Abstract
Supply chain management concepts are gaining growing attention because they are means of remaining or becoming competitive in the global market. Supply chain complications have risen in recent years, and only some organizations have created excellent supply chains as a competitive advantage. The research paper provides the characteristics organizations can use to move from traditional to modern systems of supply chain management. The data to determine the traits of supply chain excellence and their challenges will be collected through a literature review of resources such as books, online sources, and articles. The characteristics of supply chain management identified and presented in the paper include unification, sustainability, punctuality, planning, leadership, transparency, youthfulness, honesty, innovation, agility, and networking. The paper also identifies the scarcity of raw materials, inflation, and rising freight prices as the challenges facing supply chain excellence.
Introduction
Supply chain complications have been on the rise in the last few decades. A small number of businesses have used supply chain management (SCM) to build strong supply networks that give them a competitive edge. Businesses with improved supply chain designs and process skills have outperformed their rivals in terms of performance. Providing the correct item to the right individuals at the right individuals has always been the definition of excellence in SCM. However, other defining characteristics determine excellence in the supply chain. The following text will discuss the features of supply chain excellence and its challenges.
Literature Review
Assisting an organization to make as much profit as it can is the importance of supply chain management. It means selling as much as it can at the lowest cost. Avittathur & Ghosh (2020) state that the firm needs the best external and internal characteristics to attain excellence in SCM. Sustainability and low production time are examples of interior features. External performance is affected by parameters such as price, client service, and delivery accuracy. Organizations must focus on internal processes and market leadership to attain a competitive advantage in the market. They must also enhance services and lower costs to retain market leadership in the current global environment (Cui et al., 2022). A firm with an excellent supply chain can deliver high-quality products to its clients.
Research Methodology
Data will be collected through a literature review of resources such as books, online sources, and articles. The study aims to provide an understanding of the current situation in the industry and literature regarding the features of excellence in the supply chain (Mishra, Singh, & Subramanian, 2022). The paper will use a systematic literature review design to provide a clear picture of the features of supply chain excellence and determine supply chain excellence’s problems.
Results
Evidence from the literature review indicates unprecedented complexity in the current supply chain, resulting in slow growth. Avittathur & Ghosh (2020) and Cui et al. (2022) indicate varying characteristics and obstacles to creating and operating an excellent supply chain. The literature review has identified eleven traits of supply chain excellence. They include sustainability, unification, punctuality, planning, leadership, youthfulness, transparency, honesty, innovation, agility, and networking (Cui et al., 2022; Mishra, Singh, & Subramanian, 2022; Robertson, 2021). The literature review has also revealed several challenges facing supply chain excellence. According to Brown (2022) and Sweeney (2022), the challenges include the scarcity of raw materials, inflation, and rising freight prices.
The Traits of Supply Chain Excellence
Sustainability
Sustainability is a multifaceted term that can be used in supply chain operations in several ways. However, using sustainability to determine how the environment is affected by the supply chain is the most common. Sustainability is determined by how companies utilize their available resources, whether it runs on efficient energy sources, whether their packaging is environmentally friendly, and if it can minimize carbon emissions through an optimized transportation strategy (Avittathur & Ghosh, 2020; Mishra, Singh, & Subramanian, 2022). Organizations operating or planning to operate through these sustainable measures are on the road to excellence.
Punctuality
If the firm cannot timely deliver goods to the client, competitors who can are available. The logistics organization is currently swamped in the ‘now-culture’ perspective because huge companies like Alibaba and Amazon assure their clients they can deliver goods to their homes in 30 minutes (Cui et al., 2022). Understandably, not every organization can keep up with these industry giants. However, impatience is a rising aspect in the ‘now culture’ and organizations that can make punctual deliveries will attain supply chain excellence.
Unification
When a business is unified, it has an integrated approach to SCM. All the supply chain’s components, including distribution, sales, purchasing, and production, now share a single goal and have open lines of communication. Cui et al. (2022) indicate that an organization can establish a culture of excellence by obtaining the right team players with a common goal and breaking down barriers within the firm. Individual metrics should not be used to assess the company metrics because it will slow the progress.
Strong Leadership
Supply chain leaders should comprehend and influence the goals of the organization and ensure the supply chain is aware of the necessity of attaining these goals. Thus, they must possess team-building and robust communication qualities. Cui et al. (2022) state that leaders must be vocal when directing supply chain functions. It will ensure that the team members do not view the function as only cost management and include it as a development of value creation strategy.
Proper Planning
Excel spreadsheets are no longer needed to plan for effective supply chains as advancements have moved towards cloud-based add-ons and enterprise resource planning (ERP) systems. It is now a question of ‘when’ instead of ‘if’ when using the cloud to plan for supply chain processes. Companies can use operations research to develop intelligent forecasts that will assist in making better decisions when procuring safety and goods stock levels (Mishra, Singh, & Subramanian, 2022). Managers can also use these tools to develop appropriate decisions regarding the best place to store their supply and the appropriate approach to deliver their stock to clients.
Transparency
Transparency goes beyond tracking finished goods and raw materials as they move along the supply chain. There is a variation between external and internal transparency in the supply chain. Internal transparency refers to the data and material flow in the sales, purchasing, distribution, and manufacturing functions (Avittathur & Ghosh, 2020; Robertson, 2021). On the other hand, supplier visibility is the main facet of external transparency. Using the supplier network to create visibility is crucial in influencing the strategies of the supplier relationship. The performance of the supply chain can be improved by combining external and internal transparency.
Youthful
The term youthful will be used in two ways in this section. The initial aspect guarantees the hiring and training young talent in the supply chain. Seasoned veterans are currently operating an excellent supply chain, but it might not be so excellent if appropriate coaching and training are unavailable for incoming leaders (Robertson, 2021). The second facet of the term elaborates on the strategy of SCM. It implies moving away from traditional methods of operation and adopting smart digital trends that will increase efficiency.
Honesty
Many organizations realize clients are increasingly concerned about the ‘how’ in SCM. Numerous companies have been in the middle of enslaved persons and child labour indignities, which has ruined their image and minimized sales (Robertson, 2021). The best approach to evade such scandals is to remain ethical. For instance, Nestle recently admitted using slave labor to obtain seafood from Thailand. The company admitted its mistakes and formulated a plan that improved working conditions. The company was able to repair its image and attain supply chain excellence by admitting and committing to change.
Agility
A supply chain should be agile to be excellent. As operations transform, outstanding supply chains can adapt to change, especially in delivery, inventory management, and procurement. Numerous forward-thinking companies have learned hard lessons from the Coronavirus pandemic and have been compelled to create agility in their supply chain (Mishra, Singh, & Subramanian, 2022; Robertson, 2021). They have a robust risk-evaluation program and are cooperative. In addition, excellent supply chains are demand driven and install smart decision-support schemes.
Innovation
An inventive supply chain is excellent because it is ready to welcome change. Technology is growing quickly, and firms are finding it hard to keep up. Organizations are discovering methods of installing innovation in the operations of their supply chain to stay competitive (Robertson, 2021). For example, warehouses are installing smart glasses to ease picking processes. They are also implementing geo-fencing in truck deliveries to optimize the management of time slots.
Networking
It is a strategic advantage to stay ahead of the leading trends by gaining information from industry events, blogs, social networks, and podcasts. Supplier relationships can be strengthened by creating a platform where suppliers can exchange initiatives for best practices or develop tutorials for suppliers using social media (Robertson, 2021). It is an excellent move for organizations to utilize innovations that allow global communication.
The Challenges Facing Supply Chain Excellence
Scarcity of Raw Material
Since the Coronavirus pandemic began, the scarcity of inputs has been an issue because of the sharp increase in consumer demand. Mishra, Singh, & Subramanian (2022) imply that suppliers and retailers struggle to cover this demand while many materials and parts are unavailable. Growth stage brands like furniture builders have a foam shortage, while maxed-out components suppliers have made bike makers lose payment terms. The company’s working capital will determine if it can weather downtime and sustain its growth.
Rising Freight Prices
The global lockdown caused by the pandemic increased e-commerce sales, which increased the demand for the importation of manufactured customer goods and raw materials that are moved through shipping. There was an unexpected shortage of available or empty containers and inadequate shipping capacity because the demand was higher than expected (Robertson, 2021; Sweeney, 2022). For instance, there has been an increase in freight rates by 240% from the West Coast to China since the global lockdown ended (Sweeney, 2022). Businesses can lower freight cost by consolidating shipments with other carriers.
Inflation
The last two years will be remembered because of global inflation. Organizations must be prepared for the spike in prices of finished products and raw materials due to inflation (Sweeney, 2022). The impact of inflation is rising storage fees, surplus inventory, lower revenue, and declining margins of the product-based brand (Brown, 2022). Companies can re-evaluate their variable costs and fix inventory management inefficiencies to balance rising inflation costs.
Conclusion
Assisting a business to make as much profit as it can is the significance of supply chain management. Supply chain complications have been on the rise as few organizations have applied supply chain management and created excellent supply chains as a competitive advantage. The paper has identified eleven supply chain excellence features: sustainability, unification, punctuality, planning, leadership, youthfulness, transparency, honesty, innovation, agility, and networking. The scarcity of raw materials, inflation, and rising freight prices have also been identified as the challenges facing supply chain excellence. When organizations improve or enhance any of these practices, they could be leaders in the marketplace.
References
Avittathur, B., & Ghosh, B. (2020). Excellence in supply chain management. Taylor & Francis.
Brown, A. (2022). Supply chain challenges in 2023 & how to overcome them. Web.
Cui, L., Gao, M., Dai, J., & Mou, J. (2022). Improving supply chain collaboration through operational excellence approaches: an IoT perspective. Industrial Management & Data Systems, 122(3), 565-591.
Mishra, R., Singh, R. K., & Subramanian, N. (2022). Impact of disruptions in agri-food supply chain due to COVID-19 pandemic: Contextualised resilience framework to achieve operational excellence. The International Journal of Logistics Management, 33(3), 926-954.
Robertson, P. W. (2021). supply chain processes: Developing competitive advantage through supply chain process excellence. Routledge, Taylor & Francis Group.
Sweeney, E. (2022). The big challenges for supply chains in 2022. Web.