Analysis of Supply Chain Management in Business

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Introduction

Supply chain management (SCM) aims at optimizing the cost of goods and the time it takes to deliver products to the end customer. According to Russel and Taylor (2019), competing in a global marketplace requires the combined and coordinated effort of all members of the supply chain through close collaboration, cooperation, and communication. Glocalization requires entrepreneurs to utilize global SCM practices to improve the performance of their companies. The present paper focuses on two aspects of SCM to acquire a deeper understanding of the phenomenon. First, the paper closely examines the supply chain risk management as a part of the general SCM theory. After that, the paper analyzes outsourcing as a global SCM practice. The analysis demonstrates that both SCM theory and global SCM practices support operations management efforts.

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Risk Management

The idea of supply chain risk management (SCRM) emerged as a reaction to the need for coping with supply chain uncertainty. The primary aim of risk management is to evaluate the possible disruption in the SCM due to various causes and plan for them (Russel & Taylor, 2019). The SCRM process consists of four crucial steps, including risk identification, assessment, treatment, and monitoring (Fan & Stevenson, 2018). Risk identification helps to discover the possible risks and manage them proactively. Fan and Stevenson (2018) describe several risk identification strategies, such as the analytical hierarchy process, value-focused process engineering, and the supply chain risk identification system (SCRIS). Risk assessment is an evaluation of how likely and how impactful every identified risk is. Risks can be assessed using both qualitative and quantitative methods based on data or expert opinions (Fan & Stevenson, 2018). Risk treatment is selecting the most appropriate strategy for addressing the identified risks. There are five treatment types outlined by Fan and Stevenson (2018), including acceptance, avoidance, transfer, sharing, and mitigation.

Risk monitoring is based upon the idea that risks are not static, as the sources and the likelihood of risks changes depending on a wide variety of circumstances. Effective risk monitoring is associated with developing a formal process to ensure a systematic approach to the aspect of SCRM (Fan & Stevenson, 2018). While all steps of the SCRM process are crucial, the majority of research focuses on risk identification and risk treatment, which leaves a large area of the issue poorly explored (Fan & Stevenson, 2018). Thus, it may be said that SCRM remains an understudied phenomenon that requires future research, especially on risk assessment and monitoring.

The research by Behzadi et al. (2018) demonstrates how the SCRM process can help operations management efforts in agricultural business. During the first stage, the risks are identified and classified into supply-side (season-related, weather-related, transport-related, etc.) and demand-side risks (market price and capacity) (Behzadi et al., 2018). During the second stage, an agricultural business holder may utilize mathematical models to assess the risks based on relative data (Behzadi et al., 2018). Finally, relevant risk treatment strategies, such as diversification of suppliers and product substitution (Behzadi et al., 2018). Even though the process of risk monitoring is not covered in the present paper, it demonstrates how managers can act proactively to minimize the impact of uncertainty on the outcome. According to Behzadi et al. (2018), SCRM (2018) helps managers of operations to plan their activities without fear of being interrupted by unexpected events. Moreover, SCRM develops comprehensive instructions for operations managers to ensure stable performance

Outsourcing

Outsourcing is a global SCM practice associated with purchasing goods and services originally produced by the company from outside suppliers. Originally, outsourcing was meant to be a temporary solution for immediate problems, such as a temporary lack of capacity, breakdown of equipment, or testing new technology (Russel & Taylor, 2019). However, in recent years, outsourcing has become a trend in international SCM due to glocalization (Russel & Taylor, 2019). The services which are usually outsourced include original equipment manufacturing, such as parts, fabrications, and components, maintenance, repairing of equipment, distribution, warehousing, and information systems. The trend to outsourcing is associated with the inability to do a wide variety of tasks well (Munjal et al., 2019). Additionally, outsourcing helps to reduce inventories and the number of suppliers, which lowers the associated risks (Russel & Taylor, 2019). Thus, outsourcing often leads to the improved financial performance of companies and increased quality of products (Munjal et al., 2019). However, outsourcing should be accomplished wisely to ensure that benefits exceed the costs.

Outsourcing is associated with several benefits to operations management. In particular, outsourcing helps managers of operations to focus on the core competencies to ensure effectiveness. Moreover, managers receive access to skilled resources to accomplish tasks in which the firm does not specialize (Munjal et al., 2019). Operations management may also benefit from the decreased cost of production and invest the savings into developing the core competencies.

Concluding Remarks: Professional Interaction, Communication, and Presentation Skills

Effective SCM is impossible without effective professional interaction, communication, and presentation skills within the operations management and SCM environments. Professional interaction and communication between stakeholders help to arrive at more efficient and creative ideas to achieve the perfection of the products and services. Systematic exchange of well-presented information helps to mitigate the possible risks, reduce inventory, and improve both operational and SCM processes. Thus, it is crucial to utilize the most efficient strategies and technology to ensure effective interaction in operations management and SCM environments, as it can lead to improvement and effective management.

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References

Behzadi, G., O’Sullivan, M. J., Olsen, T. L., & Zhang, A. (2018). Agribusiness supply chain risk management: A review of quantitative decision models. Omega, 79, 21-42.

Fan, Y., & Stevenson, M. (2018). A review of supply chain risk management: definition, theory, and research agenda. International Journal of Physical Distribution & Logistics Management, 48(3), 205-230.

Munjal, S., Requejo, I., & Kundu, S. K. (2019). Offshore outsourcing and firm performance: Moderating effects of size, growth and slack resources. Journal of Business Research, 103, 484-494.

Russel, R., & Taylor, B. (2019). Operations and supply chain management. Wiley.

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BusinessEssay. 2022. "Analysis of Supply Chain Management in Business." October 30, 2022. https://business-essay.com/analysis-of-supply-chain-management-in-business/.

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