Supply chain management essay on: report on supply chain sustainability

 Supply chain management essay on: report on supply chain sustainability

 Content:

1. Executive summary……………………………………………………………3
2. Introduction……………………………………………………………………4
3. Supply chain management……………………………………………………..5
4. Performance measures…………………………………………………………8

4.1 Metrics for order planning…………………………………………………8

4.2 Supply link estimation……………………………………………………..8

4.3 Performance evaluation at production level………………………………9

4.4 Delivery link’s evaluation…………………………………………………10

4.5 Performance evaluation of customer services & satisfaction……………..12

4.6 Supply chain and logistic cost…………………………………………….12

    5.  Supply chain management sustainability………………………………………..13

    6.  Performance measures in supply chain sustainability……………………………14

    7.  Balanced scorecard approach……………………………………………………16

    8.  ISO 14001 standard……………………………………………………………..17

    9.  Strategic issues associated with ISO 14000…………………………………….18

   10.  Scope of ISO 14000 standards…………………………………………………18

   11.  ISO 14000 family of standards…………………………………………………18

   12.  ISO 14001 (EMS) model………………………………………………………19

   13.  ISO 14001 and supply chain sustainability…………………………………….20

   14.  Conclusion……………………………………………………………………….21

   15.  Reference……………………………………………………………………….22

 1.      Executive Summary:

The main aim of the report is to analyze the concepts, theories and framework of supply chain management. Therefore, to organize the entire report, it has been continued in several parts. Fist part talks about the management of supply chain and its concept. Then, supply-chain process and system have been outlined in order to make further evaluation. Next, performance measures have been delineated which are taken into account to examine the sustainability of supply chain management. In this context, a brief summary has been provided with reference to ISO14001 standards and supply chain sustainability. Hence, strategic issues related with ISO14001 standard have been taken and discussed as a part of the report. Additionally, researches and articles have been reviewed in the light of supply chain management theory, performance measures and ISO14001 standard. Afterward, concerns regarding standard, its scope and core elements also have been explored in the report. Finally, some decisive points have been drawn out of the entire report to make a conclusion at the end.

1. 2.      Introduction:

Supply chain management is concerned with managing the network of facilities and provides the options for distribution. These options perform the functions of raw-materials procurement, then conversion of these raw materials into transitional or finished products and finally the distribution of these products to the customers. In other words, supply chain management encompasses following four main components:

• First, the supplier who supplies the raw material to the producer
• Second, the manufacturer, who uses the raw-material and convert them into the finished products
• Third, Distribution center, it preserves and ships/distributes the products
• Last, the receiver/end user, who finally receives the product and gets possession.

It is also considered that minimum or optimum cost is used in the entire process. To check and examine it, there are a number of performance measures that assess the sustainability of supply chain management.

Furthermore, it concepts articulates the key element such as customers first, planning, purchasing, inventory, production and lastly transportation. On the other hand, it reduces the distribution cost and risk by coordinating effectively and therefore develops product’s quality and inventory management.

Moreover, the sustainability of supply chain management is a major issue for the organizations in terms of risk associated, environment and minimization of cost. In simple words, sustainability of supply chain management is considered with the viable results on company’s capital assets. In doing this, it doesn’t not sacrifice both internal and external stakeholder’s justifiable requirements and impact the people and the environment by effective operational activities as well. On the other hand, Performance evaluation methods are used to monitor and evaluate that sustainability. In addition, environmental, social and economic factors are measured under such methods (Presley, Meade & Sarkis, 2007).

Furthermore, ISO14001standard can be explained as an introduction part of the report. ISO is a short form which stands for international organization for standardization. In addition, ISO14001 refers to a model used for implementation of environmental management system (EMS) and a controlled international standard. It is not a performance and occupational health & safety standard.

After making a brief introduction of supply chain management, its sustainability, performance measurement and ISO14001 standard’s concept. Researches done by peers can be reviewed in the next segments of the report (The ISO 14000 Environmental management guide, 2007).

3.      Supply-chain management:

As described in introduction, supply chain refers to those activities which are linked with the manufacturing of finished goods from raw-materials and distribution to end-user. Supply chain managements seek to achieve corporate competitive strategic goals and objectives which are following:

• Diminishing working capital
• Taking assets off the balance sheet
• Hastening cash-to-cash cycles for faster improvement
• Increasing inventory turns and management
• Reducing time for the delivery of products to the customers
• Increasing revenue and higher returns
• Developing customer-service
• Majorly, build competitive strength and advantage (Yakovleva, Sarkis & Sloan, 2008)

Supply chain management

(Source: US study, 2008)

Moreover, supply chain management is completely concerned with the firms that are vertically integrated and where a single firm takes care of overall material flow. On the other hand, various decisions are made with respect to supply chain management such as location decisions, production, inventory, and transportation/distribution decisions.

Supply-chain management is based on a few basic principles. One of the consulting firms has dictated seven principles of supply-chain. It also articulated these principles help bringing the competitive advantage forward and reinforce the management system of supply-chain (Zigiaris, 2000).

1. Customer segmentation on the basis of service needs: According to the first principle, customer should be segmented on the basis of service need rather than on industry basis and then service should be tailored to each specific segment.
2. Customization of supply-chain management: It states that enterprises should designed their supply chain management in a way that the profitability for segment identified for the customers and service requirements can be focused more than anything.
3. Plan according to the signals of market demand: This principle says that an organization should listen to the signals of demand from market side first and then it should plan accordingly so that early warnings can be detected. It helps forecasting continuously and optimum allocation of resources.
4. Differentiation of product closer to the customers: From current scenario’s perspective, no company can afford stockpile for unforeseen potential errors. Therefore, they should postpone the differentiation in the production process that is closer to demand of customers.
5. Strategic management of supply’s sources: Leaders in supply-chain management can enhance the profit margins for themselves and suppliers by working closely with them to lessen the entire cost of acquiring raw-materials.
6. Build up a supply-chain-wide technology strategy: The organizations must develop information technologies that will support the decision-making levels and on the other hand should also represent the products, services and information flow.
7. Implement channel-spanning performance measures: The organizations should adopt such performance measures which could not only monitor the internal functions, but also clinch financial metrics like account’s proper profitability.

After embarking on supply-chain management’s concept and principles, it is also required to know its performance measures system. Therefore, forthcoming section of the report will highlight the performance measure standards of supply-chain management.

Performance measures:

Performance measures are used to monitor the supply chain sustainability in terms of return on investment, productivity, overall profitability and output. A good performance measure is quantitative in nature, quite easy to understand, visible and evaluates what is most important. It should also be noticed that performance measures should mainly focus customers’ needs and processes not functions. Likewise, a good performance measure should not only consider the service metrics but also take business handling and other financial metrics into account.

In addition, the metrics and relative measures can be defined in the context of supply chain management processes which are plan, source, production and delivery to the customer (Gunasekaran, Patel & McGaughey, 2004).

4.1  Metrics for order planning:

It involves the order entry method, lead-time for orders which includes the total order cycle time from production to order delivery, and order path system for customers. Appropriate steps can be taken to eliminate the non-value adding activities by evaluating the customer’s order path.

4.2  Supply link estimation:

In this evaluation, suppliers are evaluated in terms of competence, flow, and receptiveness, assimilation and satisfaction of customers of supply chain management. It further consists of strategic level measures that evaluate the level of quality, initiatives of cost savings and pricing from supplier’s end against the current market value. Afterward, measurements of tactical level involve purchase order cycle time’s competency, cash flow of the enterprise, and flexibility for production or distribution capacity. Evaluation of supply link also explores the measurements for operational level which include day to day operations of the supply chain management, stickiness to the schedules that have been developed for proper operational activities and finally achievement of the deliveries that are defect free (Hervani, Helms & Sarkis, 2005).

4.3  Performance evaluation at production level:

Once the order has been planned and goods have been sourced, the next step is to assemble those goods for production. It is the most crucial part of the supply-chain management, as product is manufactured and made ready for the distribution to the customers (Chunguang, Joseph, Xiaopeng & Lenny, 2012).

Product & Services’ range:

At this particular production stage, first products and services’ range is evaluated. Performance measurement reveals that the organizations producing broad range of products introduce new products slowly as compare to the organizations producing narrow range of products. Therefore, it can be observed that category of products in terms of broad or narrow affects the performance of supply chain.

Capacity utilization:

It basically refers to the optimum level of utilization of capital and other human resources. By evaluation, measures demonstrate that it affects the pace of response to the demand of customers. It is through its impact on suppleness, order lead-time and deliverability.

Scheduling techniques’ effectiveness:

Scheduling is concerned with the date or time fixed for running the operational activities so that production and delivery can be made possible on time. Techniques of scheduling such as JIT, MRP and ERP are directly linked and have inferences on purchasing of raw-materials, throughput time and size of batch. As per the supply-chain management, scheduling totally depends on customers demand and performance of the suppliers. Therefore, techniques of scheduling should be noticed in this context (Svensson, 2007).

4.4 Delivery link’s evaluation:

The link which directly affects the customer of an organization is delivery. On the other hand, it is considered as the main link which automatically determines the customer satisfaction.

Measures for performance evaluation of delivery:

Measure for delivery performance evaluation is regarded with on-time delivery of the products to the customers. In this case, there are a lot of aspects which can influence the delivery performance like transport speed, reliability from driver’s end, delivery’s rate of recurrence and the location where product is to be delivered. Following this, numbers of faultless invoice notes are also examined to check whether the delivery has been made perfectly or not and further discrepancies are identified in order to make changes in delivery system.

Furthermore, the flexibility of delivery system also affects the future order placement by customers. The flexibility refers to the requirement of customer delivery at an approved place, by accepted mode of delivery and along with agreed personalized packaging of the product. If delivery is done perfectly and in accordance with customer’s requirement, it helps retaining the customers (Corbièr-Nicolliere, Ferrari, Jemelin & Jolliet, 2003).

Performance measurement

(Source: Bozarth, 2011)

Total distribution cost:

On the basis of supply-chain management analysis, it is viewed that transportation covers more than half of the entire logistics cost. Therefore, it is required to estimate each constituent of individual cost which will lead to the successful and efficient distribution system.

 4.5  Performance evaluation of customer service and satisfaction:

For any organization, pleasant and satisfied customer with the service is of greatest importance. Hence, performance measures should be customer satisfaction centric. For that, following metrics should be evaluated:

Flexibility:

Represent flexibility is to have the adequate capacity to provide the products according to the customers’ demands. It is regarded one of the critical parts of the supply chain sustainability and metrics for performance evaluation. A few measures for flexibility comprise time in product development cycle, equipment setting up time and number of inventory turns (Presley, Meade & Sarkis, 2007).

Customer query time:

It is the time which a firm takes in responding to the order of customer with the proper information. Moreover, it is not easy for the customers to know about the status of their order, availability of stock or delivery. Therefore, a quick response to such queries of customers is necessary to keep the customer satisfied.

Customer’ service post transaction measures:

It is not an ending of supply-chain management functions after they distribute and deliver the product to the customer. They are required to evaluate post transaction activities which play an important role in overall process. In this way, the feedback from the customers helps improving the performance of supply-chain management (Craig, Dale & Rogers, 2008).

4.6  Supply chain and logistics cost:

It is essential to financially measure the overall logistics cost of a supply-chain system because its efficiency can be evaluated and rated on that basis for effectiveness. Therefore, financial impact of strategies and processes is measured to know their contribution to the products’ flow in a supply chain.

Cost linked with assets and return on investment:

The assets in supply chain are account receivables, plant, machines/equipments, inventories and plant. To deal with increasing inflation and decreasing liquidity, it is required to estimate the cost linked with each asset of the supply chain affects total time of cash flow that is combined with company’s turnover. Additionally, return on investment should also be estimated in order to know the profitability of the firm. This helps determining the cost associated with risk, inventory management, opportunity cost and insurance (Jacobs, Smith & Goddard, 2004).

5        Supply chain management sustainability:

The term sustainability is concerned with meeting the present requirements without compromising with the future generations’ ability to meet their own requirements. Besides, sustainability takes three main broad factors into account which are environmental, social and economic factors. Environmental factors involve both of the living and non-living creations on earth such as land, water, trees, animals, etc. In this context, to improve the sustainability from environmental perspective means lessening of supply chain’s ecological footprints (New Zealand business council for sustainable development, 2003).

On the other hand, social dimension of supply chain sustainability indicates toward human capital of the chain. It considers that to improve sustainability from societal perspective, it requires developing and managing business practices in such a manner so that fair environment could be offered to the labor, regions and associated communities. Therefore, three following categories are structured in this context:

• First, internal human capital working within supply chain,
• People who are directly or indirectly affected by the performance of supply chain
• Finally, the internal and external frameworks, processes and other linked values that are attached with social factor (Labuschagne, Brent & van Erck, 2005b).

Afterward, economic factors relates to the profit which have been earned by the supply chain members and economic advantages realized by the nations, communities, and areas of those members. It has been categorized in four following key dimensions:

• First is the economic performance of the firm which refers to its capability to conduct its operations and to carry out the firm’s market value as well.
• Second dimension is related to the firm’s financial health which demonstrates its well-being and long-term feasibility in terms of financial resources.
• Next economic dimension is related with the market’s health and supply chain arrangement.
• Last factor refers to the firm’s internal and external frameworks, procedures and values with respect to the economic dimension (Kleindorfer, Singhal & Van Wassenhove, 2005).

6        Performance measures in supply chain sustainability:

There are a number of performance metrics for diverse dimensions of supply chain management sustainability. Each has been defined one by one to understand it in an effective way (Gunasekaran, Patel & Tirtiroglu, 2001).

Environmental factors:

Social factors:

Economic factors:

7        Balanced scorecard approach:

Balanced scorecard is an effective device to measure the performance and in this context it mainly concentrates on the metric that basically derives the employee’s performance. In addition, it represents a well balanced set of measures which are based on four key perspectives of balanced scorecard.

• First, financial perspective that is linked with the interests of shareholders and evaluates that how their interest is served and protected. The indicators selected for this is current ration, sales & stock turnover ratio, debtor’s velocity ratio. Therefore, it reveals the future cash flows’ current value which points out the amount up to which value has been created for shareholders.
• Second perspective is customer perspective that states that how customers perceive the business and answer of this question lies in their satisfaction evaluation and the effectiveness of offering that satisfaction. This perspective mainly aims at strategy construction of creating value for the customers by diminishing order lead-time, enhancing product’s quality and by setting most competent and cost effective price for the product.
• Next, it focuses on internal business perspective that at what level an organizational should have excel like priorities for value creation to the business. Fir that, they should focus on strategies and their effective implementation in order to satisfy all the stakeholders- shareholders, customers, investors, employees and creditors. This perspective talks about both customer satisfaction and shareholders’ value creation interests. The company should identify its key competencies and go right in that way to make their efforts successful, sustainable and consistent (New Zealand business council for sustainable development, 2003).
• Finally, innovative and learning perspective comes forward as one of the major perspectives of balanced scorecard approach. It is required to innovate and execute new process in organizational context in today’s fast changing environment so that high-value quality and revenue could be generated. This suggests a firm to extend the business by adopting new processes, launching new products, extending market share for the business, creating brand value and enhancing the short and long-term profitability for the firm.

The balanced scorecard represents a clear picture of both the employees and the organizational performance. On the other hand, it plays a role of guider for user to estimate the main success factors and indicators for performance.

Furthermore, ISO14001 standard can be taken into view for further discussion. Therefore, a complete overview of its introduction and core elements has been carried forward in the discussion (Epstein & Wisner, 2001).

8        ISO 14001 standard:

It spells out the key requirements for environmental management system. ISO 14001 is an auditable and voluntary standard which has similarities with ISO 9001 standard. It was published in 1996 and has been revised in 2004. It consists of several dimensions following general standards there is environmental policy, planning for environmental and legal requirement aspects, implementation & operation, monitoring & measurement, and management review.

Moreover, the international standard ISO 14001 is based on plan-do-check-act method which is known as PDCA method.

Plan: This stage states that objectives and major processes should be planned according to the environmental policy of organization which is necessary to achieve the results.

Do: It illustrates implementing or executing the established/planned processes at an organizational level.

Check: At this particular stage, processes are monitored and measured against the environmental policy, company’s objectives and other legal requirements and then final results after measurement are reported.

Act: Finally, taking reports into consideration, further and developments are made by taking actions for improving environmental management system’s performance (NC State University, 2012).

9        Strategic issues associated with ISO 14000:

The international standard ISO 14000 was introduced to decrease barriers to unintended trade which had taken place due to the over profusion of environmental standards, rules and regulations at a national level. Therefore, the issues were regarding gathering of information that where competitors stand with respect to the standard and what are stakeholders’ demand. Next issue was with reference to the level of ISO 14000 standard’s integration in company’s mission.

Moreover, the strategic issues was related to the measurable and achievable objectives in execution of ISO 14000 standard. It was also a major matter that up to what extent this standard fits with the existing strategies of the firm. Afterward, the selection of management, support system, commitment of employees, and generation of executive commitment toward the implementation of ISO 14000 standards were also a few key strategic issues. Finally, the major issue was regarding the measurement of cost impact on the execution of standards and to evaluate the long-term financial impact of such policies and standards (Bertrand, 1996).

10    Scope of ISO 14000 standards:

The scope to adopt international standards in an organization is to ensure the establishment, implementation, arrangement and improvement of environmental management system. Additionally, it assures itself with respect to the confirmation with its environmental policy of state level and national level by making a self-declaration. Furthermore, ISO standards set the limit values with reference to the pollutants and levels for environmental performance. ISO 14000 standards do not make any interference with any environmental legislation at national or state level. It also seeks for its environmental management system’s certification by an organization which is external (ISO, 2012).

11    ISO 14000 family of standards:

The ISO 14000 family of standards consists of different standards for organization evaluation, product evaluation and management evaluation. For organization evaluation there is EMS standard (ISO 14001), EPE standard (ISO 14031) and evaluation standards which are ISO 14010, ISO 14011, and ISO 14012. Further for product evaluation, there is LCA (ISO 14040, ISO 14041, and ISO 14042) and EAPs standards (ISO 14020, ISO 14021, ISO 14022, ISO 14023 and ISO 14024).

Furthermore, ISO 14001 can be applied to any organization including its headquarters and multiple international branches. A single site, small or medium sized firms, government agencies and particular producing operation can also implement ISO 14001 standard (ISO, 2012).

12    ISO 14001 (EMS) model:

The environmental management system talks about the core processes of management with respect to the environment policy. It takes the certification of ISO 14001 into account for the same. The model of this system first demonstrates about the environmental policy form senior management. Next, it is concerned about the planning of evaluating on how business is affecting the environment, operational activities and products or services manufactured in supply chain. The planning part of the model also delineates the legal requirements of the firm, its set targets and objectives with reference to the environmental policy and responsibilities, reactions and resources required for meeting those objectives (International standard, 2004).

(Source: NC State University, 2012)

The next segment of the model dictates the implementation and operation, structure and responsibilities for that, awareness regarding training and internal & external communication. Further, it also illustrates the system documentation for EMS description and control which leads to concentrate on operational control and limits. In that, performance of suppliers is monitored and measured. Next part is checking and taking corrective actions accordingly. It includes the monitoring and measuring of key objectives, legislations and other related regulations. After evaluating each definite and important area, corrective actions are taken by the management to ensure the future potentiality of the organization and business.

In addition, records are made and are reported for audit purpose. In EMS audits, required activities are undertaken and requirement of ISO 14001 is also met with systematic way. Lastly, the model covers the management review which reveals whether EMS is suitable and effective or not. Therefore, changes are made according to the review for improvement of the system and its effectiveness (Parrish, C 2012).

13    ISO 14001 and supply chain sustainability:

According to one of the authors, ISO standard 14001 is considered as the good performance measure for supply chain sustainability. In this context, its main part for emphasis is framework, execution and maintenance of a formal EMS. ISO 14001 is linked with supply chain management to make its influence in terms of competitive advantage. Following this, through ISO 14001 certification the firms’ level of incorporation and sustainability of supply chain management is evaluated and compared. Therefore, it impacts the design and structure of supply chain and helps sustaining it with the current trend (Curkovic & Sroufe, 2010).

14    Conclusion:

On the basis of overall study of the report, it can be said that supply chain management is about sourcing the raw material from suppliers, converting it into the finished products, keeping it safe and finally distribution to the customer. After it, seven principles of supply chain management also have been defined as a part of the entire discussion. Further, the report talks about the performance measure of supply chain sustainability which is generally in terms of flexibility, order-link, order lead-time, supply link, delivery link and supply chain & logistics cost. It is understood that from sustainability perspective of supply chain, there are various performance metrics for environmental, social and economic dimensions. Like, in case of environmental factors there are metrics for air, water, land, materials and use of energy, etc. For social factors there are internal workplace, external community and other related institutions. And for economic factors, there are economic performance, market structure and other measurements.

Afterward, the report has demonstrated the whole framework of ISO 14000 standards including its family, scope and strategic issues. Then an ISO 140001 model for environmental system also has been presented to understand its vital role in sustainability of supply chain management.

If you want Supply chain Management Assignment Help study samples to help you write professional custom essay’s and essay writing help.

Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.

To get more information, please contact us or visit www.myassignmenthelp.Com