Acegate Company: Supply Chain Management

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Executive summary

The global credit and economic crunch have put more pressure on strategic supply chain management. In this regard, Supply chain managers and practitioners should ensure all suppliers come out of the downturn and can help them capitalize on recovery. This calls for a paradigm shift in the management of strategic chain supply in organizations.

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Introduction

Acetate is a vibrant and internationally recognized steel manufacturing company with a wide portfolio of high-quality metal products. The company has got clients both within the UK and the foreign markets. The company was established in 1995 and has over the years grown its market base to cover the whole world. One of the main reasons why the company has made great achievements and remains competitive is excellent strategic supply chain management. In the running of an efficient supply chain management, strategic decision plays a central role decision. According to Harland & Knight (2005),

While optimizing supply chain management is critical to business success, these days it is simply not enough. For many companies, a large portion of revenue and expenses are related to their supply chain, effectively linking supply chain management to major strategic decisions and overall effectiveness

Supply Chain Management Definition

According to Huebner, (2007. p. 57) Supply Chain Management is about managing the flow of information, materials, services, and money across any activity, in a way that maximizes the effectiveness of the process.

Most companies have well-designed business strategies but fail to have a well-organized supply chain strategy. These in most cases pose a great challenge to the effective operation of the companies. It, therefore, calls for an organized and effective chain supply which not only sets good working relations with the supply chain partners but also sets the company way above the rest. This will ensure that Acegate Company is actively competitive; thus, enjoy economies of scale. This report takes a critical analysis of Strategic Supply Chain Management, its importance, and challenges. To briefly and comprehensively explain the concept of strategic supply chain management, the paper analyzes Acegate Steel Manufacturing Company Limited as a case study. A comprehensive analysis of SWOT, PESTLE, and Karljic’s models will be used during the discussion.

Importance of Supplier Development Program

Suppliers are quite important to the company and therefore their effective management can never be discerned. In this regard, the company is adopting a strategic chain supply program that not only aims at enhancing the effective relationship between the company and the suppliers but also enhances the effective running of the company to prompt the customer’s demand.

Benefits chain supply management

Effective Supply chain management has got benefits to all. The suppliers will expect a lot of improvement in payments, good relations, and effective business communication. This will go a long way in improving time management. The employees will reap the benefits of effective management with will include salary increases and several motivational programs in our company. In this endeavor, “the client and customers are very important and this strategic chain supply program will enhance service delivery” (Bragg, 2006).

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Supply Chain improvement project for Acetate Company

The need for efficient and effective supply chain management has made the company not only strategically position itself in the market but also form a very vibrant supply chain management. This chain management project has generated positive benefits for the company.

Supply Chain improvement project for Acetate Company

Acegate SWOT analysis

Gattorna, (1998, p.37) highlights that “a vibrant company SWOT analysis should comprehensively include all issues that influence and affect the company progress.”

SWOT analysis involves a critical and comprehensive examination of the internal and external factors that affect the business in its quest to achieve its objectives (Barney, 1991, p. 71). The exercise starts with a clear objective statement and the purpose of carrying out the SWOT analysis. These objectives help in designing the business opportunity in which a company can venture into in the future.

The internal analysis of Acegate Company will not only help in revealing the strength and weaknesses but also use the information in drawing a strategic management plan. In this endeavor, the external analysis takes a critical examination of the market and competitive business environment and further goes ahead to analyze the possible external factors which may affect the growth of the business.

Importance of SWOT analysis to the Company

According to Caniëls & Gelderman (2005, p. 7), business success requires a continuous analysis of the strength, weaknesses, opportunities, and threats that affect a business. In this case, an investor can easily track the performance of the business and plan appropriately. In this line, Acegate Company Limited in the same way applies the concept and model of SWOT analysis in its business pattern analysis.

Strength

Kotabe (2008, p. 12), explains that, Acegate has many hundreds of satisfied customers throughout the United Kingdom, Europe, the USA, Australia, New Zealand, and other sister Commonwealth nations. Acegate Company is based in the UK in the heart of Rockdale. We continue to work in the metal manufacturing industry.

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Weakness in Acegate Company

Acegate Company has a small weakness in handling change management. This is because the company is stuck to most of the old management strategies adopted during its inception.

Opportunities in Acegate Company

The company has got a wide experience in the steel manufacturing business coupled with well-established brands across the globe. The company has developed a great partnership relation with other major steel manufacturing companies worldwide hence can outsource their material easily. These worldwide links put an immense opportunity to the company’s present and future growth.

Threats in Acegate Company

The company experiences stiff completion in the market. This calls for Acegate Company to come up with new business strategies to compete in the market. In this case, the cost of implementing new strategies increases the company’s overall operational cost hence erodes the expected profits.

The SWOT matrix

The SWOT matrix presents the analysis of the company in four distinct quadrants.

Strength of Acegate

  • Superior technological know-how in the Metal manufacturing business.
  • Strong Brand name Acegate
  • The company has got a well-established distributional channel not only in Europe but also in other parts of the world.
  • The company has an excellent product reputation with great customer management
  • The company has over the year installed a competent management team

Weakness in Acegate Company

Like any other business, Acegate Company is faced with an internal weakness for instance the complaint normally forwarded by the employee’s overpayment. These complaints have been a weakness to the company since they are not fully addressed in time thereby causing disharmony in the company.

Opportunities in Acegate Company

With a well and organized distribution channel worldwide, the company has position itself way above the rest in this steel manufacturing business. However, the company canner is complacent but continues exploring new ideas to enhance their competitiveness.

The threat in Acegate Company

The company is faced with several threats in the market. These threats have been brought about by the continuous increase in the number of steel manufactures in the market. In addition, the reduction of raw materials which is caused by the high cost of outsourcing poses great threats to the future growth of the company. In the analysis of the threats that face Acegate, some of its challenges are shared by other companies the world over but its central problem and threat rear its head in the availability of raw materials.

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The steel market has recorded a tremendous decline in the raw materials that have been left behind by increasing demands for steel products. Furthermore, the stringent legislation on the trade in some of the products from metal has attracted keen attention to metal and its finished products. The company has to look further beyond its traditional suppliers to satisfy its demands for steel

PESTLE- Analysis in Acegate Company

PESTLE – (Political, Economical, Social, Technological, Legal, and Ecological). This technique applies a comprehensive analysis of the company based on the above-mentioned aspects of PESTLE.

PESTLE-Analysis Chart for Acegate Company.

Political Economical Social Technological Legal Ecological
All the political issues that affect the company are analyzed and reviewed All the Economical issues that affect the company are analyzed and reviewed All the Social
issues that affect the company are analyzed and reviewed
All Technological advancements and issues that affect the company are analyzed and reviewed All the Legal issues that affect the company are analyzed and reviewed All the Ecological issues that affect the company are analyzed and reviewed

In the analysis of Acegate Company using this model, several drivers affect both positively and negatively the industry’s structure. PESTLE, therefore, allows analyzing the level of impact each driver will have in the company and the industry as a whole. This can be easily visualized by the use of an

Karljic’s models of Analysis

Outsourcing Advantages and Risks

“Increasingly, with rapid wealth growth of emerging global economies, the basis of Competitive advantage is changing from internal capacities to network capabilities” (Gottfredson & Puryear, 2005, p.17). Harland & Knight, (2005, p. 43) and Bragg, (2006, 43), further support this argument by illustrating that,

The rate at which a major company’s tasks are being outsourced to business outsourcing companies is gaining astronomical attention each day, companies are outsourcing anything from payroll to IT and even the whole management of a company is being outsourced. The reason for this outsourcing craze is simply to minimize cost because the jobs are being done by highly skilled workers in the less developed countries for less than the real cost of the job at home.

Strategic Outsourcing Matrix for Acegate Company.

Profit Impact Out sourcing risks
Low High
High Low Leverage items :
Increase market penetration and
expansion of market with high level outsourcing to increase economies of scale.
Strategic items:
In sourcing for competitiveness
Seek strategic partnership for long-term
market position of Acegate company
Low Non-critical items :
Ensure efficient cost reduction strategy
for economies of scale
Bottleneck Items :
Close partnership for assuring supply of raw materials
Sourcing alternate partners

Duplication which may arise between Acegate Company and the other company which has been bought is that when procurement is done differently this will be costly and results in duplication of roles. Outsourcing for chain supply increases efficiency in the company and above all, it reduces the cost of procurement.

Based on the analysis of the company using the three models that is the SWOT analysis, PESTLE analysis, and Karljic’s models, I would recommend that we the family of Acegate Company take joint outsourcing from the headquarters. This will reduce the cost of strategic chain supply management.

Conclusion

Strategic chain supply management is central to the success of a company. Towards this, Acegate Company must cope up with new strategies and ideas on the improvement and excellence in running chain supply management. This is because a close comparison of India and China scenario as compared to the UK, it is clear that outsourcing is efficient and relatively cheap to outsource from India and China. This will make Acegate company enjoy the economies of scale associated with outsourcing in these countries. The SWOT, PESTLE, and Karljic’s models as made applicable in the case of Acegate Company indicate that the company has position itself strategically to compete well by streamlining its chain supply management to improve its core competence.

Recommendation

Strategic supply chain management is an important department in any company. Towards this, the company should adopt new technological approaches to outsourcing. This should include the use of e-commerce to gain more economies to scale. In addition, there is a need to venture into a strong partnership with other steel industries in other parts of the world like Asia and Africa.

References

Barney, J 1991, Firm Resources and Sustained Competitive Advantage. Journal of Management 17(1): 99.

Bragg, S., M, 2006, Outsourcing: a guide to– selecting the correct business unit– negotiating the contract– maintaining control of the process. New York: John Wiley and Sons.

Caniëls, M. C. J. & Gelderman, C, J, 2005, Purchasing strategies in the Kraljic matrix? A power and dependence perspective. Journal of Purchasing and Supply Management 11(2-3): 141-155.

Gattorna J, 1998, Strategic supply chain alignment: best practice in supply chain management. London: Gower Publishing, Ltd.

Gottfredson, M., R. Puryear, 2005, Strategic sourcing: from periphery to the core. Harvard Business Review 83(2): 132-9.

Harland, C.,& Knight, L, 2005. Outsourcing: assessing the risks and benefits for organizations, sectors and nations. International Journal of Operations & Production Management 25(9): 831-50.

Hoecht, A. and Trott, P, 2006, Innovation risks of strategic outsourcing. Technovation 26(5-6): 672-681.

Hurbner, R, 2007, Strategic supply chain management in process industries: an application to specially chemicals production network design. New York: Springer.

Kotabe, M, 2008, Outsourcing, performance, and the role of e-commerce: A dynamic perspective. Industrial Marketing Management. 37(1): 37-45.

Kraljic, P, 1983, Purchasing must become supply management. Harvard Business Review. 61(5): 109-117.

Rousel, J & Cohen, S, 2005, Strategic supply chain management: the five disciplines for top performance. New York: McGraw-Hill Professional.

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