The Concepts And Effectiveness Of The Supply Chain Management - Essay Example

Running Head: Supply Chain Management Paper The Paper presents a comparative exploration of two Supply Chain Management Companies in the location of writer; Melbourne Australia. Supply Chain management Supply chain management (SCM) has developed as a discipline viewed as the management of a system of interlinked businesses working together in the core goals of providing essential services and products to target clientele or markets within the service provision base and precincts of the participating business entities. Various scholars have had their contributions to on the concepts of SCM. There are some dissonances and concurrences when it comes to defining what SCM really. Perhaps one of the lucid definitions is offered by Harland (1996) who views SCM as a form of management that covers all transportation and storage of raw material, refined goods, and inventory in process from points of departure or origin up to the points of need (consumption). The track of transported goods from the point of origin up to the point of consumption constitutes what has been termed as the supply chain in business management and logistics science. The diagram below presents an illustration of the SCM concept. Source: Chen et al (2004) In the diagram which portrays the supply chain, the arrows used represent the supplier-connections management well as inner SCM and clientele-relationship management. Further perspectives on SCM stem from the view of the discipline as pertaining to the entirety of the aspects planning and overseeing of all activities entailed in procuring, conversion and management of all the logistical activity. Also crucial to this view is the inclusion of aspects coordination and alliance within the network players which may be the suppliers, the middlemen and even third party services renders as well as clients. The core of SCM holds the integration of services and products supply as well as demand regulation in the SCM networks. Contemporary Supply Chain Management Contemporary SCM is undergoing significant transformation and modification under the influence of various sweeping phenomena in the forms of globalisation and technological leaps. Scholars around the discipline are factoring in the importance of various dynamics that have been largely less considered in earlier conceptualisation on SCM. The SCM discipline has had remarkable contributions from the works of Coyle, Langley and Gibson among others. Although the scholars s have brought the supply chain element to t fore of the contemporary concepts on SCM , the scholars have underscored the role the information is playing and will continue to play in contemporary and future SCM networks. Coyle, Langley, Gibson, Novack, Bardi (2008), contend that, “A supply chain perspective germane for appropriate deciphering and application of the feasible SCM tenets will tap in the essence and merits of information technology as well as the rate of change and a closer recognition of logistics with all its associative dimensions” Supply Chain Management in Australia The Supply chain industry is one of thriving industries in Australia. The industry is largely leveraging on the remarkable economic of the country which has an enviable GDP growth of 4% (2008 EST.). This implies that economy is conducive for various forms of business and supply chain thrives as the alienable cog of the economic whirl. This paper will present a comparative exploration of two Supply chain companies operating in the writer’s location, Melbourne Australia. Toll Australia (Melbourne) Toll is a global logistics services giant predominantly plying the Asian region. The company was founded in 1888 by Albert Toll. The company operates as Toll Australia in Melbourne Australia. The company which employs over 25000 workers provides a broad range of integrated logistic services and has staggering profit margins illustrated by annual revenue of AU$5.6 billion. The company runs an expanse network which involves over 700 units in more than 45 countries across the world. Services offered by the company include road fleet, air freighting, storage (warehousing) and rail transportation. The company belongs to a thriving industry of Supply chain and functions according to identifiable models of supply chain management (SCM). Bellow is the Toll Australia Snapshot. [Source: http://www.toll.com.au/about.html#model] Toll Australia strength lies in the integration of operational expertise and assets in strategic thrust aimed at championing supply chain effectiveness in providing optimum SCM services to the target clientele pool. The Toll group Model Toll Australia model can be explored in tandem with Michael Porter Value Chain conceptual framework. The value Chain framework of Michael Porter is an ensemble of useful conceptual tenets in exploring business activity that empower business entities through boosting their competitive advantage. The diagram below illustrates the value chain model by Porter. As demonstrated in the diagram the Toll Australia logistics system is leveraged on the systemic and systematic outlines typified in the Porters model. The coordination entails the inbound logistics unit which entails the receiving, storing and inventory control as well as transportation ad scheduling. On the operations front activities include packaging and assembly as well as maintenance. This is the second component in Porter’s operational track model. The Toll Singapore system also entails the key outbound logistics also included in Porter’s framework. This component deals with the delivering of finished products to consumers. The component also deals with the ensuring order fulfillment as well as the dynamics of logistics and distribution management. As also included in Porter’s values chain, Toll Australia has a formidable marketing and sales organ that masterminds the purchase of the company’s services by consumers. The organ plays a vital role in face of stiff delivery services industry competition in both national and global landscapes. The services front oversees aspects of customer support and service quality assurance as well as dimensions like systems upgrading, repairs and training, etc. This component is also a fundamental unit in Porter’s model. Among other aspects relating to global business management, Toll Australia in implementing organizational change process aimed at consolidating the gains of the organization and ensuring its growth, sustainability and competitiveness. In lime with some key aspects of organizational change such as the creation of shared mindset, building competencies as well as transforming corporate culture; Toll Australia is instituting organizational change in the way of disjointing infrastructure assets into listed entity. The move has been harmonised with all stakeholder expectations and is aimed improving the organizations performances. Unite parcel Service (UPS) United Parcel Service is Multinational supply Chain Company which is a leading global player in parcel deliver industry. The company is natively American with Headquarters in California. The company has a formidable global network with entail sub-networks in Australia. The company is one renowned Supply chain company in Melbourne Australia. Technological developments at UPS UPS always proved to be well ahead of time in terms of any developments. The main priority for UPS was their customers. They tried to ensure that the customer was happy in every possible way. By the 1993 UPS had seen tremendous growth and they were now delivering almost 11.5 million packages and documents. UPS was the first company to tap in the merits of information technology through setting up a website for the customers to track their orders and to ensure that the customers are of the status of the package. UPS System design (Order Management) Unlike The Australia Toll who use a typical Porter’s value chain model, UPSs Parcel Network is based on a hub and spoke model. The hub-and-spoke distribution paradigm (or model or network) is a system of connections arranged like a chariot circle in which all interchange moves along notes interlinked and converging at the Hub center. The model is commonly used in industry, in particular in transport, telecommunications and freight, as well as in distributed computing. Below is a typical hub-and-Spoke model. Fig.1 Benefits Of the model According to Babcock et al (2002) the model has following benefits. Babcock presents that for a set-up of n nodes, only n - 1 routes are needed to connect all nodes; that is, the upper bound is n - 1, and the complexity is O (n). This compares favorably to the (n (n - 1))/2 routes, or O (n2) that would be required to connect each node to every other node in a point-to-point network. In Babcock terms “complicated operations such as package sorting and accounting, can be carried out at the hub, rather than at every node whilst on the other end spokes are simple and new ones can be created easily” “Customers may find the network more intuitive. Scheduling is convenient for them since there are few routes, with frequent service.” Adds Babcock. On the other end Lawrence H (2004) presents the following as the drawbacks of the hub and spoke model He further adds that route scheduling is complicated for the network operator. Scarce resources must be used carefully to avoid starving the hub while stating that careful traffic analysis and precise timing are required to keep the hub operating efficiently. “The hub constitutes a bottleneck in the network. Total cargo capacity of the network is limited by the hubs capacity. Delays at the hub (caused, for example, by bad weather conditions) can result in delays throughout the network. Delays at a spoke (from mechanical problems with an airplane, for example) can also affect the network.” adds Lawrence. Supply Chain Companies Dependence On Customers and their interdependence Contributions by Goran Svensson (2002) have spawned insights in the manner in which there exists a form dependency between business entities in supply networks that results in need for collaboration and coordination between business organisations. The collaborations are perceived to strategically facilitate the achievement of internal and in other instances, mutual goals. Svensson quotes Lambert et al (1998) who articulate that supply chain is a cobweb of entities engrossed through upstream as well as down stream connections in the different methods and activities that generate value in form of products and services for the ultimate target, the consumer. The levels of relationship that exist between supply chain companies and suppliers as well as customers as outlined by Svensson are susceptible to aspects such as unique products , restricted supplier sourcing and nominal internal inventory buffers. These may also be complimented by high level of outsourcing. On the other the level of time relationship reliance are perceivably triggered by factors like nominal levels of customers, few products and limited markets as well as low outbound inventory cushions. Many researches have dwelt almost invariably so on the ways in which business organisations supply chain networks rely heavily on their suppliers and customers. As such the emphasized focus on the dimensions of company-customer and supplier relations has led to the neglect of the needed researches and explorations of dynamics pertaining to the manner in which businesses depend over each other in the entirety of the supply chain business activity. Svensson notes that in quest for survival among other reasons that include keeping cost-effectiveness as well as protecting favorable profitability margins; the supply chain companies have adopted lean inbound internal and external supplies linkages. He cites in the companies desire to reduce inventories and the number of suppliers while upping their outsourcing of in-house activities to external suppliers. These have seen a surge in proportions of supply chain companies’ interdependencies. This has inturn increased the vulnerability proportions of the supply chain companies relying heavily on the dimensions of interdependence. The domains of supply chain have experienced invaluable contributions of Svensson. The scholar has been the first to assemble a conceptual paradigm to asses the dynamics of vulnerability relating to companies that inter-depend on each other in supply chain networks. His model constitutes three key elements which are; Source of disturbance Category of disturbance Type of logistics flow The first aspect of source of disturbance is dissected into two categories which are termed the atomistic and holistic sources of disturbance. The second element of category disturbance is split into the qualitative and quantitative disturbances classifications. On the other end the third aspect brings into perspective varying kinds of logistics courses in the aspects of their complexity, material buffers as well as components. UPS and Toll are largely leveraging on their vast and expanse clientele networks and have both nominal levels of company interdependence as well customer and supplier dependence. Toll Australia and UPS are two logistics company giants plying the Melbourne Australia market. The companies have totally different operational designs and models despite the fact that the two entities are involved in the same trade and industry. The companies have tapped in the merits of information technology among SCM enhancements to enhance efficiency and effectiveness for their expanse global networks. Explorations of contemporary SCM will not be complete without recognition the sterling contribution of these the logistics services giants. References Babcock, B. A., 2002, Making Sense of Cities: A Geographical Survey, London: Arnold, pp. 63–94. Harland T, Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, Edward Elgar Publishing, 2006 Chen V, Factory Physics: Foundations of Manufacturing Management, Irwin, McGraw-Hill, 1996. Coyle, Langley, Gibson, Novack, Bardi , A Logistics Perspective, 8th edition, South-Western, Mason, OH, 2008 Lawrence, H., 2004, "Aviation and the Role of Government", pp. 227-230. Markusen, A., 1996, "Sticky Places in Slippery Space: A Typology of Industrial Districts", in Economic Geography, 72: 293–313 N. Viswanadham. Analysis of Manufacturing Enterprises. Kluwer Academic Publishers, 2000. R.B. Handfield and E.L. Nochols, Jr. Introduction to Supply Chain Management. Prentice Hall, 1999. Goran Svensson, A typology of vulnerability scenarios towards suppliers and customers in supplies and customers in supply chains based upon perceived time and relationship dependencies, International Journal of Physical Distribution & Logistics Management; ABI/INFORM Global,2002 Sridhar Tayur, Ram Ganeshan, Michael Magazine (editors). Quantitative Models for Supply Chain Management. Kluwer Academic Publishers, 1999. Read More