E-Supply and Its Influence on Supply Chain Strategy - Coursework Example

E Supply and its Influence on Supply Chain Strategy Supply chain management is the management of the goods and services from the manufacturer to the end user, whether the goods and services are in raw form, semi processed form or finished goods form. This supply chain might not necessarily move from the manufacturer to the end user, they can also move from manufacturer to manufacturer where the supply chain is named B2B and in the case of reaching the end user and consumer ultimately, it is named B2C. (Lysons & Gillingham, 2003) It has to be efficiently planned in advance, implemented with the right techniques and methods and then certain control measures always need to be in place for the supply chain management to be successful in delivering the goods to the customer. Logistics is a word which is often associated with supply chain management but logistics is only the physical movement of goods and therefore, should not be used interchangeable with supply chain management, which can be virtual as well. (Christopher, 1998) E-Supply E-supply refers to electronic supply, that is the supply chain does not work in real, rather it works in electronic terms and the company has to take extra care in this scenario because lots of frauds and defaults can take place electronically (Christopher, 1998). It just takes a computer genius to alter the course of the supply chain management which is taking place online. Apart from that, electronic supply of goods and services is usually done on two levels as well, whether it is business to business or business to consumer. In both cases, the company needs to give human capital and strategic planning to the process to ensure that higher efficiencies are achieved and that global sourcing becomes a success in this case. Global Sourcing Introduction: When it comes to supply chain management, there are many sub sectors like the global sourcing. Global sourcing is all about using sourcing in such a way which enables the company to succeed in a setting which operates in the whole world and where the company does not operate in an independent environment, rather it is highly dependent upon others in the economy and world, and thus it needs to plan out its distribution and procurement in such a strategic way which allows the company to get a competitive advantage of the company over others. (Harrison & Hoek, 2002) When the world is operating in an open economy, therefore there is always the factor of comparative advantage among nations. Nations which specialize in producing a certain product then use their efficiency of theirs to sell it to other nations who are deprived of it and thus make greater profits and more revenues, thus helping either the countries in one way or the other. When it comes to procurement strategy, the company has to get the best for their goods and services, whether it is the raw material which is invested into the goods and the high technology used for making the goods. But usually, any country cannot produce these products themselves and thus has to do efficient procurement, so that it will be low cost for themselves and higher quality. Usually a country does not have cheap labour and therefore, the whole world market is open for the country, enabling it to scan the environment and procure cheap labour for the manufacture of its goods so as to save costs and yet give the best quality of goods. For example, the famous shoe company Nike, started outsourcing its procurement of manufacturer of their popular shoes from outside of their point of location. (Slack et al., 2002). This type of outsourcing where low cost labour is searched for by the country is called low-cost country sourcing, but global sourcing is not only limited only to low-cost countries, it can be for other aspects as well. In global sourcing, the company has a centralized procurement strategy, where the organization is doing economies of scale and it does standardization so that all its goods and services are of the same standard. The company sets a benchmark, and then works hard to achieve that benchmark so that the company can reach a level of efficiency through available global outsourcing to the maximum. It is all about proactively coordinating all the common goods that the company produces in such a fashion which enables the company to minimize its cost to the minimum possible and take maximum advantage of global sourcing. The company which practices global sourcing is not reactive, rather it is proactive. Such companies do not react after other companies have already taken the initiative, rather they plan ahead of time and be the first to take a scan of the whole world and fish out for the best resources for absolutely every good they need for their products. (Harrison & Hoek, 2002) Integration is done of various things like the common items of use, the materials used in the company, the specific processes through which the work is done, the designs that the company specializes in or has possibly made its USP, the technologies that the company is using to save time, cost and energy or simply the suppliers that it is using on a regular basis to provide it with various tools and techniques. (Harrison & Hoek, 2002) Advantages of Global Sourcing: The company can have various other advantages apart from minimizing its cost. One of the possible advantages is that a company gets to learn how to do business in a foreign market. The company will learn the ways and methods that it will have to use if it wants to operate in a potential market that has come as a result of the economy scan. The world is becoming a global village and interdependence of company over each other is increasing immensely and thus companies need to be efficient in getting out of their comfortable zones and see other available markets and strive competition not just in domestic, but in international markets. Every company will get to learn something or the other from other markets, provided that the culture and style of living of every country is different from each other. (Harrison & Hoek, 2002) Moreover, even if the resources and the skills that the company requires to do good business is not cheaply available elsewhere but the point to focus on is that it is not domestically available at all. Therefore, in such a case, it is better to acquire skills and resources through global sourcing rather than using the low quality resources or undeveloped skills in ones own country. Let us take the instance of India. In India, the level of education is very low and you seldom find highly literate people who can talk to others and answer their queries. Thus, on a country level, India has used global sourcing and acquired low-cost English speaking people to work in their call centers. (Harrison & Hoek, 2002) Apart from that, it is important for a company not to give the upper edge to any of their suppliers, just because, in the longer run, this will be dangerous for the company. if the supplier gets the upper edge, he will be fully able to exploit the company in any direction that they want, thus raising the cost whenever they want to, leaving the company with no choice but to accept the terms that are being offered by the supplier. Thus, when a company practices global sourcing, this problems gets taken care of. The company then has his horizons open, because the whole world is a potential market now. Domestic suppliers will loose the upper edge and thus the company will have a better say in deciding who gets to supply materials, goods and other services to them. Suppliers feel the risk and they know that the competition is getting stiffer, thus enabling them to give the best deals to the company, mostly which are in favour of the company. it is a known fact that competition always ends up into bettering the functionality and productivity of companies, because every player in the market is bent upon gaining an edge over the others and becoming the market leader. (Harrison & Hoek, 2002) Disadvantages: There can be various disadvantages of global sourcing. When a company widens its horizons and moves out into the international market, there is always the danger of other old players of the market exploiting the company. This and many other risks are involved when a company does global sourcing. (Harrison & Hoek, 2002) Firstly, there are many indirect costs when the company goes into other country which has an altogether different culture and a time zone as well (Schroeder, 2002). Managers from the company have to be trained in such a way that they can handle the foreign handlings of the company in an efficient and effective manner. Differences in cultures can lead to many communication gaps, which will ultimately hinder the efficient growth and success of global sourcing. For example some cultures are more dependent on context related language and non verbal communication, whereas other cultures are less dependent on the context that surrounds them and they believe in explicitly saying it all, without using non-verbal communication for major purposes. Thus, managers need to be really careful while they are giving presentations in such cultures and need to adjust their lifestyles according to the time zone that exists in that environment. (Harrison & Hoek, 2002) Secondly, the company easily gets exposed to various risks, be it be financial or political risks (Schroeder, 2002). These types of risks become more prominent when the company is operating in a third world or developing country, where the economy is emerging on an unsure rate and the economy is highly unstable. The company might invest a lot in the doing global outsourcing in a particular country, but if deflation occurs in the country or inflation for that matter, the company will be at a disadvantage because it will lose its worth for money and might have to put extra efforts to emerge in these unsure circumstances. Thirdly, a company owns the intellectual property, which consist of human capital and the intelligence that they possess (Schroeder, 2002). The human resource of a company is always incoming and outgoing, but a company always tries that the intellectual capital which is possessed by this human capital is preserved by the company some way or the other, so that the company can build on it and then move on to brighter avenues, leaving the rest behind. When a company does global outsourcing, it is outsourcing the processes that usually its own labour would have done. But now it is being done by outside sources and thus the company is not making or building on its intellectual property at all, which is a very important asset for the company but has an increased risk of the loss of intellectual property. Moreover, when a company has outsourced, it has to start doing efficient logistics management, because most of its goods are coming from an outside source and thus it is the company’s responsibility to carry the deal from their onwards and ensure efficient distribution. Thus, high amounts of monitoring and human capital would be required to do this part for the company. Human resources will have to be trained, who will have the knowledge of the routes and countries with which associations have been made. Domestic supply will have to be really efficient and effective so that the cost which is saved in global sourcing is not lost due to ineffective monitoring of domestic supply. Conclusion In conclusion, it can be said that supply chain management is one of the crucial parts of this whole society. This is because, if a proper supply chain ceases to exist, then the responsibilities of delivering the good will lie only on the manufacturer who makes it and therefore, he would not be able to focus on making the good a quality one or improving it as time passes. He would be already too preoccupied with handling the distribution and storage aspect of his good so that it reaches its consumers the way he has promised it. Therefore, supply chain is a great way of reducing the workload of the manufacturer and a way of providing the good with the best treatment possible in every aspect, be it be storage, handling, distribution or delivery. References Lysons K and Gillingham M. (2003). Purchasing and Supply Chain Strategy, Prentice Hall Harrison A and Van Hoek R (2002). Logistics Management and Strategy, Prentice Hall Christopher M (1998). Logistics and Supply Chain Management, Prentice Hall Slack N, Chambers S, Harland C, Harrison An and Johnson R, (2002). Operations Management, Pitman Publishing Schroeder R (2002). Operations Management Contemporary concepts and cases, Irwin McGraw Hill.  Read More