Integrated Supply Chain Management in Australia - Case Study Example

Title: Integrated Supply Chain Management Name Course Instructor Date Executive summary Business collaboration is a process by which two or more businesses come together to operate as one. The adoption of this initiative by Thomas Foods International and Charoen Pokphand Group is a forward step into making increasing production. Collaboration also sees to the increase in the market size of the business operation as it makes the business wide and internationalized hence exposing it to world global markets. This collaboration will again expose the business to the whole world and as a result attracts other global business collaborates who may wish to partner with the collaboration to make the business more and more larger.The collaboration between Thomas Foods and Charoen Pokphand Group however may come with some challenges and risks that impacts on the logistics and the supply chain of the business. The business may encounter problems, challenges and risks in the supply chain that involves all the processes from acquiring raw materials, processing and distribution of the products to the consumers. The quality of the products may also change when these two companies collaborate other than operating singly. Being that the business deals in food processing and production, the quality of raw material is a great issue and concern. The quality of raw materials dictates the quality of the products. The risk of losses due to large size operation becomes a challenge. This is so because collaboration will mean enlargement in the size of operation that comes alongside employment of much labour hence additional cost of operation. Contents Introduction. Supply chain risks, challenges and issues and their impact on the logistics and supply chain of the company. Recommendations and solutions. Introduction Supply chain involves all the operations that are involved in the acquiring of raw materials, producing a product and the movement of products from the place of production or origin to the points of consumption. It is typically the processes involved in the production of a product and thereafter availing the products to the final consumer customer. When organizations merge or collaborate to operate as one, there are several challenges, issues and risks of supply chain that they tend to encounter. These risks have impacts on the overall operation and profitability of the organization as the affect the logistics and supply chain of the business .The collaboration of brings the aspect of internationalization of a business as it leads to the overall increase in the size of the business. For a collaboration business to realize good profits, there must be strategies to manage the risks and challenges that come with the collaboration. The business must adopt the chain supply management strategies and use well the risk management practices in attempt to avoid the losses that may come alongside those risks and challenges. Below are the discussed challenges and risks of supply chain that a collaboration may encounter and their impacts in the logistics and supply chain of the business. Again there is a discussed solutions and recommendations to the challenges and risks. Supply chain risks and their impacts on logistics and supply chain Delay risk. Collaboration business can undergo delays in the flow of materials. This may be due to such factors like in the case where the supplier is not able to respond faster and appropriately to the changes in demand. Collaboration dictates the size of a business and hence all its operations (MORGAN, 2012, p.47). A big business that operates as a collaboration will automatically need much more supply of the raw materials, livestock in this case, than needed by the separate companies if they were to operate as independent entities and not collaborations. As this increase in size becomes the case, the supplier will have to increase the quantity of production just to ensure that it meets the increasing need of supplying to the collaboration. This adjustment may take little much time given to the fact that it will come with expenses that the supplier may not be at a position to cope with in time (COHEN & ROUSSEL, 2005, p. 12). As a result, the collaboration will have less than its expected supply of raw materials which will eventually lead to less production of the meat and meat products. As this happens, the customers will also experience shortage in supply from the collaboration. The risk of losing customers who may not be satisfied with the insufficient supply will set in at long run. The customers may reverse their demand to other companies just to ensure their satisfaction in up to their expectations. Disruption risk. This kind of risk is always unpredictable and in most case rarely occurs (MANGAN, LALWANI & BUTCHER, 2008, p. 51). However, it can be so much damaging in the case of occurrence. Disruption like the natural disasters, strikes by the company’s employees, abrupt fire outbreaks and terrorist attacks have great negative impact on the operations of the business more so if it operates as a large one. These disruptions effects negatively on the supply chain and logistics of the business since they cause interferences with the normal flow of materials that may affect the business to the extent of closure. When two organizations collaborate, they expand the business operations and starts operating as a larger unit. Considering the size of operation, natural disasters like the earthquakes and outbreak of livestock diseases can put a business under a serious risk of disruption and lack of raw materials because they will experience animal death due to the diseases and the earthquakes. Disruptions caused by internal fire outbreaks and labor strikes results to significantly low production levels and hence shortages if products to the customer with high demand. War and terrorism impacts so negatively on businesses. Most of big businesses, like most collaborations, are always targets of terrorists (COHEN & ROUSSEL, 2005, p. 102). Wars causes disruption in the sense that it cuts off the transportations systems and hence the distribution and supply systems of a business. A business that operates as a big one like a collaboration business is therefore at the risk of disruptions. Planning and control risk. This type of risk arise when there is not enough company assessment and organizational planning of the business and all its operations. Success in any business is dependent on the ability of the owners to control all the operations of the business well. Good planning is also a very important factor that dictates the success of failure of the business. A small business may be easy to control in terms of supply chain. This is because the managers have just few employees to control, few suppliers and few customers. Planning and decision making also become easy and fast as few people are involved. A big company is always at risk of planning and control. It becomes so tricky to manage large number of employees (MORGAN, 2012, p. 55). Serving a greater number of customers is also so hard and wanting. A big company makes large purchases in consideration to the raw materials and machines. It is therefore at the risk of undergoing loses if it does not take control over its purchases. Without good control, it may end up making less purchases leading to less production or too much purchases that may results into mere wastages. Supply chain planning and decision making in a big and internationalized company involves many people and resources and also too much time. Again, a new company takes time for the managers to blend and understand each other well. As a result, the company many have delayed decisions and poor planning resulting to interfered supply chain (ROBINSON, 1983, p.83). A collaboration may also encounter inventory risk. This is defined as the possibility of a factor, say price changes, to cause a significant decrease in the value of product that is produced by the company. Market price changes affects the supply chain of a company. Price changes causes demand and supply uncertainties. A new business, like for the case if two organizations linking up to form a collaboration, is prone to the effects of the changing market prices (KERSTEN & BEMELEIT, 2006, p. 77). A company that produces in large quantities due to its large size is bound to suffer the effects of the changes of price caused by the forces of demand and supply. One of the key elements in the supply chain of every company or business is the successful deliverance of its products to the customers at the expected prices. A company is therefore at the risk of making loses in the event where it produces large amount of products into the market and unfortunately the price of the products fall due to the demand and supply uncertainty. Thus may get even worse for the companies that deal in commodities with short life span before spoilage for instance meat and meat products that cannot go for a longer time before going bad. In the occurrence of this risk, the company may be forced to sell the product at the market price which will mean decreased value of product. The risk of procurement. This is defined as the unexpected increments in the cost of acquisition. In most cases, this results from abrupt increases in the costs of raw materials. When organizations merge or rather collaborate to operate as a single operational firm, the size of business increases and becomes bigger compared to the previous operational sizes of the separate organization. Given the large operational size of the business that operates as a collaboration, the size and amount of the acquisition must also rise (COHEN & ROUSSEL, 2005, p. 171). This means the company will have to make large amount of purchases of their desired raw materials in order to satisfy all their customers. Price changes are always so abrupt and unexpected. When such big company wishes to make purchases from its suppliers, it always aims for fair and affordable costs. Due to many reasons, the suppliers may decide to raise the cost at which they supply their products (the livestock) to the company. This imposes procurement risk to the company. The sudden increment in the cost of acquisition will impact on the size of the purchase the company will make. The company may therefore opt to purchase less and this will lead to less production in terms of quantity (MANGAN, LALWANI & BUTCHER, 2008, p. 39). Recommendations and solutions A company can prevent delays or it may at least prepare for them. A big collaboration company that requires large amounts of raw materials must set up for more than one supplier. Delays arise in the case where the supplier cannot adjust fast enough to the changing demands. A business that wishes to operate as a collaboration should first strategies on the best way to obtain materials without delays. It should lay down good transportation systems that over time has been found to experience no delays. A good recommendation is the air transport. Air transport experiences less delays if not none and can be the best solution to ensure delivery of raw materials in time (KERSTEN & BEMELEIT, 2006, p. 43). Security measures should be imposed as a better way of combating disruptions. Combating earthquake require the company to build structures and building using the spring technology. This is where by the foundation of a building is fixed with flexible springs that can act as the earthquake absorbers. In readiness for the risk of fire outbreaks, buildings should be made of materials that cannot burn (MORGAN, 2012, p.60). The buildings should be fitted with smoke detector to detect any fire outbreak and make an alarm. Fire control equipment like the fire extinguishing machines. The company should train its employees on the ways of dealing with the fire outbreaks. To avoid the destruction caused by the workers strikes and the risk caused by terrorist attacks and wars, the company should take insurance cover against such. Good planning is essential for the success of any business. Before the onset of the business operations of a collaboration, the collaborating organizations should come up with a good business planning team and strategy. Good and informed decision making practices should be embraced by the company at all time. All parties should be involved fully in the decision making processes to enhance good and conclusive decisions that impact positively to the supply chain of the business. The company should have good control over tits employees and suppliers. This helps in avoiding the conflicts that may arise in the course of production and hence reduces the risks of losses (MANGAN, LALWANI & BUTCHER, 2008, p. 40). Inventory risks can lead to a significant loss if not taken care of. The company should always do a prior market survey before production and sales. In the even where the company realizes price fall, it should be able to delay production and sales till the prices are considered fare (ROBINSON, 1983, p.71). Procurement risk can be solved by signing long term contracts with the suppliers. The company may also decide to have holding inventories. The company may also combat the procurement risk by diversifying the range of its suppliers (KERSTEN & BEMELEIT, 2006, p. 21). This is to say that the company can have different suppliers from different countries globally. Word count = 2130 Reference COHEN, S., & ROUSSEL, J. (2005). Strategic supply chain management: the five disciplines for top performance. New York, McGraw-Hill. http://www.books24x7.com/marc.asp?bookid=13183. MORGAN, J. (2012). The collaborative organization a strategic guide to solving your internal business challenges using emerging social and collaborative tools. New York, McGraw-Hill. http://www.myilibrary.com?id=367654. ROBINSON, R. D. (1983). Internationalization of business: an introduction. Hinsdale, Ill, Dryden Press. ZSIDISIN, G. A., & RITCHIE, B. (2008). Supply chain risk: a handbook of assessment, management, and performance. New York, Springer. SODHI, M. S., & TANG, C. S. (2012). Managing supply chain risk. New York, Springer. http://site.ebrary.com/id/10538849. MANGAN, J., LALWANI, C., & BUTCHER, T. (2008). Global logistics and supply chain management. Chichester, England, John Wiley & Sons. KERSTEN, W., & BEMELEIT, B. (2006). Managing risks in supply chains: how to build reliable collaboration in logistics. Managing Risks in Supply Chains. Berlin, Erich Schmidt. Read More