Supply Chain and Human Resource Management at Hershey Limited - Essay Example

? Supply chain management number Table of Contents Table of Contents 2 Fundamentals of supply chain management 2 Introduction 2 Fundamentals of supply chain management 3 Case study of Supply chain management fundamentals at Nike Inc 5 Conclusion 7 Human resource and supply chain management 8 Introduction 8 Role of human resource management in SCM 8 Supply chain and human resource management at Hershey Limited 10 Conclusion 12 References 13 Fundamentals of supply chain management Introduction In the process of delivering goods to the final consumers, complex interactions between different companies occur through a process that forms the supply chain. Supply chain is thus a business practice that is meant to enhance the processes of product and service delivery from the organization to the final consumers. It ensures timely delivery of quality goods and services to the final consumers through the interaction between chains of market players that determine the nature of the final product (Sweeney, 2002). Supply chain management is an important aspect of business management that involves the effective management of the supply chain to ensure timely delivery of goods to the consumers. This highlights the essential role played by all companies that an organization engages in the processes of product delivery to the final consumers. According to the national institute of transport and logistics, the tenets and elements that guide the operations of supply chain management are included in the four fundamentals of supply chain management. In this section of the paper, the fundamental elements of logistics management will be discussed and specific examples defining the examples provided. A case study of Nike’s application of the above four fundamentals in the production and service delivery processes will also be analysed to provide an empirical illustration of the applications of the fundamentals (Sweeney, 2002). Fundamentals of supply chain management Based on the NITL definition, the first fundamental of supply chain management is the identification of an objective the process seeks to achieve and serve. According to the supply chain objectives in an organization, the company must always seek to exceed the expectation of the target market through the improvement of its supply chain and reduction in the cost of operations. Thus, every organization has an objective to maximize its product delivery to a level that exceeds the market demands. Supply chain management approaches that integrate the fundamental of objectives ensure that organizations understand the service/cost approaches in the product delivery processes. Thus, it is understood under this dimension that the requirements of customer service are dictated by the market place dynamics that affect supply chain (Sweeney, 2002). The second fundamental of supply chain management is philosophy, a tenet that is guided by the desire to deliver highly quality products to the final consumers. The final delivery of products to consumer is the ultimate source of money and revenue to an organization and it must thus occur through a process that integrates the input of various companies within the supply chain. Any ineffective input in the processes of service delivery within the chain can result into ultimate failure of the entire chain, resulting into significant losses to the organization. From this aspect of philosophy, it is evident that competition in companies has revolutionized from being one based on one company versus the other to different supply chains. It is thus common to find effective supply chains in different companies increasing their competitive advantage and productivity. The philosophy fundamental of supply chain thus seeks to provide the understanding that any weak point within the process of product delivery increases the fragility of the entire chain. Supply chains acts as a two-way flow of goods and money, with goods flowing from the company to the final consumers while money flows from the consumers to the company. Within the processes of product delivery, a number of middle stages exist within which value addition to the product is done. This value addition increases the cost of the final product thus increasing the revenue of the organization (Mentzer, 2004). The philosophy of supply chain defines the success of a supply chain process as being dependent on an organization to manage its process effectively. This stage must ensure that the final product has been upgraded in its value through different value addition processes of the organization. This is followed by the storage of the processed goods, a role that is played by middle companies within different organizations. The movement and selling stage is the prime stages of supply chain management and determines the success of the first three stages of this process (Sweeney, 2002). With improved supply chain management, organizations increase their abilities to strengthen the market links and bonds that exist resulting into cohesive environment that favours the final delivery of the products to the consumers. The role of philosophy as a fundamental of supply chain management is its ability to integrate their five processes of product formation and ultimate movement to the consumers. The ability to effectively manage flows within an organization supply chain processes determines the performance of its products. This is the third fundamental of supply chain management according to the NITL. This flow of information, materials and money must be effectively managed by an organization for the process to be considered effective and profitable (Mentzer, 2004). As different companies participate in the supply chain process, the primary organization must ensure that the process of material flow within the companies involved in the supply chain is both effective and less costly. Within the management of flows within supply chain management, information plays an important role thus making it essential for organizations to outline adequate processes of free flow of information. The proper management of the flow of information plays an integral role in the success of the supply chain system due to the influence it has on the flow of both money and materials (Sweeney, 2007). The bottom line of advancing supply chain practices in an organization arise from the role it plays in ensuring that all the companies involved in the process of product delivery to the consumers wins. This is captured under the fourth fundamental of supply chain management, which defines supply chain relationships between organizations. The supply chain functions must smoothly interact at different levels to enable the success of the process of production and to improve the quality of the final product. All participants, companies and consumers must therefore interact in an open and transparent business environment. Such an environment must be anchored on mutual benefits and trust and the development of common goals and objectives within the companies involved (Sweeney, 2002). Case study of Supply chain management fundamentals at Nike Inc As seen in most companies Nike has developed structures that enable to get the right product to the right people at the right time through the adoption of the right approaches. The company has been applauded for its manufacturing approach that outsources cheap labour from developing countries like Asia. Today, Nike is considered one of the leading sport wear manufacturer in the world with specialties in different types of sport wear, apparels and materials (Steward & Brown, 2008). In this section, the supply chain management approach of Nike in relation to the four fundamentals established by the NITL will be evaluated. As a company committed to improving its supply chain processes and thus increasing its market competitiveness, Nike has partnered with a number of companies with the right technology to add value to its product along the supply chain before it reaches the consumers. Bluesign technology is one such company that Nike has continued to engage as a prime player in its supply chain processes. This partnership has enabled Nike to improve its production processes as sustainable materials and other chemical products are now available through the assessment tools provided by Bluesign technology (Sweeney, 2007). This partnership has enabled Nike suppliers to access textile preparation information by using the Bluesign Bluefinder application designed by the company. Through this, the company has ensured a much more developed flow of information approach that enables suppliers to access essential information on the production processes from the comfort of their countries of operation (Steward & Brown, 2008). Material flow within the supply chain is another integral fundamental of supply chain management according to the NITL. Being a company that relies on the sweatshop approaches for the production of its products, the flow of materials plays an integral role in determining the success of the supply chain. Nike outsources its production work to other companies based in Asian countries where the production costs are relatively cheaper as compared to their home countries. This enables the company to focus basically on its key competence which includes designing of market competitive products. The challenges presented with outsourced production processes have guided Nike’s supply chain management approach as far as transfer of materials in the chain is concerned (Sweeney, 2013). The people in an organization are tasked with critical roles that determine the success of any supply chain management system. Supply chain thus seeks to bridge the input of the human resources with the process of product delivery to the final consumers. This results into a situation where it is justified to conclude that the supply chain management has a primary role of ensuring effective management of people and other forms human resources. This section of the people will seek to link supply chain management practices within organizations and its role on the effective management of human resources in the organization (Sweeney, 2013). NITL appreciates that the people in an organization plays a key collaborative role that enables such institution to develop key innovative capabilities that improves their competitiveness in the market. As highlighted by Sweeney (2013), the issue of the contribution of the people in the success of supply chain management has been neglected in most organization. Conclusion The development of sound supply chain management principles is anchored upon proper applications of the four fundamentals highlighted. This results into the production of quality goods which are subjected to well management supply chain lines before the reach the final consumers. With is approach in production, Nike Inc has developed and grown despite strong competition from other sportswear manufacturers such as Adidas and Puma. This attributed to its ability of effectively manage its supply chain lines leading to coordinated value addition processes to the final products. Human resource and supply chain management Introduction Supply chain management processes within all organisations are made of people who drive its success and improve the efficiency of the supply chain management processes. In this context, a supply chain can be considered as a group of organizations working together to ensure the free movement of finished products to the final consumers. According to research literature on the role of human resource on supply chain management, there exist a correlation between proper human resource practises and the success of the supply chain management approach. Interactive roles exist at the manager and employee levels to increase the impacts of employee training, compensation and motivation on the success of the supply chain approach adopted. Such organizations can be bigger companies like Nike and Hershey who employ a number of intermediary companies to complement their supply chain or a small firm with internal supply chain management structures. Literature available points to lack of human resource management practices within organization, which are working to improve their supply chains. The success of any organization’s supply chain system depends solely on how the people tasked with working on the chain are managed. Practices that improve the morale, performance and attitudes of workers must be developed in such institutions to enable them develop their supply chain management systems (Sundar, 2009). Role of human resource management in SCM There are instances within supply chain management that requires controlled application of human resource management principles. These roles are basically associated with the traditional functions of human resource management in organizations that seeks to improve the work environments. A number of benefits can thus be achieved if the principles of human resource management are applied to the supply chain management processes making it imperative to conclude that the application of supply chain management (SCM) is primarily concerned with people management and other human resource issues (Sundar, 2009). Human resource practices enables organizations to make important considerations on the strategy, features and the input of different partners when developing the human resource strategic action plan. This creates a situation where the implementation of the supply chain management process is well coordinated with the help of all the people in the organization. A number of human resource systems like the issuance of incentives, adoption of positive management and appraisal systems (Hugos, 2003). This enables organizations to build long-term relations with the human resources which are essential in the implementation of the supply chain management strategy in the organization. In the process of creating a positive working relationship with the human resource department, supply chain managers should work towards developing partnership with human resource departments within the same organization. This will create an environment that encourages mutualism and positive working relationship between the two important departments within an organization (Sweeney, 2013). Human resource departments have functioned as labour planning and recruitment agencies within an organization. The application of these traditional roles of human resource management in the management of supply chains within organizations has a number of benefits to an organization. It enables an organization to align its recruitment, training and selection processes with other companies that form part of the supply chain in general. This creates coherence in the leadership system of all the organizations that participate in the supply chain management of such an organization (Sundar, 2009). As the firms work together to ensure that the final product that reaches the consumers is of high quality, there is also much benefit in pooling together the applicants. This makes it easier for the organization to stress to the new employees the essence and rational of their coexistence as members of the supply chain thus making it possible to eliminate human resource divergent approaches. As this is a single supply chain, an organization must be able to forecast the total labour demanded to enhance its productivity and ultimate success (Cuthbert son, 2011). Training also plays an important role in the success of any human resource approach adopted by an organization and this is no exception when it comes to its applications in supply chain management. Human resource practices within the supply chain management involving different firms enables an organization to identify the training needs and desires that can complement the entire supply chain and increase productivity (Cuthbert son, 2011). Human resource departments have different systems of gauging the performance of different employees within an organization and developing appraisal or reproach approaches. This ensures that the departments have systems, which continuously evaluate the strengths and weaknesses of the organization to identify the areas that can be changed. These practices can be applied to the management of supply chains to ensure success and accountability of the process. Steps such as the identification of performance metrics within the department can improve the success of the approaches used (Hoffman, 2001). As the supply chain is one continuous linear process that involves different firms or departments working in a synchronized manner, the performance metrics should also be aligned in all the firms to ensure uniformity in the final products. From this discussion, the role of human resource management, principles and process in the development of supply chains have been exhaustively discussed. This has provided an empirical association that exist between the two important departments within an organization and across organizations who are part of the supply chain (Sweeney, 2013). Supply chain and human resource management at Hershey Limited Hershey Company is one of the largest chocolate manufacturers in the United States, a company based in Hershey Pennsylvania. The company has be lauded for its advanced supply chain management approaches and this section of the paper will analyse the approaches of the company in integrating supply chain management with the principles guiding human resource management. This discussion will follow in line with the principles that have been highlighted in the earlier sections of this paper to link the two discussions. With the expansion of its services into other countries like Brazil, china and India, Hershey is faced with a task of improving its supply chain management approaches to integrate the principle practices of human resource management. Hershey supply chain system integrates the inputs of all the firms involved in the process until the final product reaches the consumers (Hoffman, 2001). Hershey has actively involved itself in all the processes within the chain, including the provision of training services to the cocoa farmers, and this ensures the delivery of high quality cocoa that increases the quality of the final products. This has enabled the company to outsource other companies in India, china and even Brazil to process their raw and fresh cocoa without worrying about the quality of the products (Fabbe-Costes & Jahre, 2008). Hershey purposes to develops an efficient and customer based supply chain systems that makes it possible to change its key customers within the United States. These supply and distribution centres are equipped with state of the art facilities, training and proper human resource practices as applied in other supply chain firms in the country and abroad. The empowerment of their employees has enabled the company to improve its production cycles and meet the demands of its consumers in a timely manner. This has completely removed the worry of fees that arises from lack of timely delivery of goods as the human labour involved in these stages are well equipped, motivated and compensated to accomplish their roles (Hoffman, 2001). As it increased its production and ventured into new markets, Hershey was faced with a number of logistical constraints that required an overhaul of the supply chain system. However, with the use of foreign firms in different countries where the company opened its operations, the problem was half solved. The company applied different human resource principles, which included its participation in the recruitment processes of the companies, training and development of a common compensation schedule. Today, the company benefits from its efficient supply chain management supported with various human resource processes that increase employee morale and performance (Fabbe-Costes & Jahre, 2008). In conclusion, human resource management practises are vital in the success of any organisation as it coordinates the management of a key resource within the organisation. The achievement of an effective and efficient supply chain management processes depends on the establishment of better human resource approaches as the organisation depends on the people to work within the supply chain management process. These approaches have been well coordinated within Hershey Company limited resulting into increased market control and profitability. Conclusion From this essay, it is evident that the four fundamentals of supply chain management as highlighted by the NITL plays an important role in guiding the supply chain management of an organisation. The objectives of the supply chain approach adopted enable an organisation to evaluate its processes in line with their needs and those of the end consumers. The flow of information and materials within the organisation’s supply chain system results into an enabled system as finished products can reach the final consumers in time as information on the product is passed to different players within the supply chain. As highlighted, supply chain uses human labour at all stages thus making it essential for an organisation to link its supply management process with the management of human resource. In this paper, an evaluation of two companies in line with the aspect of human resource and fundamentals of supply chain management was conducted. These companies included sports apparel manufacturer, Nike and chocolate manufacturer Hershey Company. References Cuthbert son, R., 2011, Sustainable supply chain management: Practical ideas for moving towards best practice, Oklahoma: Springer. Fabbe-Costes, N, & Jahre, M 2008, 'Supply chain integration and performance: a review of the evidence', International Journal Of Logistics Management, 19, 2, pp. 130-154. Hoffman, K., 2001, Sweet success - A supply chain article from real results magazine. [Online] Available at: http://www.jda.com/realresultsmagazine/view-article.cfm?did=1634 [Accessed 15 October 2013] Hugos, M., 2003, Essentials of Supply Chain Management, New Jersey: John Wiley & Sons. Mentzer, J., 2004, Fundamentals of supply chain management: Twelve drivers of competitive advantage. Thousand Oaks, CA: Sage Publications. Sweeney, E., 2007, Perspectives on Supply Chain Management and Logistics – Creating Competitive Organisations in The 21st Century, Dublin: Blackhall Publishers. Steward, G., & Brown, G., 2008. Human Resource Management: Linking strategy to practice, New Jersey: John Wiley & Sons. Sundar, D., 2009, Role of human resource in supply chain management, Mangalmay journal of management and technology, 3(2), 45-50. Sweeney, E., 2013, The people dimension in logistics and supply chain management: its role and application, national institute of transport and logistics, Milan: McGraw-Hill. Sweeney, E., 2002, The four fundamentals of supply chain management, the journal for the national institute for transport and logistics, 5(1). Read More