Role of International Supply Chain between Organizations - Essay Example

Supply Chain Contents Contents 2 Introduction 3 Role of international supply chain between organizations 3 Key issues faced by supply chain managers 4 Theoretical frameworks of supply chain management 5 Importance of integration and recommended mechanisms 6 Conclusion 6 References 7 Introduction International supply chain management can be stated as effective management of goods flow in global context. There are various factors which are encompassed in this concept such as raw materials storage, storage of finished goods and those work-in-process inventories. This approach can be further defined as designing, execution, planning, monitoring and controlling of various supply chain activities. The major objective of international supply chain management is to create value, develop a competitive structure, leveraging logistics across the globe, bringing forth synchronization between demand and supply, and measuring the overall performance globally. However in international supply chain activities there are various issues which are faced by managers while decision making. There are challenges posed by global supply chains in terms of value and quantity. Role of international supply chain between organizations The role of international supply chain management is significant amongst organizations in the present scenario. Increased globalization is the major reason behind such form of supply chain management. It can be stated that this form of trend has given birth to increasing sourcing through cross-border activities (Farmer and Jessop, 2008). On the other hand global supply chain even enables firm to acquire certain parts of the value chain offered by low cost providers. This increasing rate of global operations has even enabled global coordination amongst firms. In present decade it is observed that many larger organizations work in collaboration with SMEs due to the support provided by such international supply chain activities (Lysons and Farrington, 2005). The framework of international supply chain management has been beneficial for larger and mid-sized organizations and even for manufacturers as they are able to develop larger lot sizes, better environments and much lower tax rates for their product line. Amongst organizations this framework plays an active role by not only storing large base of resources but even through effective customer service management, management of manufacturing flow, product commercialization and development, maintaining supplier relationship, handling returns and successfully fulfilling placed orders (Jespersen and Skjott-Larsen, 2005). Key issues faced by supply chain managers There are varied challenges associated with international supply chain management. In global context, managers are often subjected to numerous risks which they need to consider for framing appropriate supply chain activities (Maloni and Benton, 2008). It is evident that in global supply chains, lead time is usually longer. There are other issues too which are faced by supply chain managers such as multiple laws, currencies and policies (Oxley, Rushton and Croucher, 2000). The other problems majorly include different valuations and currencies in different trading protocols, countries, tax laws and transparency lack of profit and cost. For instance while large organizations collaboratively work with SMEs there are certain state policies which are often a matter of concern for supply chain managers (Hugos, 2006). These policies usually encompass fiscal policy, trade policy, regulation and financial policy. All of these policies have a significant impact on the supply chain activities and needs to be dealt with appropriately (Christopher, 2005). On the other hand, innovation is also a source of major risk as growth of advanced technology enforces managers to make the supply chain flexible enough to incorporate such changes. The other issues which are equally important and often faced by supply chain managers are man-made disruptions such as armed conflict, terrorism and labour unrest, natural disruptions like earthquakes and floods, and varying customer dynamics (Rushton and Walker, 2007). Theoretical frameworks of supply chain management Supply chain management in international context is supported by certain theoretical frameworks. The RBV or resource based view is a concept which denotes competitive advantage of firm at the disposal of the firm in terms of tangible or intangible resources (Carter and Price, 2004). This approach basically denotes that potential resources of a firm are firstly identified, and then VRIN framework is applied on selected resources. The VRIN framework usually denotes whether a resource is valuable, rare, in-imitable and non-substitutable (Croxton, Garcia-Dastugue, Lambert and Rogers, 2005). Finally those resources meet the specified conditions need to be protected as it enhances the level of performance of an organization. JIT or just-in-time framework is one of the essential components in supply chain management practices. It is a production strategy that is usually incorporated so as to improve overall business conditions and reduce carrying costs and in-process inventory (Fawcett and Magnan, 2002). There are certain factors which contribute effectively towards JIT planning such as process of design flow, total quality control, stabilizing schedule, incorporating Kanban pull system, working in collaboration with vendors, reducing inventory and improving upon product design (Kirby, 2003). In international supply chain management activities there is another theoretical concept which has gained importance known as materials requirement planning (Lambert and Pohlen, 2006). It majorly encompasses production planning, inventory control system and proper scheduling so as to manage manufacturing process. TQM or total quality management is a vital factor which aims toward setting up a permanent climate where an organization strives toward delivering superior quality services and products to customers (Olhager, 2003). Importance of integration and recommended mechanisms Integration is highly essential in supply chain management as it helps in bringing forth synchronization in between organizations. The large organizations usually comprise of wide set of innovative ideas and its geographical position is comparatively better. SME’s can provide huge value to such large organizations but they are often bounded and do not prefer supplying or forming partnerships with large organizations (Emmett and Crocker, 2006). On the other hand, these small and medium sized firms are less likely to meet desirable standards in context of quality, health and safety, and environment unlike that of bigger organizations (CIPS, 2014). These are some of the practical problems which are usually witnessed in such partnerships but both the firms can gain competitive advantage in the industry through utilizing expertise and market dominance of one another (Grand, 2014). It is recommended that SME’s should prove to be financial secured while undertaking any project with large organizations, must show demand flexibility so as to cope up with ever changing needs and wants of consumer market, and they should even demonstrate their ability in context of achieving accreditations, certifications and standards (Wong, Johansen and Hvolby, 2004). Conclusion As per the study there are many factors which contribute towards success of international supply change management. In this particular study the main focus was on larger organizations and SMEs. There are certain practices which form base of such big enterprise in terms of supply chain but are often not implemented by small and medium sized firms. However there needs to be integration so that there is smooth flow of goods from one organization to another. References Carter, R., and Price, P., 2004. Black Book of Outsourcing. New Jersey: John Wiley & Sons. Christopher, M., 2005. Logistics and Supply Chain Management. USA: FT Press. CIPS. 2014. Global Standards for Procurement and Supply. Available at: www.cips.org [Accessed on 24th October 2014]. Croxton, K.L., Garcia-Dastugue, S.J., Lambert, D.M. and Rogers, D.S., 2005. The supply chain management processes. International Journal of Logistics Management, 14 (2), pp. 13-36. Emmett, S., and Crocker, B., 2006. The Relationship Driven Supply Chain. UK: Gower Publishing. Farmer, B., and Jessop, C., 2008. Procurement, Principles and Management. UK: Prentice Hall Financial Times Press. Fawcett, S.E., and Magnan, G.M., 2002. The rethoric and reality of supply chain integration. International Journal of Physical Distribution & Logistics Management. 32(5), pp. 339-61. Grand, T., 2014. SMEs made easy. Available at: http://www.supplymanagement.com/analysis/features/2014/smes-made-easy [Accessed on 24th October 2014]. Hugos, M., 2006. Essentials of Supply Chain Management. Florida: Vivlia Publishers. Jespersen, B. D., and Skjott-Larsen, T., 2005. Supply Chain Management – Theory and Practice. Denmark: Copenhagen Business School Press. Kirby, J., 2003. Supply chain challenges: building relationships. Harvard Business Review, 91 (7), pp. 65-73. Lambert, D.M., and Pohlen, T.L., 2006. Supply chain metrics. International Journal of Logistics Management, 14 (2), pp. 1-25. Lysons, K., and Farrington, B., 2005. Purchasing and Supply Chain Management. UK: Prentice Hall - Financial Times Press. Maloni, M., and Benton, W.C., 2008. Power influences in the supply chain. Journal of Business Logistics, 25 (4), pp. 49-73. Olhager, J., 2003. Strategic positioning of the order penetration point. International Journal of Production Economics, 85 (3), pp. 319-29. Oxley, J., Rushton, A., and Croucher, P., 2000. The Handbook of Logistics and Distribution Management. London: Kogan Page Publishers. Rushton, A., and Walker, S., 2007. International Logistics and Supply Chain Outsourcing. London: Kogan Page Publishers. Wong, C.Y., Johansen, J. and Hvolby, H. H., 2004. Supply chain coordination problems: literature review. Aalborg: Aalborg University. Read More