Global Supply Chain and Business Issues

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Introduction

This paper will discuss the issues that face organizations or firms that have extended their operations beyond national level. These are the firms that have global operations. Example of these firms are multinational enterprises. Global business operations have been seen to be successful nowadays due to the lifting of the trade tariffs. Another key factor that has contributed the success of global operation is the emerging information and communication technology. It has made it possible for the whole world to be seen as digital village. This has enabled most of the business people to access information from all over the world (Cherrington 1995). The rate at which this information is being accessed is very high and with no time, people can be well informed of the regions that have high demand of the products and services that they do produce and also, the rapid sharing of information has now made it possible for many business people to realize business process outsourcing. This is anew concept that has emerged due to the existing digital age and information society. Knowledge economy is a concept that cannot be understated since this is whereby people are making use of information to make money. The processing of data into useful information has seen many professionals being absorbed in to the ICT occupation (Zhang 2000). The surfacing of technology has put all the businesses at the same level. This means that the business does not have necessarily to be very big. Even small firms are using technology to compete globally. Many developed countries are now moving to information age from industrialized economy. Creation of region communities and regional communities like European Union and East Africa Community has contributed very much to the free movement of goods, services and human capital across the boundaries hence creating global economies. Raw materials and other resources required for the production of various goods and products leave no other option to the producer apart from operating in more than one country especially if raw materials are located in a different country from where the processing or production is taking place. Although these types of organizations do exist, there are a number of issues and challenges that face them and they hinder the smooth running of these firms.This is due to the regulations, practices and new concepts that have been developed and all the stake holders have to comply and understand. Compliance to these regulations and the level at which you understand them as a player in the global market, determines the success of your operations globally. This paper looks at these issues in a deep detailed manner.

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The frameworks of global supply chains and the reasons why they have evolved

Supply chain management is the management of firms and activities that are involved starting from procurement of raw materials, storage, processing of these raw materials and movement of the finished products from the producer to the final consumer. To develop a global supply chain it is good to note that it needs the same process and information as the development of a local supply management. The only additional information required is the culture of that country, international logistics, customs, government, culture, currency, politics and the government. The products required and their quantities must be well organized and specified so that the parties involved have got easy time. It is important to involve all the parties involved in this process to make sure that no confusion will be brought about due to lack of insufficient information. There are many models of global supply chain some of which involves the agents but others do not involve agents. The involvement of middlemen in the global supply chain is determined by the client or the customer (Joseph 2006). If the aim is to make sure that the commodity reaches the client in small quantity, then many middlemen must be involved. In cases where the clients want the goods in bulk the middleman may not have a place because if the producer is dealing with a wholesaler directly. The services also do not require a middleman. For instance if it is a doctor who wants to diagnose a patient, then the doctor will have to deal with the patient directly hence avoiding the middlemen. There are also digital products like software, movies and music. The client can download them directly from the internet upon payment of a fee.

These frameworks of global supply chain have evolved as a result of emerging technology. For instance the use of Enterprise Resource Planning in most of today’s organizations, have helped in the reduction of the time spent when doing most of these operations. The most important thing about them is that most of the operations can be tracked using an ERP through out the process. Electronic commerce has also contributed to the way the business is conducted today. Many E-commerce sites have integrated payment systems so that paying for a service or a product is made easier and instant.

Description of supply chain of UNIQLO

Uniqlo’s ability to do mass marketing has enabled it to reach wide markets. This company no longer experiences huge costs while buying the raw materials. This is because it has penetrated the international business hence it is enjoying scale of labor. The other thing is that it is now listed in the stock exchange and this gives it a chance to be known by many potential clients not forgetting that it can now afford or meet huge operating costs. Its capability to maintain stores of casual wear chains put it in a better and exceptional place to do business. It has developed a concept of differentiating its products from the competitors (Monczka and Larry 1990). This has seen its success of winning the customers. Apart from differentiation strategy it has recognized that its human resources are the greatest asset they have and to this far they have converted the contract based employees to permanent employment. This has ever since increased the morale and the motivation of the employees. It is also believed that its supply chain must aim at cutting the cost. This is so because its evident that during recession its only those products with low price that experience significant sales. There has been a habit of revolutionizing the store experience and this is one of the success stories of Uniqlo. Also monitoring and keeping good standard of the store manager is a key factor because this is the person who is considered as the most important in the chain of supply. This company has realized that casual cloths are the most preferred and therefore has turned to mass production of these clothes. Since adoption of reducing the official cloths and increasing the production of casual clothes, the company has seen a major boost in its sales. The idea to also produce clothes for all regardless of the age has been a major contributor to this success story.

Level at which textile complex operate

At Uniqlo Company, garments and fabric clothes are on high rise due to mass market that exists. For instance there has been a venture for production of a chain of casual clothing in other countries apart from Japan that made a lot of progress. Knitted fabrics have been manufactured in Hong Kong’s Pacific Textiles Holdings Ltd. It has also taken a step ahead to train workers. Uniqlo aims at reducing reliance on China which is the country that produces most of its products. There has also been an effort to produce shoe brands that aims to make footwear. This is important to this company since it’s the second-largest source of revenue after apparel.

Utilization of the supply chain structure in Uniqlo Company

Each and every firm that operates internationally must put a lot of emphasis in the process of acquiring raw materials. Production or processing of these raw materials and then making sure that the end products reach the final consumer. This is the main reason that makes Uniqlo company use supply chain structure and also ensure that their agents are looking for the potential clients in the other countries. Good planning during logistics and procurement is one of the key success factors and should be taken seriously. The other reason of employing supply chain structure is to get the right product to the customer at the right time. This can save a lot of money and also significant time that can make a lot of change to the company. Supply chain structure also leads to effective and efficient business operations resulting to overall performance of the business.

Operating at the most efficient levels to compete globally

Uniqlo Company are operating at efficient levels due to the fact that they have gone an extra mile to listen to the suggestion of the potential customers and then responding positively to those suggestions. They did this by putting in place appropriate production, plans, sales and distribution in an effort of creating an optimum business structure in all business. Other efforts have been seen when they opened a casual wear shop in Hiroshima. Dividing the supply chain so as to analyze it to determine the sections which have higher costs helped to decrease the number of designs, fabrics and cuts which made production of large quantities cost effective than ever before (Monczka 2002). The fact that it has put strategies like product differentiation enable it to compete globally and also being very keen not to compromise on the style of clothes has put it a head of the competitors world wide. Focusing on basic designs and fabrics puts this company to sell its clothes at lower prices than all the other companies and hence win a lot of customers. This is because customers will always go for the products that sell cheaper but at the same time do not compromise the quality of that product. Perfection of garments makes the customer to go back after sometime to look for other garments that fit them well.

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Finding out if the supply chain used in Uniqlo Company meets social economic and environmental values of today’s global business

The supply chain of Uniqlo Company in Japan meets the economic values of the global business of today due to the fact that after some years of operations it was able to go public by being quoted in the stock exchange. This gave the company more potential as now it could afford much more finances to expand its operation in other countries. Since it is enjoying economies of scale it’s in a position to sell its clothes at lower prices and at the same time make huge profits in the face of competition. This is what we refer to as agility of the company. It has also managed to meet environmental values of the countries that it is operating in (Murphree 2002). This means compliance of all the labor laws of the countries in which they are operating in and also having enough human resources capital which calls for specialized training and also not polluting the environment. There exist environment regulations in all the countries that this company has its operations and must adhere to them so as to carry its operation without conflict with the local governments. Social values have always been the responsibility of each and every company that minds the welfare of its employees as well as that of the society. This company has not been left behind since it has been seen giving permanent employment terms to its employees who were previously employed on contact bases.

Conclusion

Uniqlo company is seen as one the international companies which has employed business strategies and also current technology to ensure the success of its operations. It is clear from Uniqlo Company that making significant consideration to customer wishes makes a considerable and a positive impact to the success of a business. Global business issues such as compliance to labor laws of other countries, acquiring and training the new staffs are just some of the challenges that human resource managers who are employed in international companies face (Cooper et al 1997). The agility of any company which wants to expand its operation will be highly determined by the manner in which stakeholders manage activities involved in supply chain management.

References

Cherrington, J. (1995) An introduction to global business issues R Magazine, Middleton.

Cooper, M.C., Lambert, D.M., & Pagh, J. (1997) Supply Chain Management: More Than a New Name for Logistics. The International Journal of Logistics Management Vol 8, Iss 1, pp 1–14.

Joseph, M. (2006) Intelligent Supply Chain Management, Information Integration and case study, Agility Forum: CD-ROM.

Murphree, J. (2002) The Global Enabled Supply Chain Map Version 4.0, iSource Business, New York.

Monczka, R. (2002) Purchasing and Supply Chain Management, 2nd ed., South- Western, Cincinnati.

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Monczka and Larry, C. (1990) Purchasing Internationally: Concepts and Principles, Book crafters; Chelsea.

Zhang, S. (2000) Virtual Enterprises and Electronic Businesses, Chinese Mechanical Engineering; China.

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