Global Supply Chain Management of Distinctive Book Company - Essay Example

Global Supply Chain Management of Distinctive Book Company Introduction Let us put it this way that I have been employed by the Distinctive Book Company to investigate the issues of sourcing and selling their books on the web as well as through their existing bookstores. Without a second thought, they know that there is potential to improve the supply chain of their business. In fairness to them, they are also aware that without a full understanding of the opportunities and risks they could implement inappropriate solutions. This paper therefore tries to investigate the issues of introducing a web presence to sourcing, marketing and supplying books to the Distinctive Book Company’s customers. This paper presents the probable strategic, tactical and operational issues of improving the global supply chain of Distinctive Book Company. Thus, part of addressing the objectives of Distinctive Book Company is the consideration of global supply chain strategies that can be of great help to the company’s business to: Improve efficiency Maintain or improve quality of service Manage supply chain risk Address supply chain issues that would come out from sourcing products through to sale and distribution of products to the company’s customers. This includes issues such as procurement, inventory management, warehousing management and strategic partnerships and others. However, part of addressing the problem or main objective of Distinctive Book Company, it is worthwhile to know the following: The business they are trying to achieve Their current position or status The supply chain strategies that they might consider that would allow them to reach their goals. The implications of strategies that might be identified The relationship between the supply chain strategies These are all the information discussed in this paper. Analysis The goal of Distinctive Book Company is to exploit a wider and more global market. This sounds very possible considering that the company offers standard number of books including business books. Considering that the company has expertise in sourcing unusual and rare books from around the world to their customers, this alone makes them unique among any other independent bookstores on the high street of a number of UK cities. Thus, they can offer excellent, reliable and fast service to their customers. However, their expertise in a small scale market is not yet tested in the international market. This means that they have to ensure that their strategies are properly planned and implemented to ensure the achievement of their objectives. This means that various points need to be considered at hand. One of the main issues that they need to focus among any other is their supply chain. This is to simply put it that they need to come up with a supply chain management that at least somewhere near excellent condition. This sounds much better for a start considering that the Distinctive Book Company is a new entrant in the international market. Part of the supply chain management of the company is to evaluate some supply chain strategies that can be of great help to the company’s business to improve efficiency, maintain or improve quality of service, manage supply chain risk and address supply chain issues that would come out from sourcing products through to sale and distribution of products to the company’s customers. Without any question, the Distinctive Book Company is partly ready for global competition. Thus, they must first be ready to face the current trend in global competition. According to Jespersen and Larsen (2005), companies compete in an environment where there is global competition which makes them faster, better and cheaper. The following such as faster, better and cheaper are considerable marketing proposition concepts of every international company. Based on these concepts, it is implied that every company that took plunged in the international market was challenged to strategise to the extent they became faster, better and cheaper. In this case alone, Jespersen and Larsen (2005) believed that the supply chain management is an important management tool and competitive parameter for many companies challenging themselves to go global. Understanding supply chain management requires a basic understanding of the supply chain. The goal of supply chain is to meet customer’s needs and expectations in a cost-efficient way (Jespersen and Larsen. 2005). According to Jespersen and Larsen (2005), under the goal of supply chain are order cycle time, production lead time, rate of turnover, on-time delivery and availability of the product. According to Long (2003), supply chain can be companies or entities in the firm that supply the others. Long (2003) cited Henry Ford who bought his supply chain within his company but resulted to inefficient group that will soon reach disintegration. According to Long (2003), the practical way is that companies need to specialise on their core competencies and buy from others what they do best. Hugos (2006) defined supply chain as the alignment of firms that have products or services for the market. These firms involved not only manufacturer and supplies but as well as transporters, warehouses, retailers and customers. In other words, the supply chain is a network of facilities and distribution options in which the role is to do procurement of materials to transform them into finished products and finally distributing them to the customers. Cohen and Roussel (2005) presented three network models; these are global model, regional model and country model. It is the interest of this paper to know more about the global model considering that the Distinctive Book Company is considering the opportunity to go global. The supply chain in general is a center of activity for every firm which one of the functions is trying to create an efficient way of distributing products and services to customers or end users. As mentioned earlier, the Distinctive Book Company is trying to go global and there is a consideration of using the web to increase efficiency of sourcing of materials and product distribution. In fact, in today’s age of advanced technology, the web can be a reliable tool to be used in the promotion of products and services. According to Luther (2001), it makes distribution possible in a large scale with fewer expenses compared to any other marketing tool. However, Luther (2001) added that there are remarkable disadvantages in using the internet. According to him, getting noticed and be commented on are major drawbacks of using the internet. These drawbacks alone are one of the most important considerations that the Distinctive Book Company should think about. The strategy now will try to focus on eliminating the bad effects brought by the disadvantages of using the internet. This prevents unnecessary costs and expenses that will try to influence the level of efficiency of the flow of products from the supplier to the customers. After all, the cost is measurable and that is why it is important to try to take a look closely at production and distribution of products. In terms of production, according to Cohen and Roussel (2005) the global model network considered manufacturing of a given product line in a certain location for the global market. The goal of this is to ensure connection between manufacturing and research and development, control unit manufacturing costs of products that are capital-intensive and the need to use high and specialise manufacturing skills. From this concept alone, the Distinctive Book Company can now have the general picture of idea on how they can improve efficiency, maintain or improve quality of service, manage supply risk and address some supply chain issues. There is not so much concern of production for the Distinctive Book Company, but outsourcing is a major area of concern. This suggests that the company has to go strategic actions other than within the bound of production. The idea is clear that the company has to give considerable amount of effort for supply chain management. Many definitions are given for supply chain management and some of them centered on relationships management as way to reach positive results for the members in the supply chain and the customer (Jespersen and Larsen, 2005). This means that customer service and relationship building is the bottom line of ensuring supply chain management. Jespersen and Larsen (2005) believed that the supply chain management is a management concept that helps a business see and manage cooperation in the supply chain. Mentzer et al (2001) explicated that the supply chain management is primarily for improving long-term performance of a company and supply chain as a whole. They believed that it is a systematic, strategic coordination of the business functions and tactics within the supply chain. Long (2003) presented that the supply chain management is the combination of key business processes involving the end users and suppliers that provide products, services and information. Through supply chain management, the links are integrated to come up with efficiency. According to Long (2003), another term for supply chain management is supply chain integration which is important because a well-integrated supply chains can improve company processes and superior customer value. According to Hugos (2006), supply chain management is about doing things to influence the behavior of the supply chain to come up with desirable results. To put it into another words, it is about coordination of production, inventory, location and transportation among the participants in a supply chain to achieve better results. What makes the supply chain management an important subject in the case of Distinctive Book Company is about the inclusion of distribution of supplies and prducts. It is important to ensure that the products should be readily available in the event of purchase. In this regard, the presence of web can be a substantial contributing factor of the distribution strategy, even though the actual achievement of products may take time considering delivery may take time. However, the length of time may be shortened by adapting some global market entry strategies. Since this is about global supply chain, it is also important to discuss the global market entry strategies. According to Kerin et al (2004), once a company chose to enter a global marketplace, it must now choose means of market entry. According to them there are four options available and these are exporting, licensing, joint venture and direct investment. In exporting, the companies can make the least number of changes on its products, organization and corporate goals. In licensing, there are some serious drawbacks such as the licensor gives up control over his or her products. Some licensee can modify the product at the expense of those who started it. There is also considerable evidence to suggest that the name of the company may be harmed. Franchising is the variation of licensing. Joint venture is a chance of local and foreign companies to join together. The good things about this first, one company may not need to have financial, physical or managerial resources to enter a foreign market alone. Second, a government may strongly recommend a joint venture before a certain foreign company can enter to a market. However, the companies may disagree on policies for joint ventures or governmental bureaucracy may be influential. The other form is direct investment which outweighs the risks and high financial commitments. Direct investment is investing and owning a foreign subsidiary. The advantages involve cost savings, better understanding of local market conditions and fewer local conditions. The point of this is for the Distinctive Book Company to be able to find ideas that in order to penetrate successfully in the global market, it has to take into consideration its amount of financial commitment, risks and marketing control by applying at least one of the alternative global market-entry strategies mentioned by Kerin et al (2004). For instance, when a customer ordered a certain book online somewhere, the joint venture may prove valuable considering that the product can be readily available for delivery at short period of time. Thus, increasing the level of customer satisfaction at some point. This is exactly true in the case of Joint Ventures for instance. The profit potential in this type of global market-entry strategy is high since the principle suggests on-time or fast delivery of products and services. This improves customer satisfaction and eventually development of higher level of customer relationship. However, the firm’s financial commitment, risks and marketing control may be too high as well in the Joint Ventures. Thus, it is on the initiative and strategic approach of Distinctive Book Company to consider evaluating the best alternative global market-entry strategy to ensure profit potential and manageable financial commitment, risks and marketing control. Figure 1. Alternative Global market-entry strategies (Kerin et al., 2004) Higher                 Profit Potential                               Lower Exporting Licensing Joint Ventures Direct Investment   Least Amount of a firm's financial commitment, risks and marketing control Worst Lymbersky (2008), presented strategies that can be used in global market entry strategy. These are home replication strategy, global strategy, multi-domestic strategy and transnational strategy. The strategic approach presented by Lymbersky (2008) may prove to be of great importance if combined with at least one of global market-entry strategies mentioned by Kerin et al (2004). For instance, the framework of trade-off between Global efficiency and flexibility if it will be closely scrutinised is somehow related to identification of profit potential and the amount of firm’s financial commitment, risks and marketing control. Thus, this is to simply put in simple terms that the goal of Distinctive Book Company should reach high global efficiency with high flexibility of course. In this regard, it is very important to consider the transnational strategy. However, as pointed out by Lymbersky (2008), it may also be possible to combine one or two strategies. It can be noted that the Distinctive Book Company wants to go global. However, it can be possible that it applies transnational strategies as it continues to operate in a global setting. This is to ensure its higher global efficiency and flexibility. Not only that, in consideration of the global efficiency, it is the integral part to consider profit potential and the business’ financial commitment, risks and marketing control. Figure 2. Trade-off between Global Efficiency and Flexibility (Lymbersky, 2008) High     Global Efficiency Global Strategy Transnational Strategy Home Replication Strategy Multi-domestic Strategy   Low Flexibility High It can be noticed that the Distinctive Book Company supplies only one single type of products, books of various and distinctive type. According to Robert (1998), a company that is product-driven is one with singular product that in the future will be subjected to modifications, adaptations or extensions of current product. In a product-driven company, the past, present and future products are interrelated. This is to simply put it that another strategy that can be possible for Distinctive Book Company is to strengthen its being a product-driven company. This means that it has to improve its outsourcing of new innovative products and services to stand out in the long run. It has already started its unique sourcing of distinctive books in the United Kingdom. Applying the same concept in the international market may never be that hard with the aid of web presence and other mentioned global market-entry strategies. Gorchels (2006) presented different strategies for existing products such as revitalization, maintenance and liquidation. According to Gorchels (2006), most products will die if they are not reinvented along with the market changes. This means that some sort of innovation is needed as one of the most important product strategies. The point here is to ensure that customers have something to use in line with their current need and demand. In the case of Distinctive Book Company, the innovation of products may be in a form of its sourcing of highly distinctive supplies. This can gain public interest that may trigger purchase at some point. The bottom line of this is a highly ensured little to risk-free system in the supply chain. Morse (1998) was able to present guide on developing product plan especially related to marketing mix. It was emphasized to examine the current system of the company adapted for product distribution. The following are guidelines presented: 1. The purpose of link between the manufactured product or service and the potential customer. 2. Objectives of the channel which may include objectives for costs, through put sales and customer satisfaction. 3. The cost, gross and net margins in the distribution process. 4. Checking if the distributors have advantage of a monopoly or semi-monopoly position in standard prices and dominant geographical position. 5. Checking if other distribution system can be applied. 6. Cost of the current system of distribution. This includes working capital required to finance stocks, cost of technical and training support to distributors and cost of direct customer service. 7. Knowing or evaluating the distance to the client, customer or consumer. This include to finding out if there is concentration of users and retail outlet and if direct sell can be applied. It is also important to find out if the distribution needs to provide service or can it be done directly by the company itself. Finally, it is also important to know if the distributor can handle the need for credit. It cannot be denied that the above guidelines are what would help and ensure Distinctive Book Company to successfully implement its plans and goals to expand wider and go global in operation. The above guidelines are clearly what will help the company to survive in the midst of adapting global strategy. It can be noticed that one of the most important benefits in the guidelines is the considerable savings on costs and expenses. The idea of web presence therefore is an advantage as agreed by Luther (2001). However, in the case of Distinctive Book Company, it is clear that the considerable amount of savings will just only be realised if the company would be willing to adapt some global market-entry strategies in which the overall goal is to achieve potential profit and global efficiency. It is clear that one of the bottom lines in supply chain management is customer satisfaction. Thus, it is very important to satisfy customers with the value of the product and the quality of service. Thus, it is safe to say that one of the best strategies of Distinctive Book Company can be customer key management program. According to Cohen and Roussell (2005) not all customers warrant the same level of service that is why they presented more strategic approaches in dealing with customer complaints and other related concerns. Cohen and Roussell (2005) simply presented the fact that customer key management program is very essential to every companies trying to obtain significant market share. Another important strategic approach that the Distinctive Book Company can do is to systematically check its capacity under its vision. According to Cohen and Roussell (2005), the core strategic vision clarifies the answer to key business strategy operations such as: 1. Finding the overall objectives 2. The value delivered to the customers 3. The differentiation of company in the marketplace It is very important to do this systematic approach because it enables company to evaluate its performance in both external and internal aspects. In the internal aspects, the company needs to check its core competencies, its key business policies and financial goals. These are all specific areas that somehow the overall objectives are set. On the other hand, the external aspect deals with checking the market size and competition, customer requirements and competitive situation. This strategic approach can be well said as entirely market-oriented approach. Thus, this means that the global supply chain management at some point can be totally integrated with successful marketing activities. Figure 3. Boundary conditions of the core strategic vision (Cohen and Roussell, 2005) Market size and competition Customer requirements Competitive situation External - - - - - - - Core strategic vision - - - - - - - Internal Core competencies Key business policies Financial goals Conclusions There are various strategies that the Distinctive Book Company can apply to improve its efficiency, maintain or improve quality of service, manage supply chain risk and address supply chain issues. However, there is one thing that is clear, that another effective approach to achieve its goals is to manage its supply chain in a global setting by being involved in some of the global market-entry strategies. This can be further enhanced and even made faster and systematic with the web presence. On the other hand, systematic approach of evaluation of the company’s core strategic vision may be worth it as it can be integrated with successful marketing activities. References Cohen, S. and Roussel, J. (2005) ‘Strategic Supply Chain Management: The 5 disciplines for top performance’. USA: McGraw-Hill Companies. Gorchels, L. (2006) ‘The Products Manager’s Handbook’. 3rd ed. USA: McGraw-Hill. Hugos, M. (2006) ‘Essentials of Supply Chain Management’. 2nd ed. New Jersey: John Wiley and Sons, Inc. Jespersen, B. G. and Larsen, T. G. (2005) ‘Supply Chain Management: in Theory and Practice’. Denmark: Copenhagen Business School Press. Kerin, R. A., Hartley, S. W. and Rudelius, W. (2004) ‘Marketing: The Core’. USA: McGraw Hill. Long, D. (2003) ‘International Logistics: Global Supply Chain Management’. USA: Kluwer Academic Publishers. Lymbersky, C. (2008) ‘Market Entry Strategies: Text, Cases and Readings in Market Entry Managemen’. 1st ed. Germany: Management Laboratory Press. Mentzer, D. et al. (2001) ‘Defining Supply Chain Management’, Journal of Business Logistics, 22 (2), p.18. Morse, S. (1998) ‘Successful Product Management’. 2nd ed. Great Britain: Kogan Page Ltd. Robert, M. (1998) ‘Strategy II: Pure & Simple, How Winning Companies Dominate Their Competitors’. USA: McGraw-Hill. Read More