Competitive Manufacturing Supply Chain Strategies in Dynamic Environment
The quote “Companies do not compete, Supply chains do” effectively summarizes the importance of Supply Chains. Supply Chain Management is at the heart of any business in today’s VUCA world, it’s the importance and dominance being magnanimous. The world today is very dynamic. Every organization needs to be on the very edge to be profitable and competitive supply chains are the only definite path to achieving this goal. The advent of digital technologies like 3D printing, Internet of Things, Blockchain and Industry 4.0 is revolutionizing the way supply chains are managed. The relationship between suppliers, customers, logistics partners and manufacturers are undergoing a paradigm shift at a breakneck pace. Yet, the fundamentals of process integration, value for the customers, forecasting and demand management, and optimization remains the same. A successful marriage between the cutting edge ideas and the core values can give a competitive advantage in an organization’s Supply Chain. For such wide issues to be tackled at the organizational level and provide the competitive edge, Research is the tool that companies are investing in. Through research, within organizations and across the B-School campuses; path breaking ideas and theories are being conceived, developed and implemented to harness the power of Supply Chains and make the supply chains competitive in this dynamic world.
RCOSCM SUB THEMES
The transformation of clusters of few monopoly markets to a perfectly competitive environment has triggered the new era of globalization. This globalization has now become the drive for managers to reinvent and redefine organizational structure. Due to the shrinking product life cycle and large variety of products, fulfillment of the customer demand is not the primary criteria. The success of business lies on retaining the customer base. The sustenance of business, now, relies on effective operational strategies to reduce the overall cost. Also, striking a balance between standardization of processes and local innovation is a key challenge which provides a comparative and competitive advantage to a particular organization. As the global markets are highly intertwined, the companies are trying to leverage their global assets and talent pool to enable greater market responsiveness. With such increasing pressure in the global business scenario, innovation and understanding the customer are primary things that a company must concentrate upon to thrive a decade ahead.
The success of a business lies in value maximization of shareholders wealth. To achieve that, it is mandatory that any sort of non-value adding activities are eliminated and a quality product is delivered to the customer. The main resource for any organization is the raw material itself which forms a major part of the expense. To eliminate the idle time of waiting of raw material and to ensure a lean flow it is imperative that right suppliers who are the originators of any supply chain are identified and materials are procured. Henceforth supplier management becomes integral part of operational activities. New competitive suppliers enter the market due to globalization which facilitates the need to integrate the procuring process under common platforms such as ERP. Therefore, it is essential for a business to develop an efficient and effective procurement cycle. Only then a strong link is formed in the supply chain.
Flexibility is considered to be an important differentiator in the current market place. Several papers already emphasized the need for flexibility although little attention is paid to how operational activities incorporate flexibility in their supply chain practices. Emphasis can also be put on the dyadic buyer-supplier relationship, marketing activities and manufacturing in order to achieve flexibility in supply chain management.Finally, the role of flexibility has to be evaluated and how this can lead to a competitive advantage.
What defines a competitive supply chain? The short answer is that a competitive supply chain is essential to a company’s go-to-market strategy, and important to winning business. It really comes down to three critical elements: excellence, strategic alignment and optimized demand management. Three elements work together: Without formal, routine joint decision-making processes, a supply chain organization is not really playing a major role in executing a corporate strategy, even if it is strategically aligned.
With rapid globalization and cut-throat competition in today’s business scenario, efficient supply change management has become an absolute necessity. In order to manage the huge supply chain which consists of hundreds of activities starting from supplier’s suppliers and ending at consumer’s consumers, standardized methodologies are required. There comes the role of modeling of SCM system which includes descriptive modeling as well as prescriptive modeling. Descriptive Modeling is a mathematical process that describes real-world events and the relationships between factors responsible for them. Prescriptive modeling uses mathematical programming combined with heuristic methods. Descriptive modeling includes forecasting, data mining, activity based costing, performance metrics, simulation and system dynamics while prescriptive modeling includes optimization models.
A lean operation is about waste minimization and an agile operation is about responsiveness. As supply chain includes a long series of activities which convert raw materials into finished goods and get it delivered to end users, there is a huge probability of system generating waste and becoming incapable of fulfilling customer’s immediate needs. Lean operations minimize transport, excess inventory, and motion within the plant for production activity, waiting, over production, over processing, defects and under-utilization/mis-utilization of skill. Hence it creates an efficient and cost effective supply chain network. Agile philosophy enhances the supply chain’s responsive capability so that it can quickly adopt to sudden change in demand, adjust to supplier’s uncertainties and make up for any anomalies created during the entire supply chain’s activities to fulfill customer’s demand on time. While implementing both philosophies, there will be points where one will clash with the other. At those points a trade-off should be obtained between incurred cost and timely delivery to make the supply chain efficient and effective.
A multidimensional learning and innovation in the field of supply chain is desired to direct future efforts to increase the effectiveness in future projects of the organizations. Productive learning leads to innovation and involves three stages namely-exploration, assimilation and exploitation. Exploration refers to understanding and exploring valuable new knowledge outside the industry. Second stage, assimilation refers to processing of this knowledge through transformative learning. The third and the final stage involves exploitation of the assimilated knowledge to give rise to refinement of existing competencies. This process of constructive and productive learning which increases the capacity of the organisation to identify, develop and implement goal oriented actions leads to disruptive innovations.
“Anything measured tends for improvement”. Performance measurement provides a direction to the organization to improve its supply chain and integrate it with substantial help from financial and human resources, technology and tight knit business processes. Improving supply chain requires a multi-dimensional approach which includes qualitative measures (such as product quality and customer satisfaction) and quantitative measures (such as supply chain response time, flexibility, order-to-delivery lead time, delivery performance).Variety of approaches have been developed over the years such as, the Balanced Scorecard, the Supply Chain Council’s SCOR model, the Logistics Scoreboard, Activity-Based Costing (ABC) and Economic Value Analysis (EVA).Once the company’s roadmap is laid out, it can set and develop performance metrics to ensure its objectives are met.
Supply chain has taken a prominent role in value addition from early 90’s. Organizations have understood the importance of having organized supply chain practices. The SCM has evolved a lot since then and sustainability has been major issue to look upon.Accountability, Performance scoring and guidance of all stakeholders can add value at every stage of supply chain. Global leaders in industries have developed their own practices and methods, coupled with restless urge to improvement, to remain on top.Vertical and Horizontal integration has been a common practice to bring together suppliers and customers for minimizing value loss. There’s a significant disconnect between supply chain executives and midlevel management. Too often, the people who are expected to make change happen don’t see the same picture. As a result, they are not able to take the steps needed to drive meaningful change in the supply chain. The fact that so many companies are struggling, however, does provide an opportunity for those willing to take a more deliberate and focused approach. After all, operations professionals do see value in pursuing sustainability.The future may see many improved practices which have been a product of disruptive innovations and competition to be leader in the market place.
Services operations management is the term that is used to cover the activities, decisions and responsibilities of operations managers in service organizations. Services operations management is concerned with delivering service to the customers or users of the service. It involves understanding the service needs of the target customers, managing the processes that deliver the services, ensuring objectives are met, while also paying attention to the continual improvement of the services. As such operations management is a central organizational function and one that is critical to organizational success.
In the recent past, the services have got major attention from daily human personal needs to other industries like manufacturing. Each service exhibits distinctive characteristics, which makes services different from goods. Service sector is comprised of various industries which are diverse in the terms of labor requirement, investment requirements and many other aspects. The labor requirement, for example, ranges from a hair salon service with few employees to airline industry with huge number of employee base. A big multi-specialty hospital is more capital intensive service industry than a small doctor’s clinic dealing with single specialty. In spite of such diversity certain service industries share some similar features which can be capitalized to implement common marketing and service strategies.The current age of customization has also driven the use of concepts of operations management to various services to optimize and provide best value of money. In Indian context, economy has taken a big leap from agrarian to service industry; hence service operation management plays a major role.
Operations management refers to the activities, decisions and responsibility of managing the purchase, production and distribution of products and services. Effective operations management is an important part of sustainability as it helps you to ensure that you are able to meet the needs of your customers over a sustained period of time.
Increasing the sustainability of your operations involves improving efficiency to help reduce costs, utilize available capacity and achieve business objectives.
Efficiently using your resources means that you are getting as much positive return from them as possible. It allows you to offer lower prices to consumers while maintaining your profit margins, providing you with a sustainable source of revenue.You need to structure your business so that you utilize the skills, knowledge and experience of your employees to their maximum potential. Recruiting the right people for the right jobs and providing them with the necessary support and responsibility to work efficiently is important to the long term sustainability of your business.
The role of Data in Making Managerial decisions has gained a lot of importance in modern business governance. The amount of available data is increasing day by day and the use of this data in successfully analyzing and interpreting the present and future circumstances of a company gives it the leading edge over others. A lot of this depends on the collection of right data. As said by Jeff Bladt and Bob Filbin, “There is a difference between numbers and numbers that matter”. So the role of managers in data driven decision making is what to use, how to use and when to use.
There are various risks associated to the supply chain management structure. This is primarily because of the complexity in different business structures and its operations. However broad the term risk in supply chain may sound, the risk situations are different based on circumstances affecting the business processes. Most of these risks are categorized into two: External risks and Internal risks. There are mainly five types of external risks. Demand risks, Supply risks, Environmental risks, Business risks and Physical plant risks. Internal risks are mostly associated to the manufacturing risks caused by the disruption of internal operations and processes. Planning and control risks, Mitigation and contingency risks and cultural risks are some of the internal factors. An organization, which has an exit strategy built in alignment of all the risks associated to a particular supply chain, can only then plan an effective supply chain strategy efficiently.