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Supply Chain Management
In its most basic connotation, supply chain implies the movement of goods from the raw materials stage through to the customer. Entirely all organizations across the world have some level of supply chain processes within themselves that accounts for the delivery of goods and services to satisfy the customer demands. The length of the supply chain process of an organization is usually a function of the nature of the goods or services the organization handles. As such, some organizations have longer supply chains than others. The process therefore involves obtaining the raw materials, transforming them into products and eventually delivering the products to the customers. Supply chain management is therefore the process of managing all these activities to ensure they run in an organized and proper manner Frazelle, 2002.
It calls for very effective management to coordinate all the processes without compromising on quality and time.
Considering the complexity of supply chain management, it is important to realize that the process is inundated with myriad challenges that often complicate the whole process. Some of these challenges arise out of poor management while others are normally issues beyond management. However, whichever the source of the challenges, it demands a lucid analysis and a proper understanding in order to seek ways and means of addressing them. It must be emphasized that supply chain management is a very important aspect of the organization and therefore requires a lot of consideration and efficiency. This report seeks to elucidate some of the supply chain challenges that face the Coca-Cola Company in its South African division. Some of these challenges are however very universal to entirely all organizations.
Challenges in supply chain management
Managers are today faced with one of the most daunting tasks that continue to face all organizations including Coca-Cola. The rising cost of supply chain processes including freight charges, transport costs, technology, and other pertinent aspects are indeed causing many concerns across the world. While organizations feel pressured to maintain their prices against their competitors,' it becomes very difficult for them in the face of the rising costs. It is becoming very expensive to run a global organization in a country where protectionist tendencies are giving the local competitors a much easier sail Boyson and Corsi, 2004.
In this case, most organizations have to greatly sacrifice on the profits and invest heavily in alternative aspects. Controlling the costs that an organization incurs is very difficult in the face of global competition and globalization that seems to have taken over the world. For instance, the global shipment costs have risen by over 150% in the last ten years and most ocean carriers have reduced their speeds by over 20% in order to conserve fuel (Jacobs and Chase, 2011). It therefore implies that managing a global corporation that relies heavily on such transport is becoming a great challenge in the contemporary world.
The global financial system has indeed been very volatile in the last few years. The fluctuations in currency values across the world greatly affect the operations of most organizations as the costs of supplies fluctuate. The relative strength of the dollar with respect to other currencies is a very important determinant of the overall business performance Zuckerman, 2002.
For a multinational, the challenge becomes even greater if the organization relies much on global trade. Managing the financial supply chain, which is a sub-chain of the whole supply process, is certainly a major challenge in the present financial environment.
The supply chain management involves a variety of people and processes some of which are very different from one another. This diversity increases the complexity and the length of the process thereby making management difficult Blanchard, 2010.
When the process becomes longer, inefficiencies and uncertainties often arise. The challenge here is to reduce the redundancies involved in material supply and logistics. The present world order presents another challenge to the supply chain process. The political instability evidenced in certain parts of the world is not conducive for the supply process. Transporting goods across such areas is very difficult due to the lack of infrastructure and the risks involved. Political instability characterizes several Asian and African countries and multinationals such as Coca-Cola are greatly feeling the impact on their supply processes.
In several African countries, corrupt governments have debased the supply of critical resources in their countries and use very unfair practices to favor the local industries.
In the same vein, trade barriers imposed by several governments across the world have very damaging repercussions on the supply chain processes of most organizations. Custom delays and unnecessary red tape and bureaucracy force ships to stay in ports for weeks before unloading takes place. Governments are today very keen in weighing the benefits and costs of foreign trade and are therefore meddling in the process. In other areas, natural disasters have been seen to cause interruptions in the supply chain processes. Disasters such as earthquakes change demand of populations whenever they occur. In most cases, organizations are forced to cover great losses.
The supply chain process in the present world is faced with many risks, which normally hamper performance. While some of the risks can easily be identified and appropriate provisions taken, majority are very difficult to predict and often catch managers unawares. As a result, one of the greatest issues that supply chain managers have to face today involves the planning and managing these risks. These risks must be identified and well quantified so that risk management measures can be put into place.
Managing a supply chain involves much about building sustainable relationships and nurturing these relationships effectively so that operations move smoothly without causing delays. Relationship management is therefore a very critical area that most managers are forced to address in the supply chain process. In such a case, building the trust among the partners is the greatest leap that managers are confronted with. Managers must learn how to avoid both internal and external biases and work with partners on mutual grounds Jacobs and Chase, 2011()
It is sad to realize that most managers are normally well versed in many areas of management but have very limited knowledge in supply chain management. This lacuna arises out of the fact that the subject has greatly been ignored both in practice and in academic circles. The emphasis laid in the acquisition of knowledge in this field is normally less than other sectors of management. Therefore, some of the challenges realized in supply chain management always arise out of the sheer lack of knowledge on some of the issues. As the world gets more global and modern, managers are compelled to keep up with these changes as fast as possible or they are rendered out of the market Atlanta, 1994.
Globalization is greatly revolutionizing all aspects of the business world as technology provides simpler options for conducting operations. However, technology comes with its own costs and challenges, which are normally difficult to address.
Modern society has become much obsessed with revolution and this greatly influences customer expectations. Competition has availed variety of options, which increases expectations. Satisfaction of these expectations comes with many costs since it implies a change in all processes including the supply chain. In most parts of the world, regulatory requirements by the governments constantly change in a way that affects the supply chain process of most organizations.
Supply chain management requires supportive structures in place in order to become successful. In most countries especially in Africa, infrastructural development is still at its infant stage and some social facilities are not developed. Managing the supply process in such countries can prove very difficult especially when it comes to transportation of raw materials and finished products. Effective and proper supply chain management involves the delivery of supplies to the right people at the appropriate time and in the right place. This process requires a very elaborate framework that effectively guides all the activities so that nothing crucial is ignored. However, in most organizations, such frameworks never exist. Decisions in the supply chain process are made haphazardly and without any form of order. Similarly, most organizations do not even have a section of the organization dealing with supply chain issues and this greatly contributes to the delays and inefficiencies often realized in the process.
Speed and urgency are very important aspects in the supply chain process. The ability to supply the customers with the appropriate amount of products at the right time certainly implies a proper supply chain process. However, the element of time never exists in isolation. To speed up the supply process and ensure that the customers are well supplied with goods, several provisions have to be made. Some of these measures can be quite expensive and it might not thereby justify the end process. A very critical balance must therefore be weighed between meeting the customers' expectations and reducing the costs while at the…