Supply Chain Management and Sourcing Strategies - Essay Example

?Background The modern dynamic business world has created an urge among the organizations to adopt the best possible business techniques for their survival and growth in the competitive world. Apart from overcoming the heavy cut throat competition, organizations also have to consider the needs and requirements of customers who now prefer those organizations who are ethically sound and environmentally friendly. Co-op supermarket is one of those organizations that need to review their ethical policy towards purchase of fashion products in such a manner that least pollution is created while shipping products from countries like China. India etc along with introducing ethical environment friendly supply chain management keeping intact price and choice. This study focuses on various aspects of Supply Chain Management and appropriate strategies to incorporate green and ethical and supply chain. But in this entire process the major questions one need to focus upon is that while implementing ethical and environmental practices , does the price on the clothing and the choices one can offer effect on pricing of the be affected or not. Supply Chain Management Supply Chain Management is the process to effectively supervise, control and administer the practice of extending goods and services to ultimate consumers. The objective and purpose of incorporating an ethical supply chain is to maintain a responsible logistic system whereby products and services are proliferated in the most ethical manner (Cousins, Lamming, Lawson, and Squire, 2008). The issues and concern of ethical supply management comprise of broad goals of ‘product supply’ along with the ‘means for the same’ that is the management tasks and activities. The key areas that are critical to supply management and must be taken care by Co-op supermarket while designing its purchasing decisions and strategies are: The extent to which the supply chain engineers or designers are required to incorporate the ethical standards while strategic decision making process is entailed. How does supply chain ethics be made applicable at various hierarchical levels strategic, tactical and operational? What are the possible contradictory and conflictory situations that may creep up while applying the ethical supply chain decisions and management? Introducing Green Supply Chain Management (Source: Penfield P, 2007) But the overall impact is that incorporation of ethical policies would in turn aor up the prices of goods as the ultimate cost burden of implementing advanced technology and achieving ethical standards will be passed on to the customers in form of increased pricing, hence it is difficult to make cheap gooods available at lowest pricing. The make-buy decision Sourcing of products from other countries has become major cause of concern for supermarkets as they enhance and aggravate chances of pollution. Supermarkets established in Great Britain have become a part of Ethical Trading Initiative so that their dedication and commitment towards sourcing of products can be socially acclaimed. Hence, the question has become critical whether products should be manufactured internally or sourced from other nations. It is clear that if supermarket is really concerned about incorporating ethical sourcing then it would certainly have to bear high costs. What needs to be done by Co-op supermarket is to apply a Green Sustainable Supply Chain within the domestic range of the organization that can provide abundant opportunities for the firm to reduce cost and create wider choice for its customers (Harrison, A & Van Hoek, 2008). However, if the organiation decides to manufacture goods locally rather than outsourcing them providing a large variety of goods to the customers would become a matter of concern, hence From a sustainable viewpoint, the supermarket can: Try to design and produce goods locally to the maximum extent possible Designing of smart packages that save cost to the company Whether make or buy, continuous environmental audits must be performed to compare and contrast both and choose the best alternative The organization has to seriously cut down on disposing of harmful by-products, reducing scrap, reducing obsolescence etc. All the above objectives can be well attained if innovative practices and beneficial links with ethical suppliers is maintained. Target local vendors Sourcing strategies and Supply Chain Configuration For realizing the desired objectives of ethical and green supply chain, mitigating the pollution effect, Co-op supermarket needs to: Source its products locally rather than opting from sourcing from other nations, as transportation cost can be reduced but cost of providing value added product will be increased, thereby balancing the net effect. Paying fairer prices to suppliers rather than opting those who agree to supply below-cost selling or price flexing Behave ethically towards all suppliers and customers as well Building strategic relationships with suppliers in form of partnerships so that environmental friendliness and business ethics can be attained uniformly in all respects, at all levels. Multi network sourcing where sources from national, regional and global networks is opted, this would certainly help the organization to reduce the detrimental environmental and pollution effects Introducing value added logistics in supply chain through the under mentioned figure: Source: (Chen, L. and Notteboom, T, 2011). Strategic supplier selection Selection of supplier is critical in reducing costs as an ethical supplier would certainly add on the cost burden in comparison to ethical one who ensures conformance to ethical standards and shipment policy, thereby mitigating the pollution effect while packaging and transporting goods through environmental friendly means (Christopher M, 2005). Co op supermarket must ensure that: The supplier selection must be made meticulously, keeping ethical and environmental friendly supplying as the prime criteria. A detailed supplier investigation must be probed on grounds of their competency level, their capacity and potential, individual credit ratings that depicts their ethical conformance and high service output and quality standards. A detailed investigation and evaluation of the supply base and the individual profile of suppliers in terms of cost and market share. Supplier dependency on terms of cost and quality Suppliers alignment and tandemness with economic forecasting Supplier’s performance measurement through regular audits Evaluation of partnerships and other association with suppliers in terms of competitive or east cost purchasing Aligning supply with corporate strategy In most of the organizations, it is observed that there lies a huge gap between the organizational business strategy and the internal supply chain management.  This often leads to a failure between the designed strategies and the final implementation just due to the organizational misjudgments and miscommunication with the ultimate supply chain associates and partners (Harrison, A & Van Hoek, 2008). Co-op supermarket must clearly communicate its green supply chain objectives with the suppliers it intends to work with in future so that all possible discords and future discrepancies can be avoided. Supply chain aspects must be represented at the base level or the functional or execution level during the strategic decision making process. Conclusion A green and pollution free supply chain can be incorporated by the supermarket only when the company is clear about the price it wants to shed for realizing broader value adding goals to its business practice. Proper supplier selection and alignment with green corporate objectives must be ensured. BIBLIOGRAPHY Penfield .P., 2007. The Green Supply Chain: Sustainability Can Be A Competitive Advantage. Available at http://www.mhia.org/news/industry/7056/the-green-supply-chain. [Assessed on 23rd July, 2011. Chen, L. and Notteboom, T., (2011). “Determinants for assigning value-added logistics services to logistics centers within a supply chain configuration”. Paper presented at European Conference on Shipping & Ports- ECONSHIP 2011 “Maritime Transport: Opportunities and Threats in the post-crises world”, Chios, Greece, June 2011. Harrison, A. and van Hoek, R. (2008) Logistics Management and Strategy, Harlow: Prentice Hall/ Financial Times Christopher M. (2005) Logistics and Supply Chain Management; creating value-adding networks, Prentice Hall/ Financial Times Cousins, P., Lamming, R., Lawson, B. and Squire, B. (2008). Strategic Supply Management: principles, theories and practice. Prentice Hall/ Financial Times. Read More