Supply Chain Management - Essay Example

?Supply Chain Management Overview In the bid to deliver their day by day responsibilities within the given confines and principles of supply chain, heads of businesses and companies go through so much to ensure that other basic principle of running business are not broken (Bovet and Sheffi, 1998, p. 23). For instance, businesses and companies take steps to ensure that responsible means of adhering to environmental and ethical conditions stipulated by regulatory bodies such as the Environmental Protection Agency are adhered to. Without any doubt, compliance to environmental and other forms of ethical regulations is a central part of supply chain management because customers who happen to be the end users of products and services produced by companies actually expect the producers to abide by the given regulations. These end users regard companies who refuse to abide by the regulations as irresponsible and try to avoid them. This means that should all factors in the supply chain process be put in place but common actions on abiding by regulations that borders on the wellbeing of people and the environment be ignored, there is no way customers would accept or patronise products from such irresponsible companies (Bowman, 1997). This way, the core motifs of companies in going into production would totally be defeated. It is in light of this that corporate organisations and companies have always taken steps to be accepted in the face of customers and the general public as corporately responsible. To achieve such tags of corporate responsibility, companies take a number of corporate responses to address specific issues. In the following sections, three companies and how they have taken specific corporate responses to address certain issues that borders on the environment and the growing challenges of global supply chain have been addressed. GlaxoSmithKline As a company, GlaxoSmithKline has taken a number of initiatives that are based on the principles and core values of supply chain management: particularly, supply chain business process integration to address a number of social and environmental issues (Lambert, 2008, p.15). Three of these and how the company facilitated change in the given directions have been discussed below. Environmental degradation As a pharmaceutical company, GlaxoSmithKline has been faced with several issues that concerns environmental degradation. Environmental degradation has been explained as an act that deliberately or unintentionally causes damage to the environment (Burgess, 1998). Such practices have bordered the company because it depends on some raw materials that are acquired directly from undertaking environmentally threatening acts like the cutting down of trees. In the course of manufacturing also, there is the release of large volumes of waste fumes into the environment. Through the supply chain management practice of manufacturing flow management, the company has been able to ensure that what could otherwise had been serious damage to the environment has been controlled. According to Goldsby (2003), manufacturing flow management “includes all activities necessary to move products through the plants and to obtain, implement, and manage manufacturing flexibility in the supply chain (p. 23)”. Specifically, the company has been engaged in the purchase of production plants that have been designed to internally recycle waste fumes for the generation of power. This way, waste fumes are not thrown into the open atmosphere. Rising energy and materials prices Recently global events including outbreak of wars and political uprising in major oil producing countries have led to rising price of crude on the world market. This has apparently led to increase in the cost of energy. Most commonly, increase in prices of energy leads to increase in prices of raw materials (Copacino, 1998, p.31). This is because of the high cost of transportation that increase in the prices of energy brings about. For GlaxoSmithKline as a company, steps have been taken with reference to the order demand management style of the supply chain business process integration to ensure that the company does not run into losses in the midst of the rising energy and materials prices. The specific order management style has been to produce precisely what the demand on the company requires (Fox, Michale and Holmes, 1998). This way, the expenditure of the company is kept within the means of demand. The threat of over production, which sometimes results in waste have been eliminated. The growing challenges of global supply chains. As the growing challenge of global supply chains intensifies also, GlaxoSmithKline has put itself in an excellent position to match up with the new trend and task. Globally, there is being a trend whereby major manufacturing companies are not able to keep to the traditional provisions of supply chain because the complexities associated with the system seem to be becoming to demanding (Krause and Handfield, 1999). To some companies, demand for goods and products have reduced and so general revenue have reduced. They therefore how the view that should they continue to follow the strict rubrics of supply chain, they will run at a lost. Therefore, a lot of them use the ‘backdoor’ means (La Londe, 1999). However, GlaxoSmithKline have ensured the application of product development and commercialization to rise above the developing global challenge. Through this supply chain management philosophy, the company has put itself in a position whereby it continues to introduce new and efficiency pharmaceutical products. Furthermore, much is spent on commercialisation and branding to ensure that even if there is a break in the supply chain process, the impact of commercialisation and the deserve among customer to try new products would continue to do the selling for the company. Stagecoach As a transport operating company, Stagecoach also has its own share of the challenges that are arising with regards to environmental and social issues in its industry. Knowing the transport operating industry is a very competitive one, Stagecoach have used a number of supply chain management principles to overcome some of its major challenges, a summary of which has been presented below. Environmental degradation As a company that boosts of an average of 8,100 vehicles, Stagecoach cannot be least concerned about environmental issues that borders on the activities of its vehicles (Mariotti, 1999). As a company, the major areas of concern that have bordered it for years have had to do with land pollution resulting from irresponsible disposal of vehicular scrapes and the use of environmentally harmful fuel that leads to the emission of carbon and other harmful gases. But as strategic as the company could be, there have been series of strategies based on the principles and practices of supply chain management that have been used to address these problems. For instance Product development and commercialization has been the company’s core strategy for addressing land pollution and air pollution issues. As far as land pollution issues are concerned, the company has developed ways of shifting to the recycling of its old and worn out vehicles rather than dumping them or selling them to scrape dealers whose activities cannot be traced. This has led to the development of a special recycling unit to undertake this. The company also deals only with companies that supply wholesome and non-lead fuel. Rising energy and materials prices Considering the fact that all estimated 8,100 vehicles of Stagecoach depend on fuel as a major source of energy, there cannot be any challenge that sky rocketing prices of energy and other garage parts would greatly affect the company. But knowing what the implications of reluctance to match up the challenge and continue to stay in business would be, the company has through an effective corporate response system instituted customer service management strategy to ensure that different service types are served to different customers (Narus and Anderson, 1996, p.21). This means that the company has different service packages that come with different pricing systems. This way, the company has been able to introduce luxury and VIP services that are directed at giving enhanced services at extra cost so that the extra revenues from those who opt for special service packages help in raising extra expenditure to cater for the overall increase in budget resulting from increases in energy and material prices. The growing challenges of global supply chains. As far as the growing challenge of global supply chains are concerned, the company’s primary focus in address the problem has been to institutionalise the supply chain system. By this, the company has revised its supply chain policy from a centralised system to a decentralised system. Under the centralised system, the entire processes in the supply chain were undertaken by only one office (Krause and Handfield, 1999). This led excessive pressure on the office when growing challenges of global supply chains became eminent. Today, the decentralised system makes it possible to have series of offices with different experts who oversee the affairs of supply chain in individual departments of the company. InterfaceFLOR InterfaceFlor’s version of the environmental and social challenges that currently confronts a number of companies cannot be over emphasised. This is because the company feels and suffers the same levels of losses as other companies who may even be in other competition sectors. To this effect, the company has had its own corporate responses to some of these issues and they have been discussed aloud. Environmental degradation As a leading global producer of modular carpet (Interface Company, 2012, p 13), much can be expected in relation to environmental degradation for the company especially when it comes to raw materials and disposal of post production waste. In most of these however, the company has placed its supply chain strategy at the supplier relationship management level. The simple reason to this is that much of the issue of disposal of post production waste happen after supply has been executed. According to Lambert and Schwieterman (1996), “managers can use to implement a cross-functional, cross-firm, supplier relationship management process in business-to-business relationships”. To this effect, the company has a system that monitors and regulates the activities of suppliers after they have come for stock. The principle is very simple and that is, should the need for disposal of any given carpet bought from the company arise, the carpets should be returned to the company for money. Once these are returned, they are recycled together with pre-production waste. Rising energy and materials prices As a global leader in carpet manufacturing, the estimated cost of annual energy alone 12% of overall budget. The estimate of raw materials runs into over 30% of overall budget (Interface Company, 2012). This certainly is a series of statistics that outlines the need for InterfaceFLOR to have proactive measures that are based on the core principles if supply chain to ensure that the rising energy and materials prices do not affect the company negative. Especially in the heat of global economic crisis, the company ensures that it does not over budget, overspend, and over produce. To do this, the company depends sorely on order fulfilment target. This is a system whereby the company produces strictly based on request from suppliers. This way, the proverbial spending within your means is fulfilled. The growing challenges of global supply chains. InterfaceFLOR has a simple strategy of overcoming the global supply chains challenges and that is depending on third party agencies to do most of these tasks. For instance the company has as a way of ensuring that it has more time to concentrate on production of quality has employed the involvement of expert agencies to oversee major aspects of the supply chain including sourcing, inventory, logistics, . These agencies are external but have established offices within all major headquarters of the company. As other competitors worry about killing several birds with just one stone, the company concentrates all its attention on production (Bell, 2012, p. 25). The resulting effect has been that the level of quality of production upheld by the company has remained unchanged. Future Directions For all three companies discussed in this paper, the future can be said toe very bright. Especially if they are to continue upholding the basic principles they are currently using to win the battle against social and environmental challenges in the manufacturing industry. Among all their efforts however, there is a strong advocacy for them to have very strong consented efforts to make technology the centre of all their endeavour. With advances in technology for instance, the pressure to undertake all forms and aspects of the supply chain process could be reduced to activities of designed software. Electronic commerce is another major area that needs to be considered more critically by the companies so that their physical presence would be dedicated more to the production aspect of the supply chain. REFERENCE LIST Bell, John E. Supply Chain Management Review. 2012. Web. April 17, 2012 Bovet, Douglas .S., and Sheffi, Yankson. The brave new world of supply chain management. Supply Chain Management Review. 1998.34(4): 14–22. Bowman, Roberts .J. Link by link: global supply chains. 1997. Distribution 96(8): 88–90. Burgess, Rogers. Avoiding supply chain management failure: lessons from business process re-engineering. International Journal of Logistics Management. 1998. 9(1): 15–23. Copacino, Willaim.C. Copacino on strategy: get the complete supply chain picture. Logistics Management and Distribution Report. 1998.37(11):45. Fox, Michale.L., and Holmes, John.L.. A model for market leadership. Supply Chain Management Review. 1998. 34(2): 54–61. Goldsby, Thomas J. Manufacturing Flow Management. 2003. The International Journal of Logistics. volume 14, number 2. Interface Company. Interface Americas. 2012. Web. April 17, 2012 Krause, Daniel. and Handfield, Richard. Developing a world class supply base. Tempe, Ariz.: National Association of Purchasing Managers Center for Advanced Purchasing Studies. 1999. Print. La Londe, Bond J. Executing in the red zone. Supply Chain Management Review. 1999.35(2): 7–9. Lambert, Douglas M and Schwieterman, Matthew A. Supplier Relationship Management as a Macro Business Process. 1996. 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