Supply Chain Management and Logistic - Subway Corporation - Case Study Example

Subway supply chain management and logistics Author’s name Institutional affiliation Contents Contents 2 Subway Corporation Supply Chain Management and Logistics 1.0 Introduction/executive summary The primary observations from the results of the interviews and literature reviews clearly indicated that Subways logistics complexity in terms of fragmented channels, client preference for customized products and product variation has increased immensely. Additionally, some trends demonstrated that several challenges lie ahead due to the complexity of the world to operate in logistically. It is universally acknowledged that supply chain management should make it easier for Subway as a corporation to satisfy its customers’ requirements and needs (YouTube, 2015). In other words, improving on consumer expectations were categorized by the research work respondents as the most significant factor, and fulfilling customer needs was categorized by over twenty percent of the research respondents as the most important logistics objective (Robert, 2013). However, due to increasing levels of consumer demands, ancient measures fail often when stipulating strategies that may satisfy Subway Corporation’s consumers. Our analysis of the literature reviews, executive interviews and surveys clearly identified customer expectations, lack of appropriate talent, and increasing level of networked economies as the most potential problems that are affecting Subway as an organization (Robert, 2013). Moreover, over the last few years, Subway has often stood as an independent entity in the market and most cases; it managed interfaces that eventually directed consumers and suppliers. However, in the modern networked economies, Subways interface networking is not necessarily enough to propel it to the next level (YouTube, 2015). By so saying, it means that, most organizations such as Subway are forced to engage in both horizontal and vertical collaboration in their respective extended supply chain Interlinkages, and as a result, their collaborating partners expect Subway to integrate their systems and processes. As a result, Subway is forced to abandon company thinking and adopt network thinking (Robert, 2013). Therefore, in our analytic view we identified specific requirements that will be able to help Subway find a solution to its logistics and supply chain management problem Although other requirements that include; sustainability, risk mitigation and social issues are discussed increasingly in the media, most consumers still tend to be analyzed in terms of the cost pressure. Additionally, given the consumer trends, it makes it difficult for Subway to reduce their prices further (Robert, 2013). Furthermore, logistics costs are at the heart of ensuring that the overall costs are reducing. For instance, Logistics cost of the overall output is as low as 5 % in Subway corporation (Google.com, 2015). However, One concerning issue was that over 10 % respondents were not able to clearly estimate and measure their logistics costs. 1.1 Methodology Analysis and evaluation of Subway Corporation’s logistics and supply chain management went through four phases. By way of example, these stages include; literature reviews, executive interviews, survey launch, and analysis and reporting. 1.2 Literature review and content analysis Over 200 research and consulting reports about Subway were comprehensively reviewed. Additionally, they were arranged, and their primary issues were evaluated, analyzed and extracted. Furthermore, in compiling and reviewing of data and information from literature sources, a content analyzer tool was employed to establish the frequency and recurrence of major strategies and trends. Moreover, the analytic content technique made it possible to scan over a thousand research articles on the internet so as to identify appropriate research articles in respect to research hits (YouTube, 2015). By so doing, it allowed the research group to validate more on the significance of the research work topic and in the process; it resulted into a set of primary themes and words for further evaluation and analysis by the research group. Furthermore, some English, Chinese and German data bases were also employed such as the Lexis –Nexus, Ibis, Bloomberg supply chain content analysis tool and Business Source premier (YouTube, 2015). In simple terms, the research group then compiled and consolidated the supply chain trends, problems and logistics that were relevant and notable from the literature. 1.2 Executive interviews Based on the compiled report from the content analysis, a preliminary list of key problems and logistics were developed. Using the identified gaps or rather problems and trends, a set of interview research protocol and questions were established for further discussion with primary Subway Corporation executives. In this case, we carried out an interview with 12 Subway corporation supply chain executives who hold a director level post or a much higher level post from the retailing, logistics departments as well (Subway, 2015). As a result, the interviews research responses were coded and transcribed into primary trends and strategies. Furthermore, the research group met in the social school hall to review the interview findings and revise the set of problems, gaps and trends that were noted from the interviews. Based on the group discussions, a survey of primary items were stipulated which were written in German, English, Chinese and Russian languages and posted to an internet online survey (RUSHTON & WALKER, 2007, 67). 1.4 Survey analysis and report The survey targeted Subway corporations in Europe and the Middle East in an effort that was meant to obtain truly a global picture of the supply chain and logistics trends of Subway Corporation. Additionally, responses were retrieved from India, the Middle East and United States (YouTube, 2015). Furthermore, a total of 297 individuals completed the survey from which only 103 of those who completed answered the whole questions. Moreover, the number of answers or rather responses per survey question varied depending on the response rate and the survey structure. Almost two-thirds of the survey respondents were from Subway Corporation that realizes over $ 10m-500m and the remaining fraction came from smaller Subway chains that realize less than $10m (YouTube, 2015). Therefore, the sample of the survey respondents globally is as shown below 1.5.0 Overall top Supply chain management and logistic trends of Subway Corporation 1.5.1 Subway Corporation consumers are demanding specialized supply chain and logistics solutions It is universally acknowledged that the change to an international economy is in most cases driven by a desire to gain accessibility to lower labor cost. However, by so doing, it exposes the company to higher regulation shifts and higher costs of transportation which determine where the companies produce, source and the company’s marketing complexity when it comes to selling to the consumer (Subway, 2015). In the case of Subway Corporation, the nature of its customers is becoming more complicated owing to the fact that it needs to establish a range of products options, logistics arrangements and packaging designs so as to meet the ever rising customers demand, tastes and preferences (YouTube, 2015). Moreover, most of the Subway Corporation chains have in recent times preferred online buying as well as mobile applications to make an order which makes the supply channel more complex (Subway, 2015). According to the responses from the online survey, executive interviews as well as the literature reviews, it was noted that, most executive’s top objective was meeting the demands and expectations of their consumers followed closely by the appropriate and on-time delivery of goods and services as shown in the table below (KOTZAB & WESTHAUS,2005,17). 1.5.2 Subway is increasingly part of the networked economies Due to the competitive nature of the market environment, Subway has established network capabilities that are meant to make it have a competitive spirit in the market. In other words, there exists a development trend of new channels of supply that are interconnected with other channels meant to serve the consumer’s requirements ( Subway, 2015).For instance, Subway has an e-commerce website, online catalogs, mobile and social networks that help in the supply chain management. In other words, with these new supply chain and logistics trend, Subway has to adapt frequently so as to accommodate and anticipate external and internal expectations and demands so as to keep costs low, meet time windows, ensure inventory are in a position to satisfy channels and in the process, help fuel Subway’s growth (Robert, 2013). Furthermore, to deal with the e-commerce environment, Subway should, therefore, outsource more inventory management, more advanced technology design, and working capital investment (WATERS, 2007, 27). Therefore, from the evaluation results, it was clear that some approaches are used in managing the supply chain relationships including the downstream versus the upstream supply chain management. 1.5.3 Subway consumers are persistent on cost force and working capital lessening Competitive persistence on cost pressure by consumers has continued to move Subway towards seeking optimized logistics networks. Additionally, the pressure that Subway has experienced over the last decade drove it to adopt the cheap cost savings that make additional savings need more sophisticated tools (BJERRESKOV & BOHLBRO, 2013, 63). The period of shifting supply to developing countries to exploit cheap labor is slowly ending because the cost of saving is becoming difficult to find as compared to the past decades (Robert, 2013). In other words, Subway Corporation must establish a way of adopting fully analytical tools that will help it design their operational logistics networks that can capture quite a number of cost drivers in addition to labor. Over a third of our respondents from Subway online survey noted that the costs of logistics have immensely increased as from the year 2013 whereas another third concluded that the costs of logistics has not changed much but rather has remained constant as in the graph below (KOTZAB & WESTHAUS, 2005, 37). However, it is known, there is no standardized way of measuring the costs of logistics as a fraction of the total revenues of the company (Subway, 2015). The reason behind this is that; the factors defining logistics often differ between departments in the same organization and besides, the logistics definition also vary from organizations to another in the same industry. 1.5.4 Talent has continued to be a challenging factor in Subway Corporation From the executive interviews, it was noted that each executive manager cited lack of appropriate talent as a limiting factor in driving logistics improvement and progress. Additionally, this point was noted across all the subway regions that were surveyed (Subway, 2015). Furthermore, the reason behind talent deterioration in logistics according to the managers in the United States, was that, most young people have no interest in pursuing logistics or rather they do not picture it as one of the exciting careers(Robert, 2013). By so saying, it means that most university students show more interest in marketing and finance careers. Moreover, in the United States, the executives noted quite a large number of retiring executives who in real sense lack able, talented youths of replacing them. Furthermore, the most affected Subway Corporation’s chains are those located in India, Brazil and China because many colleges and universities do not have logistics courses in their curriculum hence increasing as shortage in logistics capabilities and talent (Subway, 2015). 1.6 Conclusion From the analytic view of Subways Logistics and supply chain management, specific requirements were stipulated that will be able to help Subway find a solution to its logistics and supply chain management problem. First, it was not that, establishment of a talent management institution that offers logistics and supply chain management training will be so crucial in embracing complexity (KOTZAB & WESTHAUS, 2005,23). In other words, nurturing talent is an important strategy which will not only ensure hiring of talent but also, succession planning, retention, development and mentoring which will enable Subway to extrapolate gaps and identify possible specific course of actions to fill these gaps (Youtube,2015). Another way of dealing with the problem associated with networking economies is instilling rapid decision-making ability in your staffs and consumers. By so saying, it means that, with the increasing number of networking changes coupled with distinctive problems, establishing a way of positioning your products image in consumers mind will enable them to make a quick individual decision when it comes to online buying (Robert, 2013). Moreover, in many logistics situations, most companies rely on their executive managers for decisions which a very challenging calling is given the fact that it gives room for individual mistakes and ambiguity. Furthermore, this will ease the consumer’s calls for clear logistics and supply channels because it will see to it that, the mission of Subway which is meeting the customers’ expectations and demands and timely delivery due to quick management decision (Subway, 2015). Therefore, Supply chain management and logistics is a strategy that needs to be taken seriously by organizations management. References BJERRESKOV DINITZEN, H., & BOHLBRO, D. (2013). Value-added logistics in supply chain management. Copenhagen, Academica. Google.com, (2015). Supply chain management. Retrieved from: https://www.google.com/search?q=subway+supply+chain+management&biw=1280&bih =911&tbm=isch&tbo=u&source=univ&sa=X&ved=0CFEQsARqFQoTCP- KxLrwjscCFQsg2wodKSQDUQ KOTZAB, H., & WESTHAUS, M. (2005). Research methodologies in supply chain management with 67 tables. Heidelberg [etc], Physica-Verl. Robert Hadfield, Frank Straube, Hans-Christian Pfohl, Andreas Wieland, (2013). Trends and strategies in logistics and supply chain management. Retrieved from: RUSHTON, A., & WALKER, S. (2007). International logistics and supply chain outsourcing: from local to global. London [etc.], Kogan Page. Subway, (2015). Sustainable sourcing. Retrieved from: http://www.subway.com/subwayroot/about_us/Social_Responsibility/Sustainable WATERS, C. D. J. (2007). Global Logistics new directions in supply chain management. London, Kogan Page Ltd. http://www.books24x7.com/marc.asp?bookid=18821. YouTube, (2015).Subway story: supply chain, farming & logistics. Retrieved from https://www.youtube.com/watch?v=SRq-U1m2dwg Read More