Challenges of Selecting a Supply Strategy in Project Environments - Essay Example

Article Review: Challenges of Selecting a Supply Strategy in Project Environments al Affiliation) Article Review: Challenges of Selecting a Supply Strategy in Project Environments Summary This Article posits that in a project environment, many firms face the dilemma of deciding whether to adopt either an agile supply management approach or a lean one. The basis of selecting an approach to supply management is based on whether the product offering is innovative or functional (Liu, 2007). An innovative product offering is characterised by high variety of goods, short life cycle of products as well as unpredictable demand for the products. On the other hand, functional product offering is characterised by low variety of products in the market, long life cycle of products and predictable demand. The article, however, argues against these approaches, arguing that they do not help in one-off, complex environments like in construction or shipbuilding (Ullrich, 2014). The main reason provided in the article is that such projects need a combination of many divergent, largely functional products configured in an innovative and unique manner. The paper selects the example of shipbuilding to argue its case. Key Learning Points One of the main learning points is the way in which extended supply chains and individual suppliers may be managed in a more proactive manner so that they deliver better performance in the quality of the product, the time of the cycle, responsiveness or flexibility as well as the cost (Seuring, 2013). The most recognized philosophies in supply chain management are Lean Thinking and Agile thinking (Liu, 2007). Lean thinking is in most cases associated with vendor and manufacturing managed inventory namely just-in-time (JIT) and total quality management, also known as TQM. On the other hand, agile thinking involves mass customization and flexible manufacturing (Hugos, 2003). A central preoccupation decides the most appropriate instance to adopt either one of the strategies, or combine them both into one custom strategy referred to as a ‘leagile’ strategy. While the article recognizes the contribution made by several contributors to the topic, Fisher’s contribution stands out because it offers the conceptual foundation for the building of similar supply strategy models (Cantor & Macdonald, 2009). Essentially, he argues in his contribution that the firm’s nature of product offering should determine the most appropriate supply management posture. The main issue, however, is the context in which the testing of these approaches occurs, especially in Fisher’s case (Seuring, 2013). What should be considered, according to this article, is the usefulness of the models in the generation of advice for the management for supply chains for a one-off or a low volume project environment as well as the applicability of the different models to chains of supply servicing business or organizational demand (Cantor & Macdonald, 2009).. Relevant Statements The first essential and relevant statement according to the article is that functional products applied in a one-off complex project environment have a pattern of demand that can be predicted. The second relevant statement is that the use of lean techniques in managing supply chains that deliver functional products to one-off, complex projects is appropriate (Bowersox, Closs & Cooper, 2007). Critical Analysis From the author’s findings in the case study, several issues come up. To begin with, both the build and design schedule are incomplete. Ongoing change can affect them. The fact that a ship builder can commence the building part with completion of only 35-40% of the entire design effort leads to a ship building company to alter its demand for products so that its employees operate at full capacity. This, in turn, causes uncertainties in demand for the different components used in the creation of the vessel. The demand for electrical cables, for instance, is unpredictable, owing to the fact that the product has a long cycle and attracts low profit margins because of the level of competition in the industry. Coupled by the margin of error and he significant lead times for such products, demand for such products and their supply are adversely affected (Ullrich, 2014). In addition to that, the quality of communication between engineering, design, procurement functions, materials management and production planning and their degree of interactivity are spasmodic and limited (Rust, 2013). The company under study in the article adopts two major criteria for performance, which it regards as crucial in the selection of suppliers in this particular category of products. The first performance criterion is the cost. This is surprising, considering that electric cables are highly functional. The standard practice for procurement at the organization under study is competitive tendering separately for every ship then later awarding a firm price contract to the selected supplier, usually the lowest bidder. The second criterion that the shipbuilding company adopts is the ability of the cable supplier to meet the set delivery targets (Hugos, 2003). Of notable importance in this criterion is the time of delivery. The organization tends to avoid early supplies, since they attract inventory management and storage costs. They also delayed deliveries because of its effect on the operations of the organization (Liu, 2007). From the findings, a reasonable assumption is that the organization needs to implement a more coordinated and proactive management approach to improve the supply chain performance. Practical implications The analysis to the approach adopted by the organization under study in the article shows several implications. First, every supply management chain needs to reduce the level of uncertainty surrounding the time of deliveries (Bowersox, Closs & Cooper, 2007). The implication of this to the management is for them to note that a certain degree of uncertainty will always exist as they continue to demand functional products. This has the effect of diverting the mind-set of the management beyond the common lines of distribution and production towards the potential for reducing total acquisition costs (Seuring, 2013). Further, management should consider the adoption of both lean and agile (leagile) strategies. However, to undertake this course, it is imperative to determine a decoupling point between the two strategies (Liu, 2007). Learning Reflections One main weakness of this article is its focus on a single company and one supply chain. Therefore, it is impractical to apply the deductions from this research work. However, the article highlights important points that contribute to the need for the improvement of a supply chain in the document. It further explains the supply chain approaches and the instances where they apply best in the article, making it easier to understand the reasons for the testing of both approaches in the case study. The article adequately addresses the importance of cost reduction in procurement (Rust, 2013). References Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2007). Supply chain logistics management (2nd ed.). Boston, Mass.: McGraw-Hill/Irwin. Cantor, D. E., & Macdonald, J. R. (2009). Decision-making in the supply chain: Examining problem solving approaches and information availability. Journal of Operations Management, 27(3), 220-232. Hugos, M. H. (2003). Essentials of supply chain management. Hoboken, N.J.: John Wiley & Sons. Rust, T. (2013). Dynamic Analysis of Healthcare Service Delivery: Application of Lean and Agile Concepts. Worcester, Mass.: Worcester Polytechnic Institute. Seuring, S. (2013). A review of modeling approaches for sustainable supply chain management. Decision Support Systems, 54(4), 1513-1520. Liu, W. (2007). Supply chain management: Lean and agile approaches unit student guide Di 1 ban. ed.). (2007). Beijing Shi: Zhongguo shi dai jing ji chu ban she. Ullrich, C. A. (2014). Issues in supply chain scheduling and contracting. Wiesbaden: Springer Gabler. Read More