Process Improvements in Supply Chain Operations: Multi-Firm Case Studies

Process Improvements in Supply Chain Operations: Multi-Firm Case Studies

Alan D. Smith (Robert Morris University, USA)
DOI: 10.4018/978-1-4666-7272-7.ch016
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Abstract

The nature of SCM research is constantly evolving and must address a variety of concerns like poor service, large inventory levels, and friction among suppliers and manufacturers. Analytical databases and techniques in SCM are an important part of this research. Many researchers and practitioners have depended on secondary data, but given the dynamic nature of global competition, more recent and relevant data must be gathered. These efforts need to be geared to the development of properly managed supply chain relationships and corporate sustainability initiatives that ultimately promote broad-based sustainable development objectives for the good of people, plants, and profits (i.e., triple bottom-line).
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1. Introduction

1.1 Successful SCM Considerations

Understanding that supply chain success depends on supplier performance can make supplier relationships, or their lack of, having a huge impact on revenue, inventory, and profitability. There have been a multitude of positive and negative links between suppliers that can directly or indirectly impact the overall operational success of companies, especially in terms of cost, quality, flexibility, and delivery metrics (Ketikidis, Hayes, Lazuras, Gunasekaran, & Koh, 2013; Mateen & More, 2013). ; Park & Min, (2013). Firms and their supply chains must control suppliers, and not let suppliers control their business, through increased levels of mutual benefit and respect. This is the issue where the efforts of lean operatrions to reduce the waste of inventory and time begins (Basu & Nair, 2012; Brito & Botter, 2012). It is critical to align performance with demand planning. Otherwise, too much of the demand planning horizon is frozen by unnecessarily long-lead times and too much variability in performance. The authors, van Weele and van Raaij (2014) made a plea to the academic community for Purchasing and Supply Management (PSM) to engage in greater efforts to adhere to a more rigorous approach to research. They distinguished supply chain management (SCM) as a different entity than PSM, as SCM has moved away from simply a focus on the flow of goods to examining more closely the relationships between different players along the supply chain in an attempt to control more than just inventory management-related concerns. Through the creation of value for a specific customer market, emphasis is placed on proceeding as efficiently as possible (as opposed to effectively). This task may be accomplished through strategic management, of which certain aspects will be examined in the present case study, but van Weele and van Raaij suggested that research into this subject may hold no value unless the findings are executed. As profits became a result of customer satisfaction, firms began to focus on excelling at their core competencies and outsourcing other aspects of their business and shifting to a more supplier-dependent climate. It was suggested that competitiveness was not entirely internal, but relies on external relationships with suppliers, as well. Still, the literature contained a lack of studies that display any new finding on how to leverage this internal knowledge within a firm. One of the purposed of this chapter is to address this apparent lack of multiple industrial studies on internal leverage of SCM-related information.

If management recognizes that SCM processes require integration throughout the organization and beyond with suppliers and customers, problems that may have been historically significant are caught and dealt with prior to them becoming a current issue or problem. Otherwise, gaps in the supply chain are created that can significantly hinder results. Using collaboration with key supply chain participants to provide additional focus and resources to the total supply chain is vital. Assessing the entire supply chain is critical for identifying critical areas, including suppliers, logistics-service providers, ports, and other potential risks that could disrupt a company's supply chain. Essentially, SCM is not only concerned with the management of the flow of goods and services within and without a firm, but maintaining the relationships among all stakeholders that support the supply chain. Goods and service involved in this flow traditionally include fresh raw materials, inventory, and finished products. Raw materials need to be transported using fast and efficient means to make the production process successful. The availability of raw materials and the fast nature of the production process dictates that raw materials need to be constantly available in large quantity and in good condition. Therefore, proper storage of raw materials comes in handy and consequently, this would necessitate adequate storage capacities.

SCM has traditionally concerned with the internal planning, design, execution and control of activities connected to the supply chain (Casadesus & de Castro, 2005; Miguel & Brito, (2011). These activities are usually intended to fulfill certain objectives, but management is always pressured to strategically leverage the supply chain to create net value. This means that firms have to put forth extra effort to enhance their productivity at all levels. Management has to ensure that their overhead expenses do not balloon beyond reasonable levels, which initially would limit profitability. Therefore, the difference that is realized between expenditure on production and revenues from sales constitutes the net value. Effective SCM should strive to ensure the creation of the largest possible net value, yet maintain positive customer and supplier relationships (Smith, 2011, 2012). Logistics also play a fundamental role in the outworking of activities pioneered by an organization. These concerns with the overall oversight of activities, plans, and procedures in which a firm participates can be overwhelming at times and their complex interactions should not be downplayed. In many instances, achieving a sensible form of logistics proves elusive and unrelenting. Consequently, logistics always require to be leveraged against any discrepancy related to harmful gossip of strangers. The leverage of logistics has the potential to determine the general direction that the firm would be willing to take in its SCM activities. Hence, SCM is directly involved with the leveraging of logistics, not just for one firm on a local scale, but also on a worldwide scale as reflected in large customer and vendor databases.

Proper management of the supply chain would also ensure the building of a competitive system of infrastructure. Basically, infrastructure is concerned with streamlining the exchange of information and the flow of products from the point of manufacture to the point of consumption such as the marketplace. Firms with a streamlined system of infrastructure have an upper hand in terms of realizing their potential in the supply chain. The quality of the SCM-related activities has a direct bearing on the quality of infrastructure (Bulcsu, 2011; Carvalho, Cruz-Machado, & Tavares, 2012; Hamidi, Farahmand, Sajjadi, & Nygard, 2012; Pettersson & Segerstedt, 2011). Few firms are able to operate entirely within their own industries. Majority of firms have to work within the limits and allowances stipulated by the industries within which they operate. The prevalence of many firms within the same industry creates a significant competitive environment. Nevertheless, each firm within the industry has an opportunity to create its own niche within the market; hopefully within a sustainability framework. Different firms adopt varying systems of infrastructure depending on their relative strengths and weaknesses. Therefore, proper supply-chain strategic initiatives should be capable of producing an efficient and competitive system of infrastructure (Kumar, Shankar, & Yadav, 2011; Mathirajan, Manoj, & Ramachandran, 2011; More & Babu, 2012; Paksoy & Cavlak, 2011).

Key Terms in this Chapter

Fuzzy Multiple-Attribute Decision-Making (FMADM): FMADM is a useful analytical SCM tool that can serve as an aid to management when making a supplier selection for a supply chain using an optimization algorithm. The approach is based on prioritizing and assigning the importance of the supplier candidates then comparing them using a linguistic value with a fuzzy number. These values and resulting numbers can help evaluate the importance of the chosen attributes, sub-attributes as well as the suppliers themselves. The decision-making goes through a 12-step calculation to help rank the order of all alternatives.

Lean Operations: The term lean operations common refer to a family of terms that are typically associated with quality assurance, JIT, reduced waste, process-focused operations that are very efficient and cost sensitive. Lean operations can refer to processes that are found in both service and manufacturing environments. Basically, lean operations are best business practices that minimize time of task, inventories on hand, supplies, and work-related instructions and steps in order to create desirable products and/or services that satisfy or exceed customer’s expectations and producers’ profitability goals. The basic philosophies of lean are grounded in the need to reduce human involvement in very standardized processes that result in reduced opportunities for waste to occur. It is assumed that analytical datasets are used to monitor processes and gather as complete and accurate information from the point-of sale to design-for-manufacturing and ultimate delivery to consumers without significant flaws and waste. The tools associated with lean operations includes six-sigma business practices to ensure adherence to stated goals to provide ensured companies become efficient in all value-added processes. Lean has become almost interchangeable waste reduction, value-added, and sustainability as management tries to identity opportunities to reduce waste, energy consumption, and variations from original design specifications in order to increase efficiency and profitability via changing practices.

Supply Chain Management/Performance: In basic terms, supply chain is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. The configuration and management of supply chain operations is a key way companies obtain and maintain a competitive advantage. The typical manufacturing supply chain begins with raw material suppliers, or inputs. The next link in the chain is the manufacturing, or transformation step; followed the distribution, or localization step. Finally, the finished product or service is purchased by customers as outputs. Service and Manufacturing managers need to know the impact of supply on their organization’s purchasing and logistics processes. However, supply chain performance and its metrics are difficult to develop and actually measure.

Inventory Management Problems: There are a number inventory management that occurs that are not due to shrinkage. Most of these problems tar based on inaccuracies that are based on poor management and record-keeping activities. Typically too much inventory can erode working capital and profits. It is important that management spends attention to supply projections, using past demand are a basis to improve upon and adjusting for identifying and quantifying less obvious patterns.

Sustainable Supply Chain Management (SSCM): SSCM may be perceived as the proper management of related environmental, social, and economic impacts in constructing and maintaining effective and efficient global supply chains. SSCM encourages governance practices at all levels of lifecycles of goods and services that reduce waste, ensure long-term maintainability and economic value of environmental and social well-being of all stakeholders’ interest in the creation and delivery of products and services. Although it is a very difficult task to bring into the decision process of the rights and needs of all interested stakeholders in the marketplace, it is to the long-term benefit of the properly managed supply chain relationships and corporate sustainability initiatives that ultimately promote broad-based sustainable development objectives for the good of people, plant, and profits (i.e., triple bottom-line).

Corporate Sustainability Performance (CSP): CSP can be computed from large datasets in many ways and can be used as an index to measure movement for an enterprise into more sustainable strategic initiatives. One example is the Sustainalytics database, which has a multitude of companies that it has collected data on and in a stepwise process creates a CSP index, which measures stakeholder pressure on issues ranging from product-related concerns to those of employee treatment. Sustainalytics’ analysts identify concerns and assess an organization’s reputation among stakeholders, according to these concerns. This information is used to propose an evaluation reflecting the social and environmental issues most relevant to stakeholders of an organization.

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