Sustainability in International Supply Chains - PepsiCo - Case Study Example

Sustainability in International Supply Chains Table of Contents Part A: Literature Review 3 Part B- Case Analysis 8 References 14 Part A: Literature Review Supply chain management can be considered as one of the important aspects for any organization in this global business environment. Each and every organization is trying to develop and implement unique and effective strategies in business operation process in order to gain potential competitive advantages over competitors. The global business environment is becoming highly competitive as well as saturated. Therefore, effective strategy development and implementation process in supply chain department has become one of the important aspects for the organizations (Lambert, 2000, p.9). Effective supply chain management process generally plays an important role in the business development process of the organizations. Effective supply chain management process includes several organizational functional and business operation processes, such as raw material resourcing, resource allocation, manufacturing, warehousing, supplying, logistics, and distribution and after sales services. Several leading organizations in this globe are trying to enhance effective business operation activities to gain positive business growth rate. Therefore, it has become highly important for the organizations to focus on effective supply chai9n management strategy development and implementation process to ensure potential competitive edge. Sustainability can be considered as one of the most important criterion in the global supply chain management process of several leading domestic and multinational organizations. The demand for high quality and sustainable products and services has increased significantly in global market places. In addition to this, several important external and internal stakeholders of the organizations around the globe are seeking for sustainable business operation processes (Frohlich, 2001, p.12). It has been mentioned earlier that supply chain management process can be considered as one of the important aspects in the business operation process of several organizations; therefore, the organizations are trying to maintain sustainability in each and every supply chain management practices. Several developed and developing countries around the globe are trying to develop and implement unique strategies in supply chain management processes. Supply chain management does play a strategic role in the business process of an organization. First of all, effective supply chain management process helps an organization to maintain effective relationship between the suppliers and the organization. Organizations can adopt and implement two different types of supply chain management process. One is centralized supply chain network and the other is decentralized supply chain network. These two supply chain management networks have different types of advantages as well as disadvantages. Organizations can motivate its suppliers, distributors and manufacturers through decentralized supply chain network. In addition to this, decentralized supply chain network helps an organization to bring pace in the decision making process that can enhance overall business operation activities. Strategic supply chain management is highly important to enhance business performance (Christopher, 2000, p.4). Decentralized supply chain management network also helps an organization to reduce overall business operation time and cost that can result in growing business profit. On the other hand, centralized supply chain network helps an organization to keep control over each and every strategy development, implementation and decision making process. This centralized supply chain management network can be considered as both time and cost consuming process. In addition to this, inadequate centralized supply chain management and decision making process can also result in inadequate and unhealthy workplace environment (Mentzer, 2001, p.9). There are several organizations in this world that use either centralized supply chain management process or decentralized supply chain management process. These aspects effectively depend upon the nature and behaviour of the management practices of the specific organizations around the globe. Supply chain strategies and organizational performances are significantly related to each other. It has been discussed earlier that supply chain management process of an organization includes several operational processes. Therefore, inadequacy in the strategy development and implementation process in the supply chain management process can hamper the effectiveness of the overall organizational operational process. There are two types of corporations or industries in this global business environment. One is public limited organization and other is private limited organization (Stewart, 1997, p.18). Public limited organizations generally follow centralized supply chain network due to the existence of several hierarchies and departments within it. In these organizations; government, public agencies and internal stakeholders try to take control over each and every strategy development and decision making process. On the other hand, private limited organizations generally follow decentralized supply chain network in their business operation process. It is true that, several private limited organizations used to depend upon employee motivation, employee engagement, customer satisfaction and stakeholder engagement process in order to gain success in their business operation process. It generally helps an organization to enhance strategy development and decision making process (Juttner, 2005, p.12). Sustainability and supply chain management process are significantly related to each other in this contemporary era of competitive global business environment. Government of several developed and developing countries are trying to maintain environmental, social and economic sustainability in countries. It is true that, several organizations practice their business operation processes and activities in order to increase revenue and profit margin (Lummus, 1999, p.21). But, now-a-days government and several public agencies have developed several regulations and policies for the organizations in order to maintain sustainability in business operation processes. Raw material sourcing, resource allocation and manufacturing of the products are the primary things in the supply chain management process of each and every organization around the globe. Stakeholder engagement and stakeholder satisfaction has become highly important for each and every organization across the globe. Most importantly, the organizations are significantly following the industry standards in order to maintain sustainability in supply chain management process (Mason-Jones, 2000, p.22). It is true that green house gas emission and growing carbon emission in the environment during business operation practices has become one of the major concerns for each and every organization within the industry. Therefore, the government of several countries are trying to maintain effectiveness and sustainability in the environment for the betterment of mankind. Air and water pollution has become most critical environmental threats that can hamper the sustainability and good health of mankind. Too much energy consumption and natural raw material resourcing can hamper the balance and sustainability of the nature. It is true that too much industrialization has resulted in sudden climate change. People of several countries across the world are suffering from different types of diseases due to rapid climate change, global warming. Therefore, several organizations are trying to use environment friendly energy sources in order to maintain sustainability in global environment. Green manufacturing and raw material sourcing process is helping the organizations to increase their brand value, brand loyalty and brand image among the important external and internal stakeholders (Stevens, 1989, p.2). Social and economic sustainability are also major aspects in the global supply chain network. It has become highly important for each and every organization across the globe to set manufacturing and distributing standards according to the needs of customers and other major stakeholders. It is true that, supply chain management process highly depends upon two important activities, such as warehousing and logistics. Effective and transparent supply chain activities can help an organization to maintain sustainability in the business operation process. Government and other organizational stakeholders are trying to motivate and inspire the organizations to maintain sustainability and transparency in the supply chain management process. Now-a-days, management of the organizations are trying to include important stakeholders in the strategy development and decision making process in order to gain trust of the stakeholders as well as shareholders of the organization. It is significant that people have become concerned about the overall sustainability of business operation processes of each and every organization (Naylor, 1999, p.4). Now-a-days, customers and other important stakeholders have become highly knowledgeable about the products and services that are offered by the organizations. The perception of the consumers have changed significantly as several consumers are trying to perceive that quality of the products and services of an organization highly depends upon the brand image, transparency and sustainability of the business practices practiced by an organization. Since supply chain management can be considered as one of the major departments in any organization, therefore, it is highly important for the organizations to take care of the transparency and sustainability of these departmental practices in order to win the trust and faith of the stakeholders. It is clear from the above literature review that supply chain management plays an important strategic role in the business development process of an organization. It is true that several organizations are trying to develop and implement unique supply chain management strategies in the business operation process considering the sustainability and transparency. It is true that, the customers’ demand of high quality and differentiated products and services has increased drastically. On the other hand, government, public agencies and other external administrative stakeholders are seeking for sustainability in business operation processes of the industry. Therefore, the organizations are trying to maintain environment friendly supply chain management process to avoid legal and social issues. It is highly important to maintain economic sustainability to ensure profit maximization as well as supporting of the affected purchasing power of entire society (Ellram, 1991, p.12). Effective sustainability in the supply chain management strategy development and implementation process can help an organization to overcome issues and maintain effective business growth rate. Part B- Case Analysis This part of the report will analyze and evaluate the supply chain management strategy of an organization. It will cover sustainability issues, innovation in strategy development process and outcomes of those strategies. The example and case study of PepsiCo can be considered in this part of the report. PepsiCo can be considered as one of leading soft drink and food & beverage manufacturing and distributing organizations in this world. The organization is popular among the people around the globe due to its adopted and implemented unique strategies in business operation processes. Strong international business diversification, aggressive product differentiation and high quality control of the products are the major strengths of the organization. Effective domestic, international and cross-boundary supply chain management process is supporting the organization’s each and every business operation activity. Previously, the management of the organization used to follow centralized supply chain network in order to take the control of each and every business operation activity. Centralized decision making and strategy development process in supply chain network helped the organization develop strict and systematic supply chain management strategies. Slowly and gradually, the organization had to cope up with new interesting aspects due to the constant change in the nature of global business environment. The population of the entire world increased dramatically after the Second World War. In addition to this, demand for high quality and differentiated products also has increased among the target customers. Therefore, it was highly important to bring pace in the supply chain management process of the organization. Several domestic and multinational corporations tried to develop and implement new unique supply chain management strategies in business operation process. In addition to this, too much competition in global business environment has forced the management of PepsiCo to think about strong international market diversification and differentiation strategy. The management of the organizational tried to capitalize on the potential business operation opportunities that have been developed due to globalization and technological advancement. It was very hard and difficult for the management of PepsiCo to maintain centralized supply chain networking process across the world due to high bargaining power of suppliers and buyers. Therefore, the management of the organization decided to decentralize its supply chain network in order to bring pace and flexibility in the supply chain management process. Most importantly, the supply chain management of PepsiCo decided to hire innovative and skilled distribution agencies in order to maintain effectiveness in the supply chain management process. The management of PepsiCo always tried to focus on the effective raw material sourcing and resource allocation process as these two aspects are highly important for a soft drink manufacturing and distributing organization. The management of the organization always relies on its suppliers to gain high quality resources for the purpose of the manufacturing of the products. Most importantly, it is the market demand that has forced the management of the organization to adopt and implement decentralization in the supply chain strategy development and implementation process. Zero solid waste and recycling are the two major aspects of the supply chain management process of PepsiCo. The organization has developed a new policy in the supply chain management process to maintain transparency and sustainability. PepsiCo is one of the leading multinational corporations across the globe. Therefore, it is highly important for the management of the organization to focus on sustainability in international supply chain network. The management of the organization generally motivates the suppliers across the globe to follow the developed policies. It is true that the management of the organization has developed several types of sustainable policies in supply chain management process to gain the support of several important external as well as internal stakeholders. In the manufacturing process, the organization requires huge water resources as soft drinks are the major product lines of the organization. The organization always tries to recycle used water in order to limit the consumption of natural resources. In addition to this, maintaining zero solid waste in the raw material sourcing and manufacturing process has helped the organization to maintain sustainability in overall supply chain management process. It has been discussed earlier that the management of the organization always tries to capitalize on the potential business operation opportunities that have been developed due to globalization and technological advancement. It is quite clearly identical that the organization has faced several issues in the recent past due to different issues in the supply chain management process. The government of several developed and developing countries restricted the manufacturing, marketing, sales and distribution of several soft drink products. The soft drink products of PepsiCo were also in this list. Demand for high quality and healthy soft drink products started to increase gradually among the people as too much carbonated and high pesticide soft drink products started to affect the good health of the consumers. In addition to this, too much energy consumption in logistics and distribution process affected the environmental sustainability of the world. Looking into these aspects, the consumers and several important stakeholder4s started to boycott some products manufactured by PepsiCo in order to maintain sustainable society and environment. The organization tried hard and strengthens its research and development team to improve the quality of the products. The organization adopted and implemented product differentiation strategy in its business operation process to overco0me the ongoing issues. It is true that the global business environment is becoming highly competitive as well as saturated. Therefore, it was quite obvious and important for the management of the organization to consider this aspect to maintain its competitive edge and high brand image in the global market place. Most importantly, the issues related quality of the product during the manufacturing process automatically affected the sales growth rate and brand image of the organization. In addition to this, the management of the organization also took some initiatives in the manufacturing process to reduce the pesticide and the level of carbonate in the soft drinks. Most importantly, the organization stopped the productions of those products and re-introduces those products with assuring high quality control of those products (Compete, 2013, p.19). The supply chain management of PepsiCo always tried to redefine its supply chain management practices across the world in order to maintain sustainability in overall business operation process. Distribution and logistics also can be considered as one of the most important aspects in the supply chain and distribution management process. The management of the organization implemented decentralization in this department to reduce overall supply chain lead time. Reduced supply chain lead time helped the management of PepsiCo to reduce overall supply chain as well as business operation cost. It is known to all that, long supply chain lead time increases inventory management, distribution and warehousing time and cost. It also increases domestic as well as internal distribution time and cost. Therefore, the management of the organization decided to decentralize its supply chain network in order to reduce the lead time. Effective turnaround timing also helps the organization to take care of the needs and expectation level of the consumers as it enhances capital flow of the organization that brought pace in the logistics and distribution process. Earlier, the management of the organization used to operate with limited warehouses due to limited market competition. Now-a-days, it can be identified that the organization is focusing on the development and establishment of several warehouses to support the decentralization process of its supply chain network. In the supply chain and distribution process, the management of PepsiCo has decided to use long headed fuel efficient trucks to distribute the products. It is highly important for the organization as it has helped the management to maintain sustainability in the overall supply chain management process as well as business operation process (RBR, 2014, p.9). Most importantly, the organization has re-launched its new products by minimizing the level of pesticide and carbonate in the soft drink Products. It is true that the demand for high quality and healthy soft drink is significantly increasing among the target customers. The organization has produced high quality fruit juices and low calorie carbonated soft drinks for the health conscious consumers in order to meet the satisfaction level of the target customers. Last but not the least; effective recycling of the used things and water has helped the organization to maintain environmental sustainability as well as sustainability in the business operation process (Carey, 2015, p.1). It is clear from the previous discussion that PepsiCo has suffered from several issues in its supply chain management process across the globe, but strong differentiation and sustainable supply chain management strategy development and implementation process has helped the organization to regain its popularity and brand image among the important external and internal stakeholders across the globe. It is recommended that, the organization should constantly consider industry standard and demand of the stakeholders to maintain effective business growth rate. 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