Global Supply Chain Risk Management Strategies - Annotated Bibliography Example

Operations Management By PART A - Annotated Bibliography Manuj I & Mentzer JT (2008) Global supply chain risk management strategies. International Journal of Physical Distribution & Logistics Management, 38 (3): 192-223. ‘Global supply chain risk management strategies’ is a scholarly article written by Manuj and Mentzer (2008) examines global supply chains in the current context of free trade zones and other trade liberalisations. They specifically state that numerous links interconnecting a huge network of firms make global supply chains riskier than domestic supply chains. Manuj and Mentzer say that these links are really vulnerable to a various threats such as bankruptcies, breakdowns and disruptions, macroeconomic and political changes, and disasters, making the process of risk management even more difficult. In this context, the authors try to evaluate the phenomenon of risk management and explore various risk management strategies in global supply chains. The most notable feature of this research paper is that it pays attention to a broad range of breakdowns and disruptions in global supply chains, leading to the development of comprehensive risk management strategies. This paper communicates the applicability of six risk management strategies in relation to environment conditions and the role of three moderators. This scholarly work may assist managers to choose proper risk management strategies based on the global supply chain environment. The authors use grounded theory so as to explore the phenomenon of risk management having a poor theoretical base. Since this risk management model is developed in a global manufacturing supply chain context, its generalisability may be questioned. Lin Y & Zhou L (2009) The impacts of product design changes on supply chain risk: A case study. International Journal of Physical Distribution & Logistics Management, 41 (2): 162-186. ‘The impacts of product design changes on supply chain risk: a case study’ is a research work developed by Yong Lin and Li Zhou (2009). As the title indicates, this paper was drafted to address the impact of product design changes on supply chain risk. The paper also tries to explore the supply chain risk dimensions in the Chinese special purpose vehicle (SPV) industry in the light of product design change. The authors have adopted a case study methodology to draft this paper in order to give the readers good understanding of the current situation of supply chain risk management in the Chinese SPV industry. For this case study, data were gathered from extensive semi-structured interviews, and a cause-effect diagram is employed to describe the internal and external supply chain risk dimensions. From an external supply chain perspective, customer-demanded product design changes would normally result in supply, delivery, and policy risks. At the same time, such product design changes may lead to risk in R&D, production, planning, information, and organisation at the level of internal supply chain. The risk dimensions and their respective causes identified in this paper would aid both researchers and practitioners to gain better understanding of supply chain risk in the context of product design changes. Ultimately, this paper can assist industry analysts and other market watchers to understand the supply chain risks resulting from product design changes in the Chinese SPV industry. Ritchie B & Brindley C (2007) Supply chain risk management and performance: A guiding framework for future development. International Journal of Operations & Production Management, 27 (3): 303-322. “Supply chain risk management and performance: A guiding framework for future development”, a research paper prepared by Ritchie and Brindley (2007), examines the application of risk management in the supply chain through the development of a suitable framework. Ritchie and Brindley link the constructs of performance and risk so as to provide researchers and practitioners with new perspectives of risk management. They used conceptual and empirical works in the field of supply chain management to design a conceptual framework of supply chain risk management. The researchers relied on risk/performance sources, drivers, and consequences and management responses to evaluate risk elements in the supply chain. In this paper, Ritchie and Brindley provide a new framework that is helpful to integrate the dimensions of risk and performance, and they also perform a categorisation of risk drivers. This research paper has used two empirical cases to support the application of the framework and thereby add to the authenticity of the work. As this paper focuses on performance in terms of efficiency and effectiveness linked to risk management responses and risk drivers, it greatly assists managers to measure and address risk in supply chains. However, this research paper has limitations in addressing the interaction of risk management and performance, because the supply chain risk management is at an early stage of revolution. Kern D, Moser R Hartmann, E et al (2012) Supply risk management: Model development and empirical analysis. International Journal of Physical Distribution & Logistics Management, 42 (1): 60-82. “Supply risk management: Model development and empirical analysis” is a scholarly paper written by Kern et al (2012). In their scholarly paper, the researchers try to develop an empirical framework for supply chain risk management linking risk identification, risk assessment, and risk mitigation to risk performance. They have also addressed the influence of a continuous improvement process on supply chain risk identification, assessment, and mitigation. Kern e al conducted a literature review to derive hypotheses and to operationalise the constructs of supply chain risk management. They used the survey data collected from 162 large mid-sized German manufacturing companies to test the path analytical model using partial least squares analyses. In the paper, the researchers found that all their hypotheses were true. The major finding of this article is that superior risk identification facilitates the risk assessment, which in turn leads to better risk mitigation. This research work is effective in addressing the problem of measuring risk management efforts. A deep understanding of the performance effect of risk management can assist managers to thoughtfully invest in different ventures. This research paper could be rated as one of the first large-scale empirical studies conducted on the process dimensions of upstream supply chain risk management. Since this study focused on manufacturing companies in a single country (Germany), its generalisability may not be validated. Skipper JB & Hanna JB (2009) Minimizing supply chain disruption risk through enhanced flexibility. International Journal of Physical Distribution & Logistics Management, 39 (5): 404-427. “Minimizing supply chain disruption risk through enhanced flexibility” is a scholarly paper written by Skipper and Hanna in 2009. In their research paper, Skipper and Hanna (2009) evaluate whether the use of a strategic approach called contingency planning is effective to mitigate risk exposure to supply chain disruption. More specifically, the authors analyse the link between several attributes of a contingency planning process and flexibility. The research approach used in this paper may assist both researchers and practitioners to gain understanding of the means of determining the attributes with the highest relationship to flexibility. Subsequently, the research model is tested using multiple regression techniques. The authors identified that strong top management support, use of information technology, resource alignment, and external collaboration significantly contribute to flexibility. The most notable finding of this research work is that flexibility can enhance the ability to mitigate risk exposure during a supply chain disruption. This scholarly article is really helpful for managers at multiple levels to improve their understanding of the use of primary planning attributes to enhance flexibility. PART B – Operations Management of Toyota Company Background The Toyota Motor Corporation (TMC) is the world’s leading auto manufacturing corporation headquartered at Toyota in Japan. The company was founded by Kiichiro Toyoda on 28th August 1937. Toyota employed 333,498 people worldwide as of 2013. Currently Toyota is the world’s twelfth largest company in terms of revenue, and the company was the largest automobile manufacturer in the world in 2012 by production and sales. In July 2012, this multinational auto making giant reported the production of its 200 millionth vehicle. In the same year, the company produced more than 10 million vehicles to become the world’s first automobile manufacturer to achieve this target, according to OICA. Toyota was the largest listed Japanese company as of July 2014 in terms of market capitalisation and revenue. The company’s management philosophy is based on the principles of lean manufacturing and just in time production. The term Toyota Way is used to represent the firm’s managerial values and business methods collectively. Respect for people and continuous improvement are the two fundamental managerial values the company has been emphasising from its origin. TMC is a part of the Toyota Group, which is one of the world’s largest conglomerates. Toyota is a company with a strong global presence. When it comes to the worldwide operations of Toyota, it is identified that the company’s global business landscape consisted of 52 overseas manufacturing facilities spread across 27 countries and regions as of December 2013 (Toyota official site). In addition, Toyota vehicles are sold in over 170 countries and regions (Ibid). The TMC produces vehicles under five different brands, such as the Toyota brand, Hino, Lexus, Ranz, and Scion. It is interesting to see that the organisation holds a 51.2% stake in Daihatsu, 16.66% stake in Fuji Heavy Industries, a 5.9% stake in Isuzu, and a 0.27% stake in Tesla (Toyota, Youtube video). In addition, Toyota operates joint ventures with several nonautomotive companies. Operations Transformation Process “A transformation process may be defined as an ordered set of successive states of material, which are being processed from inputs into output through the interaction of personnel and equipment” (as cited in Fraunhofer-Institut für Arbeitswirtschaft und Organisation, 1985, p. 188). While analysing the operations transformation process of Toyota, it seems that the company gives particular emphasis to just in time production and lean manufacturing. Just in time production can be simply defined as a set of principles and practices that are directed at the philosophy that companies should not hold inventory levels more than necessary for immediate production or distribution. To be more specific, under this approach, firms may receive raw materials from suppliers perhaps just hours before they actually commence the production process, and finished products may be shipped to customers quickly once the production is completed. Similarly, Toyota also follows a production strategy called lean manufacturing so as to reduce inventory levels and to streamline the production process. The concept of lean manufacturing assists the company to eliminate non-value adding activities in design, production, and supply chain management and thereby to make the transformation process cost effective. Sales or market information is a key to Toyota’s transformation process. The firm’s sales department collects sales information using various managerial techniques and pass them to the top management. For this, the firm considers seasonal variations in orders, categories of buyers, changes in interest rates, and changing promotional tactics. Toyota has developed an innovative mechanism to convert market information into technical information, which is later used to bring appropriate changes to production activities. Using kanban signals for orders and delivery, sales information are instantaneously converted into either technical information or a set of instructions concerning production and delivery from one point to the other. Toyota’ line workers have been trained to respond fast to those instructional changes and therefore the firm’s transformation process could be well optimised. Operations in Terms of the Performance Imperatives Toyota’s operations in terms of the performance imperatives such as quality, speed, dependability, flexibility, and cost are described below. Quality Toyota gives utmost importance to the performance objective of quality and the firm’s vehicles are consistently ranked near the top in third party customer satisfaction surveys. The company maintains an improved quality assurance system to deliver superior quality products to its customers. The company had two major product recalls in 2009 and 2012, and this involved nearly 17 million cars and trucks worldwide. These product recalls show the firm’s commitment to quality assurance. The company has integrated over 40 emission control systems into its cars so as to eliminate the emission of unpleasant gases. Speed Toyota uses simple and small but robust and flexible machines to reduce the complexity of operations and thereby minimises the time between the order placement and delivery of finished products. Statistical evidences suggest that Toyota’s output per worker is much higher than that of other leading multinational corporations. Dependability Dependability simply indicates that ‘being on time’ or doing things in time for delivering goods and services to customers in accordance with the pre-scheduled time. In order to perform outstandingly in terms of dependability, Toyota follows just in production method and kanban control system. Since improving efficiency and quality is a major concern for Toyota managers, technical experts, and all employees, the organisation is able to provide its customers with a dependability advantage. Flexibility In the perspective of Toyota management, flexibility means that using the firm’s manufacturing resources in an efficient way so as to launch new car models that would fit the current market trends and customer expectations. Industry analysts tell that Toyota maintains high level of flexibility, and hence the company is able to produce relatively small batches of different models with little loss of quality. Cost In order to offer its products to customers at fair costs, the organisation plans to establish its production plants in countries where the cost of materials and labour is cheap. In addition, TMC tries to influence its suppliers to deliver raw materials at improved rates. Operations in Terms Risk Management While evaluating the operational efficiency of Toyota, it seems that the organisation performs stupendously in terms of risk management. TMC has been strengthening its risk management systems for the last four years in response to the series of product quality issues occurred in 2010. In June 2010, a Risk Management Council was established under the CSR Committee. In addition, risk managers were appointed, and other measures were taken worldwide to combat all risks that may occur in the firm’s supply chain. The company appointed a Global Chief Risk Management Officer (CRO) to focus on risk management in a global context and established improved systems under the Global CRO to respond to risks on a daily basis (Toyota CSR Management). Therefore, it is easy for the Toyota management to take immediate responsive actions in the event that a risk occurs. Regional CROs are appointed under the Global CRO to deal with risks occurring in individual regions and each region is subjected to its own risk management system. It is the responsibility of Chief Officers and functional secretariats to deal with risk factors within the organisation according to function and they play a significant role in co-ordinating and supporting regional risk management in relation to their specific functions (Ibid). Toyota’s Risk Management Council meets twice annually to identify and discuss all risks that would pose threats to the firm’s business expansion and to develop responsive measures to address the risks identified (Ibid). The Risk Management Council is chaired by the Global CRO, and regional CROs and all senior management officers and chief officers are members to the Council. The major function of the Council is to manage risks by reporting on major risks in each region, confirming that proper measures were taken to address immediate and serious risks (Ibid). In short, Toyota has comprehensive risk management practices to proactively respond to various risks in its supply chain and to achieve the highest level operations management efficiency. Complex Operational Issues While analysing the complex operational issues in the company, it seems that quality management issues represent a potential threat to the long term sustainability of the organisation. As per the NbcNews, the company was forced to recall millions of its vehicles in 2009, 2012, and 2014 due to quality flaws. During the 2009-10 periods, Toyota recalled over 9 million cars and trucks worldwide in several recall campaigns as a result of the reports that several vehicles experienced unintended acceleration (Ibid). Similarly, the company recalled 7.43 million vehicles worldwide in 2012 to fix malfunctioning power window switches. In March 2014, the company agreed to pay US$1.2 billion in fine for misleading the public by concealing the real issues behind recalls on Toyota and Lexus vehicles. In addition, the Toyota USA was forced to initiate another major recall in the early November of 2014 so as to fix defective inflaters and propellant devices (Ibid). These three major product recalls over the last five years directly point to the fact that Toyota Production System (TPS) and the firm’s Total Quality Management (TQM) system are not very effective today. As a result, the company lost its corporate status as a quality enhancing auto maker. In the words of Tim (n.d.), a range of issues including lack of senior management leadership, cracks in the TPS, dysfunctional organisational structure, flaws in the new product development system and a secretive culture have contributed to the current quality issues and managerial failures of Toyota. References Fraunhofer-Institut für Arbeitswirtschaft und Organisation (1985) Proceedings of the ... International Conference on Production Research. US: Taylor & Francis. Nbcnews. Toyota recall timeline. Available at: http://www.nbcnews.com/id/35240466/ns/business-autos/t/toyota-recall-timeline/ [accessed 3 Dec 2014]. Toyota. Official site. Available at: http://www.toyota-global.com/company/profile/facilities/worldwide_operations.html [accessed 3 Dec 2014]. Toyota CSR Management. Available at: http://www.toyota-global.com/sustainability/csr/governance/risk_management/ [accessed 3 Dec 2014]. Tim M (n.d.) Troubles in Toyota City. Business Theory. Available at: http://businesstheory.com/troubles-in-toyota-city-2/ [accessed 3 Dec 2014]. Toyota. Youtube video. Available at: https://www.youtube.com/watch?v=-6z1Pw2rDQY [accessed 3 Dec 2014]. Read More