Future Trends in Global SCM Strategy - Essay Example

Future Trends in Global SCM Strategy Name Institution Tutor Date Introduction Current business leaders are presented with the challenge of preparing their firms to handle the challenges that will be presented by the future and one aspect of these is in Supply Chain Management (SCM), a feature that has in recent years been increasingly taken up by many firms as a major element in their corporate strategies (Kersten 2012). Cetinkaya (2010) explains that a supply chain brings together all firms engaged in the designing, manufacture and delivery of products to markets. SCM involves coordinating the processes of producing, locating, transporting informing and inventory-making among the supply chain players. Supply chain strategy involves the making of decisions on how SCM is to be structured over a future period and through it, a manager will decide on the chain’s configuration, allocation of resources and processes to be performed by each stage (Felea & Albastroiu, 2012). The future of SCM strategy is one characterized by increased dynamism, competition and complexity, and the way out is adaptation to its new requirements for innovation, customer value and collaboration. The aims of this paper are; To outline the nature of future technological conditions surrounding SCM practice To discuss the implications of future changes on business process hence SCM strategy To give recommendations on best responses by SCM strategy to future conditions The study involves a content analysis of relevant books. Journals and reports on issues related to the future of SCM. It starts with a brief introduction to the issue, followed by a summary of the expected technological and business process contexts of future SCM. There is then a discussion of the information gathered on the two aspects, followed by a brief conclusion, identification of limitations noted in information and giving of recommendations arising from the outcomes. Expected Trends in SCM’s Technological Environment SCM strategy is among the main inter-organizational practices that can enhance competitive advantage, especially for networks and alliances having customers and suppliers. According to Mellat-Parast (2013), it seeks to have interdependence between firms and collaboration in pursuing supply chain efficiency, so that when successful it helps to cut cost, improve flexibility, boosts quality and assures of greater customer satisfaction. Global Commerce Initiative (2008) explains that this is important because in future, shoppers and consumers will become even more empowered and demanding. They will become more active as partners within the supply chain, and will be able to interact more through buying and ordering by means of various channels for instance in-store, online and mobile. They will demand other approaches to product delivery such as home delivery and neighborhood distribution. It will be necessary for innovations to be pursued continuously and technology given greater focus as the facilitator of organizational objectives, specifically profitability, competitive advantage and growth of market share. According to Oracle (2014), Information Technology (IT) will be a major competitive feature, so that the current popularity of the web as a venue for competitive advantage in SCM is just but a beginning. Kersten (2012) explains that in future, web-centric, end to end technologies will gain more ground, the Internet will continue to dominate activities that any firm will need to implement so as to attain supply chain and overall enterprise transformation. Cetinkaya (2010) notes that new sources of efficiency such as e-business will become essential in strategy, and will be accompanied by swifter transformation in how services and goods are moved to markets from the suppliers via distribution channels through IT, whether the products are manufactured goods, financial services or knowledge-based outcomes. The position of Collaborative Supply Chains is likely to become more significant. Coyle & Ruamsook (2014) believe that this is because technology will be the main differentiator of value, so that faster and smarter solutions will emerge and leave SCM strategy with no option but to seek radical innovation as a response. According to Global Commerce Initiative (2008), the concept of real-time will be the main differentiator, to the point that it will become a standard in determining optimal supply chains. Firms will have to find out ways of working together in trying to match demand with supply. Information sharing will facilitate the anticipation of changes in consumer demand within the company. Collaboration will need to deal with shared areas of interest without impacting on firms’ competitive positioning. Kersten (2012) adds that electronic collaboration will especially be a key trend in SCM strategy and will demand the application of innovative business models for instance Just-in-Time production, eProcurement, workflow engineering and eLogistics. The embracing of robotics has been a growing trend in SCM and is projected to continue doing so. Coyle & Ruamsook (2014) explain that as investments in this venture increase, there is a projected continuous emergence of human controlled but highly automated distribution facilities and factories. These will have greater complexity in the interaction between processes, machines and people. Warehouse and factory workers will therefore need to get more training on how to work together with robots, in addition to being given knowledge on how to guide and program machines so that they can become a skilled and quasi-manual workforce rather than just manual labour. With the current trends and their progression into the future, technologies will arise that are more radical and likely to irreversibly change supply chains. According to Cetinkaya (2010), there are a number of expected technologies that are likely to change supply chains in major ways. One of these is nanotechnology. In this, there will be the use of enhanced materials that are self-organising and capable of reassembling themselves from their component nature to actual finished products. There is also the prospect of wireless packages that be able to communicate to the awaiting customers exactly where they are and when they arrive at their destinations. Changes in Process Corporations will depend increasingly on global trade for offsetting local markets. Prajogo & Sohal (2013) believe that this will imply a more transnational nature in enterprise, and such an organisation will need a streamlined new approach to SCM. Leaders will therefore have to create capacity for continuous radical innovation and optimize their abilities to anticipate future customer demand and opportunities. According to Oracle (2014), service on-demand will have to be embraced as a key feature of future strategy so that the thought, design and implementation of strategy will no longer just seek to maximize efficiency or minimize cost, but rather pursue system optimization and application of software that is fastest. A firm’s access to a transparent, flexible and interoperable system of knowledge which can facilitate greater business opportunities will gain importance. Businesses will in future have to work more with varied firms within voluntary Multi-Stakeholder Initiatives (MSIs). According to Sedex (2014), this will help in planning for uncertainties and aligning so as to attain global-level development goals. Most importantly, there will be more collaboration among all sizes of business in the issue. Oracle (2014) adds that supply chains in future will be designed backwards, starting from the customer and not from the factory. A fully-developed On-Demand Supply Chain may be recommended for strategy as a way to ensure greater business intelligence, speed and transparency. The firm will need reliable, predictive forecasting. According to Felea & Albastroiu (2012), forecasting will need to be real-time, so that a business can anticipate and make appropriate forecasts on future demand, the identification of potential niche markets and create services and products to suit them. Strategy will have to maintain information gathered as part of its business assets, if competitive advantage is t be attained. Business intelligence will be crucial for business. According to Kersten (2012), the future enterprise will have to raise adequate information relating to industry, customers and competitors. Supplier and customer data will be a major tool for competitive advantage especially if IT infrastructure is appropriately adopted. Continuous networking will be essential, so that intelligent device application, for instance the use of chips in the packaging process and use of mobile devices in monitoring will be a major factor in ensuring more knowledge, speed and efficiency. Sustainability will be a significant component of SCM strategy. Luthra et al. (2014) explain that in pursuing business objectives, there are often negative impacts subjected upon the environment, and these will not be acceptable in future. Green SCM is the term used in referring to establishing a balance between economic, social and environmental benefits and it is expected to be a major ideal for future firms as there will be the demand for sustainability. According to Oracle (2014), sustainability is expected to be a replacement for cost speed and value as the main issues in SCM strategy. According to Cosimato & Troisi (2015), there is an increasing amount of awareness about global environmental problems such as toxic waste dumping, global warming and decline of non-renewable resources. It is therefore expected that there will be a trend towards use of raw materials that are environmentally friendly, reduction of fossil fuel reliance and use of recycled paper in packaging. These comprise green principles. Oracle (2014) explains that customers will be more concerned about product ethical, social, health and cultural footprints hence need for consideration. Technology will enable firms to establish large consumer campaigns, and these will tend to focus on some social cause. According to Sedex (2014), businesses will be able to influence greater numbers of people hence creation of movements relating to social missions, real-time interaction with customers and launching of dialogue about the company’s social impacts. SCM strategy should be ready to engage in activities aimed at social good and balance the benefit against cause because according to Prajogo & Sohal (2013), rises in costs of fuel and pressure, both from a regulatory and market perspective to adopt green operations are likely to impact on all businesses found within the supply chain, raising the operational costs for businesses and eventually with the effect of undermining firm competitiveness. According to Sedex (2014), the role of ethical consumption and consumers in the supply chain will change, and technology will facilitate their demand because it will always empower consumers further with information that is easily accessible in massive amounts. Both good and bad stories about a firm or product will be shared more easily globally through social media. Discussion and Analysis From the literature reviewed, it emerges that the nature of supply Change Management strategy will in future be shaped by the forces of change and further by the nature of the future economy. There will be no more building of supply chains that are reactive to needs of customers alone. Rather, there will be an increase in the push for the promotion and implementation of sustainable practices within major companies globally. There is an anticipated increased taking up of investment practices that integrate social, governance and environmental issues throughout financial markets. Accounting will therefore have to be more transparent, so that investors, capital markets and companies will integrate the full social and environmental costs of what they are doing. Collaborative Supply Chains will be more common and they will be accompanied by an increased application of technology in the mobilization of collaboration, transparency and innovation. Data collection systems will be more interoperable and gathered data will no longer be for an individual company but rather from different entities that can be aggregated. Managers and customers that are aware of the changes will be successful. Technology will be the main source of a link within collaborative networks. New technologies will serve to give greater effectiveness to old solutions. Considering the circumstances, there could be the elimination of barriers that limit collaboration internally. Shared distribution will be the way to go. This is because it reduces waste. Collaboration starts with the sharing of logistical data. When this is available, it becomes possible to predict wastefulness much better across the supply chain, in addition to identifying opportunities for joint creation of value. One can imagine for instance the wastefulness in a situation where two trucks that are half empty pass each other heading to the same destination. Three consumers in one area should also not wait for three trucks to bring in their ordered online items when just one could have done the job. Conclusion Supply Chain Management strategy is one of the ways through which a business can cope with an uncertain future. The future of SCM is expected to come with a lot of change that will necessitate innovations. Although one cannot be completely sure of what will happen in future, it is definite that SCM strategy will have to take up technology to help in the mobilization of transparency, collaboration, innovation and scale that will help in countering the future’s challenges. The idea of sustainability will also remain a major issue in the future therefore the firm has to identify the best ways of incorporating aspects such as CSR into its operations and also check to see that the image of the company is not tainted by lack of concern for the environment. Limitations It was possible to access a lot of literature relating to the future of SCM strategy. This has pointed to the likely scenario in the future operational environment for business. However, all the information does not give a definite timeline of when certain aspects are anticipated. Although some features for instance the call for sustainable SCM are likely to increase in intensity due to increased population pressure, improved technology and maybe climatic change, all this is based on speculation as there is an implied belief that whatever changes that are already being witnessed are going to be enhanced in future. There is need for further research on which aspects of current change are going to be obsolete and within what span of time. Future Direction Considering the issues that have been examined, a number of features should be adopted within the approach that any successful firm takes in seeking competitiveness. These are; a) SCM strategy should embrace leadership. It will be wise not to fear establishing strategies that are highly ambitious and bringing together social, economic and environmental dimensions b) Strategy should be predictive. Business leaders should look ahead into the future and try to see how the firm will maneuver the opportunities and challenges that are held by the future c) Collaboration. Supply chain issues will be best addressed if companies work together as their nature ensures that a firm working alone cannot tackle them. Bringing together enterprises in a collaborative action will help create desirable change in the global systems within which they operate SCM strategy in future will need to be ambitious, applying digital media and new technologies. The business models and ways of doing things that a firm applies in day to day operations should be open to innovation. The approach to data should especially go past that from the individual company to that which may be aggregated so as to show trends within an entire region. A good strategy will in future expertise in the secure and intelligent management of data, in addition to protection of consumer autonomy. A company should be able to track and monitor more information relating to commodities, people and raw materials. Bibliography Cetinkaya, B, (2010), Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice, London: Springer Cosimato, S and Troisi, O, (2015), Green Supply Chain Management, the TQM Journal, Vol. 27 (2): pp. 256 - 276 Coyle, J and Ruamsook, K, (2014), Game-changing Trends and Supply Chain's ‘New Normal’, Retrieved on 13 April 2015 from Felea, M and Albastroiu, I, (2012), Supply Chain Strategies, Valahian Journal of Economic Studies, Vol. 3(3): pp.45-52 Global Commerce Initiative, (2008), 2016: Future Supply Chain, New York: Global Commerce Initiative Kersten, W, (2012), Managing the Future Supply Chain: current Concepts and Solutions for Reliability and Robustness, Lohmar: Eul Luthra, S, Garg, D and Haleem, A, (2014), Green Supply Chain Management, Journal of Advances in Management Research, Vol. 11 (1): pp. 20 -46 Mellat-Parast, M, (2013), Supply Chain Quality Management: An Inter-organizational Learning Perspective, International Journal of Quality & Reliability Management, Vol. 30 (5): pp. 511-529 Oracle, (2014), The Shape of Tomorrow’s Supply Chains, London: Oracle UK Marketing Prajogo, D and Sohal, A, (2013), Supply chain Professionals: a Study of Competencies, use of Technologies, and Future Challenges, International Journal of Operations & Production Management, Vol. 33 (11/12): pp. 1511 - 1554 Sedex, (2014), Future Supply Chain. Briefing: Q3 2014, London: Sedex Information Exchange Read More