The research report is to analyze the strategies and tools could be used to mitigate the supply chain risks and uncertainties, and to achieve better supply chain performance. You could use any case material to support your analysis. The case material could be the simulation game, any cases discussed in class or you find it interesting in other sources, or any news reported in recent media.
The case material used for this coursework is an opinion article “Going green is not that easy for electric vehicles”, published on Financial Times. You can find the news on the following link which is accessible from UoG computers or the library: https://www.ft.com/content/daabb4ad-5766-3c4b-86ca-2b9c92da4c49. This material is only a start point for your research, you can find more similar materials to support your analysis.
In the research report, you need to focus on these two questions. You also need to use reputable academic sources based on Harvard referencing style to support your analysis.
1) What potential challenges/risks should be considered in order to achieve a sustainable and stable supply chain?
2) What recommendations would you propose to companies if they want to develop a not only stable but sustainable supply chain?
E-LOGISTICS AND INTERNATIONAL SUPPLY CHAIN MANAGEMENT
This report stresses on the risks and challenges of Sustainable and Stable Supply Chain Management and E Logistics which it faces like cyber crime, financial problems the suppliers face for production, labour risk, natural disasters, political risks and the inventory scarcity risk. This report analyses these risks and provides specific recommendations needed for avoiding the risks and secure the company or organization if the company faces these risks. It also stresses on the ways to develop the market value and economic and financial securing of company.
Table of Contents
Potential risks that are considered in order to achieve a sustainable and stable Supply Chain
Recommendations to companies regarding development of a stable and sustainable supply chain
In this modern day of globalisation various types of demand uncertainties existing in the market at various nodes of supply chain management gives rise to numerous problems and risks which is a huge challenge for the organisations and lead to disruption. The leading companies in the world stage and on top of the supply chain management are more resilient. Supply chain management increases the company’s competitive position, support growth, and produce countable measures. This report presents the risks of Supply Chain Management System, role of E Logistics in Supply Chain Management System, and recommendations by which the risks can be reduced or decreased to lead the company in an international level which helps the company to stabilise its financial and economical stand points in the global money market.
Globalisation leads to multiple channels in market. The pressure to run the lean supply chain is an increasingly vulnerable risk and possible disruptions to a company’s supply chain Management. Among which the financial disruptions Currency value fluctuations, product price vaporisation, one in a while downward turns in the ownership or investment restrictions which the governments impose have become more reluctant and evidently visible since the crisis of 2008 (Christopher, 2016, p.42). Significant growth of international trade and commerce, cross border movements for business are vulnerable to customer regime, tariffs and non tariffs barriers, quota system, security courses and infrastructure bottlenecks. All these risks can be concluded under Macroeconomic, extended value chain, operational and functional risks.
Sustainable Supply Chain and E-Logistics
The effort to make Eco friendly products is increasing day by day and the market for these E products is inflaming in its humongous scale. Sustainable Supply Chain Management is the constant procedure or effort for manufacturing an eco-friendly condition of products that helps in reducing manufacturing cost and increase sustainability. As per the views of Monczka et al. (2015, p.21), uses of raw materials which are essential to maintain a healthy atmosphere and is considered as the main advantage of attaining Sustainable Supply Chain. Typical attention has been given to lithium ion batteries which require cobalt whose biggest reserves are in Republic of Congo. The Governing body of Congo have already understood the importance of Cobalt requirement and thus are mainly focused on the production of cobalt in their country for attaining Sustainable Supply Chain Management System and taking the step to build an eco friendly “Go Green” concept for country (Christopher, 2016, p.27).
Stable Supply Chain Management
Obtaining a stable Supply Chain is considered as the best management form of an organisation. It looks after all the necessary facilities a customer expects, it offers timely delivery of the products to the customers. According to Fredendall and Hill (2016, p.43), both the small and the large scale industries are focussing on E-Logistics Management for effective and eco friendly process in timely supplying of products to the customers. A well organised Supply Chain Management allows the company to achieve and obtain profit from the market as well as sustain its leading position in the global market. DRC’s aggressive approach is a latest example for the Royalty increase to hike its take when market price goes up and the supply for the large scale mining in Congo (Cooper, 2017, p.50). The EV enthusiasts and manufacturers have laid their concerns about supply chain audits have been working to reduce the cobalt content from batteries, with some success rates.
Risks Involved in Supply Chain Management System
Various risks can be significantly pointed out in the Supply Chain Management System which is waiting for the next million dollar disruption. Hugos (2018, p.31) stated that supply chain managers must be prepared for the upcoming risks, which include Cyber Risk, Supplier’s Financial Condition, Labour Risk, Natural Disasters, Political Impacts on Supply Chain Management System and other shipment problems. The Managers of Supply Chain Management System must be ready to avoid these risks and prevent these risks from hampering the the Supply Chain Management System.
Cyber Crime in these days is increasing in a gigantic form in the recent years and has been a major problem for the Supply chain management system. Cyber attacks have been more frequent and solid these days, the supply chain managers have to be very much concerned about these cyber attacks to proceed in customer transaction as well as inherit trustworthiness to protect the company from bottom lines. As per the views of Stadtler (2015, p.17), cyber crime can not only shut out the operations but can also cost millions of dollars of losses in business. So the managers in this sector have to maintain the security measures so that they cannot be hacked again.
Supplier’s Financial Unstable Condition
The Supplier’s financial unstable condition is a significant issue in the process Supply Chain Management System, many suppliers face issues related to financial problems. In this problem lead to great problems in the business process like late deliveries, shortage of supply, searching for new financially secured supplier and overall business profit lacking. These can be due to the suppliers lack of process control, communication and can also be hinted as ethical issues. Based on views of Genovese et al. (2017, p. 356), it is obvious that a consumer will expect the delivery of a particular product in time, and if delivery is late, it is very common to get a negative impact from the customer. The supplier’s financial condition is surely a front barrier issue. The root cause to disruption in suppliers is often considered as financial problem of the supplier. Cooper (2017, p.24) opined that an experienced customer can easily understand issue of financial problem of the supplier by late deliveries, increased amount of stupid and unethical excuses and begin to impact on the supplier performance. This is the major cause which lies underneath the problems of late delivery and poor product quality from suppliers.
The next tremendous and the most deadly risk to the supply chain management system is its labour problem. Pu et al. (2016, p.45) stated that labours are considered as the root strengths of all the companies irrespective of the genre of business. The lack of labour support in an industry can lead to serious problems in manufacturing process of the company. It is the company’s duty to regulate the choices and the requirements of the labours of an industry. It is again the company’s duty that the labours requirements are fulfilled or not. If not, then the labours can lead to serious problems like strike which can lead to huge loss of a company’s earnings and result in decreasing economic stature of the particular company (Cooper, 2017, p.25). So the company should take care of its labours as it the responsibility of the company officials that the demand of the labours of a company is met as the labourers are considered as the backbone of the company.
Natural Disaster is one unavoidable reason for the risk of Supply Chain Management System, the issues which the company faces due to Natural Disaster is huge and tremendously perilous. We cannot avoid natural disasters or better known as the Act of God. Japanese Earthquakes are very conventional in that part of the world. The latest earthquake which hit the nation led to a loss of approximately 40 Billion Dollars. Canada experienced a wildfire, and storms and flood in the Europe both individually led to the loss of 3.9 million dollars. Hurricanes and Hailstorms in USA are very common especially in Florida cost about 8 Billion dollars loss (Hazen and Ellinger 2019, p.2). These are major examples for understanding the hazardous and perilous faces of natural disasters which the world has observed causing tremendous loss to the country’s GDP and economic stand points.
Political risks have always destructed business and are a constant threat to business organisations. Speaking about political risks, companies face political risks in many forms, which comprises of domestic or regulatory risks, shifts in international policy and lastly cataclysmic events. Due to the high political risks and complexities, large companies frequently outsource the service to third-party firms who are capable enough to collect as well as analyse data, information and events on real time basis (Pu et al. 2016, p.32). These are the chief risk factors which organisations face in the process to achieve a Sustainable Supply Chain Management System.
Inventory is the one of the main issues in Supply Chain management system success. Customers demand for their complete, accurate and on time shipment process which is very natural demand and should be demanded by the customers. As per the views of Hazen and (2019, p.3), the inventory quandary applies to all inventories-finished goods raw materials, parts and components. There is a dichotomy of views, the company wants 100% customer satisfaction and to make sure that there is no inventory or stock on one hand to meet each other. Finance wants to carry fewer inventories to boost up the capital for other requirements. The purpose of supply chain management is to get rid of in efficiencies, especially excess amount of inventory or stock. On the other hand inventory is a buffer to uncertainty. Uncertainty is difficult to forecast. Conquest, based on views of Taniguchi et al. (2016, p.11), inventory plays a vital role in supply chain management system where it possesses mostly negative and scarcely positive effects on business process.
Shipment problems can be seen in various ways in an organisation, As per the views of Speranza (2018, p.832) the customers face a huge problem for delayed shipments. This is really a major problem which the customers face when they buy a product online. The price of the materials and products are often increased due to the certain factors which include custom clearance problems delayed costs, missing of documents, missing of duties and taxes, it also involves penalties due to overweight cargos. It is seen in rare cases that due to some natural calamity and overloading of products problems sinking of ships occurs. As a consequence of this massive issue, the companies face a tremendous amount of loss of foreign revenue as well as profit, thus shipping is one of the major problems for Supply Chain Management (Lai and Cheng 2016, p. 21).
Reviewing all the risk factors and challenges of the Supply Chain Management System it can be pointed out that the analysis of the problems can be made in a distinctive impactful manner. Jabbour et al. (2017, p.14) opined that in order to achieve the E-Logistics and Sustainable Supply Chain Management System various risk factors can be analysed. Starting from the Cyber Crime risk factor, it can be stated that the impacts of Cyber crime can be very harmful to maintain the sustainability of the organisation. Organisational secret information can get leaked due to cyber crime and often lead to financial loss of the companies. Özdamar and Ertem (2015, p.57) the 2016 cyber crime report by Cyber Ventures forecasted that cyber crime will cost the world 6 trillion dollars of worth within 2021. And the cyber crime costs will increase and exceed 5 billion by the end of this year from previous years 325 million in the previous year. Leading to several challenges faced by the companies which they need to overcome too effectively and accurately protect themselves.
The suppliers’ financial degeneration is another significant factor for the risk of the industry. Bankruptcy of the suppliers can cause anytime which is the ultimate risk to the business process and supply chain management system. Large amount of suppliers order product on the online market via cash on delivery process, this is a major problem if the company is suffering from bankruptcy, as the company has no money in their inventory the company cannot purchase the product on time and takes time for the delivery which causes customer dissatisfaction.
Labour risk is another challenge for the company as they are the backbone for the company’s success. Rivera et al. (2016, p. 248) stated that often strikes are called by the labour’s union who demand that the companies are not recognising their problems, and for this purpose it is the company’s duty to maintain its overall reputation and profit of the organisation, as labour strikes can cause serious damage to organisations by decreasing its brand value as well as providing the company with huge loss.
Natural Disasters are the problems which are unavoidable and cannot be solved, more than 40% of the business organisations never open after a disaster and only 29% of the seam working after 2 years though this problem can be avoided by insurance policies of the company materials. Insuring against danger is the only way to prevent any Act of God or natural calamity which the company faces (Jabbour et al. 2017, p.14).
There are more risks like the political and the shipment risks which are also very crucial for maintaining Sustainable Supply Management System as both the risks can challenge the companies to face huge amount of financial loses ravishing the overall business process.
The aforementioned sections provide detailed analyses of the risks related to sustainable and stable supply chain valuing their impact. (Stank, p. 11) stated that it is essential for the companies in order to enhance their logistics and production and mitigating the issues. The following discussion highlights the range of strategies that can be undertaken in order to address the risks that are potential of arising in a sustainable and stable supply chain:
Strategic implementations for production Cycle
Companies can manage and make strategic implementations of a production plan and concentrate on manufacturing or producing the seasonal products instead of regular productions which will secure the profit for the company (Bhattacharjya et al. p.672). It will not require extra work force and the company will be able to produce the off seasonal products as well on high demand as the effective production cycle results in the increased profit rate of the company as well.
Managing Labour Risk
The labours are considered as the backbone of any organisation. In times when the labours don’t get their proper demands they organise unions and organise strike in order to achieve their demands from the company. As per the views of Rivera et al. (2016, p. 248) It is the duty of the company officials and the hierarchy to look after this problem and handle this fragile condition with caring. The company must provide the demands of the labour class as they are the root of the company and without them production will be impossible. In these cases if the company has certain conditions then the company must solve the problems of the labours organising a meeting and providing them with their demands to secure the company’s loss as strike can be very harmful and lead to numerous political and financial problems (Davarzani et al. 2016). Besides, it must be recorded that it is tremendously necessary for an organisation to maintain peace and harmony in the organisation as peace and healthy atmosphere leads to productivity and efficiency.
The companies in order to reduce their packaging costs modify their ways of packaging, has to consider the size of the packaging and understand that not all products need large packaging so the packaging must be done accurately to optimize product packaging. The company can also offer sustainable eco friendly packaging for environmental purposes.
Natural Disasters and Shipment Problems
Natural disasters cannot be avoided and thus insurance is the only option for the companies as it helps the companies to get out of trouble waters whenever there is any materialistic disaster as the insurance will protect the products and the essentials (Rivera et al. 2016, p. 248). It can also be taken into account that sinking of ships due to overloading and other customs related issues can also be insured and the company can claim any loss to the company product. (Refer to appendix)
Thus it can be concluded in this report distinctly points out the risks involved in Sustainability of Supply Chain Management, details about E Logistics and the risks faced by them in order establish successful business management process. This report also stresses on the recommended factors which are necessary to overcome the risks and challenges faced by an organisation to obtain sustainability of Supply Chain Management. The recommendations are based on the management of labour risk, package optimisations and improvement in shipment facilities.
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