SupplyChain Processes and Logistics
SupplyChain Processes and Logistics
Causesof supply chain failure
Theincreasing need for offshoring continues to make it difficult forfirms to monitor supply chains processes closely and effectively. Thefundamental cause includes increased complexity of the supply chainprocesses especially in understanding the entire chain includingsubcontracted dealers. Cost pressure and the increasing need tocontinuously cut on costs mostly result to compromised quality andethics (Mangan, Lalwani, & Butcher, 2008 Punter, 2013). Moderncommunication such as the social media and customers increasedawareness can easily damage a firm’s reputations.
Overdependenceon multiple suppliers to run firms also increases businessvulnerabilities to risks. Strategies that fail to account for ordercutbacks, inaccurate prediction and sudden deviances from historicaldata contribute to failure in a firm`s supply chain (Brenner, 2014).Inadequate supply chain knowledge and experience together with thelack of risk management strategies may also lead to possible hiccupsand supply chain failure.
Importanceof risk management
Businessorganizations need to put in place solid risk management policies tohandle aftermaths of different types of disasters that can affect thefirms effectively. Risk management in the supply chain is mostlylined up to measures put in place to prevent or recover fromunexpected events. Moreover, it enables supply chain manager toexamine various supply chain components and work towards identifyingand evaluating potential consequences of risks. This makes riskmanagers an integral part of the overall process (Chima, 2007). Riskmanagers can create and sustain an effective risk inhibition strategyfor supply chain processes. Chain supply managers manage secureresources for risk identification and develop risk mitigationstrategies by examining the firm`s weak point and sources ofpotential disruption from suppliers.
Impacton Supply Chains
Financemanagers main role in a company involves monitoring and reporting onhow the company resources are utilized and how they translate to thebusiness financials. Without a financial manager, the organizationcannot determine its earnings especially the sales activities,product costs and the general administrative costs being spent.
Accordingto Mangan et al. (2008), failure to determining correctly the assetsand the debts owed by debtors may make it difficult for the directorsto determine the firm`s shareholders equity. Financial activitiesthat make up the organization`s income statement such as the revenueearned and the implication of the firm’s supply chain is a criticalissue that needs to be addressed. The director should closely monitorthe firm`s balance sheet, cash flows, and financial statements todetermine the control of capitals.
Therole of the Balanced Scorecard
BalancedScorecard approach in supply chain management guides the coremeasures in the process. Balanced scorecard provides managers withthe correct framework to which an organization should use fromstrategy development to implementation. The balanced scorecardprovides managers with indicators that are readable and easy tointerpret and present to their senior managers (Cosman & Popa,2010). This allows the company to link strategy and daily operationprocesses ensure a strategic orientation in supply chain processesand align resources including financial initiatives withorganizational objectives.
HowGlobal events such as 9/11 impact supply chains
Since9/11, the movement of goods and people across the globe has changedas the level of security and safety concerns has transformedtremendously. Shipping logistics have since then become matters ofNational Security in which State organizations such as the HomelandSecurity have implemented some initiatives to protect againstterrorism. The introduction and proliferation of shipping barriersacross regions continue to affect supply chain processes in differentindustries. Cargo manifestation has also become highly digitized withstrict compliance rules to the movement of goods entering countries,which has transformed and directly influenced supply chain processes.
Failureof a supply chain
Failurefrom suppliers is a common and high-risk supply chain failure in manybusinesses. Changing business models is one of the greatest causes ofsuppliers’ failures. Changing business models such as outsourcingcan negatively affect an established business organization.Outsourcing increases reliance of business on suppliers’ efficiency(Brenner, 2014). Any failure from suppliers directly affects thebusiness performance. Many technology companies such as Samsung Inc.business models are structured to depend on outsourcing most ofcomponent manufacturing and assembling (Punter, 2013). A delay fromany of the suppliers can become catastrophic to the entire supplychain.
Reasonsfor the failure of supply chain
Suppliersmostly are independent companies contracted based on their capacitiesto supply specific products as per the company needs promptly. Thus,I feel that one of the main causes of failure to deliver by suppliersis an abrupt increase in orders to increased demand. Uncalled forchanges in demand can easily strain the suppliers financially ifproper planning is not done in advance to finance productionadequately (Chima, 2007 Mangan, 2008). Changing economic andpolitical environment where suppliers are based directly affect howthe companies perform which translated to their capacity to supplyeffectively.
Keyaspects of the module
Riskmanagement is critical in supply chain processes in business. Throughrisk management, managers can foresee possible risks that may becaused by different factors and be able to put in place strategiesthat will enable the firm to prevent the risks or recovereffectively. The role a financial manager in an organization iscrucial considering the importance of ensuring that the firmresources are effectively utilized, and the firm`s cash flow isproperly managed to ensure profitability. Security factors such asthe aftermaths of 9/11 directly affect supply chain processes ofbusinesses. Managers in the supply chain should find ways to ensurecompliance and alignment with new regulations that require heightenedsecurity and safety in how goods move from one point to another.Supply chain failures such as change of business model to outsourcingare issues that supply chain manager must take into consideration andfind appropriate ways to avert the risks.
Brenner,V. (2014). Causesof supply chain disruptions: An empirical analysis in cold chains forfood and pharmaceuticals. Brussels: Springer Glaber.
Chima,C.M. (2007). Supply-chain management issues in the oil and gasindustry.Journal of Business & Economics Research,5(6), 27-37.
Cosman,V. & Popa, V. (2010). PerformanceManagement of Supply Chain Using Balanced Scorecard in NonprofitOrganization.Retrieved 18 March 2016 from: http://www.virgilpopa.com/articole/art_stud_pub_in_rev_de_special_de_circulatie_inter/4.Performance%20Management%20of%20Supply%20Chain%20Using%20Balanced%20Scorec.pdf
Mangan,J., Lalwani, C., & Butcher, T. (2008). Globallogistics and supply chain management.John Wiley & Sons.
Punter,A. (2013). SupplyChain Failures. A study of the nature, causes and complexity ofsupply chain disruptions.Retrieved 18 March 2016 from: http:http://www.airmic.com/sites/default/files/supply_chain_failures_2013_FINAL_web.pdf