Supply Chain Management Risks in India - Coursework Example

Supply Chain Risks in India Importance of Supply Chain Management Supply Chain Management is an essentialcomponent to increase the efficiency of the operations of any company. Supply chain management is crucial for any business and helps in improving the overall efficiency of the system in two ways first of all it helps in increasing the customer satisfaction and secondly it helps to improve the bottom line operations of a company. The customer satisfaction is ensured by delivering the right kind of product on time without compromising on its quality to the customers (Kumar 45). It improves bottom line operations through decreasing the use of fixed assets such as plants, warehouses, transportation vehicles, etc., and by delivering the products on time so as to increase the profit margins of the company. Supply Chain Risk Supply chain forms the backbone of global economy, but there are certain uncertainties that can disrupt the supply chain configuration of any enterprise. Supply Chain Risks can be defined as events or actions that cause drastic changes in some projects or transactions that are undertaken by a company and it differs almost negatively to the set plans or budgets. Supply chain management has the major concern area of delivering the products right on time to the customers but such events or actions even restricts the delivery of products or services right on time to the customers (Radhakrishnan 154). The global nature is the main factor that creates uncertainty and then these uncertainties results into risks for the supply chain. The supply chain risk can be broadly classified into two categories such as internal and external risks that affect the operations of any enterprise. These risk factors are also a matter of concern for any US based enterprise that has its operations in India. External Supply Chain Risks India as a developing country and has become a major attraction for investment for many domestic as well as internal companies. Though the investment rate is high but there is presence of a lot of risks region wise in India that can affect the operations of a US based organization. The supply chain management controls the operation of a company and there prevails some external risks in India that can have an impact on the supply chain (Leeman 56). The first external factor is the Governmental conditions of India. India is subjected to a high amount of political instability that even includes strikes and other form of violence. These political conditions creates a lot of unrest in the country and even closures of many factories that affects the operations of any foreign enterprise that is executing its business operations in India. The other element in the governmental conditions includes regulatory changes as power gets transferred to different candidates and even there is a risk of intellectual property theft that has increased in the recent times. The second factor in the external supply chain risks is that of infrastructure. Though the ports of India are suitable for a company to transport its goods across regions but the roads and railroads are not properly structured in some part of the country that results into delays in the supply chain activities. There exist even a major problem of congestion in railroads and roadways that results into extended supply chain operations of a foreign enterprise. The third factor in the external risks is the suppliers and since there are a lot of strikes in the country so it requires a proper management of relationship with suppliers or else there would be delay in operations is the supplier’s demand is not met by the company. The other concern area is that of communication problem that a US based enterprise may face while performing its business operations in India. The culture and the language of the management and the suppliers may not be aligned so as to meet the common objectives. The US based enterprise may also face problem of getting the same quality functional equipments as it is used to in its home country. The quality of the products or services that is to be delivered by the company is a major concern area while operating in India and if not properly managed then it can increase the lead times. The next factor in the external risks is that of logistics which may result into unavailability of equipments that the company would require for carrying out its operations. This would eventually give rise to delay in delivering of products on time and even freight can be damaged while transporting as some of the raw materials may also be imported from US while the company operates in Indian market. The other external risks is that of accident prone areas in India where the number of road accidents has increased and even the industrial accidents continues to grow as there is no such prevention taken by the companies. In 2012 there were 22 incidents recorded from India of floods, and even there is rise in the degree of earthquakes in the recent years. India lies in such a geographical area that is subjected to more of cyclones, floods, earthquakes, etc. The country even experiences heavy rainfall along with heat and cold wave that results into a huge turmoil in working days of many US based enterprises having its operations in India. The economy of India changes which result into more of price fluctuations for different products and services. The price sensitive market of India requires more attention by US based enterprises to change its pricing strategies so as to sustain its operations in the market. As per the global economy price is by nature subject to change that affects supply chain operations. The external risks factors is further illustrated in the charts given below- (Wincel 49) These external risks that can be further sub divided in respect of the different regions in India as given below- (Waters 155) (Chan 114) These figures clearly illustrates that the country subjected to high degree of risks in terms of the supply chains operations that any US based enterprise would perform in this country and the major factor of concern is the risk of political instability and natural disasters. Internal Supply Chain Risks The internal supply chain risk that a US based enterprise would face while performing its operations in India is policies, operational activities, ethics, and organizational and administrative resources. The operational activities would be mainly forecasting, project management, personnel expertise and demand management. The individuals who would be a part of the supply chain operations of the US based enterprise may not possess the same level of expertise as possessed by their work force in the home country. This can result into a drop in the performance level of the company and even have an impact on its market reputation. In order to manage demand the company needs to build strong bonds with suppliers and customers (Ross 116). The supplier relationship would be a problem while operating in India as it is subjected to more of bribery, corruption, strikes, etc. To handle suppliers in a completely different market is a major risk. The enterprise also faces the risk of any uncertainty that can impact the forecasted growth or market opportunity. On the other hand if the project is not managed properly by allocating right job to right people then it can result into a major risk of the supply chain activities. The other internal risks are of conflicts of interest between the suppliers, customers, distributors, and employees. This even comprises of maintaining supplier relationships or else it can result into decrease in the quality level of business operations and increase in lead times (Bohling 99). The ethics factor even comprise of maintaining reputation of the organization by executing business operations without any form of compromise in business ethics. The other risk factor is of resources that comprise of attracting more labor especially when performing in a different market and retaining the skilled labor in the system as the competition is high so the labors would have more of options to switch over to some other enterprise. The other resource risk is to have the financial arm so as to incorporate latest technology in the system. On the other hand is the requirement of handling equipments efficiently so that the business operations are performed smoothly without any delay (Voortman 108). The other factors would be of policies that comprise of freight terms, inventory level, reverse logistics, repairs, ethics, etc. The US based enterprise is subjected to the risk of maintaining standards in the system that would enable the company to perform supply chain operations effectively. The enterprise can even be subjected to reverse logistics on not being able to meet with its quality standards that would eventually result into more of additional costs. If the system is not automated then there would be a major risk element of excess inventory levels that would result into more of operating cost for the business operations of US based enterprise in India. Supply Chain Sustainability The supply chain operations of a company is subjected to various internal and external risks but in midst of all the stated risks a company can achieve sustainability on basis of three major factors such as environmental, organizational, and social. The environment sustainability can be achieved by the US based enterprise by using less of hazardous materials, less energy consumption, and more use of non-renewable resources (Meindl 77). The social sustainability requires giving equal importance to both genders in the workplace, working as labor laws and relations, and performing in context of business ethics. The organizational sustainability can be achieved by enterprises through building a strong customer perception towards the company, enhancing customer satisfaction that would trigger more of profit levels and to be focused towards long term viability of the business operations. Risk Prevention The risk prevention method that can be undertaken by any US based enterprises in the market of India would be firstly analyzing the various uncertainties that would have an impact on the supply chain operations of the company. The enterprise can undertake a training and development program for all the suppliers with whom it would be performing its business operations. The company can also take up some extra lead time for safety while operating in a completely different market and in addition the company can also maintain some safety stock so as to meet the unexpected demand. The enterprise also would require developing strong relationships with suppliers and assessing the entire selection process of suppliers so as to ensure that quality level of their entire business operations is not being compromised. The enterprise needs to adopt measures such as keeping additional supplier base, making more number of supplier visits, and project planning so as to allocate right time frame and prioritize different tasks of the supply chain activities. Works cited Bohling. Jones., Outsourcing the third party logistics. USA: GRIN Verlag. 2013. Print. Chan. Chi-Kin., Successful Strategies in Supply Chain Management. Pennsylvania: Hershey. 2005. Print. Kumar. Sameer., Connective technologies in Supply Chain. New Delhi: CRC Press. 2007. Print. Leeman. Joris., Supply Chain Management: Fast, flexible supply chains in manufacturing and retailing. Germany: Book on demand. 2010. Print. Meindl. Chris., Supply Chain Management: Strategy, Planning, &Operation. New Jersey: Upper Saddle River. 2007. Print. Radhakrishnan. Palaniswami., Logistics and Supply Chain Management. New Delhi: Allied Publishers. 2001. Print. Ross. David., Distribution Planning and Control: Planning and Control : Managing in the Era of Supply Chain Management. USA: Springer. 2004. Print. Voortman. Craig., Global Logistics Management. South Africa: Juta and Company Ltd. 2004. Print. Waters. Donald., Global Logistics: New Directions in Supply Chain Management. Hong Kong: Kogan Page Publishers. 2010. Print. Wincel. Jeffrey., Lean Supply Chain Management. New York: SAGE. 2004. Print. Read More