What a Supply Chain Is - Literature review Example

Table of contents Introduction…………………………………………………………………………3 Porter and supply valueanalysis …………………………………………………..3 Ansoff’s way ………………………………………………………………………7 Sustaining Competitive Advantage ……………………………………………….8 Strategic Leadership and Management ……………………………………………9 Conclusion ………………………………………………………………………..10 Table of figures Figure 1. (Christensen, Cook, & Hall, 2005, p. 2) ………………………………..5 Figure 2. (Mindtools,2013) ……………………………………………………….6 Introduction Managing a business supply chain require an organizational strategists and a system that will increase the responsiveness of supply chain cost-efficiently (Blancahrd, 2007, p. 1). This paper will discuss what a supply chain is and how managers can effectively and efficiently generate positive integration and response of its operations and services. Porter and supply value analysis Michael Porter (1980) posited that there are values required in the operational chain of an organization or an industry to attain certain competitive leverage and advantage (p. 12). Porter suggested that evaluating the internal dynamics and activities of an organization will add more value to the supply, product, and services cost-efficiently—targeting that this will gain marginal value for products or services (Porter, 1980, p. 20; Fawcett, Ellram & Ogden, 2007, p. 15). If the business operations, marketing, sales, and systems are smoothened, it is expected that the company will gain marginal value for these products and services (Gadde & Hakansson, 2001, p. 1). This precluded the fact that the company is able to strategize and identify the targeted market where their products and services can be delivered satisfactorily and in less cost (Porter, 1980, p. 20). Experts contended that if managers are able to concretely apply the supply chain analysis well as a power tool for strategic planning, the administrative and organizational model can be applied and be extended in the entire supply chain and distribution networks (Porter, 1985, p. 3). Thus, it must be understood that the successful delivery of product and the ensuing economic reward it can generate for the organization (Porter, 1985, p. 3). Business strategists likewise opined that the best possible value can only be attained if the relevance of the processes in all stages is valued and if proper synchronization of all related activities is also logically synchronized (Hugos, 2006, p. 1; Christopher, 2005, p.20; Gadde & Hakansson, 2001, p. 10). Porter (1985) cited an example of the application of value chain analysis led by a manufacturing industry. The company acquired raw materials and optimized them in the production of a certain product deemed useful and demanded by the market. The company network with retailing industries and presented the products conveniently to targeted customers either through advertisement or any form of rigorous promotion to appeal to its customers its usefulness and the entailing services it could support them (Mindtools, 2013, p. 1). Often, the retailers will package the promotion and use of the products to which it targeted to distribute. Porter’s formula on this is shown below (Mindtools, 2013, p. 1): Value Created and Captured – Cost of Creating that Value = Margin When the organization value what it produces, the more profitable it will be and the more customers are enticed to purchase these products, the more competitive advantage is therefore built (Mindtools, 2013, p. 1). Porter contended that if the human resources of the company understand how they created value and if they are able to participate in creating more value, they are likely be able to develop the critical elements for competitive strategy (Mindtools, 2013, p. 1). Figure 1. (Christensen, Cook, & Hall, 2005, p. 2). Hence, the value of the supply chain should be the standards and blueprint of action set by the company and its workers to create value for the customers. The organizational strategist must therefore evaluate how all these activities are connected, systematized, synchronized, and interrelated to enable the desired performance and reach the targeted profit as value of the organization (Dornier, Ernst, Fender, & Kouvelis, p.12). This theory is clearly demonstrated by Porter in his Generic Value Chain as viewed on the table below: Figure 2. (Mindtools,2013). The table present a system and how the inputs are produced and outputs are supposed to be consumed by the customers. These supply value chains are commonly used by business strategists in providing direction and movement of products, sales, marketing, maintenance and product support services (Mindtools, 2013, p. 1). The inbound logistics refer to the processes of attaining, storing and distributing the inputs internally which can be done by nurturing relation with targeted or chosen supplier (Lipsay & Crystal, 2007, p. 12). The operational aspect refers to the activities that change and develop the inputs to outputs as a value for the targeted customers. The outbound activities are about the delivery of these products to direct customers or to retailers (Mindtools, 2013, p. 1). The collection and distribution of the products, in this case, can either be internal or external. Marketing and sales, on the other hand, refer to the rigorous promotion, advertisement and communicating about the products to attain the sales or value targeted (Mindtools, 2013, p. 1). Since products sold nowadays have its certain warranties, services should be made available for the customers following dissatisfaction of the products purchased (Mindtools, 2013, p. 1). Ansoff’s way Ansoff Product-Market Growth Matrix, on the other hand, offer strategies too to sustain the company’s presence in the market with its products and to increase sales without drifting the product-market strategy (Ansoff, 1957, p. 113). Senior managers can maximize the market in three ways: via gaining competitors customers, improving product quality, attracting non-users of the products, and convincing current customers to become its communicative tool for indirect product endorsement (Ansoff, 1957, p. 113; Lynch, 2009, p. 1). This strategy is significantly used by car companies, cosmetics, and other high valued products (Lynch, 2009, p. 1). Another way is for the company to develop new products for its customers and to utilize innovative technology in advancing its relation with suppliers and customers (Ansoff, 1957, p. 113). Senior managers can also enjoy market development strategy by identifying new markets or other geographical areas where new customers can be served. Business leaders can also diversify its strategy by essentially moving out its current products and markets into new areas (Ansoff, 1957, p. 113). Such diversification can be done in a backward, forward, and horizontal integration. The first integrates its activities towards its inputs such as suppliers of raw materials while forward integration extends its activities towards its outputs such as distribution. Diversification grew faster in cases where diversification involved high-risk strategies, including opting for unknown regions or clashing with competitors’ head-on (Ansoff, 1957, p.113). Product development strategies can also be another way of reaching into the market and in improving its competencies (Ansoff, 1957, p. 113). Sustaining Competitive Advantage This system on supply chain analysis provides the context on the approach about the resource selection to influence the company’s heterogeneity and sustainable competitive advantage (Oliver, 1997, p. 1). It’s contended that the firm’s sustainable advantage depended on the institutional context of its resource decisions and their insights in maintaining that mechanism and institutional culture to sustain the value of competitive advantage (Oliver, 1997, p.1). Such sustainability can likewise be attained if the company has also embed that learning processes for employees development as well as harness their collaboration and cooperation as integral part of strategic management (Njuguna, 2009, p. 32). The organization must also nurture such corporate culture to make it successful in establishing and fostering positive cultures that employees can identify itself to an organization and its system, thus, identifying or modelling that behaviour at all levels of the supply chain processes and management (Sadri & Less, 2001, p. 853). When all systems, inputs and outputs are organized, the organization may attain such financial performance as consequence of organizational alignments and better working internal structures (Lumpkin, Dess, McNamara, & Eisner, 2012, p. 235). Aside from that, the business management, in the interest of enjoying corporate leveraging in its supplies and production, must continually conduct political, economic, social, technological, logistical, and environmental analysis (Bansal, 2001, p. 1). Pressing issues derived from these factors should not be ignored or be abandoned to the bin. The management must be pliant and must be able to read the signs of time to manage its sustainability as well (Bansal, 2001, p. 1). The significant environmental, economic and social issues often threaten the stability and welfare of business or entrepreneurial endeavours (Bansal, 2001, p. 1). These internal values should be part of the core competencies too of an organization and in achieving certain level of business intelligence. What management must do? At such context, senior leaders of an organization or a company must have that combined expertise, knowledge, and skills to address the needs of the organization by formulating and enforcing ethical guidelines and policies; ethical trainings and education; and to make them accountable to maintain desired corporate behaviour (Bennett, 1994, p. 4). Experts contended that the best run organizations with high commitment to its core competencies use multi-tiered approach by adopting core organizational values (Christensen, Cook, & Hall, 2005, p. 2). These values is the foundation for all future ethical polices and in business relations with suppliers, with co-workers, and with customers. Only through this core competency that the supply value chain can be responded with proper management based on the edified code of conduct (Li, Duan, Kinman, & Edwards, 1999, p. 10). The internal departments and division can relate to its system intelligible, openly, and systematically. Managers must be able to conduct critical analysis to ascertain that its performance is consistent to the vision, mission and goals of the organization; otherwise, sustainability of a company would become uncertain (McKay & Marshall, 2004, p. 2; Hill & Jones, 2007, p. 10). Open communication can likewise provide such necessary impetus that could reinforce the tough side of business operation. This is essential in working with teams to attain such competitive advantage so that the company can exactly deliver the benefits as that of its competitors cost-efficiently and effectively (Lysons & Farrington, 2006, p. 8). Hence, competitive advantage enables the firm to create higher and quality value from its suppliers and to its customers. Such cost differentiation is known as a positional advantage while creating the competitive advantage that results in superior value creation. So, how can the management increase its level of responsiveness? The management must create an integrated plan to streamline operations to make the company pliant to rapid changes of customers’ demands (Duggan, 2013, p. 1). The management must conduct business operation analysis and identify alternatives to problems by dong SWOT to business operations and eliminate product errors to improve customer satisfaction; prioritize organizational activities that could meet your strategic goals and opt for staffing models; conduct interventions using templates to improve operational responsiveness and dealing it at cause-and-effects relations efficiently; and., validate implemented changes from small before launching the larger scale (Duggan, 2013, p. 1). Reichhart & Holweg (2013) explicated that supply chain responsiveness can only be fully understood by probing into the responsiveness of individual members and in delving into their interactions (p. 29). Building responses can be cons-effective for for supply chain by (a) reducing the requirements of each echelon and (b) adjusting the responsiveness in the upstream supply chains (Reichhart & Holweg, 2013, p. 29). Such responses must be gauged on the nature of the product, volume, mix, and of delivery (Reichhart et al., 2013, p. 29). The satisfaction derived from the different levels of responsiveness depending on the configuration and integration of the individual nodes (Reichhart et al., 2013, p. 29). A holistic framework distinguishing betwixt the requiring and enabling factors for responsiveness must be developed to identify key relationships within and between these two categories (Reichhart et al., 2013, p. 29). Figure 3. (Reichhart et al., 2013, p. 26). As cost-efficiency and effectiveness is also considered in this study, it’s also essential that trade-offs between the level of responsiveness and cost be dealt notwithstanding lack of empirical research information that examines the level and extent of entire supply chains can push for their performance frontiers (Reichhart et al., 2013, p. 27-28). The management must also improve the understanding of inventory in the supply chain by adopting some model in the production process and determining the nodes in terms of responsiveness from quantitative outlook of inventory of products and services (Reichhart et al., 2013, p. 27-28). Further, the management must process the coordination to determine the nature of decision-makings and the changes that are happening in all echelon viz-a-viz degree of responsiveness within the upstream supply chain (Reichhart et al., 2013, p. 27-28). The management an further assess how the company made use of information technology to respond to suppliers and customers and improve it to make automated and manned by competence IT specialists that can provide tech-based responses even including matters with complex questions. Conclusion It is therefore concluded that a systemic, logical, output-and-result oriented, creative analysis of its market and clear competitive strategy can best put the company at a competitive advantage. Senior officers must therefore consistently concern about competitively leveraging to sustain from industrial trends. They must have concrete environmental scanning to understand the political, economic, social, technological, logistical and ecological influences to organizational performances (Lumpkin, et.al., 2012). They must value the suppliers, shareholders, investors, customers, workers, and government regulators to maintain better collaboration, cooperation and networking. Organizational decisions must be strategically contextualized with organization-based participation to prevent potential dichotomy and uphold organizational sustainability (Lumpkin, et.al., 2012). Strategic partnerships with business partners must likewise be nurtured specially of they are supportive for its growth and development. Managers must therefore adhere to its internal competences and optimize the use of resources to attain goals, maintain skilled human resources, and enjoy the results and outcome (Mugalu, 2012, p. 1; Scharry & Skjott-Larsen, 2003, p.1). The business chain can be likewise maintained if the management about strategizing ways to find the mechanism in leveraging in the market. In this knowledge driven economy, business managers must also take innovative measures to manifest business leadership in the market and maximize data and information as strategic asset in in business intelligence (Silver, Pyke, Peterson, 1998, p.1). The management, in seniority and age, must optimize the use of information technology for data management to reach out suppliers and customers – an essential way for business partnership (Slack, Chambers, & Johnson, 2004, p. 20). This is the new way of maximizing business intelligence in the advent of website development and emergence of social media. This innovative tool can bring the company nearer to its suppliers and customers alike. It can also reduce operational risks and mitigate financial expenditures. It can also offer better business efficiency, inspire intelligible business insights for actionable information, provide wider or broader response to marketing opportunities, and provide interactive services and solutions through online web platforms and apps for collaboration (Watts, Cope, & Hulme, 1998, p. 101; Waters, 2003, p. 65) References Ansoff, I. H. (1957), Strategies for diversification, Harvard Business Review, Vol. 35, No. 2, p. 113-124. Bennett, A. R. (1994), Business Planning: Can the Health Service Move from Strategy into Action?, Journal of Management in Medicine, Vol. 8, No. 2. Christensen, C. & Cook, S. & Hall, T. (2005), Marketing malpractice: The cause and the cure, Harvard Business Review. Hill, W. L. C. & Jones, R. G. (2007), Strategic Management: An Integrated Approach, 7th ed., Houghton Mifflin Company, Boston: New York. Bansal, T. (2001). Building Competitive Advantage and Managing Risk Through Sustainbale Development. Ivey Business Journal, p. 1. Bennett, A. R. (1994), Business Planning: Can the Health Service Move from Strategy into Action?, Journal of Management in Medicine, Vol. 8, No. 2. Blanchard D. (2007) Supply Chain Management: Best Practices, US: Wiley. Duggan, T. (2013). How to Improve Operational Responsiveness, Chron, Texas: Demand Media, p. 1. Fawcett S.E., Ellram L.M. and Ogden J.A. (2007) Supply Chain Management: From Vision to Implementation, Pearson Prentice Hall Gadde L-E and Hakansson H. (2001) Supply Network Strategies, US: Wiley. Jacobs and Chase (2008) Operations and Supply Management: The Core, US: McGraw Hill International Edition. Hugos M. (2006) Essentials of Supply Chain Management, 2nd Edition, US: Wiley Christopher M. (2005) Logistics and Supply Chain Management, 3rd Edition, US: FT Prentice Hall. Dornier P-P, Ernst R., Fender M. and Kouvelis P. (1998) Global Operations and Logistics: Text and Cases, US: Wiley. Lipsay, R. and Crystal, K. (2007), Economics 11 Ed. Oxford: Oxford university press. Lynch, R. (2009), Strategic Management, 5 Ed. Harlow: Pearson Education. McKay, J., Marshall, P. (2004), Strategic management of E-Business. Milton: National Library of Australia. Mindtools (2013). Porter’s Value Chain: Understanding How Value is Created Within Organizations, UK: Mindtools Ltd. p. 1, Retrieved: http://www.mindtools.com/pages/article/newSTR_66.htm Oliver, C. (1997). Sustainable Competitive Advantage: Combining Institutional and Resource-Based Views, Strategic Management Journal, Vol. 18: no. 9, pp. 697–713. Porter, M. E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors. 1st Edition. New York: The Free Press. Porter, M. E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance. 1st Ed. New York: The Free Press. Powell, T. C. (1992). Organizational Alignment as Competitive Advantage, Strategic Management Journal, vol. 13, pp. 119-134. Li, S. & Duan, Y. & Kinman, R. & Edwards, J. S. (1999), A framework for a hybrid intelligent system in support of marketing strategy development, Marketing Intelligence & Planning, Vol. 17, No. 4. Lumpkin, G.T., Dess, G., McNamara, M., & Eisner, (2012), A. Strategic Management: Creating Competitive Advantages. 6th Ed. Business And Economics, & McGraw-Hill/Irwin, New York: New York, pp. 1-592. Lysons K. and Farrington B. (2006) Purchasing and Supply Chain Management, 7th Edition, US: FT Prentice Hall Lumpkin, G.T., Dess, G., McNamara, M., & Eisner. (2012), Analysing the External Environment of the Firm, In: Strategic Management: Creating Competitive Advantages. 6th Ed. Business And Economics & McGraw-Hill/Irwin, New York, New York. pp. 1-592. Mugalu, G.K. (2012). The role of senior leadership in ethical behavior of financial institutions: A case study, Udini ProQuest. Retrieved: http://udini.proquest.com/view/the-role-of-senior-leadership-in-goid:305242321/ Njuguna, J. I (2009). Strategic Positioning for Sustainable Competitive Advantage: An Organizational Learning Approach. KCA Journal of Business Management: Vol. 2, Issue. 1, p. 32. Perry, C. (1987), Growth strategies: principles and case studies, International Small Business Journal, Vol. 5, p. 17-25. Sadri, G., & Lees, B. (2001). Developing corporate culture as a competitive advantage, Journal of Management Development, Vol. 20 Iss: 10, pp.853 – 859. Simchi-Levi, Kaminsky and Simchi Levi (2008). Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies, 3rd Edition, McGraw Hill International Edition. Scharry, P.B. and Skjott-Larsen T. (2003), Managing the Global Supply Chain, 2nd Edition, US: Copenhagen Business School Press, p. 1 Silver E.A., Pyke D.F. and Peterson R. (1998), Inventory Management and Production Planning and Scheduling, US: Wiley, p. 1 Slack, N., Chambers, S. & Johnston, R. (2004), Operations Management, 4th ed. UK: FT Prentice Hall. Reichhart, A. & Holweg, M. (2013).Creating the Customer-responsive Supply Chain: A Reconciliation of Concepts, UK: Cambridge, pp. 1-30. Retrieved: http://www-innovation.jbs.cam.ac.uk/publications/downloads/reichhart_creating.pdf [23 April 2013]. Watts, G. & Cope, J. & Hulme, M. (1998), Ansoffs Matrix, pain and gain: Growth strategies and adaptive learning among small food producers, International Journal of Entrepreneurial Behaviour & Research, Vol. 4, No. 2, p. 101. Waters D. (2003) Inventory Control and Management, 2nd Edition, US: Wiley, p. 65. Read More