The competitiveness of the modern business environment is prompting industry players to seek for new ways to harness their operations. The supply chain embodies most of the activities that are poised to bridge the essence of the gap between the producer and the customer. Consequently, the supply chain covers concepts such as purchasing, manufacturing operations, transportation, and the distribution channels.
The supply chain brings all of these concepts together in an effort to formulate a seamless process that gives products and producers a competitive edge. Eventually, the supply chain “embraces and links all the partners in the distribution process” (Bowersox 43). The most notable players in a supply chain include carriers, vendors, information systems providers, and third-party companies. The universal definition of a supply chain is that it is “a system of organizations, people, activities, information, and resources involved in moving a product or a service from the supplier to the customer” (Gilaninia 577).
The chain is a crucial part of the system that transforms innate products and unprocessed materials into refined merchandise or services. The delivery of these goods or services to the customer in modern times depends on sophisticated systems that encompass high levels of logistics and innovative services. On some occasions, “finished products might re-enter the supply chain in cases where the residual value is recyclable” (Mentzer 2).
This paper explores the essence of the supply chain in reference to the manner in which the process is manifested in various aspects of the UAE business. The paper includes an overview of the strategic management that accompanies a supply chain in regards to the logistics, operations, economics, and marketing. Furthermore, there are various mini-case studies that apply to the essence of supply chain within the UAE environment.
Throughout the paper, the concepts of supply chains’ strategic decisions are identified. Some of the highlighted aspects of supply chain essence in this paper include innovativeness, logistics, information technology impact, stores identification systems, sourcing, procurement, and performance measurement among others.
Innovative Techniques for Effective and Eco-Friendly Supply Chain Logistics
In the twenty-first century, it has become important for businesses to be mindful of environmental responsibility in a bid to attain sustainability and conform to regulations. Consequently, it has become normal for “organizations to react to increasingly stringent government regulations and consumer’s appetite for ‘green’ products, and also to create competitive advantages” through innovative techniques (Halldorsson 85).
One innovative technique involves categorizing products in terms of their eco-friendliness. This technique allows an organization to track how a certain product affects the environment as it goes through a supply chain life cycle. An example of a company that uses this technique is Hewlett Packard, which employs the highest environmental standards without regard to the set environmental standards and policies.
Another innovative technique involves employing a greener supply chain that aligns with business goals. A commonly held misconception is that implementing eco-friendly supply chain tactics eats into profit margins. However, through innovative techniques it is possible streamline eco-friendly supply chain tactics with the overall goals of the company. For instance, most farming economies around the world are embracing eco-friendly techniques and increasing profit margins at the same time. The Netherlands is known for using this technique to streamline it cut-flowers industry.
Study on Process Management in Supply Chain Industry
Process management in supply chains is mostly determined by the needs of the customer. If any industry aims to improve on competitiveness, its process management strategy will mostly involve a reduction of the order-to-delivery cycle. In addition, a key component of the process management is its ability to indentify bottlenecks and streamline the entire supply chain. An example of how process management can impact supply chain industry involves a carmaker that aims to deliver ordered vehicles to consumers within one week. In the course of the carmaker’s process management, it might turn out that the company that supplies seats does not have the necessary capacity for one-week delivery.
This scenario poses a problem to the supply chain process that in turn creates a domino effect throughout the industry. An effective process management should operate in reference to customer’s needs. Consequently, in any industry the needs of the customers are the ones that should determine the pace of all other processes. In the case of the carmaker, the inadequacies of the seat supplier are outweighed by the carmaker’s need to serve its customers.
Study on Impact of Information Technology in Supply Chain
From the onset, information is a vital aspect of the supply chain. On the other hand, “key infrastructure and web-based technologies continue to have significant impact on supply chain strategies” (Wu 494). The internet has had a significant impact on the supply chain because it provides an avenue through which transparency and reduced transaction costs can be achieved. Nevertheless, there is a disparity between the rate at which information flows and the rate of goods’ movement.
Information technology is slowly improving the general design of supply chains. One supply logistics company conducted a study that indicated that “social media networks are helping companies to improve the transparency of their distribution networks” (Wu 495). In addition, it has become clear that information technology infrastructure enables organizations to harmonize their supply chains. In the short term, technology is offering businesses a chance to enhance their customer reach and coordinate sales and purchases. For example, it is easy for a company to centralize its inventory services through information technology services.
Supply Chain Excellence Future Scenario – A Case Study
Although the essence of the supply chain will keep evolving, the most dominant perspective of this evolution will remain the efficiency of movement of commodities beginning with the raw materials and ending with the end product. Currently, “the manufacturing planning and control involves the manipulation of materials through a formal chain of events that include raw-material inventory, capacity building, production scheduling, shop-floor control, work-in-process inventory control, and purchasing” (Wang 5647).
The future case scenario is expected to include activities that mimic the increasing competitive environment. Consequently, the future supply chain will excel in terms of the contacts with customers through activities such as sales, advertising, and timely delivery of products and services. The supply chain of the future will also encompass factors that go beyond the current logistics and bring all major players in a single platform. Overall, the future supply chain will mostly be demystified because there will be transparency of activities between manufacturers, distributors, suppliers, customers, and retailers.
Stores Identification System – Need, Advantages, and Payoff: An Overview
In any supply chain, there are various functions that are important to the entire process. These functions include coordination, management, and systems of identifying stores. The store identification system is one of the most complex processes in the supply chain because its success influences a company’s overall agenda. Consequently, there is need to maintain an efficient store identification system. An efficiently maintained store identification system eliminates the need to monitor complex systems because it combines only the important details. The update modalities of a good store identification system also ensure that all records are up to date at any given time.
The expected payoff in any store identification system is the minimization of a heavy workload and the acquisition of an efficient and effective structure. The stores identification system also relies on an effective warehousing and distribution system. The technology factor also influences the stores identification system in a major way. For example, modern technology has made it possible for highly sophisticated methods of warehousing and distribution to become part of the store identification system. A viable store identification system “will inevitably see an organization through to its long term business objectives and provide tangible financial pay backs” (Teece 175).
Supply chain Customer Service Management
There is a direct link between customer service management and the supply chain management. Consequently, companies that have a good supply chain will eventually formulate good customer-service management policies. On the other hand, companies that lack good customer service policies can use the supply chain to garner a competitive edge. The opposite is also true because a company can utilize good customer service management to build its supply chain.
The connection between customer service and the supply chain is not limited to big companies. It is also important for small companies to establish the link between customer service and the supply chain because this connection will help them gain much-needed competitiveness (Mentzer 7). Studies have indicated that a good supply chain can boost an organization’s customer service by aiding in these three areas: “the delivery of products to customers faster, the tracking of shipments in order to ensure that they reach their destinations safely, and the maintenance of accurate inventory in accordance to customers’ needs” (Chin 48). These three advantages create better links between markets and producers.
Strategic sourcing and Procurement in UAE
The UAE market environment consists of high levels of dynamism that necessitate good supply chain logistics. Consequently, strategic sourcing and procurement in the UAE involves a vast analysis of the internal supply-market dynamics with the view of providing a foundation for establishing a solid sourcing plan. This process also involves the application of various sourcing “strategies that can optimize savings and ensure supply security” (Bowersox 29).
The versatility of the UAE market also requires players to identify the appropriate suppliers that can satisfy the requirements of the chosen sourcing plans. The overall agenda in regards to any procurement plan is to ensure that all agents acquire value from the supply chain. The modern procurement process also requires implementation of the different purchasing methods. This strategy ensures that an entity is able to cater for procurement needs within the UAE and the rest of the world. Procurement is an independent process that requires continuous improvement through process management. This process management involves steps such as identification of suppliers, implementation of the process, integrations of suppliers, and monitoring of industry conditions in the UAE.
Supply Chain Product Development and Commercialization.
In the “process of supply chain management, product development and commercialization is responsible for structuring the market through the introduction of new products” (Teece 174). These new products are brought forth by the interaction between suppliers and customers. The effectiveness of the product development and commercialization process “not only enables management to coordinate the efficient flow of new products across the supply chain, but also assists supply chain members with the ramp‐up of manufacturing, logistics, marketing, and other related activities” (Gilaninia 577).
The trigger of any commercialization process depends on the natural flow of the supply chain. On the other hand, all product development processes are dependent on the nature of the supply chain. For example, Apple Inc. is more likely to develop a product that can be distributed through known supply chains, as is the case with music and video streaming services. Product development and commercialization are processes whose ultimate success depends on a good supply chain. Consequently, the two processes have mutual relationships with other supply chain activities such as sales and advertising.
Supply Chain Manufacturing Flow Management
Manufacturing flow management is an essential aspect of the supply chain because it makes this process both sustainable and flexible. Manufacturing flexibility in reference to the supply chain “refers to the ability to manage manufacturing resources and uncertainty to meet various customer requests at the lowest possible cost” (Wang 5648). The flow management is subject to various forces of change including globalization, technology, supply chains, and outsourcing patterns. From the onset, the manufacturing flow management involves a review of marketing, sourcing, and logistical factors.
Therefore, it is possible to make the necessary forecasts using the essence of the flow management. This process also has the capacity to expand or shrink the boundaries that apply to the supply chain. In addition, manufacturing flow management is used to determine the strengths and weaknesses in a manufacturing-process. This evaluation addresses matters such as the development of contingency plans, acceptance criteria, supplier development strategy, and communication mechanisms.
Supply Chain Physical Distribution in UAE
The UAE is divided into Emiratis that are all interconnected through a substantial transport network. In the course of managing supply chain management, physical distribution is the part of the process that is responsible for delivering customer and economic value through the established networks. In the UAE, various companies use different logistical approaches to lay out effective physical distribution networks.
Therefore, it is the established “network of amenities and supply options, which performs the purpose of procurement of materials and the distribution of these goods to customers” (Laeequddin 281). In the UAE, physical distribution within the supply chain is governed by a set of factors including the pre-existing supply chain strategies. The logistics of movement within the UAE and other nations within the Gulf region also have an effect on physical distribution.
Initially, most organizations within the UAE relied on outsourced or subcontracted services but this situation is slowly changing and companies are turning to homegrown talent. Consequently, companies are forced to harness various aspects of physical distribution within the UAE including warehousing, purchases management, and change-distribution systems. The statistics also involve harnessing the logistic costs that apply to different industries.
Supply Chain Outsourcing Partnerships in UAE
Supply chain structures have to take into account the various sets of partners who complete the ‘chain’. Nevertheless, it is important to manage the number of partners who make up a supply chain because if they are too many, the process might end up being complicated. Outsourcing partnerships are the solution to complicated supply chains because they “identify the type of the partners who are critical to the value-added activities and determine a manageable number” (Laeequddin 288).
This is often the mode of operation in the UAE where supply chain partners are either primary or secondary depending on their positions in the chain. For instance, primary partners are crucial because they perform managerial activities that bring direct returns to a company. In the UAE, the need for outsourcing partnerships has turned the region into a global logistics hub. On the other hand, the UAE’s sophisticated transport and logistics’ infrastructure have made it easier for outsourcing partnerships to survive.
Supply Chain Performance Measurement
One key component of a supply chain is the competitive strategies that are contained within it. Therefore, it is important to have a metric that can indicate the performance levels of any supply chain in reference to its competitiveness among other factors. The importance of performance measurement in a supply chain “cannot be over emphasized because this strategy has a direct impact on the tactics, operational planning, and control measures” (Chin 12).
Furthermore, performance measurement is also of importance to a company when it is setting goals, gauging performance, and formulating future policies. Nevertheless, the performance measurement methods that are used in the UAE and the rest of the world are not standard. Consequently, researchers are still working on various measurements and metrics that can apply to all organizations around the world. Some of the supply chain performance-measurement tactics around the world include measuring performance through scorecards and web portals. A good performance measurement methodology indicates not only how an organization is providing good customer service but also how other supply chain activities such as inventory are being handled.
Supply chain Warehousing Management
Warehousing is a major component of the supply chain process, and when it is handled efficiently, it can increase the chances of success within an organization. Warehousing as an aspect of the supply chain process is subject to various factors that are connected to globalization including information technology, reverse logistics, and environmental sustainability. Consequently, modern warehouses are not just storage facilities but they also serve other strategic roles.
Currently, a warehouse serves as a distribution center and a major leveraging component in the supply chain. Warehousing management might include automating the operations in a warehouse through “inbound and outbound processes, storage and inventory management, and distribution” (Halldorsson 85). The main benefit of effective warehousing management is that the operations of an organization can be streamlined through optimization of resources and assets, on-demand services, and good management of the workforce.
Sustainable Supply Chain and Logistics Management
Sustaining a supply chain is an important issue for most entities because they have to adhere to a strict logistics network. On the other hand, modern logistics management works in reference to issues such as risk, waste cost, and environmental sustainability. A good balance between sustainable supply chain and logistics management has the potential to deliver on long-term performance goals by replacing financial costs, speed of delivery, and value as the most dominant factors.
Sustainability depends on a capitalization of the gaps in value creation and harnessing of competitive advantages. Good logistics management ensures that the movement and storage of products between various stages in the supply chain is effective. The supply chain is known to have significant impacts on any ecosystem because it leads to the consumption of non-renewable resources and generates harmful by-products. Therefore, in the era of globalization logistics management covers a wider scope of issues that are all aimed at sustainability. It is also important to note that sustainable supply chain activities are not necessarily detrimental to the environment. It is possible to establish mutual benefits between the profitable logistics and an effective supply chain.
Transportation and smart city in UAE
The motivation behind the smart city initiative in the UAE can be summed up in one vital statistic: “the rate of urbanization around the world is expected to increase significantly in the future with nearly 66% of the world’s population predicted to be living in urban areas by 2050” (Angelidou 6). In the UAE, there has been a general increase in the proliferation of smart devices and this has fueled the advent of smart cities within the UAE.
One of the main purposes of the smart city initiative in the UAE is to address the complexities of mobility within the urban centers. On the other hand, transport initiatives within the smart city are seeking to minimize the usage of fossil fuels and other environment-unfriendly materials. Currently, the UAE has already made significant steps towards harnessing transportation within its smart cities. The prevailing concerns when it comes to transportation within the smart cities include minimizing the costs of developing smart-city solutions. The effectiveness of supply chains depends on some of these innovative smart city solutions such as advanced traffic flow models and smart grids. In addition, it has become important for traffic flow data to be utilized in all aspects of smart-city planning.
Humanitarian Supply Chain Management
In recent times, it has become important for the humanitarian and relief agencies to emphasize on effectiveness through various impact areas including logistics, security, information technology, and partnerships. In terms of the supply chain, humanitarian efforts involve inter-agency cooperation. Therefore, it is important for the humanitarian supply chain management to include a clear plan of action that is backed up by solid research.
Humanitarian efforts’ managers are expected to review plans of action and update them to include modalities that can accommodate partnerships and a better supply chain. For instance, a multi-disciplinary approach to humanitarian supply chain management should have the capacity to quantify the chain of operation and identify areas of improvement. The need for humanitarian supply chain management has also been increased by the fact that modern living is threatened by both man-made and natural disasters. For example, the scramble for natural resources and the increased rate of environmental degradation has compounded the risk of humanitarian disasters.
Food Supply Chain Management
In future, the food sector is expected to improve substantially in terms of utility and efficiency. Furthermore, the food industry is under pressure to “meet increasingly high quality, consistency, and safety standards to comply with the stringent food laws and demands of global markets” (Bowersox 39). Eventually, the subtle changes in the food industry will change the designs of the supply chains as they apply to the movement of food from the farm to the market. Some of the players who are found at the food supply chain include farmers, processors, restaurateurs, retailers, exporters, and consumers.
Therefore, the food supply chain has a simple flow, but one that is subject to a myriad of interferences. For instance, the small farmer is often the least regarded participant of the food supply chain but his absence in the value chain would create chaos in the entire process. Another lingering challenge in the food supply-chain management is the fact that on most occasions the process is mostly generic in nature due to factors such as perishable-materials, bulkiness, seasonality, traceability, and small-scale production.
Risk Management in Supply Chain
Risk management in a supply chain refers to “the execution of strategies to supervise both everyday and exceptional risks along the supply chain based on continuous risk assessment with the goal of decreasing liability and ensuring continuity” (Gilaninia 577). Risk management also ensures that there are shared responsibilities between the players within the supply chain. Furthermore, sometimes risks arise from logistics-related decisions.
Any modern organization has to rely on external entities for its success. On the other hand, the supply chain has enabled organizations to spend most of their money on purchases while they capitalize on strategies such as outsourcing, globalization, supply-base rationalization, lean inventories, and in-time deliveries. Risks are also managed through economies of scale. Research has also indicated that “while globalization, extended supply chains, and supplier consolidation offer many benefits in efficiency and effectiveness, they can also make supply chains more brittle and can increase risks of supply” (Gilaninia 577). Risks such as the 2011 Tohoku Tsunami in Japan have indicated that supply chains are susceptible to major interruptions.
Lean and Agile Supply Chain
The dynamism of the twenty-first century economy is of benefit to the companies that operate a lean and agile supply chain. The lean and agile strategy is particularly important to any company that aims at becoming a ‘mass customizer’ through the production of small batches of products. Furthermore, these items are customized as per the needs of the customers’ unique needs. Leanness in a supply chain involves adding value to customer-centric products and at the same time reducing waste levels. On the other hand, agility focuses on the importance of any supply chain to withstand unpredictable occurrences.
Through an agile strategy, producers can implement a wait-and-see strategy and hold out on mass production until the demand of a certain product becomes known. For example, this approach is common among carmakers when they are rolling out relatively new products in the market. In an agile supply chain, the process has to be able to respond to sudden changes in market demand.
Outsourcing is known as the process through which an organization’s activities are passed on to a contracted service provider with the view of improving performance. The main goal of outsourcing is to reduce the costs of operations and focusing on the major expenditures. Management scholars have defined major expenditures or the core competencies of an organization as the ‘central things that organizations do well’ (Wang 5666).
Consequently, organizations find it useful to leave the other unrelated competencies to providers who consider these activities to be their ‘core’ competencies. In reference to supply chains, the outsourced services are often considered to be cumbersome to a company’s operations because they take up much-needed energy, time, and workspace. In addition, these activities act as a distraction to an organization’s management prompting the personnel to lose focus when it comes to the important matters.
Globalization is one of the key drivers of outsourcing because it has cut the complexities associated with geographical distance and economic policies among others. In the current business environment, most industry players have found it important to outsource various activities that are part of the supply chain. Furthermore, outsourcing as a business tool can be used to harness the competitive edge.
Supply Chain Relationships and Strategic Alliances
Relationships in the context of the supply chain can assume various forms including: “strategic relationships, transactional relationships, tactical relationships, and internal relationships. Nevertheless, the effective management of these relationships is critical to the success of supply chains. The strategic relationships in a supply chain can take up various forms including the researchers, consultants, and the working practitioners.
The secret to managing relationships and strategic alliances lies in maintaining a healthy balance between the various stakeholders. Therefore, there will not be cases of stakeholders who have too much power at the expense of others. A ‘healthy’ supply chain is expected to feature an effective relationship management without any single sector having a dramatic effect on overall performance. However, “a number of supply chain initiatives fail, however, due to poor communication of expectations and the resulting behaviors” (Mentzer 13). Therefore managing expectations is an important aspect of supply chain relationships and strategic alliances. Trust is also a vital component of strategic alliances because without it, the entire supply chain will be defunct.
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