today's fast and technological modern world, the challenge that the Information Man faces is time's natureof putting things in order and in place in the best and most effective way. Life has changed since the invention of the computer which dictated man to deal with things in the most efficient way possible. In the world of big international business industries where transactions and other business operations are governed by law, cultural differences and mutual trust, efficiency counts largely as a common entrepreneurial aim. Companies employ detailed business plans and strategies in order to gain several benefits from its competitors such as increased profits and enhanced customer relations as company objectives. Gaining customer loyalty is a corporate challenge today in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide. The changing business world allowed customers to change as well. Company management had shifted their focus on their clients or customers so as to stay successfully in business with the need to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered. With the advent of technological innovations, logistical decisions about delivery operations, stockholding, warehousing and economies of scale get more complex solutions in today's business environment. Supply-Chain Flow Management According to Bowers, Martin and Luker (1990), supply chain management is considered as one of the most important strategic aspects of any business enterprise where decisions about coordinating of production of goods and services, store inventory, list of suppliers, and cost-effective and timely distribution are made. Supply chain management functions in order to design and manage the processes, assets and flows of material and information to answer the needs and demands of the customers and clients. The supply chain is traditionally characterized as a stable system in which components and goods move smoothly from supplier to assembly customers. In addition, supply chain refers to the suppliers, distributors, wholesalers and retailers that involved in manufacturing a product and getting it to consumers (Lee & Billinton, 1995). Supply chain is also defined as a network of independent or semi-independent corporation bodies collectively accountable for procurement, developing and or manufacturing and distribution scheme connected with one or more groups of related products (Janyashankar et al, 1996). Research study shows that supply chains increase in their complexity as the number of nodes increases (Bacharach and Lawler, 1980). They also argue that genetic algorithms can be an efficient method to locate a good solution quickly in one to fifty node networks. Supply chain design models are making decisions worth millions of dollars, usually without integrated analysis of the variability of the proposed system (Hane & Sudar, 1998) McKinnon's interview study found that Supply Chain managers are responding to such pressures by such actions as increased back loading, improved vehicle routing, greater load consolidation, the redesign of packaging and changes in the ordering system (McKinnon, 1998). As such, companies at present are deploying supply-chain management (SCM) systems to enhance efficiency across the product lifecycle by streamlining procurement, production, fulfillment, and distribution processes. To help ensure that an SCM solution provides the intended return on investment, the enterprise network infrastructure must work together seamlessly since its effectiveness depends on the ability of users to access up to the minute information across the supply chain. Organizations usually share proprietary corporate data with external suppliers and partners while ensuring maximum security. This requires integration of applications and data across multiple geographically dispersed supply chain partners, as well as internal integration with legacy systems. Discussion and Analysis Most companies find it impossible to create any kind of sustainable competitive advantage based on product alone as successful companies sought and found a precise understanding of how it could create a customer-cantered competitive advantage. Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. In this light, reliance to the internal resources of the organization will not do if environmental considerations of the company are not likewise taken into account. These include the significant market characteristics that directly and indirectly influence and dictate the strategic business implementation and sound decision-making from the options available. The forecast of subsequent political, economic, and social implications that change will result to also needs to be identified and enumerated to ensure the success and development of the organization as well as the welfare of the general public. The best suppliers continuously update and upgrade their service deliveries in order to answer the demands of their customers. Customers have the ever-increasing demand on getting their hands into the products which can lead to change in supplier if expectations are not met. This meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centred. Rethinking and reformulating the organization on the other hand, entail the consideration of several factors such as various processes, technology, the environment as well as the success factors of people (Cohen and Moore, 2000). Hence, in order to bring out exceptional customer services within the company operations, the management should employ fine-tuned organizational restructuring. Moreover, employing proactive customer commitment involves the consideration on culture and infrastructure (Lowenstein, 1997). Moreover, it is a management philosophy that seeks to integrate all organizational functions such as marketing, finance, design, engineering, production, customer service, and others to focus on meeting customer needs and organizational objectives (Hashmi, 2000). A considerable number of companies have developed into an essential part of the period of global competition, increasing development, improved business paradigms, and corporate reorganization. The continuing transformation from the traditional industrial framework with its hierarchical companies to a worldwide, knowledge-founded financial system and intelligent corporations necessitates human resource purposes to realign and relocate itself. As opposed to the core ideals of Fordism, the current business environment is characterized with the relevance and value of customer participation as the most significant consideration in implementing operation strategies. In the case of contract manufacturing, service providers highly take into account the specific requirements of their clients through customization of services and goods. This is evident in short life cycles and increased variations among products in order to supply for the fast-paced product differentiation due to highly demanding and varying consumer tastes. As such, the focus of Fordism in the technicality and standardization of goods and services neglects the open and active participation of customers in influencing and to some extent dictating the succeeding market trends. Organizations that capitalize on customers' active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Lovelock & Young, 1979; Reichheld & Sasser, 1990). Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers' satisfaction. Business organizations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. According to Bowers, Martin & Luker (1990), if consumers somehow become better customers -- that is, more knowledgeable, participative, or productive -- the quality of the service experience will likely be enhanced for the customer and the organization. Every business wants to have a regular customer base because customers dictate profits and how the customer is treated will reflect on whether the customers will remain loyal with the company or not. Gaining customer loyalty is also a key corporate challenge today especially in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide (Chow & Holden, 1997). At present, business firms invest on researches that will define their target customer groups that they believed they could serve best. Every business person is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets. Hessan & Whitely (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself. The development of Lean Quality Management System is one of the quality management approaches that address the business setting at present. It was developed to (1) save thousands of dollars each year by avoiding the waste associated with a paper quality system, (2) harness the creativity of employees while maintaining control of their projects, (3) perform tasks that are clearly assigned, defined, communicated and focused, (4) spend less time managing the quality system and more time improving the value stream, (5) reduce training costs by integrating procedures with training, (6) provide a management system that provides the who, what and when, and (7) provide the metrics to drive your organization to ever-higher levels of performance and success which works just as well for small as large companies (Lean Software Quality Management). The lean machine is known in the ease of its use and installation as well as its cost effectiveness in dealing with wastes in most quality systems thereby saving time and money for the software. It can integrate information, reports, graphs, and other tools that work together to simplify and deliver information for improved business operations which minimize the time spent on other software programs (The Lean Machine). But evidently, the lean quality management approach can be discerned to have been significantly based on some of the aspects and considerations of the concept of Fordism. At present many production companies, particularly those in the manufacturing industry, use and implements the improved applications of Fordism principles. Perhaps, every organization wants to initiate a management system and strategy that could maintain the organization's capability, strength and competitiveness. It is important that the management team and the organization per se should always open their mind for changes that they might encounter in order to cope and adapt to the latest development that are happening within and outside their environment. The major objective of change management is the introduction of innovative means and systems in the work organization. Businesses must normally undergo change in order to evolve to a higher level of for instance, stability, management or production. Organizations are neither the rational, harmonious entities celebrated in managerial theory nor the arenas of apocalyptic class conflict projected by Marxists (Bacharach & Lawler 1980). Hardy and Clegg (1996) believe that modern organizations passed by the guild structures and as organizations grew larger, skills become increasingly fragmented and specialized and positions become more functionally differentiated. Leavitt had defined three approaches to organization, which includes structure, technology and people (Hessan and Whiteley, 1996). New formal guidelines and procedures like organization chart, budgeting methods, rules and regulations can also be structural approaches on inducing change. On the other hand, rearrangements in work flow through new physical layouts, work methods, job descriptions and work standards can be done as technological approaches. Some organizations stress on people approaches which includes alterations in attitudes, motivation and behavioral skills. This can be done through new training programs, selection procedures, and performance appraisal schemes. Part 2. 1. The managements avowed intention is to develop an independent commercial sector operation discuss the issue if any, that may prevent Hypergol entering into this highly competitive market. The idea for the HES managements to develop an independent commercial sector operation can result to company's profit and expansion, however there are still some issues that needed to be discussed in the current form of HES: The market can be volatile and prone to speculation in mergers, take-overs, incidents and accidents. Many of the contracts are government funded and prone to change and cancellation. The volatility of the world wide political situation and the change in the needs of the military are also prone to effecting contract completion. That same shift is also reflected in the civil aircraft, as less people are willing to fly reducing the need for replacement or upgrading of the fleets particularly the flag carriers. Because of the comfortable relationship and that many of the contracts are government sponsored; inefficiency and the resultant costs have often been passed on particularly where there have been long overruns in the overall contract. The procurement process and the fluctuations in policies of the contracting government departments reacting to shifting political fortune and public spending pressures has often established a culture of uncertainty in which the inefficient processes could be hidden but not with deliberate intent. 2. Hypergol are presently based within the United Kingdom, although they operate worldwide. Recommend any course of action that may improve the competitiveness of the business in relation to its location In competition there is motivation in every company to improve and develop their objectives. For an enterprise to succeed in global competition there is a continuous plan to develop new products with higher quality than its competitors. Reichheld and Sasser (1990) analyzes that new product and new business development must be highly effective and efficient, however that alone won't ensure its competitiveness. It must be supported with a suitable culture throughout the enterprise. It must have a group of body that supports, encourages, and promote innovation for the company to succeed in the end. Corporate World is very classy and every move they made seems to make an impact on the life of the people. Every aspects of our everyday world have been influenced by modernization, consequences of countless business decisions. Business activity integrated into our way of life, and culture changes in accordance to the rapid growth of "business culture". In other words, people are one of the main reasons why corporations and different business establishments seek to develop different strategies that will make them stand out among their competitors so as to maintain and sustain their existence. They want to create an impression so that people will patronize their products and eventually lead them to financial success. Prior to the common use of the term sustainable industries, the terms sustainable economy and sustainable development were common. They coined the most broadly used definition of sustainable development as, development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Moingeon and Edmonson, 1996). Sustainable development demands that the search for ways of living, working and being that allow all people to guide vigorous, satisfying, and economically safe lives without destroying the environment and without endangering the potential interests others (Appelbaum et al, 1998). Sustainable development is an economic state where the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations; is economic development that has a positive long-term social and/or environmental benefit; and meets the needs of the present without compromising the ability of future generations to meet their own needs (Chow and Holden, 1997). People anxious about sustainable development recommend that meeting the needs of the future depends on how well we balance social, economic, and environmental objectives--or needs--when making decisions today. It requires an understanding that operating has consequences and that we must find inventive ways to change institutional structures and influence individual behavior. Merely it is about taking action, changing policy and practice at all levels, from the individual to the international (Abraham 1997). Hypergol continues to make risks because of increasing and overlapping cost pressures. However, if it sticks close to its low-fare model as it has been intending to, it may continue its sustainability because true to the Walmart model, the cheapest product always wins. Eventually being the lowest cost and lowest fair airline will attract several passengers that will compensate for rising fuel costs especially since Hypergol is good at increasing passenger seats and expanding routes. In order to maintain competitive edge in a manner that is low-cost, they should keep the following perspectives or metrics in mind: The maintenance and operation in a manner that is low-cost, effective marketing schemes, development of their brand and the skillful management of their routes. These metrics are reflective of the major operational decisions which determine how their daily management and performance should be properly decided. Low cost operations are performed through decisions that have to do with balancing utilities which would be in favor of increasing passenger loads, flight time, and making premium the free services mentioned above. This is basically where airlines cater to more passengers at a lower rate and is thus also known as Financial Perspective). Marketing and Brand enhancement is responsible for providing the facelift and attractiveness and promotion of a product which it performs through its shockingly low prices and give Customers the value of their money and encouraging them to be loyal (which would be the Customer and Business Process Perspective). Route management is the product catered to customers. This is where the airline finds its audiences and consumers. This is where they can choose to cater to tourists who travel for pleasure or business (Earl, 1998). By managing their Route networks, they may determine which customer segment they should focus and have the most profits possible. This route network may be enhanced through the increase of new hubs that will have the more customer preference and access. Customers always look for the cheapest flight available and Hypergol providing this will certainly benefit. By expanding Routes it is possible for Hypergol to open to new niche where there is no frontal competition. This can also be the Innovative Perspective approach. 3. The highly competitive commercial market has differing expectations in the terms of delivery and after sales service comment on what issues and possible changes may be required in order that Hypergol will perform within that market. The possibility to bestow a competitive advantage is not intrinsic in all resources. (Wilson, 1995) Nevertheless, to a certain extent, in simply those that satisfy a thorough collection of situations. The first condition is that the resource has to be important. That is, it has got to supply the chance to make use of a number of environmental opportunities or counterbalance a few hazards. Resources are believed to be important when they allow an organization to conjure up of or put into practice strategies that perk up the organization's competence or efficiency (Barney, 1991). A number of authors interpret importance in the context of satisfying a key consumer requirement (Aaker, 1989; Coyne, 1985). Additionally, resources have to have the features of exceptionality. If important resources are owned by a great number of competitors or possible competitors, they no longer correspond to a source of competitive advantage. This is the key subject of heterogeneity fundamental to the resource-based view. In this context, organizations owning exceptional and inimitable collections of capacities and resources can accomplish a sustainable competitive advantage. Third, there have got to be the condition of imperfect mobility of resources. Where resources are effortlessly traded among competitors, no competitive advantage can be preserved. Imperfectly mobile resources take account of those that are characteristic to the organization (Williamson, 1979), those for which property rights are not well characterized (Dierickx and Cool, 1989), or those that are co-specialized assets (Teece et al, 1990). The imperfect mobility of assets is a decisive feature in businesses as the consumers are the key assets in a lot of circumstances, and their high mobility recurrently results in the shortfall of accounts and the materialization of new competitive threats as in the condition, for instance, with personnel employed by HYPERGOL and eventually shifting to other companies that directly compete for the similar market. Finally, for an advantage to be maintained, resources have got to be imperfectly imitable (Barney, 1991) or offer a few ex-post restrictions to competition. That is to say that following to an organization acquiring a superior position and receiving rents, forces have to be made that could limit competition for those rents (Peteraf, 1993). It was taken into account above that innovation such as the improvement of a new kind of account by a retail bank or a new promotion approach by a creative department recurrently triggers a multitude of replications from competitors. For an organization to be in a situation to make use of an important and rare resource, there have got to be a resource position obstruction averting replication by other companies (Wernerfelt, 1989). Preserving a competitive advantage over a period of time necessitates the attendance of separating instruments that thwarts replication. Quite a few such obstructions that have been taken down in the literature consist of causal ambiguity (Reed and DeFillippi, 1990) and uncertain imitability (Lippman and Rumelt, 1982), where the motivations of success are not easy to recognize. Replication may similarly be thwarted by the process of asset stock accumulation within the organization. Where these stocks have power over the features of time compression diseconomies, asset mass efficiencies, and interconnectedness, then replication is not easy (Dierickx and Cool, 1989). Without a doubt, the implication of asset stock accumulation in the business sector has been established elsewhere, when the reservoir of organizational and managerial knowledge that has been developed over the years can make available branch offices with information at a price very much inferior than a de novo indigenous organization would have to bring upon itself (Boddewyn, Halbrich, and Perry, 1986, p. 50) that is to say, an ownership advantage in global competition. Powerful buyers drive down profitability because they bargain for lower prices, demand better product features for the same price, and play one competitor against another. In the context of the current status of the supply chain of company, the influence of the buyers intensifies (Aaker, 1989). One could recommend for the company to target future growth in market segments composed of small and midsize buyers. They are less likely to bargain on price and will often pay more for less. They have less leverage and fewer options than the large customers everyone is trying to attract. It would also be beneficial for the company to find new ways to differentiate their products that have value to the customer. Even if the product is a commodity, there are ways to differentiate it in terms of the services that surround it. Differentiation can occur from the very first time customers becomes aware of their product to the time when they must dispose of it. Moreover, they should also offer additional services or support to customers in exchange for a larger share of their total purchases. It is also deemed necessary for them to develop services that make it easier for them to work with the company as a single source supplier. HYPERGOL should also combine a reduction in the buyer overall cost of doing business with the creation of switching costs. For instance, offer a lower price in exchange for a long-term contract. Alternatively, the company should link IT systems to the customers to reduce transaction costs and lock them into to the business. Furthermore, the company should as well focus new growth initiatives on customer segments with the best profit margins. They are less likely to beat the company down on price. They should also consider creating a new distribution channel such buying one of their customers, figure out ways to disintermediate those in the distribution channel. Similarly, it has also been established in this paper that the competition in this industry is powerful, not only for the consumers of the industry, but also with regards to the loyalty of suppliers. Competitors can drive down industry profitability by cutting prices or offering more product features for the same price (Barney, 1991). When rivalry is most intense, competitors often compete head-to-head on price. When competition is disciplined and constrained by industry norms, rivalry is weak. In looking into the profile of HYPERGOL it is recommended that where possible, they should minimize their investment in plant and equipment. Moreover it is also recommended that they work to reduce the fixed assets on the balance sheet. They should get rid of outdated facilities and equipment. In addition, HYPERGOL should as well help weak competitors exit the industry. The company should make it easy for them to get out by buying up their assets even if they have little value. The value comes in getting them out of the industry and reducing the number of competitors. New entrants are potential competitors. New entrants are a powerful force in the industry. The easier it is for new companies to enter the industry the greater the competition in the industry (Boddewyn et al, 1986). New entrants will often attempt to break into the industry with low prices, innovative products, or new features and benefits. When it is difficult to enter an industry, the threats of new entrants is low. In this light, it is advisable for the company to work with regulatory bodies to establish industry policies and procedures. The more stringent the requirements, the lower the likelihood of new companies entering the industry; the cost will be too high. This is one time that industry regulations are good business. Similarly, the company should go after new entrants aggressively. Moreover, they must defend its market and cut the price if necessary. The company should make sure that they are adding more value than the new entrants. Moreover, they should as well form partnerships with key distributors to keep new entrants out of the market. Give key suppliers price breaks or provide supplemental services in exchange for exclusive distribution rights. HYPERGOL should make sure the company are growing faster than the industry. They should make new entrants fight for every customer. They should not also become complacent and assume that there's enough business for everyone. 4. The Company's main stream activities are well accepted in its markets how would the new business and its different market reflect on the established business. Today's market is characterized by highly competitive organizations which are all vying for consumer's loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth (Dierickx and Cool, 1989). Today most companies find that it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage. Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. In turn, company management had shifted their focus on their clients or customers so as to stay successfully in business. This transition meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered. Hence, in order to bring out exceptional customer services within the company operations, the management should employ fine-tuned organizational restructuring. Moreover, employing proactive customer commitment involves the consideration on culture and infrastructure (Lowenstein, 1997). Organizations that capitalize on customers' active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Lovelock & Young, 1979; Reichheld & Sasser, 1990). Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers' satisfaction. Business organizations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. According to Bowers, Martin & Luker (1990), if consumers somehow become better customers -- that is, more knowledgeable, participative, or productive -- the quality of the service experience will likely be enhanced for the customer and the organization. Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organization to reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market. Hessan & Whitely (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. 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