Global Supply Chain Management Issues and Strategies (Essay Sample)

Global Supply Chain Management Issues and Strategies
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Introduction
A supply chain refers to the process that takes a product from production to the customer (Croxton, et al, 2001). In the industrialized world, most people do not notice the workings of the food supply chain, except in the rare occasions when Food and Drug Administration (FDA) issues a food recall. The development of the modern supply chain with its national and international networks present several challenges to producers and distributers with regards to maintaining quality, timely delivery of products, and minimizing costs (Negi & Anandi, 2015, p. 48). This section discusses the development and similarities between the fresh food and automobile supply chains, and current issues, and the future strategies to address these issues.
Task One: Current Issues in the Fresh Food and Automobile Supply Chain
Fresh and automobile supply chains have common challenges associated with minimization of wastage and costs in the production and distribution stages, cutting costs, environmental regulations, avoiding damage, and delivering finished products to the market in a timely manner (Arivazhagan, Geetha, & Ravilochanan, 2016, p. 724). However, there are differences in terms of perishability and fragility, which makes fresh food categories such as fruits, vegetables and dairy delicate and difficult to handle during production and distribution.
Fresh Food and Automobile Chain Supply Issues
The competitive nature of the modern business environment requires business organizations to adopt corporate practices that will boost their competitive advantage whilst addressing environmental and other corporate social responsibility issues (Drumond, Ensor, & Ashford, 2010, p. 156). For instance, economic crises and rising costs of production compel businesses to pursue cist-cutting strategies not only as a means of improving their profit margins, but equally important, of surviving in a competitive market. At the same time, organizations have an obligation to promote sustainable development by ensuring that their business activities have minimal negative impact on the environment (Kandula, 2005). Scarcity of resources also contributes to the quest to achieve efficiency as well as explore alternative sources of raw materials, such as through outsourcing. To succeed in a competitive environment, fresh food and automobile supply chains strive to achieve four key performance indicators, which include quality, time, cost, and carbon dioxide emissions.
Quality
Compared to the automobile industry, quality is a very critical component of the fresh supply chain. Because they are intended for human consumption, fresh food categories require close supervision right from the initial stage of production, harvesting, packaging, and handling (Rais & Sheoran, 2015). In the fresh food sector, accordingly, quality encompasses the concepts of product quality, safe handling, and quality of delivery services (Bergaman, 2003). In contrast, the automobile supply chain is primarily concerned with brand strength and customer service. This is because automobile products do not have a direct health impact on end users as is the case in the fresh food categories. For instance, product quality of fresh food categories deteriorates with time because it is determined with freshness (Lemma & Kitaw, 2014). This is the case for products like milk, vegetables and fruits. On the other hand, automobile products such as cars are not impacted by time because they are non-perishable. For instance, a car’s quality does not deteriorate by staying in the show room two days longer, while fresh vegetables will lose their value due to shrinkage.
Time
Time is also an important factor for both automobile and fresh food categories. In the automobile supply chain, time as a key performance indicator refers to the length of time that it takes to outsource body components, assemble the ordered vehicle models, and deliver them to the dealers or customers (Dinkovski 2015). Time has a direct impact on cost because the longer a car manufacturer takes to produce one unit, the more costs it incurs in terms of paying workers and overhead expenditures, as well as the cost of capital assets depreciation (Sreenivas & Srinivas, 2005). Automobile supply chains address the challenge of time through mass production in batches. Toyota and Ford Motors, for instance, adopted mass production in the 1970s as a means of utilizing their production capacities and meeting market demands. They achieved this goal by dividing the production process into different areas of specialization and outsourcing of raw materials and components from different suppliers as shown in the figure below.
In the fresh food categories, time is very critical with respect to the period farm produce takes to mature, and their lifespan after harvesting (Bujari, 2016). The biggest challenge facing fresh food supply chains is the lack of room for flexibility with respect to scheduling of production and delivery. This is because this sector is very dependent on whether changes and producers must time their planting season with weather patterns. While automobile manufacturers can change their production schedules, fresh food supply chains do not have this freedom due to the need to plant and harvest at specific times of the year.
Cost
Cost is a major factor in the supply chain not only because it has a direct impact on product pricing, but also because it determines profit margins. Consequently, businesses strive to minimize costs by implementing efficiency in the production and supply chain. For instance, automobiles employ waste elimination strategies such as Six Sigma and lean supply chain. The famous Toyota Way demonstrates the minimization of cost by eliminating production and management functions that do not add value to the production process and the end product, or result in better customer satisfaction (Pyzdek, 2003). For example, Toyota eliminated data factories, such as cost-accounting department from its production and supply chain, a component that contributed to Ford Motors’ high production costs. Instead, Toyota adopted a simple production and supply model that focused on the flawless flow of the production process and production of maximum units from minimum inputs and delivering finished units to the market in time.
In the fresh food supply chain, cost results from the need to outsource different fresh produce from different suppliers (Ray, 2007). This is because of the fact that some crops are only grown in certain climate regions. Pizza and the cheeseburger are good examples of the way outsourcing from different suppliers not only increases costs, but also makes it difficult for marketers to track and manage upstream production to ensure quality.
Carbon Dioxide Emissions
Carbon emissions are particularly a big challenge to the automobile supply chain because of the massive fossil fuel consumption that occurs both at the production, distribution and end-user utilization of the product phases. Big manufacturers such as Ford Motors and Toyota engage in business activities that are energy intensive, such as the manufacturing of steel to make vehicle body parts (Brady, Ebbage, & Lunn, 2013). At the same time, they produce end products that run on fossil fuel, contributing to the amount of carbon emissions. In this regard, automobile supply chains face a big challenge of reducing environmental pollution by investing in technologies that purify pollutants. In the fresh food categories, green house effects present a big challenge due to the use of pesticides.
Task 2: Contemporary Issues and Strategies in Global Supply Chain Management
The rise of multinationals and the advent of globalization have transformed the business environment by allowing businesses to acquire raw materials from international suppliers and market finished products in foreign markets. At the same time, changing consumer trends require marketers to design new products and offer services that meet consumer needs. The consequence of these developments is the creation of new challenges that global supply chains must meet to function in the global market. These challenges relate to product safety, outsourcing, global warming, changing consumer tastes, and resource scarcity. This section discusses contemporary issues that affect global supply cha...