Strategic Supply Chain Management Assessment

Question One 

There are those who believe that supply chains can be characterized in universal terms such as good or bad. In many cases, companies strive to build the most efficient supply chain, whether or not they are competing on price.

Cost and inventory optimization can be detrimental to lead times, flexibility, and risk management. In the same way that your company competes, your supply chain should also. It is not possible to isolate the corporate strategy from supply chains or to measure them in absolute terms (Watukara, 2019).

1.1 List and critically discuss the six steps in aligning an organization's Supply Chain with its Corporate Strategy 

• Define and communicate a clear corporate strategy.

One of the biggest failure points in aligning strategy is when the supply chain organization doesn’t know what to align with. Strategies cannot be too limited and fail to consider and prioritize all the market requirements and factors on which participants compete (features, price, delivery, etc). And strategies cannot be platitudes promising all things to all people. Corporate strategy needs to define how you are going to be different and better than your competitors, and it needs to set specific, measurable goals. Then the strategy needs to be communicated to the organization thoroughly and repeatedly.

• Identify the areas of your corporate strategy that are enabled by the supply chain.

You need to connect the dots between your strategic goals and how those get delivered by the company. This process defines what your supply chain needs to be good at, and it allows you to prioritize supply chain objectives. Ask the question, "What part of my core competence and competitive differentiation falls within or derives from my supply chain activity?" This step is especially critical in making in-house/outsource decisions.

•  Align supply chain performance metrics with the corporate strategy.

One of the most common issues we see is the belief that there are standard supply chain performance measures, and the company should strive to maximize them all. This belief fails to account for the fact that there are tradeoffs in optimizing different goals. There are also no absolutes in competitive strategy. Goals should be set based on your performance relative to your competitors.

We have a client who had operated their supply chain with the goal of shipping product within one day after an order. But their mature market no longer needed that level of performance. Relaxing that delivery requirement opened up a significant opportunity for inventory improvement. It is important to note that they didn't stop delivering in a timely manner or stop measuring delivery performance; they just re-prioritized their goals to optimize a different objective.

• Structure your supply chain to optimize the strategic goals.

This step is where you address the elements of supply chain design: Supply chain network, locations, supplier selection and business terms, inventory and planning policy, organizational structure. Supply chains that are optimized for cost efficiency will look different than supply chains that are optimized for flexibility and responsiveness. Your organization and the skill sets of your people will be different, too.

• Align incentives end to end.

Internal performance evaluations and bonus structures need to match the aligned metrics that have been set. Supplier performance management and business models should align the suppliers' incentives with yours. Don't forget that channel and demand management are part of the supply chain, too. Build a robust S&OP process and drive your sales and marketing teams with objectives that aren't at odds with your supply chain objectives. One common failure is when sales and marketing have no incentive to control inventory. They will overdrive the forecast to guarantee availability and then the supply chain organization is left with the excess inventory.

• Keep refreshing the strategy and alignment process.

Most companies have strategic planning cycles of one to three years, but we have seen companies that literally go decades without re-aligning their supply chain strategy. Put your supply chain strategy on the same schedule as the rest of your planning.

1.2 Provide two practical examples for each step listed in Q 1.1. Please source your examples from academic sources such as journals or articles. 

Question Two 

2.1 List and critically discuss the different types of logistics network modelling by giving examples of they’ve been applied in certain companies (9)

Optimisation Modelling

An optimization model is a mathematical formula that can be used to determine which procedures provide the best or optimum solution based on that formula.

In other words, the model does not include any subjective input, only assumptions and data. It is important to consider data such as:

• Customer satisfaction levels
• Distribution centers number and location Number of manufacturing plants
• Distribution centers assigned to a manufacturing plant
• Inventory to be maintained

Linear programming has been used as an optimisation approach in logistics networks.

A great deal of value can be derived from this method for linking supply and demand concerns of manufacturing plants, distribution centers, and market regions (Murray, 2020).

In order to minimize costs, linear programming can be used to determine the optimal pattern for the distribution of facilities based on the constraints identified.

Nevertheless, since this is a mathematical formula, there is no room for subjective judgment.

Simulation Models

Based on the real world, a simulation model is created. It may be possible to conduct experiments on the model after it has been created in order to determine how changes made to the model may affect the overall cost of the logistic network (Murray, 2020).

In order to determine whether the cost-effectiveness of the overall network will be affected by changing the constraints on the network, a simulation model may be used.

If you wish for your simulation model to be effective, you must collect data on a number of variables, such as:

• Transportation
• Warehousing
• Labour costs
• Material handling
• Inventory levels

By collecting this information, you can modify the constraints and have a simulation model that is accurate.

Simulation models are not designed to replicate the optimal logistics network generated by an optimization model. However, it focuses more on evaluating the changes that were made to the model (Murray, 2020).

Companies often use this type of model when they have made general decisions regarding their network and wish to get a sense of the overall impact of any change they may make.

Question Three

Transportation mode plays a vital role in the movement of cargo within or between countries. Normally, cargo is moved using three modes of transportation, e.g., road, sea and air, depending on the cost, urgency and the destination. However, for cross-border cargo movement mostly sea and air modes of transportation are preferred, as most of the countries are connected well by air and sea. The road option is preferred when countries are connected by land and other options are either costly or not feasible. In Indian subcontinent, the road is an important mode of cargo move-ment across India, Nepal, Pakistan, Bangladesh and Bhutan. The railway is the important mode in Europe because of the availability of a modern and efficient train system.

3.1 List and explain five uncontrollable elements within Logistics by giving examples of where they’ve been applied in certain companies (10)

• Political and legal systems of foreign markets
• Regional and global economic conditions
• Technological forces
• Competitive forces
• Social and cultural customs

3.2 List and explain five controllable elements within Logistics by giving examples of where they’ve been applied in certain companies (10)

• Customer service strategy
• Inventory strategies
• Transportation strategies
• Packaging strategies
• Warehousing and storage strategies

3.3 List and critically discuss the four main types of channel intermediaries by giving examples of where they’ve been applied in certain companies (8)

• Agents

They act as an extension of the original manufacturer and represent the producer when attempting to find a buyer. Agents can be individual salespeople or entire companies. To sell their products and services, they deal directly with customers. It is important to note that agents do not own rights to the products they sell on behalf of their clients. The editorial team earns commissions from sales instead (Indeed Editorial Team, 2021).

• Wholesalers

Distributors purchase a company's products in bulk and resell them. Agents sell products on behalf of manufacturers, while wholesalers sell their own products and earn a profit by doing so. Since wholesalers generally benefit from the discount they receive for purchasing a large volume of products, they can often make a profit. It is uncommon for them to interact with the final purchaser of a product. Wholesalers, on the other hand, sell their items to other merchants at a higher price point than they spent to obtain the goods (Indeed Editorial Team, 201 ).

• Distributors

Distributors are part owners of the product they sell as well as having a business relationship with the manufacturer. Distributors sometimes purchase the exclusive right to distribute a product to ensure that they are the only distributor in a given region. In fact, distributors generally sell to wholesalers and retailers, leaving little contact with final consumers (Indeed Editorial Team, 2021).

• Retailers

Distributors and wholesalers provide products to retailers for resale directly to consumers. Retailers can be small or large for-profit companies. They typically purchase fewer goods than wholesalers and distributors. A retailer is a business that sells goods and services to others, such as grocery stores and department stores (Indeed Editorial Team, 2021).

Question Four

In the last decade, a number of organizations have been rocked by unforeseen supply-chain vulnerabilities and disruptions, leading to recalls costing hundreds of millions of dollars in industries ranging from pharmaceuticals and consumer goods to electronics and automotive. And multiple government organizations and private businesses have struggled with cybersecurity breaches, losing critical intellectual property due to failures in the supplier ecosystem.

4.1 Critically discuss the six internal supply chain risks that organizations are exposed to, by giving examples of where they’ve been applied in certain companies 

• Disruptions of internal operations
• Changes in key management, personnel, and business processes
• Not putting contingencies in place in case something goes wrong
• Not implementing proper cybersecurity policies and controls to protect against cyber-attacks and data breaches
• Not complying with environmental regulations or labour laws
• Not having the goods to meet customers’ needs.

4.2 Critically discuss the five external supply chain risks that organizations are exposed to, by giving examples of where they’ve been applied in certain companies 

• Unpredictable or misunderstood customer demand
• Interruptions to the flow of products, including raw materials, parts, and finished goods
• Social, governmental, and economic factors, including the threat of terrorism
• Supplier risk management, including concerns related to a supplier’s physical facility and regulatory compliance
• Natural disaster, including earthquakes, hurricanes, and tornados