The Chain Management or Sourcing as the Most Researched Segments of the Modern Business - Research Paper Example

 Introduction It is rightly observed by the industry that the word ‘change’ is the only constant word in the present world of today. The massive developments in the arena of information technology along with the communication process have significantly impacted the terms and the tricks of the trade. The influential factors like that of globalisation have made the world a small place to live in. The factor of globalisation has almost made the international geographical borders non – existent as companies from one country have their units (not just selling fronts but also manufacturing and production facilities) in foreign lands. The revolution of internet has made the process all the more simple as the consumer does not require to visit the shopping outlet anymore as the transaction is possible only with few clicks of the mouse. The major beneficiary of such developed process has been the end – customers. Even the companies or the business houses have induced the modern methods of procurement within their system as it results in saving of the scarce resources. In this regard, it can be said without much hesitation that the supply chain management of the big corporates and the reputed brands have undergone total transformation in order to involve the modern methods of supply chain management. The other very important aspect in this regard has been the factor of sustainability. In order to face the dynamic business environment of today that is changing constantly, the business organizations need to be flexible and adaptable with the external and internal changes. The flexibility and the adaptability can be inculcated with ease if the business model followed by the organization is sustainable and environment friendly. Supply Chain Management Supply chain management basically comprises of the process through which the business organization procures materials from the supplier’s side. In other words, supply chain management involves the processes like that of procurement, internal operation and even the research and development of the targeted product. Supply chain management also involves the influence that logistic beholds upon the process of procuring material from the supplier to the own storage of the business organization. There is no doubt that supply chain management is one of the most important activities of any organization as it is the starting activity of the organization. Wailgum had discussed the various process of supply chain management long back and the steps included: Planning – Planning is the most integral part of any methodology. It is the measure of planning that sets the tempo and the direction for achievement of the objectives and the goals. With regards to supply chain management, planning is very important because to make the entire process sustainable that would help the measure to remain active for a long period of time, high quality goods are to be delivered at the lowest prices. In simple words, there has to be optimal pricing. Source – The major hindrance that the supply chain management faces is that the sources and the procurement details of the suppliers of any company are essentially external. The business organization, therefore, should ensure that there is a clear and concise monitoring system in place so that the materials that come in to the company possess minimum deviation from the standard product. Make – After the material has arrived in the company, the step involves manufacturing of the process. This is the most important part and certain order specifications are to be followed by the organization in the process of making the product and again sending those in to the delivery process and ultimately delivering the assignment. Delivery –Delivery, according to the Wailgum, is the method that has facilitates the transfer of the product prepared by the organization to the high value customers. Similarly, in case of business to business deals, the delivery of the supply chain management is important as the supplying vendors send the business organisation the ordered material which needs to be user friendly as well as environment friendly. Return – Returns hold the last major steps that complete the process of supply chain management. The goods one sold to the customers can be returned if it does not fit their purpose. Similarly, the returned goods can be sent to the suppliers as they must have not followed the order specification in the truest sense. (Wailgum, n.d.). Literature Review It has been discussed till now that supply chain management is one of the building blocks for the success of any organization and the literature on the issue supports the same. In the year of 2005, Skjott-Larsen & Jespersen rightly observed that the any effective framework of supply chain management helps the business organization to understand the dynamic environment and also to find out the ways that would help the business organization to cope up with the issue (Jespersen & Skjott-Larsen, 2005). Before delving deep into the various methods of sustainable supply chain management, it is prudent to understand the perspectives that the literature of the subject possesses regarding the three categories of the supply chain management. Mentzer in 2001 viewed that the three prime categories of supply chain management include that of basic supply chain, extended supply chain and the ultimate supply chain. The basic supply chain is the simplest concept among all the three and can be instantly related with the end customer as well as the supplier as it have high provisions for upward as well as downward progresses. The extended supply chain management does not have the privilege of contacting the customer or the supplier instantly as it deals with the second line of the suppliers and the customers. The third category of the supplier chain management i.e. the ultimate supply chain management comprises of all the steps of supply chain management that are involved with the upward as well as the downward progress (Mentzer, 2001). The literature on the subject holds strong view about the requirement of the sustainable supply chain management for the benefit of the present day organizations. Formulation of Strategy In order to maintain the desired level of profitability and the influence, formulation of strategy holds prime importance to any business organization. The strategy of the organization works in tandem with the vision and mission of the organization as it finds the way out though which the business should be carried forward in order to have the planned success. But the most important aspect in the discussion of strategy of any business organization is that it not only requires planned formulation but also calls for proper implementation along with understanding of the need for the right strategy at the right time. The business organizations all across the globe have three major determining factors that plays pivotal role in planning the strategy of the organisation and they are as follows: Competence – Competence can be referred as the ability to perform a certain job or assignment. In fact, competence is the most basic thing. A person or a business organization can think of value addition only if it has the competence to complete a particular assignment. In this regard, it can be said that the business organisations can opt to have sustainable and environment friendly supply chain management only if it is competent enough to devise supply chain management within the strategy of the organization. Opportunities – Opportunities is one of the most positive and dynamic terms in the business fraternity. The opportunities, which is also an important part of the external audit – SWOT Analysis, if can be utilized duly, can take the business to the next higher level. Applying the methodologies of sustainable supply chain management, the business organization can reduce the inefficiencies of the various processes and at the same time, it helps the business to have an environment friendly look as the adaptability of the sustainable methods essentially calls for greener methods. Governance – Governance can be of two types namely internal and external. The external governance is the one that guides the business organization with the laws of the land. The internal governance basically means the corporate governance. It deals with the various aspects that the organization provides supreme importance in terms of business ethics and sustainable and environmental friendly mechanisms that ultimately provides for reduced social costs and higher profitability for the business. Sustainable Supply Chain Management The phrase, ‘Sustainable Supply Chain Management’ is one of the widely used phrases in the business framework of today all across the globe. The prime motto of having sustainable supply chain management is to have reduced social costs of the organizations and to propagate environment friendliness as today’s aware world view sustainability as the ability that helps to pacify the requirements of the present without hampering the resources for the future generations. The industry observes that the three major components of sustainability are prosperous economy, quality environment and social equity (City of Union City, 2008). But the major point in debate and contention has been that how a business organization can successfully implement sustainable supply chain management within the framework of the business. Though there are many initiatives that are undertaken by the business houses all over the world in order to implement sustainability like involving in to corporate social responsibility, going green, becoming carbon neutral or carbon positive and even methods like reducing the usage of plastic and taking active initiatives to plant trees but these factors are believed to be the outcome of the adopted agenda of sustainability. According to the New Zealand Business Council for Sustainable Development, there are five major methods that help a business organisation to obtain sustainability in the supply chain management and they are as follows: Looking at the internal process of the business organization and decide the areas that are due for improvement Identification of the supply chain management within the business process The sustainability should be made part of the business process The efforts that are undertaken should be quantified and there should be proper measurement tools that can help the business organizations to decide how can those methods can be implemented After deciding the methods of implementation, the business organizations should be able to implement the initiatives that are undertaken with respect to the supply chain management (New Zealand Business Council for Sustainable Development, 2003). Agenda 21 Agenda 21 is basically an action plan that was adopted by as many as 178 countries during the Earth Summit held in June, 1992 at Reo – Di – Janeiro of Brazil. The program was sponsored by the United Nations and was focused on the increasing adaptability among the various governments as well as non – government and business organizations of the world, any organization that has human activities. The objective of the Agenda 21 has been to provide sustainable long term development among the global citizens. The success of the Agenda 21 was its adaptability by so many nations all across the globe. The guideline of the Agenda 21 has been subdivided in to 40 chapters which are broadly classified into four main sections namely: Social and Economic Dimensions Conservation and Management of Resources for Development Strengthening the role of the Major Groups Means of Implementation United Nations Conference on Environment and Development that originally organised the Earth Summit, further created Commission on Sustainable Development in the month of December of 1992 in order to monitor the effective follow – up of Agenda 21. Also, UNCED further organised another event, World Summit in Sustainable Development, at Johannesburg in 2002 that further reaffirmed the policies that were undertaken in the Agenda 21 of the Earth Summit in 1992 (Center for a World in Balance, 2010). Few of the core areas upon which Agenda 21 delves deep into and those have greater significant in the day – to - day life of the business organizations are as follows: Reduction and elimination of the usage of the scarce resources Repeated reuse of materials that can be done so Recycling of the materials that cannot be re-used The Agenda 21 urges one to use energy efficient products Greater usage of public transport and not the private one Encourage others to inculcate similar measures Starbucks, Inc Starbucks started its journey in Seattle’s “Pike Place Market” in the year of 1971 with the service of providing coffee to restaurants and bars. After Howard Schultz started looking after the marketing & retail sectors of Starbucks in 1982, the company changes its direction as it adapted the principles of Italy in order to get a strong bar culture. Now, Starbucks Corporation is an international coffee house chain based at Seattle, Washington, United States (Hoovers, n.d.). Starbucks is the leading coffeehouse company worldwide, having 17,133 stores in 49 different nations in different parts of the world, which includes more than 11,068 stores in the United States, approximately 1,000 stores in Canada and almost 800 stores in Japan (Spatial Data Box, n.d.) Starbucks sells filtered & blended coffee, coffee based hot & cold drinks, eateries like Panini, pastry, snacks among others. Starbucks also have an entertainment division named “Hear Music brand”; and the company sells books, music and film through it. Many products of the company are seasonal and specific to the places of the store. Starbucks branded ice cream and coffee is also offered at grocery stores (Starbucks, n.d.). Sustainability at Starbucks One of the leading corporate beverage brands of the world, Starbucks have great initiatives in the segment of corporate social responsibilities. The company has five major divisions that ensure that they contribute towards the sustainable environment. The five important segments are as follows: Community – The company has undertaken numerous initiatives in the neighbourhood and the locality where the company operates. The community service inculcating the youth through the Starbucks Foundation has been major success for this brand of repute. Also, the company has contributed for fresh drinking water. Environment – Starbucks have undertaken numerous programs in order to propagate recycling, saving of energy, green building along with measures to prevent climate change and educate mass about the ill – effects of such changes. Wellness – The company states that it is dedicated towards the wellbeing of the customers as well as that of the employees and the communities. The brand provides healthy food and beverage to the valued customers and also it is supportive to the health of the employees and that of the communities. Diversity – In order to have sustainable development, the leading coffee brand provide the opportunities of learning and knowledge for the human capital so that it creates value for the stakeholders of the company. Ethical Sourcing – The company also has a through sustainable supply chain management as it states, “We’re committed to buying and serving the highest-quality, responsibly grown, ethically traded coffee to help create a better future for farmers” (Starbucks, n.d.). Sustainable Supply Chain Management at Starbucks The modern theory suggests that the issue of sustainability should not be viewed as a management problem but a management tool. It can be perfectly exemplified with the case of ethical sourcing at Starbucks. The company purchases coffee beans from the farmer that are ‘responsibly grown’ and ‘ethically traded’. For the purpose of sustainability, the company has collaborated with Conservation International. The company has wiped out the middlemen strata in between and works directly with the farmers. Starbucks has been investing quite a heavy sum in the order impart the knowledge of modern methods of growing coffee that directly relates to sustainable supply chain management. Same is applicable for tea farmers of the company too. The producers of the Tazo Teas are taken into the framework that enables improvement in the livelihood of the farmers as it has been observed that such improvement contributes toward the sustainable supply chain management. Even the policy undertaken by the management of Starbucks in order to purchase Cocoa confirms that the high – quality Cocoa can be purchased for prolonged durations which are also an active measure of sustainable supply chain management. The products that are purchased from the farmers or the producers; are processed and then are stocked up in the stores. The company claims that the entire process is sustainable and such efficient supply chain management has positively impacted the financial performance of the company along with creating a responsible image in the industry (Starbucks, n.d.). Conclusion It can be stated without any hesitation that the issue of supply chain management or sourcing has become one of the most researched and debated segments of the modern day business. With the increasing competition in almost all the segments and the industries all across the globe, the margin of profitability has drastically reduced and the competition increased. The companies are trying to make their processes thoroughly efficient so that they can save the scarce resources and increase the profitability. Therefore, the supply chain management has gained enhanced importance. Also, the terms and the trade of the global business have been experiencing paradigm shifts. In order to align itself with the changing scenario, the companies are looking for sustainable business processes that would enable them to have prolonged and profitable existence in this tremendously competitive industry. Agenda 21 has been one of the greatest achievements in this respect to guide the businesses all around the globe. With increased emphasis on sustainability, the onus lies on the corporates to devise effective and efficient strategy to overcome the challenge. References City of Union City, 2008. Environmental Sustainability Element. Introduction. Center for a World in Balance, 2010. Agenda 21. International Agreements. Hoovers, No Date. Company Description. Starbucks Corporation. [Online] Available at: http://www.hoovers.com/company/Starbucks_Corporation/rhkchi-1.html [Accessed May 17, 2010]. Jespersen, B. D. & Skjott-Larsen, T. Supply Chain Management: In Theory and Practice. Copenhagen Business School Press DK, 2005. Mentzer, J. T. Supply Chain Management. SAGE, 2001. New Zealand Business Councils for Sustainable Development, 2003. Business Guide to a Sustainable Supply Chain. New Zealand. [Online] Available at: http://www.nzbcsd.org.nz/supplychain/SupplyChain.pdf [Accessed May 17, 2010]. Spatial Data Box, No Date. Maps - Demos. Starbucks. [Online] Available at: http://www.spatialdatabox.com/map-demos/starbucks-map.html [Accessed May 17, 2010]. Starbucks, No Date. Ethical Sourcing. Responsibility. [Online] Available at: http://www.starbucks.com/responsibility/sourcing [Accessed May 17, 2010]. Starbucks, No Date. Being a Responsible Company. Responsibility. [Online] Available at: http://www.starbucks.com/responsibility [Accessed May 17, 2010]. Wailgum, Thomas, No Date. Supply Chain Management – Definitions and Solutions. CIO. [Online] Available at: http://www.cio.com/article/40940/Supply_Chain_Management_Definition_and_Solutions [Accessed May 17, 2010]. Read More