Managing Integrated Global Supply Chain - Case Study Example

A case study on managing integrated global supply chain Rolland’s organisation is bed-ridden with chaos as evinced by the unendingstack of problems engulfing it every now and then. It is quite natural a reaction if a global retailing giant like Wal-Mart revises its opinion on including them in their preferred list of suppliers: it is a leading company after all, being consistently awarded Best Practices recognition comes from a rigorous adherence to the highest standards in the industry, and all suppliers must conform to their minimum expectations, if they wish to thrive in business. Just selling a final good product isn’t enough; professional customers tend to visualise their deals as a permanent establishment of sustainable partnerships, and viable networks which, if not fulfilled, can cause tremendous loss in value and image acquired from years of consistent value delivery to 100% satisfied customers. A look into Wal-Mart’s existing supplier chain (Web page) can help clarify the fundamentals of their clear-cut expectations from the supplier base; from the lowest margin of error to the highest significance attached to quality, it relentlessly pursues a zero-tolerance policy towards non-compliance, and swiftly punishes unaccountable suppliers with heavy fines, indemnities or even termination of contract. It brooks no controversies related to violation of its basic ethical policies, as specified in its supplier standard code which specifies norms on issues like child labour, medical hazards in the workplace, discrimination on any grounds, and lack of concern for the environment. Rolland’s will have to walk the talk when it comes to developing as it ambitiously likes to call itself, a “world-class manufacturer.” Clearly, the entire house has to be set in order for justifying the use of such a behemoth expression to qualify its present shortcomings. The key themes that must grab the management’s attention are discussed here under: Lean manufacturing Lean manufacturing is an established philosophy developed originally in Japan, that seeks to eliminate the production of 7 wastes: overproduction, waiting time, transportation time, processing time, inventory, motion and scrap (wikipedia). This invariably leads to improvement in quality and reduction of manufacturing cost. How is this approach going to benefit Rolland’s? The case study mentions several instances which clearly project that chaos reigns supreme in the day-to-day operations over there. Huge amounts of Work-in-progress (W.I.P.) and unsold inventory forever keep the employees on their toes, always being chased as last-minute orders; the turnout of events spiraling into a big mess on the shop floor ultimately, all this leads to an undesirable rate of rejection, even at the cost of employee overtime. Rolland’s can adopt the methodology of lean production in a phased-manner. It might want to do away with existing orders first before taking up fresh work. But, this time in between the intervals, it must undergo a process overhaul through extensive discussions and brainstorming sessions between the factory manager, the line and supervisory staff, and the workers. Defect areas must be clearly identified and holes be plugged in proper through innovative solutions. For example, there’s a reference in case study regarding the manner in which material is handled; the finished goods’ section also doubles as incoming-materials department. Clearly, such malpractices must not be allowed to continue at any cost. The entire workforce needs to be given proper education on the time and energy-saving principles behind lean manufacturing. A team of experts may be called in from outside to demonstrate the process “maturity” of such a methodology. Practical demos like amalgamation of task routines can directly enable workers to visualise how they are able to avoid double handling and double setting of machinery and equipment due to frequent changes in batches, and removal of entire units. Suppliers’ role also have to be clearly delineated through effective pursuit of lean deliver models. In the footsteps of Wal-Mart, Rolland’s management must relentlessly seek tough negotiations from its suppliers of thread, materials and sewing machines, and thereby, demand highest standards of quality and timeliness from their supply. Indeed, getting your demand fulfilled from an apathetic supplier is a chronic pain for small and medium-sized companies, but an uncompromisingly, tough stance can often help in securing a much better deal. The tendency to chase orders at the eleventh hour must be strongly discouraged; all it takes is following of a simple business principle, “don’t take orders that you can’t deliver well in schedule.” Perhaps, the Production, Planning and Control department can show the right path ahead. Managing quality in supply chain As pointed out in the case study, merely “thinking quality” is not sufficient; it has to be made sufficiently intrinsic to each and every process from production to procuring of materials to inspection standards. There are some expert techniques on quality control available today; all it takes is a few rounds of training and orientation to have a hang at world-class innovative practices. A disgruntled labour force at Rolland’s frequently gripes about the poor quality of materials, cheap threads and bad sewing machines. Surely, for any organisation committing itself to a tie-up with the likes of Wal-Mart, such abnormalities are a serious blot to its corporate image. Give the workers the best tools and equipment to play with and they will bring a volatile turnaround to the face of the factory, with their diligence and hard work. Modern factories look for methods beyond conventional inspection gauges to monitor quality; in fact “quality control” has become an obsolete term in preference of the more acceptable “quality improvement”. Instead of plainly working towards maintaining a certain benchmark, organizations driven with a passion and a zeal to perform, continuously attempt to exceed their own expectations. There are a myriad aspects of quality as regards to Rolland’s present situation. First let us discuss the facets that correspond to internal and external benchmarks. While in no certain terms, product rejects have been an issue so far, the company must redesign its manufacturing processes in a manner that these defects are not allowed to creep in in the first place. This clearly advocates the need for some R&D initiatives which will automatically preclude any future quality issues. The experience of workers counts a lot in designing of best processes; the whole purpose of such undertakings must be to ensure that no two processes become victims of the same breed of defect. Functional quality and robust design will eliminate the need for wasteful processes on account of reject samples. Benefits of cross-functional approaches The first thing that strikes a newcomer at the shop floor of Rolland’s is the lack of synergy between various departments, that often borders on discord. In fact this seemed surprisingly, to be the only method prevalent there. Management pursues a “Divide policy” to expedite its work done because all incentive schemes were designed on the amount of work done, meaning those with better and new machines were oddly, at variance with the rest. This level of disunity extends to such a childish sentimental level that workers began to associate better machines as status symbols. Rather than continue with such ungratuitous outlook at work, efforts must be made to establish cross-functional teams that aid and support each other’s initiatives, rather than compete into each other’s area of influence. As far as possible, all workers must have unconditional access to same machines and uniform systems. Wherever it is not feasible to go for new equipment, simple measures like rotation of shifts and extra stipend can go a long way in avoiding friction between workers, and rather pool their combined efforts to make cross-functional teams. A cross-functional team will involve both management and labour staff where they will discuss all issues common to various stakeholders: it will enable people to speak their minds more freely, without any fear of retribution or reprisal. It will also give bolder insights into the current crop of problems, because employees will feel compelled to perform well, realising that in the good of the company, lies greater good of all people inside. At present, organisational culture is so closed-minded that many employees don’t see eye-to-eye, leading to a deep suspicion of one another and thereby, hampering growth and productivity. This cycle of suspicion must give way to a genial atmosphere of mutual support and nurturing. Such camaraderie is only possible when people begin to understand, and appreciate each other at a highly personal level. It is very important for Rolland’s to keep the enthusiasm of its employees buoyed up. This is only possible through social interactions, healthy training sessions, and the gradual promotion of a culture where “cooperation” is the roadmap to move ahead, and “competition” is redundant. A cross-functional team is also advantageous from the point-of-view of cost savings as it becomes far more economical to manage a scenario of interdependence. Need for strategic partnerships in modern supply chains Modern business networks flourish on the basis of organised connectivity between various stakeholders involved; customer and service provider, procurer and supplier, retailer and manufacturer, etc. Wal-Mart has tie-ups with some of the world’s leading companies like L’Oreal for cosmetics, Armani for clothing, and Reebok for footwear. A strategic partnership like the ones mentioned above, enable the seller to maintain the right inventory required to get maximum profits. When two organisations declare themselves to be strategic partners, they in turn enter into a tacit understanding that in the future they’ll be more responsible towards each other’s needs and expectations related to demand and supply. Business thus, acquires the dimension of sensitivity. Two companies promise to tide over each other in times of difficulty. Shortage of supply or late delivery become things of the past. In this light, the present relationships of Rolland’s with its suppliers must be carefully examined. Why does the delivery keep coming late? Was there any instance of late payment by Rolland’s, which caused such a situation to emerge? Is there an absence of communications between the procurer and the supplier? These and other introspective questions must be resolved in order to describe the present situation. After a careful scrutiny, corrective measures must be taken to arrest any further decline of relationships. Any outstanding dues must be settled to mark the transistion into a new era of mutual benefits. Impact of IT to plan material flows across global chains (Case study solution) The advent of the information age has changed the way things are done in manufacturing firms: many business practices associated with operations, productions and distribution have been automated. The technology that drives the flow of materials in a factory floor is called Materials Requirements Planning (MRP). A special software controlling MRP actions from “back office” is called Enterprise Resource Planning (ERP) (data from Wikipedia). Wikipedia describes ERP’s role in handling the “manufacturing, logistics, distribution, inventory, shipping, invoicing and accounting of a company. The software is a tremendous aid for controlling business activities such as, sales, delivery, billing, production, inventory management, quality management, and human resources management. “ Other aspects of ERP softwares are that they are back-office systems where the customer has no interaction with front-end service, they are cross-functional in that various departments are integrated into one, unified system. There are several advantages of using these softwares, especially for a company like Rolland’s: it offers a single-window interface to process simultaneously almost all functions of an enterprise such as design engineering, order tracking, bill of materials, inventory receipts, costing, accounting etc. ERP terminals are highly safe, secure and reliable and have been designed for protection against unwarranted abuse. Disadvantages of ERP being high costs of company-specific software implementation packages, require precise training of all employees and also, problem in one point of application can disrupt the flow of the entire logistic setup. Despite these misgivings and handicaps, an ERP software package is what the Doctor would order to take care of the chaotic situation in Rolland’s, which emanates from widespread clutter, disorganised systems and a directionless approach to solving problems. The choice before Rolland’s would be now to lose the lucrative deal with Wal-Mart and put the shutters down in its future, or adopt this highly sophisticated software, bear the inconveniences to install it and spend some money in training its personnel to use it effectively. Alternatively, the management of the company may want to go for some other module-specific softwares, or a combination of them: a few examples are (wikipedia); Accounting softwares, E-procurement software, Management Information Systems (MIS) and APICS. ERP scores over everything else in this case study because the main problem lies in mismanagement around logistics and supply chain, for these applications ERP is the best-available customised software in the market. This is the case study solution Environmental impact/ other issues Any case study solution is incomplete without examining the environmental pros and cons of the current condition of Rolland’s. Retail outlets like Wal-Mart put a great emphasis on environmental issues. Some of the major environmental issues associated with the textile sector are: air and water pollution, soil degradation, erosion by water, deforestation and thereby natural habitat of plants and animals. While some aspects of clothing are unavoidable, a modern clothing company must act responsibly in what is called the concept of corporate social responsibility (CSR). A right example would be set when say, for every tree uprooted to make way for cultivation, a new one is planted. These soft measures can go a long way in building the right impression for Rolland’s with a responsible retailer like Wal-Mart. Summary In this case study, we have looked at several key aspects of the current business scenario facing Rolland’s directionless future. A ray of hope comes in the form of the world’s biggest retailer Wal-Mart agreeing to accord preferred supplier status to the company on account of its good quality product, but the deal’s chances remain bleak as long as the company doesn’t improve upon its existing management culture and thereby, manufacturing practices. We single out thus, the most pivotal things ailing the organisation and devise easy solutions for each predicament mentioned. First Lean Manufacturing is recommended in order to minimise waste, scrap and piling up of inventory. Then, there is a renewed focus on best quality initiatives to be adopted across the orgnisation in lieu of maximising yield on good quality. Cross-functional teams and strategic partnerships are recommended to improve upon the existing apathetic management structure. Finally, as a solution to the case study, we recommend the usage of a customised ERP software which can take up any problems arising out of logistics and supply chain issues. Also, the environmental issues concerning the factory should also be paid attention to in an ethics-concerned global marketplace. References ERP & Lean Manufacturing. 4 May 2006 wikipedia, www.wikipedia.org Supplier Standards. Jan 10, 2005. May 7, 2006. Wal-Mart Stores Inc., http://www.walmartstores.com/Files/SupplierStandards.pdf Read More