The extent Supply chain management can be seen as the latest “tool” to reinforce the position of major players within the food sectors
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TOC o “1-3” h z u Introduction to Supply Chain Management PAGEREF _Toc384392844 h 3International businesses PAGEREF _Toc384392845 h 3Methodology PAGEREF _Toc384392846 h 5Importance of Logistics and Supply Chain management (SCM) in Waitrose PAGEREF _Toc384392847 h 5Effectiveness of IT in Managing Supply Chain within Waitrose PAGEREF _Toc384392848 h 8Relationship between Ethical Supply Chain Management and competitiveness (and menu design) PAGEREF _Toc384392849 h 9The difference between a supply that is responsive PAGEREF _Toc384392850 h 10Contribution of IT to SCM within Waitrose PAGEREF _Toc384392851 h 10How the supply chain can help a company reach its strategic goals PAGEREF _Toc384392852 h 11Why many companies choose to contract with third-party logistics companies PAGEREF _Toc384392853 h 12
Introduction to Supply Chain ManagementThe concept of supply chain has different meanings in different times, while the understanding also varies from one research to another (Lemke et al., 2003). In relevant field, researchers illustrated supply chain from different perspectives. However, it is generally believed that formal researches on supply chain started at the 1960s. Stadtler (2005) pointed that Forrester (1961) first used system dynamics model to optimise the dynamic relationship between industrial upstream and downstream and put forward the term of supply chain, so that Forrester is recognised as the father of supply chain. Many modern supply chain design principles can track back to the production distribution system of Forrester. Since the 1990s, researches on the theories and application of supply chain management have attracted wide attention, while, with the continuous evolution of corporate development, there emerged many representative definitions of supply chain. Early researches defined supply chain as a network. Lee and Billington (1992) pointed out that supply chain is a network in which an enterprise obtains raw materials, produces semi-finished products or finished products and then delivers the products to consumers through sales channels.
Ganeshan and Harrison (1995) pointed out that supply chain is a logistics distribution selection network instrument, which enables enterprises to obtain raw materials, transform raw materials into semi-finished or finished products and then distribute the products to consumers. Later, researches defined supply chain as a dynamic process. Kalalota and Whinsto (1996) argued that supply chain is a series of independent steps and enterprises can meet customer needs if following these steps. Harrington (1997) pointed out that supply chain includes product flow, information flow, and capital flow, while supply chain is a two-way process which links all members from suppliers to consumers into a virtual aggregate, while supply chain also links procurement, manufacturing, and product/service distribution activities. At that time, supply chain took suppliers, manufacturers, and customers into account, while the entire supply chain was divided into different organically-linked processes. After 2000, the definition of supply chain emphasised that supply chain is a dynamic process and that the management plan needs to be continuously adjusted. Chopra and Meindl (2001) maintained that supply chain is a dynamic chain of information, product, and capital flow in various stages, while supply chain is made up of the mutual linkage between a series of upstream suppliers and downstream customers.
International businesses
With increase in international businesses and exploration of the emerging markets in developing countries, global supply chain management is becoming a very important aspect of the business cycle. Just like the traditional supply chain management that is aimed being cost effective by decreasing the costs of inputs and the process of procuring the inputs. The major difference is that global chain supply chain management comes with a more detailed variety of options and challenges as opposed to the local supply chain management.
At a global level the issue of differences in the currency is a major challenge, this is because buying and selling is not based on simply the forces of demand and supply, it is also based on the exchange rate, whether a currency is appreciating or depreciating. Differences in the countries technological advancements also pose as a challenge to global chain management as it becomes difficult to sell or buy certain commodities in some countries because there is no market for them. The benefit that firms can get to enjoy is that it can easily outsource labour and inputs from a cheaper country and this goes a long way in reducing the operational cost. Increase in the market is a benefit as it offers the company a new slate to build a clientele base.
Supply chain manager are involved in organizing and planning of what inputs require to be purchased, from where and how they will conveniently get to the firm while ensuring the cost is at its minimum. The main roles of a supply chain manager are to ensure that there is proper facilitation and collaboration of the factors of production. In doing so they ensure that there minimize costs, stabilize operational expenses and increase revenue through increase in sale s and quantity produced.
Different companies have different roles for their supply chain managers, but at the end of the day it is an action oriented position that requires flexibility, swiftness and adaptability to the changes in the business cycle.
MethodologyIn examining and providing an analysis of the effects of ethical supply chain management on menu design and competitiveness of restaurants in their market segments, a comprehensive overview of literary and scholarly works was done. This is especially for scholarly works specific to the United Kingdom written within a timeframe of the last 15 years. While literary and scholarly works that are specific to the hotel and restaurant industries would have been preferred, the research was not limited to those works that target this field rather it also incorporated works covering ethical supply chain management in the market in general.
Importance of Logistics and Supply Chain management (SCM) in WaitroseLogistics plays an important role in the supply chain management due to its importance in procurement among other functions. Logistics plays a multifaceted role in the supply chain management of the supermarket. First, it is essential in the management of the flow of inputs from the suppliers into the warehouses, stores and within the company. Logistics is further responsible for the management of the flow of materials and information resources within the company through the different operations. Finally, it ensures that the flow of these materials to customers is well managed to guarantee success and efficiency. Therefore, logistics can be seen on two perspectives or angles in terms of inward logistics and outbound logistics where the former is responsible for managing the flow of resources and materials from the suppliers to the company while the latter manages the flow of the materials and necessary resources from the firm to the customers. The flow chart below provides an overview of the inward and outbound logistics for Waitrose Supermarkets.
Figure SEQ Figure * ARABIC 1: Waitrose Logistics
The flow chart above has assumed that the suppliers adhere strictly to the value challenge given by the company and thus there are no backorders. However, in case of any backorders from either suppliers or external customers, it is assumed that they are not significant to affect the judgment on the performance and efficiency of the supply chain management strategy. The functions of procurement, which are integral part of logistics, are generally present in the network facilities and distribution options of a supply chain. This makes a supply chain a very important part of logistics. For this reason, transformation of the materials into intermediate and final products is part of the functions that a supply chain performs and which are of importance to logistics as the goods are distributed to the final customers.
As an important part of the supply chain management (SCM), logistics management is responsible for planning, implementation and control of the efficient, operational flow and storage of the merchandise and all related information between the points of origin and the consumption destinations with the purpose of meeting customer requirements. The flow may be forward or reverse. Logistics entails “getting in the right way, the right product, in the right quantity and right quality, in the right place at the right time, for the right customer at the right cost” (Bales et al 2004).
A good supply chain strategy must be one that integrates information, resources, transportation and time in a way that ensures efficiency and continuous flow of these vital elements within the supply chain. Since there are possible risks associated with supply chain management, an integrated supply chain must have well-laid measures intended to manage these risks. Therefore, having a supply chain risk management strategy is an important indicator of success in performance and management of risks associated with supply chains. Some of the risks and vulnerabilities in the supply chain are caused by lack of access to information or a lag in the supply chain information system. To mitigate this and ensure that the supply chain is efficient, the company must ensure it achieves supply chain visibility. This visibility ensures that the reaction time is minimized and the event is detected in time, the projected or apparent consequences are determined in time and evaluated and relevant responses put in place.
An integrated supply chain strategy must therefore have mechanisms that pull together the different players in the supply chain network. These mechanisms must be able to carry out thorough and accurate risk assessment and come up with mitigation strategies and offer appropriate responses to any unanticipated disruptions in the supply chain network. Aqua Management Consulting (2010) provides five essential drivers to achieving an integrated supply chain strategy.
For a company to have an integrated supply chain strategy, it needs to have an integrated supply planning where the supply planning processes are synchronized with the consumers, manufacturing, suppliers and logistics. Within this aspect of supply planning, the business needs to incorporate other aspects such as vendor managed inventory processing and supplier rationalization. This implies that as the supermarket strives to have an optimal demand-supply matching at the consumer end, this must also be worked for at the supplier side. This factor when pursued ensures increased efficiency and reduced costs of operation.
Another driver is the product deign and development that targets concurrent engineering as a tool of achieving differentiation of the business from other competitors. As an example using the current case, Waitrose came up with a strategy of product engineering and brand image differentiation in 2010 when it launched its products as essential Waitrose and using simple white packaging for the products. In order for this approach to be effective, all the stakeholders must be involved.
Effectiveness of IT in Managing Supply Chain within WaitroseIn recognition of the importance of information technology, Waitrose has taken various steps to embrace information technology as a way of improving performance within the supply chain. In January 2011, the company adopted the Aldata Ordering system, which is retail and distribution software solution that enhances performance in the ordering operations. This information technology system has improved performance of the Waitrose ordering system of the frozen warehouses since it went live in 2011. It enabled the company to adopt the new multi-channel environment easily and sustain high availability with low inventory since it helps in calculating, optimizing and managing supplier orders for replenishment of the warehouses. The Aldata project has led to a rapid turnaround helping Waitrose to increase its efficiency since the suppliers replenish stocks to the branches with increased efficiency. In addition, the design of this solution gave chance for integration with the existing systems within a short time and with no hurdles.
Earlier on, in 2007, the grocery chain had witnessed another important benefit of information technology when it adopted the Datalogic scanning technology. Through this, the company was able to cut on customer queuing time in the Rickmansworth grocery store. Among the factors that prompted for the choice of this solution against the others is its flexibility and the fact that it provides an option for use of the scratch resistant sapphire glass. To demonstrate that information technology solutions have played an effective role in the operations of the company, in mid 2012 Waitrose VoiteQ to provide a voice-directed interface for the new warehouse management system. This solution includes about a thousand Talkman A500 terminals. It also includes more than 3,000 headsets that can support several shift patterns.
Relationship between Ethical Supply Chain Management and competitiveness (and menu design)The relationship between ethical supply chain management and competitiveness and menu design in restaurants has been an open secret in the recent times. This is especially considering the changing consumer preferences pertaining to foods, as well as the dynamics of the workforce.
Scholars and researchers in the food and beverage industry have noted that there has been a shift in the consumer behavior in the recent times. Previously, individuals were least or even not concerned as to the kind of foods that they consumed. In fact, inorganic foods were the in-thing and could even be more preferred as they could be seen as more aesthetically pleasing that the organic foods. Inorganic foods are those that are produced using synthetics such as pesticides and fertilizers. A 2004 survey showed that 80 percent of Europeans saw the making of a healthy diet as too difficult, with 90 percent of UK citizens calling on retailers and restaurants to enhance the ease with which healthy diets could be obtained. However, recent times have seen an increase in the popularity of organic foods, thanks to the increased concern of consumers as to the manner in which their foods or the end-products are made.
The difference between a supply that is responsive An efficient supply chain is one that adds value to the business cycle experienced by the company at any part of the financial year. This means that it should be clearly outlined and executed in a way that is able to reduce any losses that can be experienced. Efficiency comes in ensuring that all the roadblocks are all removed, these include lack of enough raw materials and labour, lack of funds to pay for supplies and the lack of market for the final products (Wang, 2007). All these should be easily avoided with an efficient supply chain because it is based on information and data collected coupled with the experience of the firm.
A supply that is responsive is one where changes in the factors that affect the supply of goods and services, raw materials involved, lead to changes in the quantity supplied to the firms and to the market (Leeman, 2010). These factors can be price and government policies, for instance changes in the tax rate leads to increase in the price for the final buyer, this reduces the purchasing power and ultimately the quantity supplied. This is a responsive supply chain.
Contribution of IT to SCM within WaitroseAs mentioned under AC 3.1, Waitrose has taken technology seriously and this is seen from the way the company has adopted the use of information technology platforms to enhance efficiency. As for the company’s supply chain management, IT application infrastructure is an important element in providing a strong pillar for the various operations within the supply chain network. The IT infrastructure within the Waitrose SCM has contributed in putting the company in a competitive position in the market. By providing a platform for quicker and easy access to information, information technology has also contributed to the efficiency within the SCM and led to reduced costs of managing the supply chain. Information technology infrastructure in place has enhanced visibility within the supply chain network. In addition, it has become easier for the business to standardise many procedures and processes within the organisation and with the partners. The IT application infrastructure has also promoted accountability and the departmental automation that accompanies the infrastructure has enhanced efficiency in operations and this brings the benefits to the entire supply chain hence improving SCM. Lastly, information technology has also improved supply chain management practices by boosting supply chain integration thereby allowing for partners to enjoy more visibility, efficiency, cost effectiveness and timely sharing of crucial business intelligence.
How the supply chain can help a company reach its strategic goals
Increase in profits- It can lead to increase in the quantity produced, this will increase the revenue earned and consequently the profit will be ploughed back.
Cost effectiveness-Increase in quantity produced due to a proper flow of raw materials will allow the firm to enjoy economies of scale and be cost effective; the costs of production will decrease with increases in quantity produced.
Increase in customer satisfaction- constant supply of the products ensures there is no deficit and creates a clientele base that has a well structured and satisfied market.
Why many companies choose to contract with third-party logistics companies
To be cost effective – this is because third party logistics companies reduce the amount of facilities and physical capital and labour required by a firm to conduct proper logisyics.
Economies of scale- the third arty companies can offer discounts on large volumes of shipments and transportation of goods.
Qualified service and reduce used up space in the firm- the third party companies are specifically for logistics and being in the industry they have connections and qualified employees for the work (Langley et.al. 2008). They also do all the billing and reduce on the space that would have otherwise been used up in the firm.
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