Supply Chain Management Systems - Tate and Lyle Logistics - Essay Example

by In Supply Chain Management system there is the availability of different facilities which help the purchase departments of different industries in procuring materials and then there is the transformation of these materials into intermediate and finished products. The SCM also provides the facility to distribute the finished products to the concerned customer. INTRODUCTION SCM or logistics plays a vital role in enhancing the overall organizational performance. The key definition of SCM is that it serves as an integrator of business processes between end users and the suppliers who serve their customers in the form of providing products, services and information (Lamber et al. 1998). Supply chain management (SCM) is the 21st century global operations strategy for achieving organizational competitiveness. Companies are attempting to find ways to improve their flexibility and responsiveness and in turn competitiveness by changing their operations strategy, methods and technologies that include the implementation of SCM paradigm and information technology (IT) (A. Gunasekaran, E.W.T. Ngai 2003). The industries in the 21st century are trying to improve their infrastructure in order to compete in the global market. The industries are adopting agile methods for the sake of fulfilment of market requirements. For achieving market goals industries are moving towards outsourcing virtual enterprises and resulting in the decentralization of their activities for getting maximum market benefits. So there is the need of a bridge, which may serve as an integrator between suppliers and partnering firms, in the domains of supply chains or logistics. The bridge which can fill the gap, between suppliers and partnering firms, is the domain of Information Technology. The integration of suppliers and partnering firms through Information Technology evolved the new approach known as Supply Chain Management. Supply Chain Management Systems or logistic systems are present everywhere and they are adopted by many industry champions or network leaders. In the beginning the interorganizational systems used by the industries were only able to support the automation of manual processes such as for managing orders and accounts. Then with the passage of time the addition of different powerful features, like information sharing, communication and collaboration, in the existing systems have made them more robust and beneficial for network leaders (Icasati - Johanson and Fleck 2003). There are round about 30,000 interorganizational systems which are being developed and these systems are supporting the business to business transactions (Harris 2001). Information technology and e-commerce are playing a significant role by providing the means of collaboration and integration between the industry partners. The collaboration and integration among the network leaders is achieved through the features provided by the information systems which are used as supply chain management systems. The benefits of these systems are of more concern with the supplier firms. The supplier firms come in the domain of supplier networks and these supplier firms have relations with network leaders. The network leaders are the core bodies which organize the supplier for the sake of their utmost industrial benefits. The network leaders play a vital role in introducing the information systems related to supply chain management to their respective suppliers. Benefits associated with the information systems and ecommerce are distributed roughly and are more favourable for network leaders (Riggins and Mukhopadhyay 1994). Further the benefits from information technology and ecommerce for the network leaders are associated with the confirm participation of suppliers and there are rare chances for the suppliers to get benefits from network leaders rather these network leaders are enjoying at the expense of suppliers (Carter 1990; Clemons and Row 1993). The scenario which is stated increases the work load at supplier side and this thing add more cost to them. How does the activities at supplier side raise? The answer to this peculiar question can be in the form of an example e.g. the adoption of vendor-managed inventories transfers the tasks of monitoring and managing retail inventories in the court of suppliers and this ultimately results in the benefits for network leaders and this thing adds more tasks at suppliers’ end. Auto manufacturers and retailers gain benefits from quick response programs and increases the burden at suppliers’ end in the form of making frequent deliveries and higher cost of inventory management (Mukhopadhyay et al. 1995). The bargaining power of network leaders plays a vital role at their end in terms of benefits by streamlining their internal processes e.g. introducing the target of cost reduction in supply contracts (Ghosh and John 1999). For suppliers the supply chain management systems are unfortunate in terms of getting benefits from them (Barua and Lee 1997). In the said research paper we will find the logistics or SCM processes of Tate and Lyle industries Silverton and the problems or issues associated with the logistics processes. TATE AND LYLE (CASE STUDY) In this research the major industry which is focused is Tate and Lyle industry Silverton and the logistics or supply chain management processes of the industry. One of an innovative tool which is used to improve the logistics and SCM processes is the electronic procurement and the electronic procurement provides a base to eliminate the challenges which are in the way of an industry. The tool helps in providing services and purchasing goods online. The electronic business converts the whole procurement process online and enables the distributed employees to coordinate online and e-business helps in streamlining the procurement cycle (Hearn and Gibbons, 2001, p. 3, 5). For e-procurement solution huge budget is required because the expense of procurement at a refinery industry is very high. The cost is a major issue in e-procurement but the price of a product is not accountable as compared to overall expenditure of the procurement. In the recent years the industries are focusing on better cost management techniques. E-procurement or information technology provides cost reduction opportunities which ultimately results in the overall logistics processes. As Tate and Lyle is a market leader of food industry. At Tate and Lyle it is in the upstream supply policy that the good and long term relationships with the partners and suppliers are very important. At Tate and Lyle a consistent group-wide approach is adopted which is based on the code of conduct. The very approach helps in providing the purchase strategies at global, regional and local level. At Tate and Lyle they have to follow supply chain ethics and for this purpose best practices and standards are shared among suppliers. For the industry the major raw materials are corn and sugar cane which are used in the various products at Tate and Lyle. The growers and producers of corn and sugar cane are the major suppliers, or can also be termed as partners, of Tate and Lyle. The company have developed long term and mutually beneficial relationships with the suppliers of corn and sugar cane. Tate and Lyle have introduced an auditing program for supply chain in 2007. The purpose of auditing program is to evaluate the social, ethical and environmental performance of the suppliers and the program also helps in identifying the problems or shortcomings at suppliers’ end. If some drawback or shortcoming is found at some supplier’s end then the company adopt innovative ways to encourage the suppliers for the necessary improvement. Tate and Lyle do not purchase the raw materials from farmers and sugar mills rather they prefer to buy corn and sugar cane from contracting parties which may be a government organization or a cooperative through and electronic system so using an electronic system it is not possible to contact the individuals. For the sustainability in the market Tate and Lyle have developed a firm supplier-manufacturer relationship and this sort of relationship enhance the profitability of both the parties i.e. suppliers and manufacturers. The relationship is based on the coordination among the business partners. The firm relationships with suppliers also help in improving operations performance and this performance can be measured in terms of quality, delivery of products. At Tate and Lyle there are three components flowing through the supply chain. In supply chain the goods and services are in one direction, the payments are in the other direction while the flow of information is in both directions. An important factor which is strongly integrated with SCM is the procurement management. At Tate and Lyle procurement management is directly related to the activities involved in purchasing the goods and services which play a vital role in the overall success of the organization. There are seven stages which are involved in the purchase of a product or service that include information gathering, supplier contact, background review, negotiation, fulfilment, consumption, maintenance and disposal and renewal. Traditionally the procurement management is related to the supply of essential commodities which are required for business operations and the factor of money saving is also kept in the mind during procurement process. At Tate and Lyle round about 80% of the purchased items, which include maintenance, repair and operations, contribute 20% in the actual total purchase value. Due to the inclusion of non-value added activities in the procurement process forces the experts not to pay full attention for a sufficient time on the procurement of those materials which yield a high value. E-PROCUREMENT PROCESS AT TATE AND LYLE Purchase Process At Tate and Lyle it is the responsibility of purchasing department to search the specific products which fulfil the requirements of the department and their customers and then for buying these products the vendors are invited to bid for the said products or negotiate their prices with the purchase department. The prices, which are confirmed after consensus or on agreed upon conditions, are stored in the electronic databases by the buyers. Before shipment the buyers have to compare the alternatives for the said suppliers who are supplying the products and these alternatives can be accessed using electronic catalogue on internet or using internal database management system. The purchasing decisions, taken by the purchase department, are considered according to the strict internal management standards of the workflow. These standards are predefined by the purchase department at Tate and Lyle. The selection of right supplier is a crucial factor which is considered in terms of quality, delivery of product in a specified time and the cost of the purchased products. The information available on these sources is updated according to the procedures as and when required. Using the electronic procurement system of Tate and Lyle a user can also buy the products and services online and it also helps the suppliers to receive and transfer funds without any problem using credit cards. The challenges which are faced by Tate and Lyle forced the organization to adopt the e-procurement solutions for simplification of supply management issues around the world. The Tate and Lyle is facing the challenge of diverse properties in many countries so there is the need of a robust sort of supply chain management system because there would surely be the different needs and issue of supply management. There was the need of the integration of a sophisticated but easy to use e-procurement solution with the existing supply chain management system. At Tate and Lyle the integration of electronic technologies provided them the ability to easily simplify their procurement processes. And this goal was achieved through a software based system. The software based system would help in optimizing the supply chain management system of Tate and Lyle across all the business properties. Tate and Lyle management also wants that the electronic procurement system must be easily accessible across all the stations. The management at Tate and Lyle quickly assessed the importance of the automation of their supply chain management system. As a solution electronic procurement software was considered more suitable. The system helps in electronic hosting and maintenance for Tate and Lyle’s Supply Chain Management electronic procurement portal. The system also provides the solutions for number of other e-procurement issues. The system provides the following noteworthy benefits to the organization. The software helps in streamlining the procurement processes and the software also plays a vital role in streamlining the back office automation processes. The software provides the ability to host and maintain the e-procurement portal in a secure and real time environment. The software is more flexible in its usage and it provides the on-demand purchasing capabilities which provide 24 hour help in searching the suppliers, budgets and order processing information just in one click. The software is providing a flexible integration of localized brand business requirements for the supply chain management system at Tate and Lyle. The software tool helps in optimizing the customer services for the sake of easy access to the concerned data. The software is a scalable solution which suits well for scope of Tate and Lyle properties. The software is a cost effective, secure, and robust solution for the supply chain management system. Using the software the suppliers can easily maintain and update their product catalogues and it would help in saving of time and other resources. The software also provides better reporting and analysis capabilities. Information Sharing The flow of information to and from all involved stakeholders at Tate and Lyle is also included in SCM. There is a suitable information sharing process to share the information among all business stakeholders and the sharing of information among all the departments of the concerned organizations and this process of information sharing is very essential for the key success of SCM. It is very essential to measure and compare the performance of an existing SCM for the identification of problems and more opportunities in the business. There are different ways to measure the overall performance of an existing SCM at Tate and Lyle like cost, quality, customer service and satisfaction, delivery, cycle times, responsiveness, products and services offered and the utilization of assets. During the purchase process the fast information sharing or information communication are very essential for the key success of an organization so the integration of information technology and automation is required throughout the whole procurement process. Through electronic procurement an organization can establish very fast relations with its suppliers. The integration of electronic commerce or information technology is considered as an important factor in making a collaboration bridge between different trading partners at Tate and Lyle and this technology integration had paved the way for the successful implementation of the procurement management strategy at Tate and Lyle The concept or philosophy of SCM in Tate and Lyle industry is applied to a certain extent. Tate and Lyle industry is a fragmented one and the business is running in many countries at different properties and the raw material is purchased by hundred of suppliers in the market. Due to this fragmentation the whole industry is facing significant challenges for procurement management for example the industry is susceptible to inefficient control of procurement procedures. So to cope with these challenges it is very essential to have a deeper understanding about the core of supply chain management in the context of the target industry. Tate and Lyle SCM leaders are enjoying the following benefits from electronic procurement and this innovation has eliminated the traditional approaches of SCM along with their challenges. They have an increased control of the suppliers and quality standards due to a strong relationship which is built due to e-procurement system. The e-procurement system also provides an environment at Tate and Lyle in which a better understanding, coordination and collaboration exist among all the supply chain members and business partners. There would be matured processes after such an approach and there would be a better communication and cooperation link among all the stakeholders of Tate and Lyle. The company is enjoying the faster customer response and an improvement in the ratio of delivery. The electronic procurement system at Tate and Lyle is also providing help in good planning and scheduling the business activities. By using e-procurement the productivity rate of Tate and Lyle also increased automatically and there would be better response against demand fluctuations. There are lower levels of inventory in this approach and with the adoption of electronic procurement the overall costs of procurement are reduced. PROCUREMENT OPERATIONS The procurement operations with the integration of information technology and electronic commerce are performed under different modes or marketplaces. The researchers have called many-to-many mode as a public electronic marketplace .And when the operations are performed in one-to-many mode using electronic commerce or information technology then this mode is called a private electronic marketplace. Tate and Lyle industry has adopted such a model for creating their own electronic marketplace where they have introduced the brand of their company. Using the e-marketplace or the internal websites the two franchises can get the data of their inventories. When the different franchises have to utilize the inventories of different other franchises then it is evident that this would help in time saving in making correspondence with the suppliers and it leaves an impact that there will also be an overall increase in the cash flow of the different franchises. There are two types of marketplaces i.e. vertical and horizontal. A single industry or a segment of an industry comes in the domain of vertical marketplace and the very industry or the segment of the industry is supported by many other strong companies who are in the marketplace. If a service or product is the focus of all the industries then it comes in the domain of horizontal marketplace. There are two types of purchasing or sourcing strategies which are taken into account one is the spot/competitive sourcing which is based on urgent needs and the other one is the systematic or strategic sourcing which is based on a long term relationship between suppliers and the buyers. At Tate and Lyle the second strategy of long term relationship is adopted and it is more beneficial than the firs one. When spot strategy is adopted by the industry then there come the problems of dynamic behaviour and uncertainty in the prices of the products or services. The market makers are in the need to match their supply and demands in their exchanges. But in the case of systematic sourcing strategy the prices of the products are predictable because in this very approach the prices are negotiated by adopting a framework of terms and conditions between the business partners or buyers and the suppliers. So using the systematic sourcing, in collaboration with e-commerce, a collaborative sort of commerce has established, by Tate and Lyle at Silvertown, among the partners of the supply chain. And it results in shorter time span for product or service delivery, not frequent delays and less work interruptions, fewer inventories and very low costs of the administrative operations. Using the electronic procurement software systems Tate and Lyle is performing the upstream supply chain management operations, for example the placement of orders with suppliers, which have to dealt with internal supply chain activities like inventory control, production scheduling, and cost and these softwares are also supporting the downstream operations of Tate and Lyle like sales, delivery scheduling and billing of the customers. The electronic procurement softwares are providing the built in features or built in analytical tools to check or automate the overall performance of the suppliers in the form of product and service quality, price comparison, reliability, and compliance with the procurement policy of Tate and Lyle. CONCLUSION Organizations are becoming too much aware of the emerging internetworking competitions and the success of the organization is based on the integration and management of business processes among all the member of supply chains or purchase department. The management of supply chains is dependent upon chances rather people have to work hard to find out how to manage and control the company’s supply chain system. The business processes among the collaborating partners are vital for good relationships and these relationships play a vital role in creating competitiveness and profitability for the company. A successful supply chain system is also based on integrated processes which are involved in a business. In a company if the supply chains are not integrated then it would result in wastage of valuable resources. So for integrated supply chains it is very necessary that all the activities must coordinate to implement a successful supply chain management system. One way, to coordinate these activities, is the adoption of innovative technologies which pave the way to mature processes as discussed above. It is very essential for the leaders of a company that they must find out in which domain their company is fitting best i.e. the horizontal marketplace or the vertical marketplace. In SCM the focus is from the manufacturer to the customer in most of the cases. Further ERP (Enterprise Resource Planning) systems are providing a robust and modular framework and these systems also help in integrating business process and managerial decisions. In the paper it is also evident that the food industry (Tate and Lyle in our case) is improving all the processes at organizational level. In food industry in the past people were focusing on increasing production and generating revenues due to these two factors they were able to attract their franchisees that they have to show interest in their brands. But now they can reduce the total costs and can enhance their brands with the adoption of innovative technologies in their supply chains. The integration of marketing and procurement operations showed that the persons who are involved in supply chains assure that the integration of innovative technologies is warmly welcome. For electronic procurement there is need of training of the staff persons and the notable thing is that they must have to observe the importance of the benefits of electronic procurement systems. The electronic procurement is a continuously changing area and these systems are very flexible and can be modified and upgraded according to the needs of the organization. The electronic procurement technologies are serving as an important management tool for increasing the overall performance of the supply chains. Bibliography Carter, J. R. 1990, The Dollars and Sense of Electronic Data Interchange,. Production and Inventory Management (31:2), pp. 22-26. Clemons, E. K., and Row, M. 1993, Limits to Interfirm Coordination through Information Technology: Results of a Field Study in Consumer Goods Distribution,. Journal of Management Information Systems (10:1), pp. 73-95. Hearn, Gibbons. 2001, Defying the dot-com syndrome: E-procurement is still a viable solution, Hospitality Tech Advisor 8 (18), p. 1,3. Icasati-Johanson, B., Fleck, S. J. 2003, Impact of E-Business Supply Chain Technology on Interorganizational Relationships: Stories from the Front Line. Presentation at the Sixteenth Bled Electronic Commerce Conference, Bled, Slovenia. Gunasekaran, E.W.T. Ngai. 2003, Information Systems in Supply Chain Integration and Management. European Journal of Operational Research 159 269–295 Lamber et al. 1998. D.M. Lambert, M.C. Cooper and J.D. Pagh, Supply chain management: implementation issues and research opportunities, International Journal of Logistics Harris, N. 2001, Private Exchanges. May Allow B-to-B Commerce to Thrive After All,. Wall Street Journal, p. B1. Mukhopadhyay, T., Kekre, S., and Kalathur, S. 1995, Business Value of Information Technology: A Study of Electronic Data Interchange,. MISQuarterly (19:2), pp. 137-157. Riggins, F. J., and Mukhopadhyay, T. 1994, Interdependent Benefits from Interorganizational Systems: Opportunities for Business Partner Reengineering,. Journal of MIS (11:2), pp. 37-57. http://www.gtlon.co.uk/case_studies/126_tate_lyle_s_sweet_smell_of_success.html Tate and Lyle’s Sweet Smell of Success http://www.tateandlyle.com/NR/rdonlyres/eudtd6y3f65nvsmsjcrkskq6zgxiwm45xkwwtucccpfkoybabrtolykm5r7ydxs33mufmkuqxhhrfrtrwl52457fqsf/2002_TL_AReport_p22-25.pdf Corporate Social Responsibility Read More