Introduction to Supply Chain Management - Report Example

INTRODUCTION TO SUPPLY CHAIN MANAGEMENT of the of the Contents Contents 2 Introduction 3 1.Background 3 2.Aims and/or objectives 3 1.3.Scope 3 2.Key Findings and Discussion 4 2.1.Description about supply chain network of Sony 4 2.2.Opportunities linked with supply chain network 5 2.3.Key challenges faced by the network 6 2.4.Impact of supply chain issues 7 3.Conclusion 9 4.Recommendations 9 References 11 Appendices 12 Appendix 1: Supply Chain Network 12 Appendix 2: Supply Chain Integration 12 Appendix 3: Manufacturing Production Index 13 1. Introduction 1.1. Background This report shall outline the supply chain issues faced by Sony. Sony is a multinational conglomerate based in Tokyo, Japan. This company is focused on certain product line such as electronics, financial services, game and entertainment. The sales volume of this firm has been drastically lowered due to significant issues in supply chain management. Supply chain forms an integral part of business operations and it is closely knitted with level of customer satisfaction. This report is important since it highlights some key challenges witnessed by supply chain of a firm such as resilience and natural disasters. It would even encompass list of recommendations for further improvement of supply chain activities. 1.2. Aims and/or objectives This report has been written to answer some key questions like- Issues or challenges associated with supply chain of Sony Corporation Impact of these challenges on overall business functioning Relationship between essential components of Sony’s supply chain Appropriate solutions for eliminating such challenges 1.3. Scope The report would cover supply chain elements of Sony and describe integration been set forth between these elements. This study will further encompass issues and challenges faced by supply chain of Sony Corporation along with probable solutions. Report shall be organized in well structured format. 2. Key Findings and Discussion 2.1. Description about supply chain network of Sony Supply chain management is an area of concern for many organizations. Sony has always adopted the best possible practices in its supply chain network. The basic framework of its supply chain system has been outlined in Appendix 1. On the basis of this framework it can be stated that flow of production is initiated from acquisition of raw materials and ranges to delivery of products at retail outlets. Successful integration is achieved by the company in terms of aligning operational flow. The company desires to establish positive change within its supply chain network. Sony Corporation works in collaboration with subcontractors and suppliers in order to address issues related to health and safety, environmental protection, labor, human rights, etc. Sony is actively indulged into manufacturing products across the globe so as to meet customer expectations. The company has developed a large base of suppliers to procure raw materials of high quality and within competitive price range. Equal opportunity, fair business practices and transparency has facilitated collaboration and mutual trust between suppliers and Sony. The company has specific departments which undertake various supply chain responsibilities (Kirby, 2003). For instance, procurement of raw materials involves strategic planning with suppliers to gain superior quality raw materials. This procurement stage is followed by production stage where final products are designed. The production department has its tasks divided into two segments such as internal production department and subcontractor system. Task integration is established when marketing and sales department undertake the responsibility of distributing products around the world. They effectively coordinate with production department if there is any customer complaint regarding default in product features. Sales department also coordinates with retailers in context of timely delivery of products and increase or decrease in sales volume. Sony Corporation is one of the renowned companies who have been part of EICC framework or Electronic Industry Citizenship Coalition. EICC code of conduct is a major aspect which has incorporated information and responsibility integration in supply chain network. Integration amongst supply chain elements is represented in Appendix 2. The company seeks continuous improvement through long term relationship between customers and suppliers. As per the figure in Appendix 2, audit organization takes into consideration flow of quality goods along with flow of information between supply chain components. Continuous self-assessment and risk assessment has enabled the firm to share information amongst supply chain participants. To be more precise two-way information flow is witnessed in supply chain management of Sony Corporation (Sony Corporation, 2015). Information primarily flows from suppliers to production department, then to sales and marketing team, and finally to respective retail outlets. On the other hand, customer complaints are registered at retail outlets or at customer service department, followed by reverse flow of information to respective departmental units. 2.2. Opportunities linked with supply chain network Sony Corporation over the years has been highly cautious about delivery of high quality products to customers. This quality aspect can be sustained by a firm only when it is able to incorporate best practices and efficiently address customer expectations. Sustainable supply chain management framework can be one of the opportunities for supply chain network of Sony Corporation. The main drivers in context of sustainable supply chain management are stakeholder’s interests, compliance or regulatory pressure, leadership and risk management. This area is an opportunity for the firm in order to enhance future growth and success (Hugos, 2006). Collaborative work approach with suppliers and retailers would be able to enhance performance level of supply chain management practices. Sustainability in supply chain can be accomplished through industry collaboration and supplier transparency. These sustainability strategies encompass profit margins and prove to be beneficial for companies in long run. Sony can actively indulge with global IT companies so as to ensure that there is availability of advanced technology based platform. This technology facilitates integration of information amongst supply chain participants and would even help in increasing overall efficiency (Maloni and Benton, 2008). IT based value chain is a key to improve organizational productivity. Green supply chain management practices can also be included by the company in order to achieve green objectives. Corporate social responsibility is already an essential factor within supply chain management practices of Sony, but it can be further extended in the form of supplier transparency and risk assessment. Risk assessment tools can also be converted to technology based methods for better organizational performance. 2.3. Key challenges faced by the network Natural disasters can be considered as one of the major challenges faced by supply chain of Sony Corporation. The company has suffered drastically due to natural disasters occurring in Japan. These disasters tend to disrupt the entire framework of supply chain system which is not an easy task to be recovered. Resilience and natural disasters are the common challenges faced by supply chain network of Sony Corporation. The intensity of earthquakes has increased in recent years and this has affected manufacturing operations of the firm. Earthquake tends to dismantle supply chain operations and it ultimately affects consistency in production or information flow. Manufacturing divisions of the firm gets affected due to natural disaster. This in turn results into lowered product quality and increased delivery time. Tohoku earthquake had caused serious damages to manufacturing equipments of the company. These damages eventually lower down production capacity and initiates wide array of issues within supply chain network. The company has its production operations mainly centralized in Japan and frequent earthquakes develop raw material shortage. Natural disaster is a common challenge for those companies which operate in earthquake prone areas. It results into a major breakdown in distribution link or production node. This forms an integral factor of supply chain system. Globalization has led to less tight control over business operations and this affects other geographic location based activities (Wong, Johansen and Hvolby, 2004). In certain location of business operations, there is increased intensity of production agglomeration, economic activities, supplier consolidation, etc. Natural disasters have adverse impact on supply chain where production facility is concentrated. Significant structural losses are observed in supply chain network due to such natural disaster. It is viewed as a challenge since lump sum investment is required by the firm to restructure its entire model of supply chain network. International distribution facilities get disrupted due to extended lead time. Sony Corporation also is not able to locate substitute suppliers in short time period after occurrence of natural disaster, to effectively sustain global business operations (Emmett and Crocker, 2006). Recovery cost and direct damage are some key factors which accompanies natural disaster and resilience. These challenges can take severe form when it restricts flow of information between supply chain participants. 2.4. Impact of supply chain issues The adverse impact of identified challenges is well observed in decreasing profit margins and sales volume of the company. Decrease in sales volume takes place due to disastrous impact on supply chain management. It can be stated that production facilities should be appropriate of a company in order to deliver exceptional quality products to end customers. There has been drop in sales percentage of Sony’s LCD television. This is simply because of disrupted supply chain operations and lack of contingency plan. Inappropriate flow of information between different departments tends to increase stock completion time and it ultimately facilitate late product deliveries. Natural disasters not only results into late production mechanism but even enhances cost factor of the company (Oxley, Rushton and Croucher, 2000). Financial losses are not suitable for an organization which desires to achieve sustainability in the market place. Resilience can be stated as degree of flexibility in an organization to recover from its present scenario. Sony Corporation has widespread operations and it is not possible for the company to regain its position after every natural calamity. However the company needs to invest lump sum amount so as to continue supply chain operations and meet customer demand. Natural disasters have significant impact on manufacturing operations in Japan. Statistical evidence in Appendix 3 is able to classify such impact on multinational firms. Appendix 3 clearly portrays that manufacturing companies have witnessed a downfall in their operational procedure due to natural disasters. Impact of these disasters is such adverse that firms are not able to regain their position in specific time frame (Lambert and Pohlen, 2006). On the other hand, damage of equipments initiate running operating cost for the company. Sony Corporation has also faced problems in supply chain integration due to natural disasters and resilience. Integration in information flow is not proper for the company and this leads to misunderstandings between participants, specifically at resilience stage. Disruption in manufacturing unit leads to delayed distribution function and this causes lower level of customer loyalty. Suppliers if not communicated well about the present circumstance, might cause hindrance during procurement of raw materials. 3. Conclusion As per the study, supply chain management is an important aspect of business operations. Organizations are greatly dependent on supply chain management or logistics for effective functioning of overall business operations. Over the years, Sony Corporation has attempted to establish strong market position. This is accomplished through its wide range of quality products and customer service. Products designed by the company are innovative by nature and this has been possible due to efficient supply chain management practices. Opportunities are closely knitted with supply chain operations of Sony Corporation. These are mainly in the form of green supply chain, incorporation of information technology, etc. On the contrary, issues associated with Sony’s supply chain are adverse impacts of natural disaster. Earthquakes are highly responsible for disruption of supply chain practices. Supply chain practices of the company are inclined towards active collaboration with customers and suppliers. When manufacturing equipments are disrupted it results into dismantle of overall supply chain operations. International distribution network is violated by impacts of natural disaster. Sony Corporation has also suffered financial losses due to such impacts. Inappropriate integration amongst supply chain components creates further problem for an organization. 4. Recommendations The findings of this report clearly indicate that the company is not being able to implement proper contingency plans. This is resulting into adverse impacts on organizational operations. Natural disasters are a common phenomenon in Japan and it needs to be addressed properly so that there is smooth flow of business operations. It is recommended that the organization should adopt technology based equipments which can assess risks and its overall impact. This would lower down percentage of negative impacts caused by natural calamities. Information integration system should be so strong that it can communicate required data across departments. It is observed in case of natural disasters that there is disruption in flow of information. Sony is a multinational firm, and effect on one area’s operations creates massive impact on other locations. This should be controlled with the support of IT based platform. Information integration during phase of natural disaster, results into proper communication of information between suppliers, manufacturers and customers. The company is recommended to form partnership with global IT firm. This would provide technical base to the company in order to sustain supply chain management practices. Environmental sustainability can be achieved by the firm through incorporating eco-friendly practices. References Emmett, S. and Crocker, B. (2006). The relationship driven supply chain. UK: Gower Publishing. Hugos, M. (2006). Essentials of supply chain management. Florida: Vivlia Publishers. Kirby, J. (2003). Supply chain challenges: building relationships. Harvard Business Review, 91 (7), pp. 65-73. Lambert, D.M. and Pohlen, T.L. (2006). Supply chain metrics. International Journal of Logistics Management, 14 (2), pp. 1-25. Maloni, M. and Benton, W.C. (2008). Power influences in the supply chain. Journal of Business Logistics, 25 (4), pp. 49-73. Oxley, J., Rushton, A. and Croucher, P. (2000). The handbook of logistics and distribution management. London: Kogan Page Publishers. Sony Corporation. (2015). Responsible sourcing and CSR in supply chain management. Retrieved from: http://www.sony.net/SonyInfo/csr_report/sourcing/supplychain/ . Wong, C.Y., Johansen, J. and Hvolby, H. H. (2004). Supply chain coordination problems: literature review. Aalborg: Aalborg University. Appendices Appendix 1: Supply Chain Network Appendix 2: Supply Chain Integration Appendix 3: Manufacturing Production Index Read More