International Management: Britain Risks A Supply Chain Crisis - Case Study Example

Introduction Purchasing and supply chain management is part of the routine activities of companies that are in both the production and service sectors of the economy. As part of the chain of operations involved in production and service delivery, organisational leaders are always tasked with the responsibility of ensuring that all stakeholders whose contributions are needed to guarantee the success of the operational process are brought on board. This situation leads to a more focused concept of purchasing and supply chain management, which entails the management of the flow of resources and materials from the point of origin to the point of production (Harland, 1996). In Britain, the contribution that multinational companies that are into production and service delivery make to the gross domestic product (GDP) of the economy has been noted to account for over 31% of the total size of the country’s GDP (Inman, 2009). Meanwhile, in the dealing of most of these multinational companies, they are involved in the direct outsourcing of raw materials from international suppliers, which creates an international purchasing and supply chain. Regardless of the contribution they make to the economy, there have been recent calls to look into the processes and practices involved in the activities of these multinational companies as their international purchasing and supply chain management could contribute to a serious supply chain crisis for the country. The context of this claim largely rests with the fact that the consumer is hardly made aware of what is involved in what they consume from the supplier end (Plimmer, 2014). Based on this problem, the essay tries to examine the question of whether Britain really risks a supply chain crisis. Theories of international purchasing and supply chain management in Britain According to Jacoby (2009), most of the practical professional application of international purchasing and supply chain management in Britain are based on organisational theories. Three of these theories that apply either directly or indirectly to the case study are resource-based view, order management system and total quality management. Writing on resource-based view and how it applies to the British context of international purchasing and supply chain management, Barney (2001) noted that resource-based view doubles as a basis for competitive advantage for companies. This is because it entreats companies to apply bundles of valuable tangibles and intangible assets in such a way that transforms their short-run into heterogeneous and non-mobile formats. A company that successfully achieves this is thus seen as one that makes purchases and gets supplies that cannot be easily imitated or substituted (Rugman and Verbeke, 2002). In the bid to achieving resource-based view, most multinational British companies go very far in terms of geographic location to get supply of their raw materials and other forms of resources of production, knowing that the source of supply could contribute to consolidating the value of the resources (Barney, 2001). Writing on order management system, Matthys (2009) likened it to a modern day approach to international purchasing and supply chain management whereby companies in both the service and production sectors take advantage of technology to ease up the supply chain process. This is because order management system enhances electronic commerce through the application of computer software system for the entry and processing of supplies. Deming (2006) however argued that as much as the order management system helps British companies to be proactive and efficient with their international purchasing and supply chain management, it has an underlying problem that most companies have failed to address. This underlying problem has to do with the fact that most companies tend to focus on the easy and speed that order management systems offer so much that they fail to concentrate on other aspects of the supply chain that are quality oriented. For example, because a company may be more enthused about how many lines of raw materials it is able to make within a given time frame by the use of order management system, other things like quality assurance and quality control are totally overlooked. Writing on total quality management (TQM), Matthys (2009) debated that this is the highest level at which responsible British companies have operated in terms of international purchasing and supply management. This is because companies that operate their international supply chain based on TQM tend to be more focused on how they can achieve organisation-wide implementation of permanent culture of continuous improvement in the delivery of top-quality products and services. In effect, such companies are forced to be proactive with the issue of quality right from the supplier end through the production processes, and then to the consumption point (Hines, 2004). From the basis of the case study however, one would wonder if companies using TQM could only be focused on the quality of raw materials they use or they will also be concerned with the quality of treatment and practice that go on at the production ends of the supplier such as whether or not minors are involved in the production of the so called quality raw materials. The problems at hand To better address the question raised as to whether Britain faces a supply chain crisis, it is important to attempt to identify possible problems that exist with the existing supply chain in Britain. After identifying the problems, they will be related into the larger global context to know if these problems are serious enough to constitute a crisis for the supply chain sector. From the case study presented by Plimmer (2014), one of the very issues that are outlined is the fact that “British businesses have poor knowledge of where their products were sourced from”. This is certainly a situation that can be considered to be a problem for supply chain. As noted in Jacoby (2009), the need for businesses to have full knowledge of the source of their raw materials and what goes into the production of these raw materials is not an issue that can be overemphasised in today’s business climate. Blanchard (2010) cited the need for there to be the promotion of fair trade of all kinds as one reason it is very important that businesses have adequate knowledge of the sources of their products. By fair trade, there is a long standing case being made for to the effect that when suppliers use unfair and unacceptable practices such as slavery, child labour and cheap labour to get raw materials produced, the eventual businesses that purchase these are breaching fair trade because there is a promotion of an undue advantage that is taken by the supplier. The fact that businesses are not proactive enough to know the sources of products and what goes into the production of these products is therefore a major problem for Britain’s supply chain. Also in the case study, Plimmer (2014) outlined an issue that can be said to be even a worse form of a problem. According to the case, “professional say the scandal has not led to risks being taken more seriously”. By implication, very little is being done to prevent or control risks that are posed to the consuming public because legislators and other people who must be concerned with the making of laws and the enforcement of the laws have showed reluctance to their duty (Mentzer et al., 2001). Once this happens, it means that through supply chain, the larger British population is put at risk of consuming products that are poorly tested or run through the processes to ensure that they are safe for the consuming public. Citing the horse meat saga with Tesco, one would wonder if there had been any proactive measures that had gone on through any of the channels within the supply chain. This is because as indicated earlier, supply chain is a process rather than an event. As a process to, there are several channels that raw materials go through before they get to the consumer (Hines, 2004). As an evidence of an existing problem of authorities doing very little to protect the public against consumption risk, no one could detect that the products that were on the shelves of Tesco were unwholesome till they had gotten to the shelves and some of them sold. Absence of a strong consumer protection law is therefore a problem for Britain’s supply chain. Particularly, the protection laws have been made to be curative in nature instead of preventive. One issue that was clearly spelled out in the case study but has its content inferring to is the issue of national competitive advantage. With the advent of globalisation, it is open knowledge that countries across the globe are competing against each other for political and economic power (Wieland and Handfield, 2013). In any of these, one factor that helps a country in amassing points to be competitive is the ability of the country to adhere to international standards and principles of trade and commerce (Ferenc and Sándor, 2002). Also as part of globalisation, it is known that there have been several international bodies that regulate how international business and trade to be performed. An example of such body that Britain holds allegiance to is the World Trade Organisation (WTO). Meanwhile, the WTO has specific international purchasing and supply chain management principles that are expected to be adhered to by all member states. Typical example of this is the ban on trade with suppliers whose activities are questionable due to acts like slavery, child labour and forced cheap labour. With the whole international community having knowledge of such regulations, it constantly looks for countries that abide by these rules to go into international trade with. But given the fact that there continue to be reports of businesses in Britain doing business with such suppliers, or doing little to clarify if they really do business with such suppliers, Britain gets a negative international image that affects the national branding of the country for competitive advantage negatively. There is therefore a problem of poor competitive advantage against Britain due to how little efforts have been made to know more about suppliers. Why the problems amount to supply chain crisis It may be one thing to say that there is a problem and another thing to allege that the problems amount to a crisis. In the context of the current study, the claims of problems made above are being likened to a supply chain crisis for Britain with evidence of the crisis given in support. The first claim of evidence that can be made to the effect that the problems discussed amount to a crisis is when the problems threatens the lives of people directly. Certainly, the life of humans is the most precious and valuable asset that can ever be referred to. Anything that affects or threatens this life can thus be considered to be a crisis. With this said, one would ask what the breakdown in law enforcement and checks at various channels of the supply chain mean to people’s lives, particularly consumers. Using the example of the horse meat case of Tesco which was cited in the case study, one is tempted to question if the situation could not have been worse than horse meat. If the situation could have been worse, one may also ask that could it also not have been as worse as life threatening to consumers. In most of the instances, the consumer rests all hopes and trust in the consumer protection officers to ensure that what is put on the shelves is safe for consumption. But if virtually nothing will be done by way of checks to ensure that nothing unwholesome gets to the shelves or the selling point, then the lives of consumers are certainly at risk and this is certainly a crisis situation for Britain. Again, a situation may be described to amount to crisis in the current instance if it can lead to the partial or total collapse of the British supply chain system. Giving how important supply chain is to the production and service sectors of the economy, anything that affects or threatens the survival of the supply chain system is certainly a crisis situation (Cooper, Lambert and Pagh, 2007). Meanwhile making reference to the problems discussed above, it was seen that the actions of businesses in which they have not been proactive enough to authenticate the sources of products creates a problem that affects Britain as a whole. As the national competitive advantage of Britain continues to become dented, chances that prominent suppliers may not want to associate with British producers and service providers are higher. This is because for such suppliers, they may fear being tagged as being part of the league of suppliers that use child labour, forced labour and other forms of unfair means to get raw materials produced. Once a situation like this comes up, the supply chain system risks a major challenge, which amounts to the crisis of partial breakdown of the system. This is because in such a situation, all that producers and service providers may be left to rely on will be lesser known supplier whose track records and quality lines cannot be easily authenticated. For the fact that the problem can collapse the supply chain system therefore, it can be said that there is indeed a crisis. Solving the problems at hand As threatening as the current situation may be, there could be good news if all stakeholders will be pragmatic enough with the need to solving the problems. In the first place, it is very important to have a more proactive supply chain management team within the individual businesses that trade with international and local supplier. The word proactive is used in this context to signify a supply chain management team that will not be only passive with the reception of raw materials. Rather, it is important to have a team that can go as far down as the supply end to ensure that they have adequate knowledge of what is happening at these places. Even though the suppliers have their autonomous right to be independent with their way of doing business, it does not necessarily mean that no one can have access to what they do, especially when the access borders on safety (Haag et al., 2006). Businesses in Britain can therefore be very helpful to the general public if they would spend enough time and resource to be more informed about what happens at the supplier end. It is important to note that the advocacy being made is not just for one that makes the businesses know where the supplies come from but one that also ensures that they businesses are aware of what goes into the production of the raw materials. Secondly, it is very important that law maker in Britain will adopt a protective regulatory approach rather than a curative one. What this means is that the law makers should be more concerned about ways in which they can prevent evil from happening rather than merely looking into ways of dealing with evil after they have taken place. This is because in the issue of consumer protection, it is often very difficult to detect forms of rot until some form of harm have been done (Kaushik and Cooper, 2010). To effectively implement this recommendation it will be important that there will be personnel at all channels and stages of the supply chain that check to be sure that the right things are done. Until now, the consumer protection agencies only seem to be concerned with checking products after they have finally arrived with the companies that purchased them. This approach however comes with the obvious risk that some bad products may never be detected till they have finished posing their threat. Should this second solution approach be adopted, there will be a two-tier approach to curbing the risk. This is because whereas the first recommendation will ensure an internal mechanisation of the change process, the second recommendation will be more focused on the external aspects of the crisis. What is more, it is important to ensure that the need to have laws in place will not only be for their enactment but enforcement as well. What this means is that law enforcement should be taken more seriously so that consumers can have sufficient assurance that there is a form of protection for them. Situation in which breakers of the law and other offenders are made to go without being punished is not a deterring approach to preventing evil and crime. There are several British people who doubt if law enforcers can really live up to their calling to ensure that wrongdoing within the supply chain sector is curtailed. This is especially as most companies involved in such actions are regarded as giant players in the business arena. It is however important for the law enforcers to know that until they show such commitment for all those at every level of the business chain, there is no way the country can enjoy the sort of success it seeks with supply chain. Conclusion Whether at the production sector of the economy or the service sector, one thing that cannot be denied is that the successful outcome of businesses is a process that informs several chains of operation. As a process, Kouvelis, Chambers and Wang (2006) noted that organisational leaders and managers cannot expect that the executions of a single task or event can lead to the successful end of production or service delivery. The analysis of the case study has however been useful in establishing that it is out of this very situation whereby companies have to put together different parts of the procedural processes that the looming supply chain crisis has evolved. Even though companies involved in international purchasing and supply chain management can be commended for the contributions they have made to the country’s economy, it is also important to ask if Britain wants to be developed based on unfair and questionable principles of practice. As it has been established in the paper, globalisation is now the leading concept in nation building and so no single country can pretend not to be bordered about the need to ensuring that it gains sufficient grounds in building its competitive advantage. Meanwhile, for there to be international competitive branding, it is important that Britain positions itself in such a way that it would be seen by the international community as being committed to eradicating all forms of condemnable practices associated with supply chain. Until this gaint step is taken, it would be agreed with the position taken in the case study by Plimmer (2014) that Britain risks a supply chain crisis. References Barney, J.B. (2001). Is the Resource-Based Theory a Useful Perspective for Strategic Management Research? Yes. Academy of Management Review. Vol. 26 No. 1, pp. 41–56. Blanchard D. (2010). Supply Chain Management Best Practices, 2nd. 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Britain risks a ‘supply chain crisis’ [Online] Available at http://www.ft.com/intl/cms/s/0/0fafdfdc-0e59-11e4-a1ae-00144feabdc0.html [October 30, 2014] Rugman A.M. and Verbeke, A. (2002), Edith Penrose’s Contribution to the Resource-Based Views of Strategic Management. Strategic Management Journal. 23, pp. 769–780. Wieland A. and Handfield R. B. (2013). The Socially Responsible Supply Chain: An Imperative for Global Corporations. Supply Chain Management Review, Vol. 17, No. 5. pp. 32-44 Read More