Supply Chain and Operations Management

Executive Summary

Ecosystems

Ecosystems represent a paradigm shift in business. They are a new form of organization in which organizational networks combine to deliver services and products in new innovative ways (Jacobides, 2019). Ecosystems are developing rapidly and offering immense opportunities. This new concept is supported by the fact that advances in regulation and technology have blurred the traditional boundaries that existed between services and products, consumers and producers, markets, and organizations.

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Businesses will need to restructure their strategies, business ambition, policies, and organizational behavior to adapt to the change. It is predicted that by 2025, many current value chains and industries will have morphed into complex ecosystems accounting for about one-third of the world’s total revenues. The use of the concept of ecosystems is growing among large companies, and evidence shows that companies that have adopted it are growing faster than those that have not.

The changes in the business environment will require competent business leaders to be effective. This is because the management involved in ecosystems is very different from that in the traditional business environment. Different sets of corporate leaders may be required. The article proposes that business leaders must accept to only offer leadership and management as opposed to controlling their business ecosystems.

Ecosystems will offer customers a more extensive range of products and services to select from. Traditionally, companies focused on delivering mass-produced products to the market while paying little attention to the service component of the process. With the adoption of ecosystems, companies must personalize their services and products to each customer’s needs by working together with other stakeholders and innovating their products and services around user needs.

Mercedes-Benz and BMW are rival luxury vehicle manufacturers that had to work together to counter the onslaught by Uber and preserve their investment in luxurious vehicles. Businesses will also have a broader range of companies from which to select partners, as most companies will serve to complement ecosystems. This means that business competition will become multidimensional.

The technological advances through 5G and the Internet of Things will increase the range of potential partners that companies can choose. According to BCG, more than half of the existing ecosystems are composed of partners drawn from 5 different industries, and 90% of the participants originate from 5 or more nations. This shifts attention from single companies to conglomerate networks. Companies must, therefore, approach their operations and supply chain management differently. Besides, companies need to migrate from traditional manufacturing to modern data and IT-driven processes because innovation will be driven by technology, and companies that are bound to become global giants are those that adopt the technology.

E-Commerce

According to the article, Mercedes-Benz India is introducing an e-commerce segment to its business in India. This will be rolled out in partnership with Roadster Inc, a sales solutions supplier. The move is in response to the adoption of a similar e-commerce approach by BMW India that began in November 2018 and the realization that customers are becoming more and more digitized. The segment will handle accessories, pre-owned vehicles, and new vehicle sales. The company expects that by 2025, 25% of its sales will be made through e-commerce (Naik, 2019). The initiative is meant to bring customers convenience and increase dealers’ revenue streams. It will also increase synergy and efficiency in supply chain management.

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Hybrid Vehicle Market

The report provides detailed information about the hybrid vehicle market for the period between 2019 and 2028. It includes information on the following regions: North America, Europe, The Middle East, and Africa, Asia-Pacific, and South America. The leading manufacturers in the hybrid vehicle market are Toyota Motor Corporation, Ford Motor, Volvo Car Corporation, Continental AG, Daimler AG, Delphi technologies, Infiniti, General Motors, Kia Motor Corporation, Tesla Inc., and Mercedes-Benz. The market is segmented based on the type of hybrid technology and vehicle type (Johnson, 2019).

Based on the hybrid technology, there are micro-hybrid, plug-in hybrid, mild-hybrid, and full-hybrid. Based on the vehicle type, there are the passenger and commercial vehicles. The report also addresses pertinent questions regarding expected market growth by segment, factors driving the industry in various regions, pricing, opportunities, and risks facing the industry.

General Tactical Vehicles Market

The report gives an in-depth market analysis and outlines the future projections of the world’s general tactical vehicles market between 2019 and 2023. The report outlines key suppliers and manufacturers in the industry and the market share based on regions. It addresses other aspects of supply chain management, such as profit status and cost, marketing status, challenges, and drivers of market growth (Saunders, 2019).

Business players in the world’s global general tactical vehicles market are BAE Systems, General Dynamics Corporation, BMW AG, Thales Group, Mercedes-Benz, Textron, Elbit Systems, STAT Inc., Ford Motor Company, Rheinmetall AG, INKAS Armored Vehicle Manufacturing, Oshkosh Defense, International Armored Group, IVECO, Navistar Inc., Krauss-Maffei Wegmann GmbH & Co., Lockheed Martin Corporation, and Lenco Industries.

The report also highlights the latest developments in technology, rising business opportunities, threats, and market restraining factors. It also examines the regional business environment, influential sources of raw materials, competitive landscape, and regulatory structure.

Self-Driving Vehicles Market

The article examines various aspects of the self-driving vehicle market. These include definitions, total revenues, and end-use. Other factors considered are top performers in the industry, export and import, supply chain management, supply and demand, gross margins, and distribution channels. The study also examines the winning strategies that have been adopted by dominant vendors to create a competitive advantage. It examines emerging sectors, their impact on the market’s growth for the duration being examined, key consumer bases, and the effect of the companies on regional economies. Manufacturers discussed in the report are Bosch, Volkswagen, Continental AG, Ford Motor Company, Delphi, Toyota, Denso, Mercedes-Benz, Google, Tesla, Nissan, BMW, Volvo, Audi, and General Motors.

The report presents vital statistics related to the shift in customer preferences, total revenue and profit, production capability, and region-wise sales. The critical industrial products are drive assistance, full automation, and high automation (Kumar, 2019). The vehicles are mainly applied as passenger and commercial vehicles. Finally, the report makes strategic recommendations in business segments that are considered to be vital to the market.

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Overview of The Concept and Relevance to Managers and Customers

Relevance to the Topics Discussed in Class

Business ecosystems are networks of companies composed of distributors, suppliers, customers, government bodies, and competitors that are concerned with the delivery of products or services through cooperation and competition. Each entity within an ecosystem has effects on and is affected by the operations of the others. Their interactions result in a continuously evolving relationship that requires each of them to be adaptable and flexible to survive. In an ecosystem, a firm is not considered individually but rather as a constituent of a bigger organized entity composed of players from multiple industries. Increasing globalization and advanced technology have warranted changes in business practices leading to the necessity for business ecosystems to allow companies to thrive in the fast-changing business environment.

Supply chains are crucial to today’s global economy. Supply chains enable flow in international trade, hence, empowering global commerce. Current supply chains are evolving under the increasing complexity of global business. The international environment has become highly competitive, interconnected, dynamic, and highly volatile. Supply chain and operations management have, thus, become an essential part of managerial considerations concerning business strategy. Current supply chains are global arrangements that are highly interconnected and have high interdependence comprising of complex operations and more significant vulnerabilities.

Impact on Organizations

Impact on Managers

Business ecosystems are relevant to managers because they establish substantial barriers to entry for upcoming competitors and create a competitive advantage. Newcomers must overcome the tough challenge of improving on the existing product or service and also compete with the whole system of complementing suppliers and businesses. Business leaders within an ecosystem have access to means of leveraging technology that enable them to realize excellence and superior performance in business competence and research. Ecosystems allow managers to create collaborations that address environmental and social challenges, harness innovation to reduce the cost of product development and production, reach new customers, and learn through collaboration, skill, and knowledge sharing.

The increased adoption of business ecosystems has significant impacts on managers. Managers are forced to morph from traditional managers that control organizations to modern leaders that guide organizational strategy. Ecosystems require organizations to work in cooperation with other stakeholders within the ecosystem while maintaining healthy competition. Managers will, therefore, need to be skilled in creating networks and collaboration in sharing knowledge and skills, all the while maintaining the healthy competitiveness of the ecosystem. They will also need to be pioneers in the adaptation of technology and innovation in business.

The managers at BMW and Mercedes-Benz will be better placed to work with one another and with other managers from key players in their vehicle manufacturing industry. Through ecosystems, the two companies can expand their growth into the hybrid, self-driving, and general tactical vehicle markets.

Impact on Customers

Business ecosystems are relevant to customers because they lead to improved product quality and customer services. Globalization and increased use of technology lead to improved availability and variety of products. Ecosystems focus on improving individual customer experiences; therefore, customers enjoy personalized services and higher customer satisfaction. Product selection and acquisition is also simplified because various products and services are provided under one umbrella organization.

Business ecosystems contribute to the pooling of capital and innovation in production. The ecosystem has a more extensive capital base than individual companies and leverages more significantly on technology and other emerging trends in operations and supply chain management. The result is improved quality and variety of products of services. The process of production also becomes efficient as the supply chain is better linked and smooth. There is an improved flow of raw materials from suppliers to the manufacturer and the flow of finished goods and services to the market. This leads to enhanced product availability as a result of the adoption of the concept of globalization in supply chain management. There is also improved customer service through innovative ways such as e-commerce.

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The customers of both BMW and Mercedes-Benz will enjoy a wider variety of innovative vehicle options. They will also enjoy convenience when making purchases of new vehicles, used vehicles, and accessories through the e-commerce channels provided to them.

Implications for Organizations in the Future

Business ecosystems will lead to increased creation of collaborative partnerships. These partnerships will be concerned with off-shoring and outsourcing, thus, creating extensive networks of companies composed of various stakeholders and requiring complex management, communication, and control. There will be fewer individual companies, as most companies will prefer forming supply chain and operations management ecosystems.

Companies such as BMW and Mercedes-Benz will create partnerships to mitigate the stiff competition that results from new entrants such as Uber. Business ecosystems will enable these companies to diversify their operations into upcoming vehicle segments such as self-driving vehicles, hybrid vehicles, and tactical vehicles. This will be done through cooperation in innovation and supply chain management.

Business managers will increasingly adopt innovation in a highly competitive business environment to empower company operations and supply chain management. This will lead to improved movement of cargo across the globe resulting in social and economic benefits that will finally result in improved standards of living across the world.

The role of supply chains in business operations will grow to become a strategic one. It will become an enabler of business that drives revenue and differentiates one ecosystem from another. The quality of the supply chain will become a consideration in the competitiveness of a company in the business environment. Competitive companies will have established effective operations and supply chains that ensure a shortened time of product delivery to the market and establishment of effective distribution channels.

Business ecosystems will enable companies to mitigate operations and supply chain risks. The collaboration created between companies that complement the business ecosystem will reduce reliance on single suppliers and increase the commitment of suppliers to the specific ecosystem. It will be less risky for a company to buy goods and supply finished products to a company that is part of the same ecosystem as compared to dealing with an individual company.

Lean Practices in Operations Management

Lean practices in operations management are intended to increase profitability by improving operations. Lean operations achieve this by eliminating waste and providing value to customers. In this approach, the company focuses on enhancing customer satisfaction using the minimum amount of resources possible resulting in increased efficiency of operations. When embracing lean practices, organizations focus on the following areas to reduce inefficiencies and improve services: efficient human resource management, maintenance of optimal quantities of inventory, production time optimization, and efficient management of transportation.

Conclusions

The global business environment is highly dynamic. It is changing driven by innovation and globalization that have a direct impact on operations and supply chain management. The business environment is, therefore, morphing from one composed of individual companies to that of ecosystems made up of companies working together through strategic partnerships.

The role of managers is also changing from one of controlling a single company to one of providing leadership and strategy to business ecosystems. It is demanding more cooperation and skills sharing. Business ecosystems will become more competitive and enable the improvement of operations and supply chain management through product and process improvement. They will also allow companies to venture into new segments of their respective markets, therefore, increasing revenues and profits.

Business ecosystems will be necessary for customers because they will lead to improved product quality and availability as a result of innovation and improved supply chain management. Customers will also have a greater variety of competitively priced goods and services to choose from. Customer services will improve under the business ecosystem with the provision of personalized products and services, resulting in improved customer satisfaction.

References

Jacobides, M. (2019). Goodbye business as usual. Web.

Johnson, B. (2019). Global hybrid vehicle market value share, supply demand and value chain 2019-2028. Web.

Kumar, N. (2019). Self-driving vehicles market (2019-2026) | Size, growth trends, future prospects, and their contribution to the global industry scenario | Exclusive report by Market Expertz. Web.

Naik, A. (2019). Mercedes-Benz expects 25 per cent car purchases to be made online by 2025. Web.

Saunders, A. (2019). General tactical vehicles market 2019 strategic analysis, top manufactures, forecast until 2023. Web.

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