Supply Chain Management - Essay Example

Describe how global supply chain management acts as a driving force in global markets. Include value capture and value creation in your discussion as interactive dynamics that link the internal and external firm business processes. In the global marketplace, firms are challenged by the intensive need to reduce costs and thus achieve efficiency; this can be done through better collaboration and integration of the supply chain partners (Martin, 2005). Better collaboration in turn means greater communication.

When firms communicate effectively (even in diverse geographical parts with different cultural backgrounds) and given that these firms are customer –focused, then knowledge on the customer value is created. Value creation through global supply chain management is achieved through strategic integration of all members of the supply chain under the scope information exchange and understanding of the changing global consumer (Flint, 2004). According to McAdam and McCormick (2004) value creation occurs when organizations develop new ways of better addressing the customers’ needs and customer satisfaction; the supply chain which acts as a source of information can increase value creation.

Especially in the case of global supply chains, effective management of the flow of processes and functions indicates a better coordination of resources (including learning), which in turn provide the potentials for accumulating greater information on the global marketplaces. Given that global markets are underpinned by different cultures, different institutions and different structures, management of the global supply chain becomes the most important tool for effective operations. Value creation is therefore achieved through global supply chain management through greater synergies and integration of the supply chain partners in communication and information exchange, which allow faster response to the global changes in consumer behaviour.

Value capture, which is the appropriation of the value creation as Lepak et al. (2007) explain, is achieved when the value is isolated and leveraged by a specific organization (or in our case the entire supply chain network of an organization) and continues throughout up to the customer. Value capture in essence, within the global supply chain management is accomplished by dealing with the different business processes at each level of the supply chain as one, integrated process flow (McAdam and McCormick, 2004).

This means that considering the various internal and external business processes as one single set of procedures which has one goal eventually leads to value creation. Horvath (2001) comments that collaboration across supply chain partners regardless the geographic or cultural distance is necessary because “advanced GSCM will offer exchanges that allow members of the value chain to integrate in the design and development of products, manufacturing processes, logistic and distribution strategies and all related forms of supply chain” (p. 207) 2. How can firms use their supply chains to compete in global markets?

Provide a brief example The supply chains refer to the network of organizations which interact in order for a product (or service) to follow a process from manufacturing to the delivery to the final consumer. Within this process value is created on the basis of learning and accumulating knowledge on the customers’ markets; at the same time within this process firms interact in order to communicate the knowledge and transform this knowledge into capability of fast response. In the global marketplace, changes in the consumers and the demand occur faster and information (through communication) is processed at real time (Barry, 2004).

Therefore, firms need higher commitment of the partners of the networks (the supply chain networks) on the effective communication and integration. This allows them to better assess the different markets, identify needs of the different markets and eventually respond more quickly and in a more flexible manner. Managing appropriately and efficiently the supply chains can offer these benefits to organizations, given that the global marketplace entails many uncertainties and risks. The supply chain may integrate supply chain partners throughout the world (as a means of achieving reduction of cost for example when a company uses a foreign distribution center in order to sell the products to the foreign market or when localizing production) and this can provide leverages of more information and quicker information as well as quicker reaction (response).

Apple Computers for example is a company that uses the supply chain in order to compete to global markets. Apple’s headquarters are located in California but manufacturing and assembly facilities are also established in Europe (Ireland), Asia (Korea) and other parts of the world. At the same time, Apple has also outsourced part of its manufacturing to third party vendors in China (Lee, 2002). All these facilities and supply chain networks are designed in such a way to address two issues: reduction of costs (and thus efficiency gains) and better understanding of the market needs (for example the different facilities collaborate and integrate and therefore communicate any information regarding market demand or customer needs).

This eventually allows Apple to create value for customers and also capture value by responding quickly through introducing innovative products. References Barry, J. (2004). Supply chain risk in an uncertain global supply chain environment. International Journal of Physical Distribution & Logistics Management, 34 (9), 695-697 Flint, D.J. (2004). Strategic marketing in global supply chains: Four challenges. Industrial Marketing Management, 33 (1), 45-50 Horvath, L. (2001). Collaboration: the key to value creation in supply chain management.

International Journal of Supply Chain Management, 6(5), 205-207 Lee, H.L. (2002). Aligning supply chain strategies to product uncertainties. California Management Review, 44(3), 105-119 Lepak, D.P., Smith, K.G. & Taylor, M.S. (2007). Value creation and value capture: a multilevel perspective. Academy of Management Review, 32(1), 180–194 Martin, C. (2005). Logistics and supply chain management: creating value - added networks (3rd ed). UK: Pearson Education McAdam, R. & McCormack, D. (2001).

Integrating business processes for global alignment and supply chain management. Business Process Management Journal, 7(2), 113-130