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Supply chain management is a strategic method which maintains the supply chain process to satisfy the end user requirement. The supply chain process includes the physical movements of products as well as the services. Considering the supply chain as the physical distribution of products is too narrow, but informational and financial services are also considered as the process in the supply chain. The primary objective of using supply chain management is to deliver the end user satisfaction. The chain involves customers, planning, purchasing, inventory, transportation and the main feature of the supply chain is, which starts from the customers and ends in the customers itself. It reveals the core attraction in the whole supply chain is customer itself. Also the flow of the supply chain is not only limited to one direction but its bidirectional now
Before the technological boom the predictability of the demand can be fore seen but it was bit difficult to know the exact demand. But the easily available technological help and the high communication standard helps the organizations to connect the suppliers and the supplier's supplier thus making it extended. The technological hype has given a lot of opportunities to find out the demand in a specific time by using software which comprises different modules such as ERP, CRM and SCM all together. As technology being an important part in every aspect of the organizations, the world market is changed to a place where there are no barriers.
This globalised effect made the companies to think out of the box. They are extending their supply chain to a new level to other countries, as it's very much economical for the companies. Although the manufacturing costs of developing countries are much less compared to the developed countries, there is some point in which supply chain doesn't work according to the strategy. The real time data sharing, the long distance transportation, much less technological development, costly tracking devices are the points which are concerned.
The global supply chain became so important that the market is grown out of the borders. Most of the organizations used this opportunity to grow beyond the boundary. And most of the organizations changed to global organizations servicing the customers all around the world. It also resulted in high competition which leads to the high pressure environment in the organization to provide best service to the customer all the time. Although technological boom is helping organizations to reach the customer base easily, It creates a lot of variations in the trend of supply chain to connect to their vendors effectively. Every organization is trying to get the maximum result from the globalised supply chain; still they are struggling to deal with the complexity of supply chains which extended beyond the borders.
As I mentioned the technology allowed the supply chain to be more efficient and responsive to the recent trend of changes. But the process of being effective through out the inconsistent circumstances of the global economy is very complex. The dynamic change in the market insists the management to redefine the strategies according to the time. The main issue in the strategy is how quickly the supply chain can establish a new invention or accept the change which is beneficial at the end.
The main concern which we are dealing is the flexibility of the supply chain to accommodate the change. To accomplish that, there must be a good coordination between the different units in the supply chain. The complexity of the market environment is much higher now as it became a globalised market with endless flow of services and capital. It's not a diverse market to which is easy to market, but it's a converging market with a lot more competitors. So it won't be an easy operating environment but will be an uneven ride of procedure. The harmonization of marketing and the so called supply chain activities need to be well controlled within a context to get the utmost revenue from the market. Integrating all the operations into a single context is very hard in a market place with almost implicit boundaries.
The main idea behind implementing the supply chain strategy which is flexible is to avoid all kind of risks. The risk involving in a supply chain management is in purchasing activities, inventory shrinkage and in cost. To avoid these issues in the supply chain management, new technologies and the trends such as RFID, just in time production (JIT) are used. In the recent time companies are not restricted to a specific place rather they are showing the interest to grow beyond the boundaries. Even though the labor costs are much less, the other cost such as cost of new place, different tariffs, other expenditure involving in overseas business is critical in the supply chain strategy. The time is another factor, in which the shipping of the product may take much more time as compared to the parent country. The customs plan and the different government policies will affect the cost of the overall service. The decision to make the best outsourcing plan or selecting the best supplier also affects the best practice of the supply chain. Most of the time the companies go for the lowest prices which in practical will not be the case comparing to different cost factors which mentioned above. All these things are meant to be the part of the strategies of the supply chain management. And all these strategies are supposed to change in time because of the time being. So rather than setting up a strategy, its better to set a strategy which is flexible to the market, this will be difficult but it's not impossible.
The main objective of my thesis will be to find out the importance of the flexible strategy in supply chain management. Other than this, I'm trying to find out the importance of flexible strategy for the organization in international markets. As the supply chain is growing larger in context the simple nature of the chain is disappearing, it means the complexity is increasing a lot. In the global aspect to understand the complex nature of the supply chain will be interesting. As in the complex nature of the supply chain the different units of the chains are meant to be integrated to maximize the effect of the global effect. This will be one of the difficult things to accomplish in the globalised economy. Addressing the topic of globalization, the research will also cover up the impact that made to the organization's strategy, especially to the supply chain. The development in the technological method has given a lot more opportunities to the performance of the supply chain. It improved the value of the service through the supply chain as it adds value each and every time. The research is also trying to reflect the improvements in the supply chain strategy because of the technological advancement especially the RFID technique. Although the technological growth helped the supply chain in a huge way, it added complexities in the operation but still the complexity doesn't suppress the benefits.
e) Research Methodology:
As the primary aspect of the research is to deal with the increased amount of knowledge in substantial area rather than producing some prototype, the methodology that I'm going to follow is Qualitative. Mainly it involves the case studies, which consist of the usage of secondary data. The main idea behind the qualitative methodology is based on the facts on the natural world and using the inspiration from them. The facts of the natural world are already set by representation of the facts in different forms such as reports and theories. Mainly it covers the policy and the global strategy taken by the two different companies, Tesco Plc, and Woolworths Plc.
The purpose of the thesis is to evaluate my abilities to collect, evaluate and critically analyze the theories of my desired area and to develop, question, protect the statement with rational arguments and facts. This will highlight the importance of globalised consequence in supply chain in different perspective giving importance to the flexible strategy towards the global economy. It will also emphasize the globalization as an entity and the impact that made to the supply chain strategy. The technological growth in the last decade has made a drastic change to the entire way of doing business. This kind of growth had given a lot of opportunities and value to the business, accompanied by a lot of complexities in the process.
2. LITERATURE REVIEW
In the previous section we have addressed the research question in which the main concept was to know about the strategies in the supply chain management in globalised market to keep up the competitive edge. As the time goes the business is also transforming the way it does the business in the past. The technological growth of the world is exponential compared to any other growth, and this kind of growth is giving a lot of power to the customer. Although the technological boom is used by the organizations efficiently still it made a lot of complexities to their operations. As the customer have got more power in these days the organizations are very keen to give the best services to the customer efficiently and immediately. Also the national borders are become virtual barriers because of the globalised nature of the economy. The word "global" became globally accepted by everyone in the business world as it provides a lot of opportunities to grow beyond. The globalised nature and the rapid change in the technology made the organization to set up a strategy which is flexible according to the new requirement. It's not feasible to stick with the same technologies and the basic rules of the business to get the profit the organization are looking for, instead the organizations must be flexible to include the new improved technology to achieve the standard that they are looking for. There are a lot of organizations which are capable of incorporating the advanced technological changes suitable for the global market and they did well indeed. Some of them made a late attempt to make the most of from the globalised technological boom, but it didn't work as an effective one. In this section we will discuss the insight of the research problem by reflecting through the literature and research done by the other scholars in the field of supply chain management, globalization, global strategy and global supply chain management.
The practice of the supply chain management is relied on some of the basis concepts that have not changed over the centuries. The term "supply chain management" arose in the late 1980's and it came into widespread use in the late 1990's. Before that the businesses used the term "logistics" and "operation management". Other than the difference in the term there is also difference in the activities in them. Logistics in simple words means the activities that occur within the organization and supply chain refers to the networks of companies that work together to deliver the product to the market. The traditional logistics refers to the activities such as procurement, distribution, maintenance and inventory management (Hugos, 2006). Other than the logistics activities supply chain management also includes activities like marketing, new product advancement and customer service. As a whole the supply chain management manages all the different activities required to coordinate the flow of services or products to serve the ultimate customer.
b) Supply chain management:
As per James Ayers (2001) the supply chain not only includes the movement of the physical goods but it also includes information, financial movement, creation and deployment of the intellectual work. In the case physical goods the flow direction of supply chain is restricted compared to the information flow. Products are may be of the form of intangible products that may be music, entertainment, software or designs (Hugos, 2006). The basic task of the supply chain is to deliver the products to the market and it contains different basic processes such as product designing, procurement, production, demand management and distribution (Schary, Skjott-larsen, 1995). Development of products to match the market requirement is the part of the product design step. In the procurement process the materials and the components for the final part is assembled from the different suppliers in the supply chain that become the part of the final product. Production is transforming the material and the components into the finished product. Demand management is initiated by the demand which leads to the production. Not only the demand but also the forecast also plays an important part in the demand management. Finally the distribution process delivers the final product to the customer. In all these process the - 7 activities within them are not isolated but a lot of interactions are involved between the processes (Schary, Skjott-larsen , 1995).
In a simple way the supply chain is composed of company, suppliers and the customers of the company. These are the basic participants in a simple chain. Extended supply chain is formed by the suppliers to the basic participants in the supply chain. Extended participants are of different form; it may be supplier's ultimate supplier or customer's customer or of the form of the company's service providers (Hugos, 2006). Supply chain of the company is the integral part of the approach towards the customer they serve. Supply chain should respond to the requirement of the market and also it should align with the company's business strategy. The companies which serve their customers competently and instantaneously gain the market share and the profit well. One of the main characteristics of the supply chain is the interdependence between the tasks. Even though the different tasks are considered to be in isolation, the decisions made in one area have a significant effect on the other areas. Decision on type of production determines the pattern of distribution and ho the products are consumed depend upon the method of production which eventually determine the supply relationships (Schary,Skjott-larsen ,1995). The main thing to consider in the supply chain management is to have a proper warehouse management. Companies those having multiple warehouses have got more profit rate as it serve the end user with continuous flow of services or the products in a continuous manner. Multiple warehousing when incorporated with the distribution order management systems enables the high visibility which reduces the shrinkage of the inventory. Later outsourcing is considered as a substitute for the role of multiple warehousing, as the world market is grown significantly. The main agenda behind setting up the outsourcing distribution center for the companies to gain the flexibility in managing the cost and the changing requirement and for the improved customer service (SnieÅ¡ka, DrakÅ¡aitÄ-, 2008). The paradox is that of one third of the companies that outsource their distribution center services had experienced the dissatisfaction with the 3rd part logistics providers (SnieÅ¡ka, DrakÅ¡aitÄ-, 2008). To reduce the investments in the warehouse wages is considered as a major cost saving method for the different companies. They usually uses the small cities as their warehouse centers where the hourly wages of the employees is much lower compared to the larger cities. Also software as a service is used by the most of the companies in these time by saving the extra cost and servicing the best quality services in the industry. And it became one of the most innovative and the profitable strategy in the supply chain management. Instead of configuring and maintaining the server within the company, the idea of the company to host the data and the applications on a third-party's server for a payment, has lead to a promising industry and its becoming more popular day by day.
Regardless of the size of the organization the small and the big organizations are willing to use the "software as a service" method. The main cost saving for the large organization is in hiring a technician with a low level knowledge with a moderate pay, rather than going for a in house server settings, which needs much more human resource (SnieÅ¡ka, DrakÅ¡aitÄ-, 2008).
The high demands of our global economy are insisting the companies to adopt responsive but flexible supply chain strategies to compete in the economy. The interdependence between the organizations and the rapid change in the environment are forcing the organization to act fast and deliver with the help of all new improved technologies. Throughout these times there are a lot of new technologies that will help to improve the supply chain of the organization. The improvement of the supply chain not only helps the individual supply chain activities but the whole company's process. There are a lot of new technologies that will boost the performance of the supply chain but it doesn't replace the existing system (Hugos, 2006). Managing the supply chain in highly innovative and competitive marketplace became more complex because of the large amount of outsourcing and off shoring business activities (Dos Santos,Smith, 2008). In the past two decades the thrust of information technology has helped the supply chain management to think according to the changing time. In the early 80's the Electronic data interchange (EDI) came into the scene which revolutionize the method of transaction in the business. After that in 90's the vendor managed inventory and the configure-to-order supply chain played a significant role in the business. RFID was the latest entry to the field of supply chain management which revolutionized the activities within the supply chain dramatically still in an improved way (Dos Santos, Smith, 2008). The after effect of the technological growth had a great effect on the operations in the supply chain flexibility which resulted in a dramatic change and those who are ready to accept the change according to the time are supposed to sustain the profit. At the end of the day it's not only the information technology which boost the business, but the people who thinks beyond the technologies are real grosser.
Radio Frequency identification (RFID) is one of the main technologies used in the supply chain management. It's not entirely new to the industry as it has been used from the past 20 years in different purposes. Nowadays the cost of the RFID technology is became less because of the widespread use of technology. In the beginning, the RFID technology is used within the company to track the movement of items, and because of the cost effectiveness of the RFID, tracking of products moving through the supply chain which is stretched all over the globe is also possible (Hugos, 2006). The information produced by the RFID is enormous, and some of them are when and where the product is manufactured, selected, packed and shipped (Wailgum, 2007).
Mainly the identification system in the RFID consist of two components, they are tags and readers. In the tag memory there is bit string which read by the readers through the wireless channels (Vaidya,Das, 2008). In general the tags are attached or embedded to the product which are needed the tracking and the reader from the neighborhood itself reads the products by running the simple layer protocol via wireless channel (Vaidya,Das, 2008). For RFID there is a standard and it's known as EPC (Electronic Standard Code). This standard is set up by the EPCGlobal Plc which is an organization sets the standard for the worldwide RFID production (Dos Santos, Smith, 2008).The basic details in the tag may be product type, manufacturer and a serial number but in an advanced tags the details may be about time, location and the temperature when the product moves through the supply chain (Dos Santos, Smith, 2008).
d) RFID: Impact on the supply chain strategies
The main advantage of the RFID technology compared to the bar coding technology is there is no need of physical line of sight (Gozycki, Johnson, 2004). In the case of barcode the reading equipment should be aligned with the barcode which is not a feasible way as it requires a lot of human labor. A large amount of products with RFID tags can be scanned by the RFID reader as its passes through the dock door equipped by the reader, so its much easier than the bar coding method. One of the significant advantages of the RFID technology is the information stored in the tag. It may be the date of manufacturing, manufacturer, product id to any information related to the specific product. And the best part is that the information can be changed or updated for further use. Another important factor in sing this technology is human intervention is not possible, it makes the RFID tracks reliable at any time (Gozycki, Johnson, 2004). But there is a point in which we might have a concern; there are two types of tags. The write once tags which are used for only once and the re-writable tags in which the information can be updated. During the flow of products through the supply chain the data in the tags can be changed by the different firms in the chain (Dos Santos, Smith, 2008). Dos Santos et al mentioned the benefits of RFID compared to the bar coding system(2008), but the corporate intelligence is a special case in the supply chain as it offers a large amount of information availability to the competitors. The advantages mentioned by the RFID is the reliability as it restricts the human intervention compared to the bar coding. In the case of corporate intelligence the disadvantage mentioned in the bar code became an advantage. As per Dos Santos et. al corporate intelligence which is acquiring the information about the competitors is not easy when we use the bar coding as it requires the product reading directly by human and the information needed for the competitors are stored in the computers (Dos Santos, Smith, 2008). The RFID technology allows the competitors to have easy access to the information which is harmful to the firm. But this was not considered as a disadvantage to the RFID advantages; however it's more about the strategies of the firm whether they need any information about the counterparts.
In the year of 1999, before the RFID technology come into picture, Geoff O'Neill who was the head of the Logistics of Woolworth Plc applied a similar technology to track the goods moving from the distribution store to the single store in order to secure the channel (Gozycki, Johnson,2004). But it was not a successful project because of the unreliable and expensive nature of the tag; also the range company was looking for was not present at that time. All these was a start of the new technological improvement in which the supply chain is going to improve in the future and the head of the logistics department of Woolworths Plc, O'Neill know this for sure. The idea that he got from the project failure is that there is a better chance of visibility in product flow, accuracy in the order and the security of the shipment. Within a year itself O'Neill applied the RFID technology in a entirely different perspective. By the mid of 2000 the UK home office took an initiative to reduce the theft of the merchandised product in the retail industry, which is used for the funding for the crimes (Gozycki, Johnson, 2004). They planned to address retail theft issue by "chipping" the products.
The inventory "shrinkage" is considered as the one of main losses for all the retail industry, in 2000 itself it costs around â‚¬30 billion in Europe (Gozycki, Johnson, 2004). And this issue was also addressed in the RFID forum by O'Neill itself in 2003. The issue was not only with the theft of the goods but the incorrect shipment deliveries, stock losses in the distribution center also are issues (Gozycki, Johnson, 2004). The government was ready to subsidize the implementation cost, other than addressing the theft issue; the business benefit is also significant in transferring the goods from the manufacturer to the retail stores through the supply chain. Acting to the government's concern O'Neill sent a proposal to the government in which he depicted the benefits such as addressing the theft issue, RFID technology and the profits to the retail industry (Gozycki, Johnson, 2004). At the end the UK home office selected the proposal by him and selected Woolworths Plc as the pilot program. With the partial help from the home office Woolworth implemented the system which tracks the products from the distribution center to the specific store (Gozycki, Johnson, 2004).
As an example O'Neill explained the process in the RFID forum which was in the Focus (2003). The company has tagged around 16000 dollies which are assigned to the specific tote boxes with bar codes. The movement is tracked by the readers through the distribution centers and also checked whether they are on the correct pursuit via GPS (Focus, 2003). By reaching the specific store the loads which are allocated to the store can be identified by the RFID hand held device, owned by the driver. Using these integrated approaches, the tagging is not concentrated to the item level but rather the visibility of the item level (Focus, 2003). The benefits of the RFID technology shown by the Woolworths Plc's are in the process management, asset management and improved visibility. The real time notification of the loading and delivery errors, GPS tracking, effective use of the dollies, reduced rate of shrinkage are the advantages that they are experiencing directly (Focus 2003).
Following the trend different firms were ready to apply the RFID technology to their supply chain strategy to improve the efficiency and the competitive edge. At the end of 2004, the NRF (National Retail Federation) convention was held in the New York , in that conference CIO of Tesco Plc, Colin Cobain said that they have already started using the RFID technology in high value high shrink products through the supply chain to the shops (Food logistics, 2005). The main purpose of the Tesco Plc using the RFID technology is to improve the efficiency and reduce the shrinkage of the stock. This initial roll-out of the Tesco is named as secure supply chain as it trying to put a vast infrastructure in the entire UK stores and the distribution centers (Food logistics, 2005).The readers are set to implement in the goods-in and goods-out doors of around 1400 shops and 30 distribution centers. Addressing in the convention Colin Cobain's plan was to complete this secure supply chain at the end of 2005.
The time proved the essential values of the RFID which improved the supply chain performance in a significant way. One contradictory factor to this technology is, the competitors have got easy access to the supply chain data and they can identify the supply chain innovations of the other firms (Dos Santos, Smith, 2008). Usually before this time, the firms would have got the idea of the competitor's product under development through corporate intelligence, but not the supply chain innovations. By using the RFID tags it's easy to gather the supply chain information. Another issue concerning with the firms using RFID is law support, in which the trade secret and the copyright law give very little support to the firms. Regarding the data in tag, the firms have no idea, what rights they have. It doesn't mean that there is no solution to this problem, there are solutions, by restricting the data in the tag by using passwords, and encryptions are some. Using the technology is giving a lot more complication again. Such as the tag readers must identify the tags and use the specific password or encryption (Dos Santos, Smith, 2008). Encryption technique is not easy as it requires the standardized nature; the encryption key must be same for the sender and the recipient, and it will add more responsibility to the EPC Global Plc. All these may increase the cost and may need an involvement from the third party, which could influence the operation (Dos Santos, Smith, 2008).
From the beginning of the human era, there was a huge amount of cultural establishment between the different societies. Most of the cultural heritage obtained by most of the well known cultures in different parts of the globe is because of theses collaboration. As the time moved the relations between different countries developed in large extent, in which technological growth, transportation and communication played the role of catalysts. This scenario also insisted more interdependence between the countries. The organization which are only concentrated on their parent countries are started to think of the multi level co-operation or establishment in other countries. In other way the organization extended their customers from a specific place or countries to a large audience. The concept of Multi national enterprises
(MNE) became more popular in these times. Multinational enterprises started manufacturing the product using the raw materials and the resources from the different parts of the world and distributing the products to large customer, regardless of the national boundaries (Global policy forum). Along with technology, money, raw materials and products there was a swift moving of culture and the ideas in spite of the national boundaries, as a result of this a new level economies, law and social whereabouts were established. As a result of the smooth flow of money and resources it created a new market wealth and economy, but still there was some sort of disorder and friction. Depending on the positive contributions towards the economy, the global value might create new work force, innovative processes and a new marketing trend (Chiarvesio, Di Maria, 2009).
f) Challenges in the global business:
From the previous section it is crystal clear that globalization of business and trade became a reality significantly. In the year of 2000 the global trade and the business in goods and services rate became 25% of the GDP (Govidarajan, Gupta, 2000). In the case of terms of manufactured commodities, international trade has multiplied by more than 100 times since 1955; ironically the growth rate is faster than the world economy rate (Schifferes, 2007). The detonations of globalization have created a lot of challenges to the organization who wish to establish internationally. Numerous strategic aspects must be considered before committing any kind of international collaboration. More than the strategy, flexibility in the strategy is more important as the business is dealing with a different pattern in regional, local and international level.
Globalization is usually divided into globalization of markets and globalization of production (Hill, 2005). According to Levitt (1983), market globalization implies a standardization of products across the world as national barriers become less and less relevant. Market globalization is difficult in a way because the customer needs and the national boundaries are creating a small barrier to an extent. But still there are a lot of opportunities are open nowadays as more and more competition is insisting the market to accept the new trends. Product globalization had a deep impact in the way, business operated in the past and now. Sourcing of the goods and services from the other part of the economy to take the maximum advantage in the form of raw material, labor, territory and investment is part of globalization of production. Globalization of production continues to experience issues from trade barriers, costs of transportation, economic, social and political risks (Hill, 2005). However the effect of trade barrier is has been lowered radically since World War II, formal and informal barriers persist to stay alive.
As stated in the previous section the emergence of the MNE was a result of the globlised impact on the business and the identity of the MNE is considered different as from a single company. For instance, Bartlett and Ghoshal (1998) have introduced the idea of the transnational model, which allows the transfer of knowledge developed and information sharing on a worldwide basis. It means the to create the success story in the global business the mindset must be different which should support the development and the interpretation of the business regardless of a specific culture, country and context. As the businesses and their supply chains became more global, the rate at which the MNE's are growing also made a substantial transform. Over last two decades the new revived geopolitical events with the technological development and deregulation of trade laws has created an era of global sourcing and the new trend in supply chain strategy (Christopher, Peck, Shrivenham, Towill, 2006). The old tradition of production for the specific market is changed to due to the new laws of regulation and the new business environment. The amount of cost saving is due to the less regulatory rules and the low wages of the labor. The regulatory rules and the wages might be beneficial for the parent company to move the labor to the emerging economies like India and china. China has became the favorite spot for the organization's manufacturing industry as it offers less wage with good quality compared to the developed countries (Christopher, Peck, Shrivenham, Towill, 2006). One of the most remarkable growths reported by any economy in the world is of China's. After years of isolation from other parts of the globe, in the 1990's the growth reported in the business in China three times faster than the world economy, which is a significant remark (WTO,2003). The impact of globalization not only affected the manufacturing industry, but it also had a great blow on the service sector industry of the developed country. The role of the China in the case of manufacturing industry is played by India in the case of service industry. India has become the center spot for the business process outsourcing (BPO) industry- which includes the customer service, pay roll, development and IT support. India is world's largest exporter of IT services with a growth rate doubles every year (Schifferes, 2007). In the year of 1999-2000 the percentage of contribution to the GDP is around 2%, after 5 years it reached 5% of the GDP. This scenario helped the Indian economy significantly, with a growth rate of 9%, which is almost equal to the growth rate of china. As per the report by the UN in 2003, India topped with $12.2bn in the global outsourcing industry through out the world, leading a $3.6bn with the Ireland which is in the second place in IT outsourcing. The flow of outsourcing to the emerging economies such as India and China, shows that many of the MNE's are exploiting or intend to utilize the advantages such as low labor cost, favorable regulation and tax reduction (Rugman,Jing Li,Hoon Oh, 2009).Its not only the cost they are saving but they are using the global talent pool within their services which eventually boosts the performance of the industry. Through these kinds of partnerships with the suppliers in different parts of the world MNE's can keep up with the other competitors to co-evolve in the new design and engineering technologies (Kotabe and Murray, 2004). Theses kind of knowledge sharing might create the competitive edge for the firms, if they are capable of integrating with their supply chain partner's in marketing, manufacturing and the R&D (Kotabe and Murray, 2004). In spite of the significant benefits by using a global supply chain, to make it work properly is a challenging task primarily in case of cost wise. The cost can be of two types- cross country environmental factors and the relationship management (Rugman,Jing Li,Hoon Oh, 2009). In an international context the flow of information especially flow of money is important, but to deal with these issues will definitely add the complexities since it involves different taxes, duties, exchange differences and trade barriers compared to operating in a single environment country (Rugman,Jing Li,Hoon Oh, 2009). Other than these factors there are qualitative factors such as infrastructure of the country and stability of the government also plays as contradictory points which add the complexity of he global supply chain.
g) Implications on supply chain strategies:
During the time period of 1995-2007 the number of intercontinental business doubled from 38,000 to 79,000, and the overseas subsidiaries tripled from 265,000 to 790,000 (Butner, 2010). MNE's can be considered as distributed system as it adds the complexity to the supply chain since it deals with different currency, trade tariff and the fiscal system (Pontrandolfo, Gosavi, Okogbaa ,Tapas, 2002). Expanding the companies doesn't mean that growing only by geographically, but it also includes much more involvement inn the supply chain by different firms. One of the main concern in the supply chain is management is the organizations are expecting much more collaboration from the suppliers. Other than this a lot of other issues also to be addressed to reach the best supply chain strategy. As per the research carried out by the scholar Butner the main challenges in the supply chain industry faced by the executives are cost containment, visibility, risk, customer needs and globalization (2010). The outline of any business is to make the profit regardless of any kind of innovative technologies used within the business. At the end of the financial year if there is no profit is shown in the annual report, there will be a huge side effect. The profit of the organization is not only concentrated on the end customer, but it starts from every processes and the activities happening within the organization including the supply chain. During the credit crunch time a lot of organizations experienced the high temperature of this issue. Shifts in the cost and the fundamental operational activities are happening immediately hence the reaction time of the management to sort out the issue is very much less (Butner, 2010). In other words the supply chain strategies should be so flexible to response to address the issue. Ground-breaking supply chain strategies which consist of the movement of material and the monetary information sharing can create a large amount of cost saving (SnieÅ¡ka, DrakÅ¡aitÄ-, 2008).
The second type of cost that plays an important in context of global supply chain based on the relationship management. Managing the relationship between the supply chain partners is challenging as it requires sharing of information, goals and even risks in both direction which is in most cases not acceptable for both the parties. The value to the product or services is added at each and every part of the supply chain when it's going through suppliers, manufacturers and to customers. Information flow in between the different partners is considered as the foundation for strategic alliance and the integration (Vanpoucke, Kenneth,Vereecke, 2009). In the case of strategic alliance and also for the integration between the different units Information technology plays an important role as it allows sharing of large amount of data which in terms help the system integration to reduce the technical barrier and the incompatibility. Another issue that we need to address other than the IT is the information that the firms have to share with their partners in the chain. The information that need to be shared to serve the downstream customer efficiently and effectively are planning process, production status, business environment and also the goals of the company (Vanpoucke, Kenneth,Vereecke, 2009). Traditional information sharing methods are of the form of telephone, fax, email and advanced form of methods are EDI, ERP and computer links. More than the sharing of information, willingness to share the information is considered as the characteristics of the relationship. It's always difficult for the knowledge transfer and integration between the partners and its costly to bring out the synergistic output in an effective way. Building relationships with different units in the global market can be is challenging due to the various political and economical conditions, social norms and cross culture nature of countries (Rugman,Jing Li,Hoon Oh, 2009).
As supply chain strategies are important for any organization, it doesn't mean that sticking a specific rule through out the life cycle of a product or services will bring the success. Most of the supply chains missing in this time are strategic approach to carry out the process with adding extra values to the supply chain such as new behavior and critical adaptations (SnieÅ¡ka, DrakÅ¡aitÄ-, 2008). One of the interesting studies about the supply chain is about the lean model of the supply chain. The firm that made the lean supply chain strategy a success story at first is Japanese motor company, Toyota (Cox, 1999). The basic principle behind the lean thinking supply chain is the reduction of the waste. The end note about the lean thinking supply chain strategy is it will work under the situation in which the demand is stable as a result there is predictability. In a scenario where the demand is impulsive and the customer requirement is high, we cannot use the lean supply chain model. In this case what supply chain is looking for is the flexibility or in other words responsiveness. Responsiveness means the ability to match up with the supply and the demand in a turbulent, unpredictable market, in other way supply chain must be demand driven rather than forecast-driven (Christopher, Peck, Towill, 2006). It doesn't mean that selecting any of these strategies will lead to the success in the supply chain, eventually to the business. Selecting a hybrid of these two strategies might help the organization to gain the competitive advantage. Cox in his research explained that supply chain concept has strategical as well as the operational importance (1999). Supply chain strategies have got two magnitude-first one is operational supply chain and the second one is and the other is entrepreneurial supply chain (Cox, 1999). The operational supply chain refers to the primary and the secondary supply chains used by the company to deliver the service or product to the end user. When the companies decide to involve within the supply chain, they have to take decision in placing themselves in the chain. The decision whether to integrate all the vertical links together or to use one or two resources for all the production is more than operational level thinking, clearly its strategic thinking. In an ideal condition the companies will choose the resources which are difficult to replicate and with low barrier to market entry (Cox, 1999). All these kind questions in the supply chain must answered only by the entrepreneurial thinking. Whatever strategy, the company is using in their supply chain, to identify the changing scenario; there must be a continuous assessment of the market characteristics.
Risk management is always important in every aspect of the organization, since the supply chain is also comes under the immense risk by a lot factors such as insufficient data, inadequate technologies and the lack of standardized process (Butner,2010). Scenario planning is considered as the best way to tackle the risk raised by the uncertainties in the market, exchange rate, tax legislation and material cost. Each scenario should provide the complete internal operations, demand, supply, investment options and many other factors (Shapiro, 2004). Companies with best supply chain are taking a further step in managing the risk by including the best possible IT support to monitor the turbulent nature of the market. Strategic supply chain planning is not easy in the complex world of unstable market, but applying the best integration techniques and analyzing the dynamics of the market using the best optimization tools the supply chain can really pull a lot of profit.
3. RESEARCH DESIGN AND METHODOLOGY
By reviewing the literature in the above section we came to know that the flexible strategic plan gives more opportunity to the organizations to be in the competition and to be profitable. Those organizations which are resistant to keep up their strategy with the changing environment deals with big time losses and also they are unable to give a god competition to others. Those organizations which are willing to change their plan according to the situation are considered to be more successful in this clinical time of credit crunch. Most probably this will be the first time in 50 years the companies are obliged to change their strategies into an entirely new way. In the contrary some of the companies have made a lot of profit in this time only because of the new strategy. From the literature review one thing is sure that those companies which are ready to accept the change and innovative in their new approach is more profitable.
In this section we are going to explain the design of our research through which we are trying to address the problem which is raised in the previous section. By doing this we will get to know about the methodology that that we are going to use in the thesis.
b) Design and methodology:
As per the proposal, the topic of the thesis is based on the flexibility of the supply chain management which is based on the current globalised market. The methodology for the thesis must be an organized critical discussion of the principles and methods of the subject area (Horn, 2009). In order to fulfill the above mentioned aim and research objectives, the right research method needs to be adopted. Jankowicz, (2000, p 209) defines research method as "....a systematic and orderly approach taken towards the collection and analysis of data is that information can be obtained from those data".
The main purpose of the thesis is to create a new form of knowledge in the desired subject area. Before the answering the problem of this thesis we should answers the question such as what are we going to consider as the knowledge? What are the resources of that knowledge and what are the boundaries of the knowledge.
The resource that we are going to use is the annual reports of these companies in the last five years. All these reports are available in their official sites and also in the Companies house official website. The profit of these are analyzed during these times and compared to show the susceptibility of the supply chain which is the back bone of these companies. The organizations which are flexible enough to adapt the changes of the supply chain according to their plan are considered to be successful. The majority of data collection for the thesis is based on the secondary data. The data which is included in the research but that has not been collected as part of the study is considered to be the secondary data (Horn, 2009).
In this case the qualitative data analysis is used as the methodology. Using the quantitative data analysis is not practical in this study as it requires more causes, patterns and results. In the qualitative analysis, the specific way to find out the distinction in the operation of the supply chain of the organizations is to carry out the case study. In the qualitative analysis the approach is based on studying the theories which is grounded on the basis of the facts of the natural world. The main point that we need to consider in qualitative analysis is to look the facts of the world which is already studied and to grab the specifics for our studies. The significant part of the qualitative study is mainly unfolding and considering the complex phenomena in the real world. Another point to mention is that the question such as "why" cannot be answered in a specific way the question supposed to be answer. In this case to answer the question we have to include the factual and circumstantial representation of the data which are already present. Qualitative data analysis not only answers the complex phenomena but also capable of creating and evolving new theories; to confirm the theories by hypothesis. The main disadvantage of the quantitative as well as qualitative research is that they do not always strengthen understanding of multi-dimensional view.
c) Case study: as a research tool
Yin (2003), describes a case study as a method of choice when the phenomenon under the study of not readily distinguished from its context. Gomm(2002) refers to Bromley's (1986) view that if the aim is not just to develop knowledge but also to search for a remedy to some problem then case study method is appropriate. Gomm(2002) cites that the term case study is employed to identify a specific form of inquiry and frequently it deals with the collection of unstructured data and qualitative analysis. Case study analysis is not just an analysis technique but more than that it's a methodological approach that presents issues for analysis (Horn, 2009). In the thesis context case studies more often consist of research into a low number of cases that provide a rich amount of detailed data under the area of study. The main thing which is to be addressed in the thesis is the factors, the variable that played a part and circumstance which lead them to rather than the universal facts. The primary focus of the case study research is to focus on the research problem (Soy, 1997). Case studies can be of single or multiple cases, where a multiple case design must follow the replication other than the sampling (Tellis, 1997).
Yin (1989, 2003) is convinced that it would be appropriate to use a case study method when there is a need to-
* To define topics broadly
* To cover contextual or complex multivariate conditions
* Rely on multiple sources of evidences
* Document and analyze implementation processes (in evaluation context)
Like any research method even the case study method has both advantages and disadvantages.
d) Disadvantages of Case Study Method
Gummesson (2000) point of view-
* Case study lack statistical validity
* Case studies can be used to generate hypotheses but not to test them
* Generalizations cannot be made on the basis of case studies
When case studies are used as research methods they are usually presented in narrative and tabular forms according to the structured plan which recapitulates in greater detail of the stages that a researcher went through in doing the research (Jankowicz,1991). Thus it can be said that along with the above mentioned three disadvantages the most frequent criticism is that as case research is not based on random statistical samples of a large number of observations, thus making it inferior to other research methods (Gummesson, 2000).
Gummesson (2000) is convinced that all the disadvantages regress around the same issues, that is findings from the case study using an organization in particular will be influenced by the circumstances in particular to the organization and that the available subject matter for scrutiny isn't broad enough to statistically proven conclusions, which needs to be drawn from the analysis, which can then be drawn from other situations.
The disadvantage pointed out by Yin and Heald (1975) is that, case studies whether qualitative or quantitative are prevalent in many fields and from their perspective is that each case study would provide a rich insight into specific situation, but it is difficult to generalize about the studies as a whole (Gomm, 2002, pg 317). But it has been argued by Gummesson (2000) that the research would lack an appreciation of the minutiae of the situation if case study has been excluded as a methodology from research topic. Jankowicz (1991) cites that the difficulty in including case study as a methodology in a research is that the design are laid open to a great influence and interpretations arising from the day-today events, when compared to other research methods.
Though there are many criticisms by many researchers, its popularity has gained within business research and Gummesson (2000) has argued that the potential lack of generalization of case studies does not mean that it prevents a researcher from contributing to an area. Rather, they argue that the in-depth understanding, which they provide and their reliability for other researchers are more importance than their generalisability. The other reason, cited by Gummesson (2000), for the increasing popularity of the case study method is because an in depth understanding is possible thus making it as a scientific tool in management research.
e) Advantages of Case Study Method
Some of them pointed out by Gomm (2002) are-
* Allows to get a different perspective of the situation
* Decreased defensiveness
Jankowicz (1991) cites that one other advantage of case study method is that the issues and variety of events in the organization or the department in question can be analyzed and described completely by the researcher as this method attempts to be comprehensive. The aim of this research, which is to identify the factors that have contributed to the high rate of employee turnover in the study organization and to develop an understanding for the causes and search for appropriate recommendations to the problems identified, and the view point of the above mentioned authors are similar, also consider that the case study method attempts to be comprehensive and involves the researcher in describing and analyzing the full richness and variety of events and issues in the organization or department in question (Jankowicz, 1991), it can be said that the case study method's advantages are stronger than its disadvantages thus it has been decided to use case study method as a research tool.
The next issue that arises among the researchers is deciding on whether the qualitative or the quantitative research needs to be used for data collection. Yin (2003) cites that the continuing priority is to consider case studies as a method not implying any preferred form of data collection. There are six sources of evidence that can be the focus of data collection for case studies; documentation, archival record, interviews, direct observations, participant-observation and physical artefacts (Yin, 1989).
f) Case study organizations:
First we have to know those companies which are capable of doing their businesses in a profitable way in this time. Also we have to know those companies which are troubled due to this time and because of the unlikely changes that they made.
Woolworths Group plc:
Woolworths Group Plc is a company which is started their operation in the Liverpool, UK in the year of 1909 as a secondary of US based company, F.M.Woolworths. However Woolworth became very much popular to the people of the UK, which served with a wide range of the products for home, entertainment and family. By the middle of the year 2008 they have got around 815 stores all around the UK. But at the end of the year 2008 the whole world comes into a severe financial crisis, eventually the Woolworth Group Plc too entered into big crisis. All this resulted in the company going for the administration with a debt of £385 million. Eventually all the stores through out the UK started closing their retail stores in 2 month long process. Woolworth Group Plc will be selected as a case study in which their supply chain strategy will be screened in the last 5 years.
The success stories in the retail industry cannot be complete without mentioning the story of Tesco. On the first day of Tesco launching in London they made 1pound profit, and at the end of 2008 they are making 6912 pounds a day. This is a real success story and it is worth to mention especially the supply chain management system which is serving 1500 stores in UK itself with a wide range of products. Now Tesco established themselves in 15 countries trying to reach to the global market. They have made a lot of changes to their supply chain to ensure their competitive edge in the market. That's the main reason for selecting selected as one of the case study as it showed the audacity to implement the best technology in their supply chain management.
g) Restrictions of the study:
The main problem with the research is, the case studies are based on two organizations in which one company has topped in profit in the retail industry and the other one is different in some how in their products and services. And also which also stopped working, as it was took over by another one. Although they kept the name for the company as in the past, it only works online in the internet. The main thing to concentrate is on the supply chain strategies these two companies applied on their management. And these details are commonly available in the internet in the form of news, blogs and retail publications rather than the journals. So credibility of the information is a big concern, although the information available from the resource is very popular and reliable. But it does not suppress the credibility of the literature represented in the previous section, because the review section tried to include every aspect of the fact represented through proper literature. Data collection methodology and techniques are discussed in the next section.
4. DATA COLLECTION AND CRITICAL ANALYSIS
The topics discussed in the literature review are critically analyzed in this section. More than covering the topics, in the literature review I tried to address the possible way of solving the problems mentioned in the beginning. In the section of research design and methodology, the discussion is all about the methodology undertaken in the thesis and further design to inculcate the findings. In this section the main idea is to critically analyze the facts that presented n the above section. As mentioned in the earlier section there are a lot restriction are present in this study, as the findings are based on the case studies of the two different companies, in which one company is growing in terms of profit every fiscal year, and the other company is on administration, with no more high street stores, other than the online shop. The research is based on the case studies, the data collection part and the critical analysis part is grouped together to one part.
b) Discussion on Tesco Plc:
In the year of 2005, the research carried out by the AMR showed the top supply chain companies using the demand driven policy. In that list Tesco was in 9th place followed by Dell, P&G, IBM, Nokia, Toyota Motors, Johnson & Johnson, Samsung Electronics and Wal-Mart. AMR report was based on the past performance and the future capabilities of the supply chain management (ICMR, 2006). The basic principle in their supply chain management was based on lean supply chain management with the support of RFID. The company has gained the advantage over its competitors by integrating innovations in their supply chain like point of sale data, continuous replenishment system based on customer demand, primary distribution and use of a single vehicle to serve several stores (ICMR, 2006).The key period for the Tesco's supply chain innovation was in between the 1983 and 1996, in these time itself they started innovation like point of scale scanning, centralized distribution, centralized ordering, automated ware house control and EDI (ICMR, 2006).
As of 2005, Tesco have got 2365 stores around the world, including 1780 stores which is operating in the UK itself. At the beginning of the globalization itself they made this huge step to use the opportunity revealed by the trade laws and the virtual boundaries to flourish the business. The impact on their business was huge from the beginning itself. They upgraded the supply chain software to create the common business model for the all the countries in which they are operating (Friedlos, 2007). The reason behind this move was to support the movement of the store to the US market. At the end of the 200t they planned to move their business to the US market by launching the first store in the California. Tesco's plan was to set up a common business model across the worldwide business and to support supply chain replenishment when expanding themselves into new economies. In case of US Tesco estimated a market which is worth $600bn a year and their plan is to expand the by 40% in five years (Friedlos, 2007). To achieve this target the supply chain must be modernized to adapt to the changes in the new market, which is challenging, but Tesco did that with the help of best service providers, such as Micro Focus. They applied this integrated approach to all of the Tesco's information centers, using the existing servers and saving the cost. This strategic movement of the Tesco resulted in high amount of cost saving in implementation using the best technological advancement. But Tesco didn't experience the sweetness of the success in the beginning. The stores opened in US were in California, Nevada, Arizona and these are the states which are badly hit by the recession (Warner, 2009). Geography and the timing of the launch in US was the factors which affected Tesco Plc in the beginning, but still they managed a revenue of £206 million at the end of 2009(Tesco Annual report, 2009).
In the case of procurement Tesco Plc had a very good reputation through out theses time. Speaking at the World Retail Congress in Barcelona in March 2007.CEO of Tesco stressed the point that the procurement is completely customer based. And he also pointed some factors which are going to impact the procurement; they are simple choice, time and immortality. He believes that giving the simple choice to the customers is the best option to gain the competitive advantage. He also mention about the time spent by the customer to select the product and the health consciousness of the people (Charlotte, 2007). It's clear that the buying team for the Tesco is as same as any one in the market but what they buy based on the customer end.
At the conference Mr. Leahy stressed the importance of keeping the best relationship with their suppliers. One of the best examples that Tesco works along with the suppliers is an investment of £25 million to the UK dairy Industry. The idea behind was giving a higher price to the milk producer's, without affecting the consumers in the end. At the end of the day the supplier is benefited, customers too, he irony is Tesco is also benefited in the promotional way as it raised a lot of applaude (Charlotte, 2007). Other than buying the right product and the supplier relationship the main factor in retail business is the availability of the product in the shelves through out the season. Tesco plc managed this issue properly as it's not easy for a company with a high growth rate, regionally and internationally, with a large number of suppliers. Brisk changes in the customer trends add complexity to this issue, and Tesco managed this with a well oiled supply chain. It is evident that supply chain efficiency is a reason to gain the cost effectiveness and the value added to the customer eventually the profit to Tesco Plc. One of the main issues concerned with all the retailers is the availability issue, which is addressed by the Tesco effectively, even though the growth rate of the Tesco is eventually supported by the growing supply chain. It is clear that the flexibility offered in the supply chain, innovative technologies and assessing the customer trend are the key success factors of the Tesco supply chain.
c) Discussion on Woolworths Plc:
F.W.Woolworth started their operation in UK in the year of 1909, as a subsidiary of US parent company. In spite of the US parent, Woolworths became so popular among the UK, with a wide variety of product range for family, home and entertainment. Eventually the F.W. Woolworths listed on the London stock exchange with a major share, still on the parent US copany (Gozycki, Johnson, 2004). In the year of 1982 Woolworths is acquired by the Europe's largest home improvement retailer. After the acquisition, the new management changed the infrastructure of the operations which led them to introduce wide range of specific products. In t