Literature review
Historical development
According to Rangaraj, Supply chain management (SCM) is management of all business processes involved in production of goods and services (87). It involves the management of all the activities from production of the raw materials, processing, packaging and delivery to the consumers.
The historical development in SCM involves four movements, which are the creation, the integration, the globalization and the specialization (Wang, Heng, and Chau 31).
The creation era is characterized by the requirement for large changes, the re-engineering, the downsizing as well as the extensive attention to UAE management practice. As a result, this era requires that organizations restructure their structures by recruiting and retaining skilled personnel who are able to produce quality products that can compete in the global market.
Moreover, the integration era involves reducing the cost of the products while increasing the value through amalgamation of technology and resource planning. This integration is in many oil industries like the Saudi Arabia Basic Corporation (SABIC) Company.
For example, this company associates with other organizations that involve themselves in research like the Saudi Arabian University to form processes like polymerization that will lead to production of quality plastics products at a low cost. Furthermore, integration ensures that the market is constantly demanding the organization products. This is because customers usually prefer products of low cost provided they are of high quality and they satisfy their needs.
Additionally, Globalization entail worldwide expansion of the supply chain via cost reduction so that businesses fit well in the competitive universal market (Gattorna 115). For instance, a local organization can team up with an international organization to enhance a smooth import and export process.
Additionally, teaming up facilitates funding and sharing of relevant information about the business environment. For example, people can learn from each other the different ways of distributing products to the market at a lower cost or a new way of manufacturing products.
Finally, according to Sundarakani, specialization deals with collaboration between the producers, the suppliers and the customers (26). This collaboration involves activities like manufacturing, designing, distributing and selling of the products and services that change depending on the region and its demand. For example, the market forces like the demand can interfere with distribution of products and services. Therefore, collaboration between the distributing industries and the selling industries can address this problem effectively.
The activities and the functions
The SCM function include the management of how the raw materials move into industries, the processing into refined goods as well as the movement of the refined goods within the industry and to the customers (Gattorna 100). As industries focus on competencies and flexibility, they decrease ownership of raw materials as well as the channels of distribution via assigning these activities to other organizations that can perform it effectively and efficiently.
Ackerman states that the purpose of this outsourcing is to reduce the management control of the logistic operations hence the creation of SCM concept (60). According to the SCM concept, the intention of SCM is to develop collaboration among its partners thus enhancing the visibility of the inventory as well as its velocity.
According to a recent research, several models that assist people to understand the activities involved in SCM exists. For instance, Wang, Heng and Chau explain that supply chain activities involve three levels that are the strategic levels, the tactical levels and the operational levels (33).
Strategic level is concerned with the number and the location of distribution centers like the warehouse, partnership with the suppliers and the customers, the management of services and products as well as the information technology. Besides, tactical level involves the decision that an organization makes about the purchases, the production, the inventory, the transportation and the market demand.
Lastly, the operational level entails all the planning activities that the organization undertake to facilitate increase in output and decrease in input with a core aim of delivering quality products to the customers. For instance, it involves the manufacturing and the distribution planning, the demand as well as the inventory planning.
The issues addressed by SCM
SCM address a variety of issues concerning distribution, logistic activities, information, inventory and the flow of cash (Sundarakani 27). To begin with, SCM ensure that there is smooth configuration of the distribution network via assessment and evaluation of the number and the location of the distribution and the production facilities.
Moreover, Rangaraj states that SCM solve the problem that can occur due to the distribution strategies like the shipment and the docking (88). This is because SCM helps the company to choose the best shipping or docking strategy via analysis and evaluation of these distribution methods.
Furthermore, SCM helps an organization to coordinate its logistic activities so that it incur the lowest cost possible (Gattorna 104). For instance, it coordinates trade-offs activities via system approach. This means that it help the organization to order products at a low transportation cost by the development of efficient logistics.
Moreover, SCM increase the organization awareness on the business environment through information sharing. This is because Ackerman argues that SCM make certain that an organization research and collect relevant information about the market demand, the supply cost, the value of products and services as well as the inventory (64).
Additionally, SCM address the issue of inventory management by analysis of the amount and the location of the inventory like the unfinished products, the processing process and the refined goods. Finally, cash flow management entails the terms and methods of cash exchange across the supply chain.
The SCM integration processes
SCM requires integration of activities into the chain process to facilitate advantage of information that supply partners share. Therefore, the integration process entails cooperation between the buyers, the suppliers, the systems as well as the shared information.
According to Wang, Heng and Chau, the supply chain integration processes are the customer management, the procurement, the development of products, the management of manufacturing process, the distribution, the outsourcing, the measurement of performance and the management of warehouse (52). These processes operate hand in hand to ensure that organizations deliver quality products to the right customers, at the right time and at an appropriate cost.
To begin with, the customer management involves the relationship that exists between the organization and the customers (Sundarakani 48). This relationship is important because the customers are the sources of information hence the organization should maintain a rapport with them via establishing goals that satisfy their needs and giving them positive feedbacks.
On the other hand, the customers should also receive information about the organization products and services. Moreover, the procurement process entails collaboration with the suppliers so that the company receives raw materials at a reduced cost (Rangaraj 94). As a result, the organization and the suppliers should work together on issues about scheduling, hedging, order placement, the storage and the transportation.
Additionally, Gattorna states that the product development should combine the efforts of the organization, the suppliers and the customers so that the marketing time decreases (120).
Therefore, this process should identify the customers need, involve suppliers in the selection and procurement of materials as well as develop advanced manufacturing technologies that combine the supply and the distribution of the products to the organization and the market respectively.
Additionally, the management of manufacturing process ensures that the customers receive quality products (Ackerman 73). Consequently, the manufacturing process requires flexibility so that it caters for the changes that occur in the market as well as encompassing the mass customization.
In the latest research, Gattorna explains that the distribution is the movement of the refined product to the customers (118). In this distribution, the ultimate destination is the customer hence the availability of products and services is very vital. Therefore, the organization should integrate the customers’ time and the space so that products and services are available to the customers at the appropriate time.
Additionally, the outsourcing is the management of the logistic activities (Rangaraj 90). This ensures that the transport, the warehouse and the inventory are under monitoring and control. For instance, logistic activities ensure that the warehouse has enough stock so that the organization does not run out of supply.
Finally, the measurement of performance includes analysis of the cost, the services provided to the customers, the productivity, the assets and the quality of services and products. Sundarakani noted that organizations that engage in the measurement of performance usually improve its overall productivity (40).
Finally, the management of warehouse concerns monitoring of the distribution facilities and the storage of the products (Wang, Heng, and Chau 32). If this monitoring is perfect, the cost of labor, transport and storage will dramatically reduce and as a result, the organization will enjoy an increase in profit.
Components of SCM integration
According to Sundarakani, SCM has the following components: The planning and the control, the structure of the work, the structure of the organization, management and leadership (27). Planning involves determining what will take place in the future while control involves ensuring that the required resources are within reach.
This component facilitates smooth running of the supply chain activities and functions. For example, a well-planed logistic activity reduces the cost of production thus increasing the profit margin of the company. On the other hand, excellent control ensures that the organization has enough supply and that the customers always receive the products that they require at any specific time.
Additionally, the structure of the work deals with all the processes and procedures that take place in an organization while organizational structure is the hierarchical arrangement of the organization from top to bottom (Rangaraj 91). These components ensure that the SCM is under control.
For example, the organization structure determines the movement of products from the supply, to the processing unit as well as the distribution to the customers. On the contrary, the structure of work ensures that the customers receive products and services that are of high quality.
Finally, the management and leadership components are vital in the SCM because they enhance all the activities of the SCM (Gattorna 116). This means that if the management of an organization fails then the supply chain activities fail because SCM completely depend on the organization management without which it is bound to fail.
For instance, poor leadership style interferes with the organization collaboration with others organizations leading to disruption in the supply chain management, which solely depend on other industries like the supply, distribution and transport.
Supply chain management in UAE
The SCM centroids
In the latest study about SCM Sundarakani states that centroids are imperative in the economic consideration (27). Centroid is a region with a high population and production companies are within approximately eight hundred kilometers. Although UAE does not have a centroid, it is on the road to acquiring one.
For instance, Dubai is capable of becoming a universal centroid of the cargo transportation (Rangaraj 89). This follows instigate of the air cargo operations based at Al Maktoum International Airport. This will create an opportunity for the Dubai as the airport amalgamates the supply chain into its economics.
The supply chain sustainability
This involves issue that affects logistic activities and it entails the impact of the organization supply activities on the environment (Gattorna 108). Many customers are aware of the impact of an organization and its products on the environment and this determine the sales of an organization. Therefore, majority of the organizations are attempting to produce environmental friendly services and products.
For instance, In Abu Dhabi, procurement team of Masdar introduced the supply chain sustainability. This led to the construction of an environmental friendly city resulting to consultancy commerce. Additionally, most of the companies in the UAE have adapted the principle of supply chain sustainability. Some of these companies are Saudi Arabia Basic Corporation (SABIC) and the Dow Chemical Company. For instance, SABIC has a cooling system that ensures that cold water gets into the gulf so that marine life is preserved.
The global logistics and the SCM
In the past few years, the discussions of logistics in many corporations in the UAE were rare (Ackerman 66). Recently, discussions about SCM have increased and its objective has shifted from cost reduction to sustainability in the competitive business environment. As a result, many learning institutions in UAE offer courses about logistics and SCM (Gattorna 118).
For instance, the course cover the following subjects: transportation, supply chain, warehousing as well as market demand management. Moreover, Singapore and Dubai are significant logistic hubs that connect many people both locally and worldwide thus serving as an ideal region for the specialization of the SCM.
Additionally, most of the UAE have realized the importance of sharing information about SCM in order to compete globally. As a result, annual businesses and conferences are usually organized and people from all walks of the world assemble to share relevant information concerning SCM.
For instance, in February 2010, A Global Supply Chain & Logistics Conference was in Dubai and managers from UAE, Middle East, Europe, China and United States attended. Various issues about SCM were on discussion and some of them include the development, the advancement and the dissemination of the supply chain information.
My perspective about supply chain management
Many organizations rely on SCM to remain competitive in the worldwide market and the networked economy. As a result, they try to incorporate new knowledge and technologies in the SCM. For instance, many mangers apply the current management paradigm that is a concept of commerce relationship.
This concept concentrates on a shift from a single enterprise to multiple organizations. In this case, organizations need to work collaboratively with other relevant organizations so that they meet the customers’ needs effectively and efficiently and at a lower cost of production. For example, a manufacturing organization should collaborate with the transport, the supply and the distribution industries.
Additionally, in the past years, the globalization, the outsourcing as well as the information systems have facilitated the success of many organizations. For example, the success of the SABIC Company is due to its collaboration with the suppliers, the distributers and the research organizations.
Therefore, inter organizational network is worth of being acknowledged as an innovative type of an organization. On the contrary, this coordination can also interfere with SCM because the different organizations are not familiar with each other’s the trade-offs. Additionally, many organizations focus on the input and output hence neglecting other key players and this exposes the organization at a risk of incurring losses. Fortunately, the SCM addresses this issue because it concentrates on collaborative work.
Finally, the changes that take place in the market environment contribute to adaptation of SCM. For example, most of the oil producing industries in UAE embraces the principle of SCM because of the cyclic nature of the products that they manufacture.
This is because products like oil and gases are affected by the market demand, and any change in the market demand results to interference with the industries profit. Moreover, a change in the technology leads to a change in the SCM. For example, a drop in the communication cost can affect the coordination of the SCM activities and functions.
Works Cited
Ackerman, Kenneth. Fundamntals of Supply chain Management: An Esssential Guide for 21st Century Managers. Washington DC: Velocity Books, 2008. Print.
Gattorna, John. Dynamic Supply Chain Management: A New Business Model for Peak Performance in enterprise Supply Chain Across All Geographies. West Harcout: Grower Publishing Limited, 2008. Print.
Rangaraj, Narayan. Supply Chain Management for Competitive Advantage: Concepts and Cases. New Delhi: Mcgraw-hill Publishing Company, 2009. Print.
Sundarakani, Balan. A Sustainable Green Supply Chain for Globally Intergrated Net works. New York: Springer, 2007. Print.
Wang, William, Michael Heng and Patric Chau. Supply Chain Management: Issues in the New era of Collaboration and Competiton. New York: Taylor and Fransis, 2007. Print.