Global Supply Chain Essay
In today’s competitive global environment, companies understand the significance of a properly managed supply chain. As supply chain is the key factor that can give any firm a competitive advantage; most of the organizations tend to hire such supply chain executives that have highly developed skills and expertise in all the areas that links to the supply chain of their product directly or indirectly.
Since globalization has affected many fields in a positive way, it also has created certain barriers that are still to be overcome and for that organizations are striving hard, so that things can be iron out. Amongst these major hurdles; cultural differences is the major one which almost all multinational companies come across. According to Bender (2000) going global is something that requires a proper set of framework and planned strategies without which a company is most likely to fail in an environment that is entirely different from its home country.
In global supply chain, competitive edge is something that requires a careful matching of the value adding processes of the chain with those of the advantages of different nations has to offer in building up that particular chain. In order to do this, the most challenging thing
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Being the most essential part of knowledge based economies and industries cultural differences have also affected the transfer of supply chain knowledge for companies which opt for globalization. This paper aims to identify the major loop-holes that can affect the information transfer in global supply chain of any organization, though cultural differences is an obvious one, others will be examined and conclusions will be helpful for facilitating the firms. Review of Literature
To understand what supply chains actually are, one must need to know the basic structure that forms a supply chain. There are many different concepts of supply chain but some researchers agree on one particular definition which was stated by (Balan, 2002) “The supply chain of a company is the sum of all the people and companies who touch any of the products, services, monies and information that go into creating or using the products or services of that company. ” It is the sum of all the phases and factors that are concerned with meeting a customer’s demand directly or indirectly.
Thus, a supply chain consists of many entities; amongst all these each entity has its own significance in adding value to the product or service. In a nut shell, t can be said that the efficiency of this multi leveled process can be increased when there is an effective data processing and sharing inside and outside the company. For instance, companies that have many suppliers (as in automobile companies), there needs to be an appropriate use of knowledge based management systems in order to better plan and forecast future operations(Aldrich 2007).
According to Closs and Stank (1999) in order to make a supply chain successful, a proper flow of all the information, products/services and monies has to be managed in and out from that particular supply chain. If only one part is not functioning properly the entire change has to suffer the turbulences in the flow. These interruptions in the flow, leads to countless issues in the harmonization, such as inventory pileups, late deliveries, increased lead time, empty short shelves and the list goes on.
Davenport and Prusak (2001) says the past few decades were not so significant with respect to the quality of supply chain. The reason was, not facing efficient global competition. But now, every member of the entire supply chain network is of great importance to the company. A supply chain that runs uninterrupted and is a sophisticated one serves as a key factor in making any company successful in the global market. The Impact Information Technology on Supply Chain
Clark and Hammond (1997) stated that Information Technology can be regarded as the most crucial part of a supply chain network, this is so because the recent developments in the field of IT has enabled organizations to quickly interact within the organization and share valuable information regarding to supply chain. IT has also left an impact on the parties with whom a company can collaborate ranging from suppliers to customers across geographic and international boundaries.
Some of the important benefits of IT for supply chain includes decreased lead times for production, inventory reduction and lower costs throughout the chain and maintaining a competitive advantage for firms that already have it whereas creating one for new firms. Nevertheless, IT also has its limitations. For instance, one common issue obstructing collaboration among different parties is inconsistent IT system. The inconsistency can be in the form of information, the technology or the people who are using the system.
It is dependent on people because it’s the human intellect that has the power to operate and apply different applications that are beneficial for the system itself. According to Peterson C. (2002), it can be said that, despite of the fact whether supply chain collaboration is technologically advanced or not, it is the people who are actually responsible for operating the flow of information and the resources which the technology provides and as for supply chain alliances, the partners must train and educate their employees in order to transform knowledge into information and managing that particular information effectively.
This is important because when companies collaborate with firm that are outside their home country, a major difference of understanding is likely to occur due to differences in the cultures of both the organizations. Supply Chain and Knowledge Management According to HBR (2003) Knowledge Management systems are the core factor for maintaining any supply chain system.
Through harmonization of the information available inside-out of the knowledge management system, companies can actually reduce the chances of inventory pile-ups, can reduce the lead time of a product and deliver much more value to the internal as well as external customers which will eventually lead to a competitive edge in the global market place. As argued by Peter S. (2000), to capture, organize and to disseminate the information is not an easy task and involves many complexities.
So, in order to create an optimized supply chain the company must need to connect all the elements in a way that it ensures an uninterrupted flow of information across the supply chain. Second important feature of a knowledge management system is to communicate this information. It should be done in a manner that all of the users in the supply get the autonomy of making strategic decisions for delivering maximized value to customers simultaneously to reduce lead times and costs.
The third and the foremost attribute is the aptitude to work together, encouraging users to share information and facilitating the supply chain to respond to market changes positively. Positioning a robust knowledge based management system within supply chains has many challenges in creating a competitive advantage for the company, these may include: • The increasing rate of competition in the market. Innovation is the key to success now-a-days. • Different cultures have their own norms and values, so employees in different geographic regions working for the same organization takes time to interpret the knowledge.
• Changes in the strategic directions of an organization may cause the loss of knowledge of a particular area. Organizational Culture as a Supply Chain facilitator According to Wilkins M. and Dyer P. (1998) majority of the managers who were interviewed in the research have stated that the top management has the responsibility of maintaining such an environment where participants are not only encouraged to talk but also their suggestions will be highly valued, where people may have the autonomy to experiment, take risks and solve different problems; and where incessant process of information sharing and life-long learning is the expectation.
Peter S. (1990) stated that although, information gathering and sharing is an essential part for maintaining effective supply chain operations, it is the interpretation of knowledge from the information and the new ideas that are shared which makes the firm to sustain its competitiveness in the global market. If the partners in the supply chain do not have the ability to convert knowledge into information then the company is prone to loss its efficiency and effectiveness of the supply chain, which will ultimately lead to a failure in competing other supply chains.
As stated by Mathew. McCarter, Stanley F. and George M. (2005) one manager responded that: “Changing the culture is the key to leveraging people”. If the “right” culture is not in place, then the supply chain will not be able to use their employees effectively to pour their passion into supply chain initiatives. ” Another manager responded, “You can’t have hierarchical control if you want to be in a supply chain environment”. Educating Employees Educating the employees is crucial for organizations to remain proactive.
Apart from leadership, managers indicated employee training program according to a survey by House R. and Stank T. (2001), Companies these training programs offer from a range of 50 to 100 courses to understand supply chain. Other training approaches which were brought into limelight during the interview by the managers include: Rotation Programs Many organizations are now hiring people who are fresh graduates and put them into special cross-functional training program. This involves different assignments which are from the different functional departments of an organization.
This is done before giving the employee the actual charge of a managerial post. Workshops and Seminars Many organizations expand their on-the job training to seminars and workshops offered by different universities, consulting firms or professional associations. Such seminars present a dynamic experience to the employees and provide them the opportunity to standardize the practices of their companies with those of others. Computerized Training and Simulations Computerized training simulations are getting popular day by day because they are more flexible than the conventional training programs.
It is convenient because whenever managers are free or have a spare time of about 30 to 60 minutes they can work through it at their own. Simulations help in making the complex trade-offs to appear more visible and provide such a vision about supply chain that is not easy to gain from any other source. Learning through Experimentation A number of companies have adopted such a working environment which enables the managers to use new approaches for conventional business scenarios.
This is a kind of experimentation which gives managers the autonomy to make decisions on their own for situations that were traditionally dealt some other way. Through this, the managers will have possible learning outcomes regarding what should be done in a particular situation. Conclusion Based on the entire review of literature the conclusions which were drawn out are mentioned underneath: • People are vital for organization, provided that they understand the entire business of the organization.
Organizations that go global have to face cultural differences which are usually due to the difference in the values and norms of people belonging to different geographic regions. The amount of expenses and time invested to train people for supply chain alliances is not enough. • According to Cachon and Fisher (2002) the fact that an organization’s employees are its key weapon to survive in the global supply chain; this fact is usually ignored by the top management. Therefore, it is the duty of the senior management to arrange different training programs for the employees and allocate sufficient resources to do so.
• Organizations must know about their supply chain networks, if even a single function is not operating properly, then, it sure is going to ruin the entire cycle resulting in inventory pileups, increased lead-times and late delivery. This will eventually lead to a reduction in the value which is delivered to the customer. References Aldrich H. (2007), Organizations and Environments, Prentice-Hall, Englewood Cliffs, NJ. Balan D. (2002), “Driving Business Transformation,” Four Diamond Publications Chicago, IL.
Bender P. (2000), Debunking five supply chain myths, Supply Chain Management Review 52–58. Cachon P. and Fisher M. (2002), Supply chain inventory management and value of shared information, Management Science, 1032–1048 Clark T. and Hammond J. (1997), Reengineering channel reordering processes to improve total supply chain performance, Production and Operations Management, 248–265. Closs D and Stank T. (1999), A cross-functional curriculum for supply chain education at Michigan State University, Journal of Business Logistics, 59–72.
Davenport T. and Prusak L. (2001), Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston, MA. Harvard Business Review, Supply chain challenges: Building relationships, Harvard Business Review, (2003), 64–74. House R. and Stank T. (2001), Insights from logistics partnerships, Supply Chain Management: An International Journal, 16–20. Mathew. McCarter, Stanley F. and George M. (2005), The effect of people on the supply chain world: Some overlooked issues, Human Systems Management, 197-208
Peter S. (1990), The Fifth Discipline, Doubleday, New York, NY. Peter S. (2000), The leader’s new work: Building leaning organizations, in: Knowledge Management: Classic and Contemporary Works, D. Morey, M. Maybury and B. Thuraisingham, eds, MIT Press, Cambridge, MA, pp. 19–52. Peterson C. (2002), Learning supply chain: Pipeline or pipedream? American Journal of Agricultural Economics,1329–1336 Wilkins M. and Dyer P. (1998), Towards culturally sensitive theories of culture change, Academy of Management Review, 522–533.