Unified Definition of Supply Chain Management - Assignment Example

A-1 Businesses operating on the global scale are the ones that are most affected by globalization. The scale with which businesses are affected by globalization can be understood when one looks into the value commodity chain of a company operating on a global scale, like Nike. Nike is a publicly traded sportswear and sports equipment supplier with more than 30,000 people worldwide (Sage, 2008). The slide from the lecture shows how globalization is affected by business. The slide presents three important concepts apart from the value commodity chain and these are concept, globalization, and logistics. The discussion of the elements presented in the slide and its application to Nike appears below. The value commodity chain presented in the slide is divided into two parts – the concept part which include R&D, Branding, and Design and the Logistic Part which include Manufacturing, Distribution, Marketing, and Sales. The first three parts of the value chain are referred to as concept because the details of the products are conceptualized in these stages before they are actually produced. One can notice that with the presence of globalization, the concept chain is declining until it reaches the minimum which is manufacturing. The idea behind this graphical representation of the concept makes sense when one looks at Nike. Nike operates mainly in Oregon, USA but with the increasing movement of people in United States and the growing demand for equal employment opportunity, Nike is able to hire people from various culture, geographical region, and perspective to work on its conceptualization. Nike’s R&D depends highly on various disciplines and perspectives. The more people there is to contribute to the R&D, Branding, and Design and the more diverse they are, the closer Nike gets to what makes the market tick. The added value is high for R&D because great amount of raw ideas can gives Nike the advantage when it comes to product research and development. Nike values the ideas of people from different culture and from all walks of life because the different perspectives they pitch in will add to the product knowledge of Nike. For example, with the different idea they would gather from people, they could come up with a good running shoes. While the added value is still high for branding, it could not be as high as in R&D. This is because Nike uses smaller number of people to work on its Branding. For example, Nike assigns specific departments or people to work on the branding concepts and this number of people is significantly less compared to the people whose ideas were collected during R&D phase. The more specific the work required in the concept part, the fewer Globalizations adds value to the value chain. This can be seen on the Design phase as well. People and departments assigned on the Design phase are not so much affected by the influence of globalization and on the other hand, globalization does not add much value on the design phase. This is because regardless of the influence of globalization on the organization as a whole, the Design phase will only perform what it is required to design and the only effect globalization has is the globally-acceptable design R&D and Branding phases have come up with. As can be noted on the graph the value added by globalization decreases as the chain belonging to the concept part progress in time. The other part of the graph is the logistics part. Logistics refers to how products are moved from one station to the other until it reaches the consumers. This part includes manufacturing, distribution, marketing, and sales. The elements of the logistics part increases in value with globalization as the product shifts from one phase to the next phase. The explanations for this are as follows. Globalization offers low value for Manufacturing as it should be. The more globalized the operation of the company is, the more localized Manufacturing should become. It would be unwise for Nike to open Manufacturing plants in all of the countries where it operates because it would just lower the profit margin of the company. Thus, Manufacturing should be kept at minimum in order to achieve financial goals. A rapid increase can be seen as one moves from Manufacturing to Distribution to Marketing and finally to Sales. The added value for distribution is high because operating globally means products must be manufactured throughout the wide-scale supply chain. One can see that the wider the scope the higher the added value there is to the phase. Of course, the marketing efforts will increase as well as the marketing team will be dealing with a very diverse target and captured markets. Marketing efforts are directed to increase the market share of the product and so the marketing team will experience higher learning curve as they will look for creative and innovative ways to market the product. This adds value to marketing phase and this added value is brought about by globalization. In the same manner, sales phase will increase as well because of the scope with which the sales people and the sales efforts would operate. As was noted in the graph (as well as with the explanation) the logistics part of the value commodity chain moves through phases because of the interactions that happen in a global scale. REFERENCE Sage, Alexandria. Nike Profit Up but Shares Tumble on US Concerns. Reuters. June 26, 2008. Accessed from http://uk.reuters.com/article/companyNews/idUKWNAS924120080626 [Retrieved February 21, 2009] #B- 3 The growing demand for product transport from one part of the world to another brought a lot of changes in the processes of getting one product to another. As the demand increased to a global scale, managing the supply chain becomes more complicated than usual. These requirements in the supply chain have shaped the development of inter-modal freight transportation. Inter-modal freight transportation is the use of two or more modes to move shipments from the origin to its final destination (Mentzer, 1999). Two of the major types of ocean shipping units are container and bulk. Container cargos are cargos that are usually made up of small items like sacks, cartons, drums, or pallets which are then placed in sealed boxes of standard sizes and are placed in large containers. The process is called containerization and is one of the most important supply chain management technique developed in the 20th century (Britannica, 2009). The capacity of the container is expressed in twenty-foot equivalent units or TEU and the standard lengths of containers are 20-feet, 40-feet, 45-feet, 48-feet, and 53-feet. The typical width of the container is 8-feet while the height of the container is usually neglected even if there are two container heights in general – 9.6 feet and 4.3 feet. For 20-feet dry cargo container, the maximum gross mass is 24 tons while for the 40-feet dry cargo containers is 30.48 tons. The load will enter the container from the rear using forklifts while there are containers that can be opened on the top for ease in placing down heavy and bulky cargoes using cranes and hydraulic systems. In case moving docks, forklifts, and cranes are unavailable, container ramps are used instead. The same dimension is followed for containers handling liquid cargos (Emase, nd). According to Ehlenfeldt (2009), containers can be bought, rented, or leased for short term or long term use. A bulk cargo on the other hand is an un-packed cargo which is homogenous in nature (ASC, 2005). Bulk cargos can be liquid cargos or dry cargos and are usually dropped or poured to bulk carriers using shovel buckets. Some examples of bulk cargo are oil and petroleum for liquid bulk cargos; coal and iron ore for dry bulk cargos. During the industrial age, shipped cargos are consisted of homogenous loads like coal, iron ores, and gold ores for processing in major industrialized cities. However, present day economy increased the demand to move various products of different form and sizes from a port in one continent to another. Products from China, Asia, India, and other parts of the world are being exchanged in different ports worldwide and Canada is no exemption. In the most general sense, cargos in Bulk have not experienced significant increase in frequency of loading/unloading in the major ports compared to Container cargos. This trend in shipping and distribution became apparent in today’s movement of product. With today’s trend in shipping and distribution, it would be very wise to invest in a Dual Purpose port in an island close to Vancouver. Cargos shipped in bulk are significantly valuable compared to cargos shipped in containers and so they bring huge amount of profit for port authorities. However, their frequency of loading/unloading puts a ceiling profit. On the other hand, container cargos may not hold that much value and thus port authorities can get very small from each cargo being hauled in the ports but because of the volume of container cargos being moved from one place to the other makes it an ideal consideration for serious business. The expenses associated with operating and maintaining a Container port is somehow cheaper when compared to the expenses associated in the operation and maintenance of Bulk ports. This is because Bulk cargos can take up so much space and requires huge amount of effort to move from one container to the other whereas Container cargoes can be stacked using highly automated equipments saving time, space, money, and effort in the process. For example, when the influx of bulk cargo slows down, profits become less. In the same manner, when container cargos used up all the spaces already, profit trickles down. In other to maximize the earning capacity of the port as well as ensure steady flow of cargos to and from the port that will be established, it is just right to choose Dual Purpose port. By opting to choose Dual Purpose port, the company will be earn profit in two effective ways – small time but consistent profit (for container cargo) and one-time big profit (for bulk cargo). A mixed purpose port is the best choice to take because the port can handle as much cargo it can without any downtime and without any problems on space. REFERENCES Mentzer, J. T., W. DeWitt, et al. A Unified Definition of Supply Chain Management. Working paper. University of Tennessee, Knoxville, 1999. Apparel Search Company. Bulk Cargo Definition. 2005. Accessed from http://www.apparelsearch.com/Definitions/Shipping_Freight/bulk_cargo.htm on February 21, 2009 Containerization. (2009). In Encyclopædia Britannica. Retrieved February 21, 2009, from Encyclopædia Britannica Online:http://www.britannica.com/EBchecked/topic/134680/containerization Emase. Shipping Containers. Accessed from http://www.emase.co.uk/data/cont.html on February 21, 2009 Ehlenfeldt, Jennifer. Guide to Using Container Sales and Leasing. Accessed from http://www.business.com/directory/transportation_and_logistics/ocean_and_maritime_transport/container_sales_and_leasing/ #C Pusan, South Korea is the fifth largest container port in the whole world with an output of production of 13,270,000 in 2007 and 12,030,000 in 2006 and is the largest international port in South Korea. A Strength-Weakness-Opportunities- Threats (SWOT) analysis of Pusan appears below. Strengths It can be said that the strategic location of Busan is its greatest strength. Its location in the tip most part of South Korea makes it an ideal starting and ending points of the movements of product and goods from and to other parts of Asia and the Pacific. Pusan’s location is very strategic since it complements the industrial belt of South Korea comprised of Pohang, Ulsan, Changwon, Geojae, Gwangyang (Jang-soo, 2006). Because of the economic activity within the ports of Pusan, the metropolitan has seen increase in manpower as well as improved infrastructures showcasing the fertile South Korean economy that invite local and foreign investors to invest their money in the country. In addition to that, Pusan has established academic institutions which open avenues for present and future entrepreneurs to open new businesses in the area. With 85.2% of high school graduates who received college education (Jang-soo, 2006), Busan’s supply of manpower aids in the major strength of the port city in its economic development. Weakness It can be argued that the major weakness of Pusan in terms of its being a major international port city is its lack of flat land (Jang-soo, 2006). Pusan covers 763.3 square miles or merely 0.77% of Korea’s total land area. The small area that the metropolitan Pusan occupies present serious issues in terms of urban management as roads are markedly small and traffic congestions are frequently experienced in the city. On top of that, people occupying Pusan are feeling the congestion as the population increases while the land area remains the same. An implication of this constraint is the fact that Pusan ports could never be expanded and thus would have a hard time increasing its throughput to significant degrees without pushing the inhabitants away. This means that the profit that Pusan ports experienced have unwanted ceilings which bars the port city from receiving more container cargos which would invariably increase its profits. Thus said, even though Pusan has the manpower required to operate and manage the port business, earning capacity is pegged at a certain maximum value compared to other port cities. A byproduct of the weakness is the accounted migration of Pusan population to other parts of South Korea. In 2003 alone, a net loss of inhabitant is noted when 186,386 people from Busan moved to other parts of the country compared to only about 144,123 people coming in to Busan. If this trend will continue in the future, the strength of its manpower will begin to experience serious problems. Opportunities Despite the issue with the Pusan land area, there are a lot of opportunities for Pusan. For one thing, the South Korean government can decide to transform Pusan into a major economic hub of Asia and the primary port of choice for international products because of its strategic location facing the Pacific and the industrial belt of South Korea. This means to say that while Pusan could not expand as much as it want to inland, it can diversify its economic focus into other industries aside from shipping and port industries. By being the primary landing site for goods and products that would flow inland, Pusan can bring business not only to its own people but for the rest of Korea as well. On top of that, the number of Pusan local people that have achieved higher education can actually help the city come up with better solutions to the constraints that shape the growth of Pusan’s port economy. Threats From the discussion above, it is easy to identify that there are two major threats for Pusan and these are the declining population and the limited land area. With the declining population, the number of capable people who would be operating and maintaining the port business will become too few for full operation and there would be a threat to the stability of the processes involved in operating the port business of Pusan. In addition to that, it would be very hard and expensive to train new people who are not familiar with the system compared to those who are already aware of how the whole process goes. As for the limit on the land area, the threat on this part is when Busan could no longer take care of the demand because of the lack of space and clients will begin pulling out accounts from Pusan losing valuable revenues in the long run. REFERENCE Jang-soo Ryu, Sung-joon Paik, Dae-shik Lee, Hyun-joong Jun, Eui-soo Cho and Jong-han Kim. Supporting the Contribution of Higher Education Institutions to Regional Development. OECD Report. January 2006. Read More