Analysis of Supply Chain Management in Mektaoda Company - Case Study Example

ANALYSIS OF SUPPLY CHAIN MANAGEMENT Analysis of Supply chain management Customer Inserts His/Her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 12, 12, 2010 Analysis of Supply chain management Introduction Business activities have kept on evolving over the resent past. With the current globalization, it is evident that a person who lived in the 18th centaury would be taken for a rude shock had he visited the world now. Markets have evolved into something more diverse and only the fittest and quick adapting businesses have survived in this era (Hines 2004). In the process of adaptation cooperates have met several challenges that have seen some of these cooperates fall to the bottom of the value chain. Over the years, professional conduct and business-customer relationship issues have been major contributors to the general success of cooperates. Customers are a sensitive part of this success. As a result, corporate owners are looking for corporate leaders who can empress good service/product delivery in the present diverse global environment, leaders who are ready to adapt to the ever evolving market but still keep good professional conduct and maintain iconic corporate reputation (Hines 2004). Supply Chain Management greatly counts in the success of the business. This research analyses supply chain management of Mektaoda Company and its impact in the general success of the company. It evaluates the effectiveness of the chain at the company looking at all the shortcomings. The supply chain situation is analyzed with more emphasis put on the issues and problems that are related to the chain. At the end it suggests possible solutions to various challenges in the chain. Mektaoda Company Mektaoda Company is a product manufacturing company based in Dubai. The company was established in 1965 and ventures in the manufacturing of spectacle branded ‘Dox Spectacles’. It also manufactures stunners and spectacle glasses and frames under the same brands. The company has been successful due to its good reputation both locally and globally. This has seen the company grow into an international company with branches across major countries in the world as a result of the good reception of its products in the international market. Mektaoda’s also partners with international organizations to reach its oversea customers. The company has a well structured supply chain due to partnership with a number of organizations. These organizations include transport companies, importing and exporting organizations among others. The supply chain at the company addresses distribution network configuration of the company, distribution strategy and the trade-Offs in logistical activities. The Cash-Flow, Inventory Management and the mode and means of how information flows between the company and the market is also addressed by the chain. However, the company faces several supply chain problems. As such, even though the chain plays an important role at the company, there are a number of challenges that come with it too. Supply chain situation analysis Supply chain management (SCM) shows how business activities revolve around the manufacturer or the vendor and the customer (Hines 2004). The chain shows how products and services rendered by the manufacturer move from the manufacturer to suppliers/distributors to wholesalers and retailers and finally to the consumer. As such, the process ensures the smooth flow of goods between these parties with the goal of reducing inventory. An effective SCM flows comprises of three major flows; product, information and finance flow. From the definition above it is evident that the supply chain of any business organization involves different parties. It covers the manufacturing of goods and the means through which the goods reach consumers. The process involves several people and organizations. An analysis of Mektaoda Company reveals a number of parties. In this research, these parties are classified into first-party logistics, second-party logistics, third-party logistics and the forth-party logistic. All these parties have different roles in the supply chain of Mektaoda Company. All the parties are interconnected and have effect on each other. They collectively determine the general success of the chain. Hines (2004) states: All parties of a supply chain are interconnected. Typically the first-party logistics providers subcontract their transportation's needs to 2PLs and 3PLs, which are companies specialized in transportation. This helps the 1PL to benefit from cheaper transportation prices thanks to the specialization of the 2PLs and 3PLs, and the subsequent economies of scale. The transportation needed by the 1PL can be anything from transportation by ship, barge, aircraft, train, van or truck. (p. 34) The first-party logistics provider is the company itself. This party is in charge of availing the goods or services into the market. Mektaoda takes up the part as it is the manufacturer of the dox spectacles. The spectacles are manufactured by the company and made available into the market through different way. This first-party, in this case Mektaoda Company, gives guideline on the pricing of the goods it manufactures. The second-party logistics providers of Mektaoda’s supply chain include companies that own the means of transport of its goods. This party is in charge of transporting goods manufactured by the company to the market. Being an international company, its supply chain includes various shipping lines, airlines and truck companies as second-party logistics providers. AO Bayusuf & Sons Ltd is an example of the truck companies that helps in the transportation of the company’s products to the local market. On the other hand, Fly Emirates is an airline company that associates with Mektaoda in transporting dox spectacles to the abroad market. In addition, several warehouse owners like Multiple Haulers affiliates with the company. The Sarit Company in the country’s capital city affiliates with Mektaoda Co. as a third-party logistics provider. “A third-party logistics provider is a firm that provides a one stop shop service to its customers of outsourced (or "third party") logistics services for part, or all of their supply chain management functions” (Hines 2004, p. 82). He goes a head to explain, “Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.” (Hines 2004, p. 82). Cooper Waters Consultants on the other hand associate with the company as forth-party logistics providers. Mektaoda Co. consults Cooper Waters Consultants for their transportation, supply chain management and logistics. From the above parties it is obvious that Mektaoda Co. associates with a number of companies and organizations. As such, the company needs a well structured supply chain so as to reach all its local and international customers. With the help of consultants and supply chain expertise, the company established a well structured supply chain. The chain is structured to include and address various supply chain strategies, logistics and product lifecycle management. Procurement and asset management are also among the elements that are addressed by the supply chain management. In addition, the supply chain management addresses the supply chain enterprise applications. Another aspect that forms Mektaoda’s supply chain management is the supply chain planning. Appendix A shows chart representing Mektaoda’s supply chain management. On the other hand, Appendix B shows a detailed diagram of the flow of Mektaoda’s goods in the supply chain. The diagram shows various parties involved in the movement of the goods manufactured by the company. As stated earlier, most of the transport work of the company’s goods is done by local companies that are Mektaoda’s affiliates. From the manufacturer (Mektaoda Co.) the goods are transported to local outlets by road through trucks. AO Bayusuf & Sons Ltd is the major truck company that helps in transporting the company’s goods to major warehouses in the country. From the warehouses the goods are transported by smaller trucks and vans to small retailers all around the country. For the international market, Fly Emirates is the main airline that exports Mektaoda’s goods to the markets abroad. Dubai’s Railway Services also helps in ferrying dox spectacles and other goods manufactured by the company to the market in the neighboring countries. Mektaoda Co. also associates with Mediterranean Shipping Company (MSC) that helps in shipping its goods to the market abroad. Appendix B shows a diagram showing the company’s both domestic and global supply chain. It illustrates how goods manufactured at the company reach both local consumers and consumers abroad showing the channels through which the goods move. In my own view, Mektaoda Co. settled for this supply chain due to its effectiveness and positive impact on the company’s business. The company has a simple chain with a well detailed structure. This implies that incases of supply chain problems, it is easier to pin point the troubleshooters. In so doing, it is easier and effective in managing problems related to the supply chain. The simplicity of the chain also implies that it is easier to manage the chain. It involve minimum parties that are easier to address when need be. It also implies that it is easier to manage it both administratively and financially. With this and other many merits of the chain, I think it is the reason why the company settled for the supply chain. An analysis of the chain the overall strategy of the company shows that there is an intermarriage of the two. The chain comfortably fits into the company’s strategy that emphasizes on minimal input and maximized output. This is evident looking at the simplicity of the supply chain management strategy. The company’s supply chain is managed with emphasis on various aspects of the chain. As stated earlier, an effective SCM flows comprises of three major flows; product, information and finance flow. In this case, the chain insists on Vendor managed inventory (VMI) as it is an important process in business. It is the process through which the company (the vendor) gets vital information about the commodity it is supposed to provide to his consumers. VMI greatly helps in the management of the flow of information in and out of the chain. The pros and cons of entering into a Vendor Managed Inventory arrangement with major suppliers are assessed by looking at various factors such as employee acceptance EDI tasting among others. Procurements and strategic alliances are done with the help of qualified expertise. All these factors of the supply chain used by Mektaoda Co. shows that it is a highly responsive supply type chain. With the chain, the company has made tremendous achievement especially with its international market. The simplicity of the chain makes assessment of the market an easy process. On the other hand, it has positively effected the operation management of the company in directing the physical functions to co-work with the technological functions so as to achieve the organization’s goals. Main issues and problems Despite the tremendous achievements of the supply chain used by Mektaoda Co. there are a number of obvious supply chain problems that come with chain. An example of the major supply chain problems faced by the company is the lack of adequate support of the best suppliers. It has been a big obstacle for the company. Part of this problem has been attributed to the lack of right technology of the company and its affiliates. Technology is an important ingredient of a supply chain and thus lack of right technology poses a lot of challenges to the effectiveness of the chain. Similarly, finding real cost-reduction in the supply chain has emerged to be one of the obvious supply chain problems affecting the company. This is a problem that has several causes such as lack of focus among the company and its affiliates, negative attitude, their routine, various barriers and parties of the chain being resistance to change. Risk management is a mainstream business process. The presence of the above problems has made the company formulate various risk management tactics in the efforts of undoing the riddles poses by the program. Example of these tactics is the global optimization. “This is the finding of the globally best solution of (possibly nonlinear) models, in the (possible or known) presence of multiple local optima” (Hines 2004, p. 103). The tactic helps in offering a global search approach for some problems that the company experiences. Together with the tactic the company also uses capacity optimization in the efforts of maximizing on storage space especially in its computer systems. All these tactics together with business analytics and optimization strategy help in solving the problems at the company, bringing its supply chain under control. General evaluation and alternative solutions From the above supply chain situation analysis of the Mektaoda Company, one can make various evaluations. From the analysis it is obvious that the company employs a simple and well structured supply chain. This can be judged from the chains positive impact in the company’s business as far as marketing is concerned. However, for a better and more effective supply chain, the company needs to make a few changes in its supply chain activities as well as infrastructure. Lack of the right technology poses various threats to the chain. Therefore the company should invest in more advanced IT assets. These assets help in improving accuracy and speed of the supply chain activities. The company should also go an extra mile in sensitization its employees and other partnering companies on the need of collective participation in the supply chain activities. This sensitization will help in changing both parties’ attitude towards positive participation in the chain. It will also help kill negative routines the supply chain management. Reference Hines, W 2004, Supply chain strategies: Customer driven and customer focused, Monash University, Australia. APPENDIX A: Mektaoda’s Supply Chain Management APPENDIX B: Mektaoda’s Supply Chain and Supply Channels Read More