The business environment is very dynamic i.e. keeps on changing every other day. Consequently, the business practitioners have to keep on altering their time so as to move at a faster pace than the business environmental changes or rather risk their old strategies becoming virtually outdated. The business world continues to become more and more globalized, monopoly in business has become a thing of the past, hence business environment have become liberalized.
Furthermore, business all over the world are operating in perfectly competitive market systems where firms are free to enter and leave the market at will. Consequently, Market rivalry has been on the increase. As such, businesses have to keep on coming up with strategies that streamline their business operations and give them competitive advantage over rival’s/competitors.
In reacting to the competitive pressure and the endeavor to seek competitive edge business practitioners have realized the importance of establishing efficient supply chain that gives them guarantee of customer value delivery and product quality and reliability in a way that beats the market (Cooper C et al, 2007). Vacumet Coating Company (VCC) under the stewardship of Frank and Richard are in similar predicament, being faced with a situation that requires them to establish an efficient supply chain that gives them not only short term benefits but also that guarantees them sustainable gains in the long run.
This essay therefore provides situational analyses of VCC and guides frank and Richards in developing an efficient supply chain that enables them to take advantage of emerging sales opportunities and which is sustainable in the long run.
The Situational Analysis
Having been started in 1976, Vacumet coating company relied on the creativity of the founders frank and Richard Williams who came up with a coating for the automotive industry that provided greatly improved levels of ultraviolet protection and which had massive opportunities especially in the automotive headlamp market. In the early days of the company existence i.e. late 1970s and early 80s the company was ideally successful through its targeting strategy that concentrated on a narrow base of products to the automotive industry.
Over this period, the management of VCC has run their business manually with limited automation of systems. In addition, the company relies purely on local suppliers with sourcing entirety reliant on suppliers’ nearness to the company. Moreover, inventories foresting and sourcing styles have been typically traditional with the latter being entirely conducted through phone calls and faxes and new orders being made manually instead of an automated process.
The problem is that the supply chain that VCC is currently holding is inefficient that the company at times finds itself either with excess inventories or with shortages of materials forcing them to expedite in the last minute so as to meet customer’s deadlines. In addition, the supply chain that currently exists in VCC is ineffective in cost management. However, the business environment is changing and competitive pressure is increasing.
In addition, the growth in the markets demand for the company’s products presents a new opportunity for VCC and the company is presented with a new challenge of serving many customers and extensive markets. As such, establishment of a highly efficient supply chain, that enables VCC to meet the new market demands (take advantage of the new sales opportunities) and present the company with a sustainable competitive advantage is a the most strategic way to guarantee VCC sustainable success.
Designing an Efficient Supply Chain
In order to succeed in coming up with an effective supply chain, VCC will have to adopt a strategic approach. This will involve the company carrying out a thorough situational analysis to identify its current position as far as its supply chain is concerned, identify the loopholes that the current company supply chain has and its shortcomings in the achievement of the set supply chain objectives (Hatesh, 2007). As such, the company must clearly set its supply chain objectives and establish proper control that will enable VCC to appraise the overall efficiency of the established chain by measuring its achievements against the preset objectives.
According to Carsten (2007) an efficient supply chain is the one that is consistent with the inventory policy. According to the latter, the aspects of the inventory policies which include, demand, lead time, product diversity and the supply chain objectives (which includes the level of service required or offered by the supplier, cost management ( minimization) and its consistency with the corporate cost objective/ structure) will make up the effectiveness of supply chain management.
The nature of the supply chain that a company adopts depends on the company inventory and business strategy (Hatesh, 2007). As such, the supply chain has to be guided by aspects such as the competitive requirement or whether the company intends to use the established supply chain as a competitive strategy and the competitive edge that the supply chain has the potential of offering to the company, the level of reliability that it poses to the company, its degree of responsiveness and flexibility to accommodate future emergencies and changes e.g. How easy it is for the company to expedite in cases of emergency demand for inventories, its consistency with the costs objectives of the company as far as inventory management are concerned, among others (Cooper et al.,2007).
The supply chain that Frank and Richards establish must (in both short and long run) take into consideration putting the objectives alongside the company’s product objectives and lifecycle. While developing the new supply chain, VCC management must not be overwhelmed by the need to take advantage of the emerging markets opportunities and loose focus on continuing offering top quality product that will put VCC in a favorable market position.
The supply chain that will be adopted must therefore be consistent with the overall product strategy. This is in line with the fact that a good supply chain is the one that enables the company to achieve its optimal results (Jonathan et al., 2007). While maximizing the company’s inventory reliability (in terms of quantity and quality of the inventories) the supply chain must allow the company to minimize its cost on the latter for maximum productivity or result (Carsten, 2007).
Success in supply chain management is a combination of the supply chain networks optimization and the inventory optimization (Hatesh, 2007). In the endeavor to attain an efficient supply chain therefore, VCC will not only concentrate on optimizing the product availability and increased market locations via optimal suppliers’ reliability and availability but also ensure that the inventories guarantees top product quality. In order to create a sustainable competitive advantage, in VCC, Frank and Richards will have to ensure that the supply chain they create has optimal visibility. This is because if supply chain visibility exists it will not only increase the company products performance through reliability and meeting of increased demand but also will effectively reduce the company’s internal costs (Hatesh, 2007).
Supply chain visibility is the ability of the supply chain to provide the company or business supplies management with the right information and supplies of inventories, that enables the company to provide the market with the right quality and qualities of the products and offer quality information support that ensure cost effectiveness and efficiency in supplies related decisions that ensure optimal products delivery (Carsten, 2008, Hatesh, 2007).
While establishing the supply chain, the company VCC must be sure to come up with a supply chain that optimizes the customers value proposition, where a collaboration between VCC and the suppliers is established to design produce and deliver products to the customers in the right quantity, quality and highest level of sustainability in production and steadiness of supply through continuous flow of quality accessories (Jonathan et al., 2007).
In addition, the supply chain should enable VCC gather information about a wide range of suppliers thus expanding its supply chain for optimal competitiveness, streamline the flow of accessories and ensure materials quality through comparison of numerous suppliers, in order to include only the global suppliers who are able to meet the objectives of the supply chain.
With the technological development and their applications in business today, Frank and Richard can afford to ignore it. According to Jonathan et al., (2007) technology is the pedestal on which successful supply chain managements in modern day business rests. In the development of the supply chain, VCC must be sure to do away with its manual sourcing and replace the phone and faxes with much more automated systems that integrates modern technological advancements, the manufacturing processes, product designs and supplies sustainability of the supply chain. This will enable Frank and Richards to successfully align the supply chain strategies with the market needs and enhance cost efficiency and cost savings thorough encompassment of technology throughout that supply chain (Carsten Barth, 2007).
While developing the supply chain, the company must ensure that it is consistent with the overall business strategy they should thus develop global engineering and managements strategies that are able to grant the companies supply chain the responsiveness that it requires. This is achievable via embracing the modern technology while developing a competitive supply chain; the company must come up with a global system that supports internet related supply chain as well as establish an environment in which e-sourcing relationship exists between the organization and suppliers (Jonathan et al., 2007).
The incorporation of modern technology has several advantages over the manual supply chain. First, automation and computerization of the supply chain increases the precision/ accuracy and speed in forecasting of inventories need, preparation of orders, processing of the latter, delivery and payment for orders thus playing a major role in the minimization of lead time and cost (Cooper et al 2007).
In addition, the automation or rather entrenchment of modern technology in the supply chain will enable VCC to effectively and with great accuracy predict and set the required inventory levels so as to do away with inventories demand uncertainties, develop contractual and strategic relationships with suppliers so as to lessen technical and sustainability risk in the supplies process (Carsten Barth, 2007). While developing the supply chain Frank and Richard must aim at bringing all the parties in the supply chain together to work towards common objectives, that is, to enhance product quality through continuous supply of inventories while maintaining the highest level of cost effectiveness.
In conclusion, the current supply chain in VCC is ideally inadequate to effectively handle the challenges that the business is presented with by the continuously changing business environment, the manual sourcing that depends entirely on suppliers proximity is not only insufficient (to fully meet the increasing market demand and size for VCC) but also fails to give the company sustainable competitive advantage in the industry. The company cannot adequately take advantage of the new market opportunities and results in excessive cost. It is not reliable and is totally inefficient in accurate forecasting of inventory needs for the organization.
To come up with an efficient supply chain, the management must have well stipulated and clear supply chain and inventory objectives that supports efficient Identification and establishment of top suppliers followed by engaging them into strategic two-way relationships that guarantee reliability and optimal sustainability for Just- in -time inventory acquirement and products deliveries. This must also be supported by modern technology and absolute automation that allows for web-enabled and e – sourcing systems. This is what amounts to successful supply chain management.
Carsten Barth, (2007), The Importance and Development of A Supply Chain Management. Harvard Business School Publishing.
Cooper C et al (2007) Supply Chain Management, More That A New Name For Logistics Inc The International Journal of Logistics Management Vol. 8 pp 1-14.
Hatesh Attri (2008) Supply Chain Management: The Supply Chain Visibility and Sustainability. Web.
Jonathan Wright et al (2009) The Sustainable Supply Chain: Balancing Cost, Customer Service and Sustainability to Achieve High Supply Chain Performance achieve a high-performance supply chain. Web.