Global Aviation Industry - Essay Example

Research Paper Table of Contents Introduction 3 Challenges in Rolls-Royce’s International Supply Chain 4 Reasons behind choosing Singapore Market 4 Challenges Need to be Considered 5 Recommendations 9 Decentralized Distribution Model 9 Reverse Logistics Activities 11 Conclusion 12 References 14 Introduction Global aviation industry is becoming highly competitive as several leading organizations within this industry are trying to capitalize on the potential opportunities in the business operation processes that are developed due to the globalization and technological advancements. It is true that effective business operation activities of aerospace manufacturing organizations significantly depend upon the efficiency of the supply chain management activities. Rolls-Royce is a renowned organization that manufactures and offers integrated power systems for defence aerospace, civil aerospace, and marine and energy. Now-a-days, several organizations within the aerospace manufacturing industry are trying to select Singapore innovation hub for several favourable reasons. Being one of the leading aerospace manufacturing organizations, Rolls-Royce tried to focus on emerging South Asian markets in order to gain potential competitive advantages within this particular industry. The significant growth of the Asian market and effective business opportunities attracted the organizati0ons to develop its manufacturing hub in the emerging Asian Markets. Singapore is one state and one country. The government of Singapore is trying to influence the leading aerospace manufacturing organizations around the globe to invest within the country’s industry as this particular industry is playing a significant role in the economic development of country. The government as well as the policy makers are trying to limit the degree of external environmental challenges in order to attain positive economic growth rate in this particular period of global economic downturn. This essay will discuss about the challenges that are faced by Rolls-Royce in international supply chain management operation. In addition to this, this study will recommend some important facts and concepts that will help the management of the organization to mitigate the associated risks and improve its supply chain management performance in global market place. Challenges in Rolls-Royce’s International Supply Chain It is clear that Rolls-Royce has tried to implement several unique strategies in the business operation process in order to maintain its core competency in global market place. Rolls-Royce started to venture in the global aerospace business in the year 1990. Slowly and gradually, the organizations started to expand its business practices in global market places in order to increase its market share. However, it is true that that the organization capitalized several opportunities in the supply chain management processes thanks to technological advancements and globalization. On the other hand, the organization also has faced several challenges and risks in its overall supply chain management process due to several reasons. First of all, this part of the essay will discuss about the reasons behind choosing Singapore as its preferable manufacturing location for the production of sophisticated aerospace parts and engines. Reasons behind choosing Singapore Market Singapore can be considered as one of the leading technologically developed countries in this world., In addition to this, the country is also gaining positive economic growth rate, where as other emerging and developed nations in this world have failed to ensure positive economic growth rate during the European financial crisis and global economic recession. First of all, it is important to identify the reasons behind the market selection. It has been mentioned earlier that the government of Singapore tried to develop several unique policies of the organizations to enter in the market. In addition to this, the government of Singapore has took several initiatives in order to support these organizations to enter in the potential Singapore market and motivate them to implement unique business operation strategies in order to ensure positive economic growth rate. Singapore is politically stable. In addition to this, the government and policy makers used to offer low corporate tax for the aerospace manufacturing organizations to motivate global leaders to ensure effective business practices. These aspects and favourable policies motivated the South Asian management of Rolls-Royce to select Singapore as its manufacturing location. Slowly and gradually, the management of the organization started to think about the development of manufacturing plant and campus. This growing demand and market emergence motivated the government of Singapore to develop a global aerospace manufacturing hub. It is true that recent financial crisis and global economic recession affected entire global economy. But, several Asian countries managed to overcome these impacts due to effective economic planning and positive industry outputs. Asian market can be considered as one of the largest consumer markets in this world. However, this aspect motivated the management of Rolls-Royce to select Singapore as the aerospace manufacturing hub. The organization ventured with Pratt and Whitney and invested collaboratively to develop a large and potential manufacturing unit in Seletar (Grant, 2014, p.1). This decision to develop manufacturing campus in Seletar was largely based on the growth of the industry. However, growing customer base and effective business opportunities provided by the government of Singapore motivated the management of the Rolls-Royce Company to invest in Singapore Market. The organization has a strong collaboration with the Singapore Airlines. Looking into these above aspects, it can be stated that Singapore Market can be considered as an effective, fastest growing and potential market for Rolls-Royce in Asia. Challenges Need to be Considered It is clear from above discussion that the organization has a strong and potential opportunity to gain huge and positive business operation success if they perform effective business operation practices in Singapore. It is true that demand for several highly technological parts and engines is increasing at a rapid paces among the organizations within the aerospace industry due to potential market growth rate. However, it is true that the organization needs to focus on great efficiency of international supply chain management practices in order to ensure positive business outcome. It is true that, the management of Rolls-Royce are still depending upon the Japanese suppliers. It is true that there are several advantages behind this dependency. On the other hand, it is also true that the management of organization faces several challenges in international supply chain management that needs to be considered by the organization. It is clear from above mentioned facts and aspects that the organization used to depend upon its Singapore aerospace manufacturing campus in order to manufacture and supply products in global market place. Therefore, it can be stated that the organization generally adopts and implement centralization in its supply chain and distribution process. It is true that, this centralized distribution method has both advantages and disadvantages. The management of Rolls-Royce can have the control over its entire supply chain and distribution management activities due to this centralized distribution process. In addition to this, the organization can maintain discipline in entire business operation and supply chain management process due to its centralized decision making process (Ross, 2004, p.47). However, the management of Rolls-Royce can face several challenges in its global market place due to the adoption of this centralized distribution system. However, this part of the essay will help the management of Rolls-Royce to consider the possible challenges that can help to improve the supply chain management performance. First of all, it is important for the organizations to determine the disadvantages of this centralized decision making process. Most importantly, this particular supply chain and distribution model can cause high supply chain lead time as the organizations generally depends upon single warehouse, singly manufacturing firm and single distribution centre. Therefore, the organizations generally fail to meet the distribution lead time that are ensured by the management of the organization. A single distribution centre generally fails to meet the deadline in global business operation as this distribution centre has to cover up the entire global territory within a short period of time. Cost-effectiveness of a particular supply chain network also needs to be considered by the management of Rolls-Royce in its international supply chain model. Now-a-days, each and every business organization is trying to develop cost-effective supply chain network in order to reduce overall supply chain as well as business operation cost. However, it is true that the management of Rolls-Royce saw the opportunity and developed manufacturing campus in Singapore. But, adoption and implementation of centralization model in the supply chain and distribution process can increase the supply chain management as well as business operation cost. It will cost so much if the organization sources raw materials from a country, manufactures in other country and distribute the end products to the customers according to the customers’ or business clients’ placed orders. Collaborative work performance of the employees within the global supply chain management of an organization is highly required as each and every organization used to implement workplace diversity in workplace. It is clear from above discussion that, the supply chain network can be considered as an important department for Rolls-Royce for its international business process. Centralized distribution model can create several types of workplace conflicts within its supply chain department. It is true that the organizations used to focus on effective cultural diversity in order to manage overall supply chain network performance. Workplace diversity has several advantages as well as disadvantages. Centralized decision making process in the distribution channel creates a possibility of communication gap between the top level management and low level employees. On the other hand, it creates miscommunication among the employees of supply chain management in several global areas. This miscommunication can hamper overall supply chain performance of Rolls-Royce in international market. In addition to this, it can hamper the workplace performance of the organization (McCullough, 2008, p.42). Ultimately, this can affect the business performance of Rolls-Royce in global market place. Rolls-Royce failed to utilize the pre-used products and materials in its supply chain management. It is true that several leading global manufacturing organizations used to consider the concept of recycling and reverse logistics in supply chain management process to reduce the supply chain management cost as well as entire business operation cost. It has been mentioned earlier that the global economy is facing slowdown due the great impact of recent European financial crisis and global economic recession. Therefore, it can be stated that the management of the Rolls-Royce Company should consider the concept of reverse logistics and recycling of waste materials in its logistics and supply chain management process in international market place in order to, maintain environmental sustainability and low business as well as supply chain operational cost. Huge cost for the sub-standard performance and consequences for low-quality can be considered as other possible issues of this centralized su8pply chain distribution model (Simtech, 2013, p.16) Last but not the least; this decentralized supply chain and distribution model can affect the decision making process. In addition to this, it can create difficulty for the management of the organization to develop effective and fruitful supply chain strategies. It is true that, several organizations try to include important external and internal stakeholders in the decision making process in order to overcome the possible issues that are developed in the decision making process. In addition to this, this centralization model in the distribution process can force the government and several external agencies to withdraw support from the management of the organization if the organization does something unethical (Tompkins, 2003, p.17). Therefore, it can be stated that the management of Rolls-Royce should also consider stakeholder engagement aspect in the supply chain and distribution management decision making process. Recommendations It is clear from above evaluation and discussion about the supply chain activities and performance of Rolls-Royce that the management of the organization may face several challenges and risks in its global supply chain activities. Following recommendation plan will help the management of the Rolls-Royce Company to consider the issues and improve the supply chain performances accordingly. Decentralized Distribution Model First of all, it is quite clear from the above discussion that the management of the Rolls-Royce Company can face challenges in its international supply chain management due to its adapted and implemented centralization model in distribution process. Therefore, it can be strongly recommended that the management of the organization should try to think about the implementation of change management process in its supply chain network. It is clear from the above discussed challenges and risks that the centralized distribution model can increase the overall supply chain lead time and can increase the overall inventory turnover. Therefore, implementation of decentralization model in the supply chain and distribution model can help the management of Rolls-Royce to minimize the supply chain lead-time and reduce the inventory turnover. It is quite important for the organizations to increase the number of distribution centre. Sufficient distribution centre and warehouses can help the supply chain department of Rolls Royce to bring efficiency in the material sourcing and resource allocation process. This efficient resource sourcing and allocation process will help the organization to produce products in quick period of time comparing to its adopted centralized supply chain and distribution model. In addition to this, it can help the organization to clear the inventory as quick as possible as low inventory turnover is the only characteristic of effective business performance of a manufacturing firm. It has been also discussed that the management of Rolls-Royce should try to consider the aspect of cost-effectiveness in its international supply chain management process in order to reduce the business operation cost. Centralized distribution model may help Rolls-Royce to limit its initial business operation cost as it will help to control overall supply chain management activities through its only distribution centre that can enhance cost reduction. But, long and centralized supply chain network can increase the possibility of huge distribution and logistics cost as the organization will cover global market places through its centralized supply chain network and one distribution centre (Thadakamalia, 2007, p.75). Introduction of several distribution centres can reduce the length of supply chain network and can bring efficiency in the global distribution activities. It will help the management of Rolls-Royce to reduce overall supply chain as well as business operation cost in global market places (McDaniel and Gupta, 2007, p.110). In addition to this, the management of Rolls-Royce should try to consider the concept of cost leadership business level strategy in its decentralized supply chain and distribution model in order to reduce the supply chain activity cost as minimum as possible. It will not hamper the productivity or quality of the product. But, this cost leadership strategy in the decentralized distribution model can help the management of the Rolls-Royce to source and allocate resources according to the needs of target customers and supply chain operation activities. Decentralized distribution model can also help the management of Rolls-Royce Company to avoid and overcome several types of workplace conflicts that can be developed due to cultural diversity within the workplace (Umar, 2003, p.64). It is clear from the above mentioned possible challenges that each and every organization faces risk factors in the organization due to the workplace conflicts. Decentralization in the supply chain management and distribution process can help the management of the organization to maintain effective relationship with the low level employees within the supply chain and distribution department (Kiank and Fruth, 2012, p.14). In addition to this, this particular distribution model will enhance stakeholder engagement in the decision making process. Employees and management of the organizations are considered as the valuable and important internal stakeholders of an organization. On the other hand, government, industrial agencies and policymakers are considered as the important external stakeholders of an organization (Kosalka, 2008, p.19). Therefore, decentralization may also help the management of the Rolls-Royce to motivate the management of the organization to integrate government representatives and potential employees in the decision making process. First of all, it can help to maintain good relationship with the government. So that, the organization can face limited legal barriers in the international market. On the other hand, it can motivate the effective employees as the integration of competent employees in decision making process will help the organization to develop effective supply chain and distribution management strategies. Reverse Logistics Activities Maintaining sustainability in the supply chain and distribution management process has become one of the major concerns for the business organizations in international supply chain management. Environmental, social and economic sustainability are the major issues that should be considered by the organizations in their supply chain management activities (Chopra, 2008, p.507). It is clear from above discussion that unethical supply chain management practices and low operational sustainability can raise several legal challenges for the management of Rolls-Royce organization in the global market places. Adoption and implementation of reverse logistics management process and activities will help the management of Rolls-Royce to maintain sustainability in its supply chain management process (APICS, 2013, p.1). Adoption and implementation of this reverse logistics management process will allow the organization to recycle and utilize its pre-used products in supply chain management process. First of all, it will help to reduce the cost of resource sourcing and allocation (Kersten, 2008, p.39). Secondly, it will help to maintain environmental sustainability that can enhance strong relationship with its existing important external stakeholders (Hill, 2012, p.23). Conclusion It is clear from above discussion and evaluation that the government of Singapore is trying to influence and support several leading global aerospace manufacturing organizations to enter in the country in order to stabilize the economic growth rate. It is true that aviation industry is playing important role in the economic development of Singapore. On the other hand, effective market demand and potential customer base also motivated the Singapore government to develop aerospace and innovation hub. This market emergence motivated the management of Rolls-Royce to develop aerospace manufacturing hub in Singapore. However, this decision helped the organization to maintain a positive market growth rate. The management of the organization adopted and implemented centralized distribution model in the supply chain management process. It helped the management of the organization to maintain its overall supply chain management process and activities. However, high supply chains lead time, high inventory turnover and high supply chain management cost. Therefore, it can be recommended that the management of Rolls-Royce should adopt and implement decentralized distribution model to overcome the above mentioned challenges. In addition to this, adaptation of reverse logistics management activity can help the organization to maintain sustainability in the business operation process. References APICS., 2013. Reverse Logistics at Rolls-Royce. [Online]. Available at: http://www.apics.org/industry-content-research/publications/apics-magazine/apics-magazine---landing-page---everyone/2013/11/21/reverse-logistics-at-rolls-royce. [Accessed on March 27, 2014]. Chopra, S., 2008. Supply Chain Management. 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Available at: http://www.simtech.a-star.edu.sg/PECOI/media/3322/13014%20Requirements%20to%20be%20an%20Aerospace%20Supplier%20(version%202).pdf. [Accessed on March 27, 2014]. Thadakamalia, H., 2007. Decentralized algorithms for search and Routing. New York: McGraw-Hill. Tompkins, J., 2003. No Boundaries. Stamford: Cengage Learning. Umar, A., 2003. E-Business and Distributed Systems handbook. London: Sage. Read More