Managing supply chain can contribute to remarkable improvement in businesses competitive advantage. Marsanic (2014) emphasises that supply chain management is increasingly being considered as a key factor in enhancing the efficacy and effectiveness of business systems. Therefore, improving a firm’s approach towards supply chain can result in development of new competitive advantage. According to Jie, Parton and Cox (2012), the turbulent business environment has created the need for businesses to continually improve their approach to management in the quest to develop sustainable competitive advantage. Supply chain management comprises one of the fundamental areas of management that business managers should consider adjusting. Manzoni and Jie (2014) support the fact that ‘the global market requires competitiveness across and within the whole supply chain and for all stakeholder-members participating in the value web of the inter-firm network’ (p. 15). Antony, Kumar and Banuelas (2006) assert that the goal of supply chain management is to formulate and implement effective supply chain strategies and to enhance the level of customer satisfaction. Jie (2007) supports this view by affirming the need for firms in the Australian beef industry to implement advanced supply chain systems. In his opinion, Jie (2007) emphasises that advanced supply chain systems dramatically improves an organisations ability to meet the customers’ specifications.
Integration of logistics or supply chain management approaches does not guarantee that an organisation will achieve the desired competitive advantage. Therefore, it is essential for organisation managers to entrench effective logistics or supply chain performance indicators and logistics/supply chain practices. This paper presents a critical analysis on logistics/supply chain practices and supply chain performance indicators. The analysis on logistics/supply chain practices focuses on three areas that include continuous improvement, strategic supplier partnerships, and lean six-sigma. The supply chain performance indicators evaluated include supply chain responsiveness, supply chain quality management and supply chain flexibility.
Different tools, methods and practices that have been development in the quest to enhance the performance of logistics/supply chains (Kersten, Blecker & Ringle 2014). Some of such tools are evaluated herein.
Businesses across the world are under intense pressure to strengthen their productivity and improve operational efficiency (Mandell 2014). Developing an effective supply chain is one of the approaches that can lead to attainment of this end. However, for supply chain or logistics system to contribute to attainment of sustainable competitive advantage, it is essential for operation’s manager to consider entrenching the concept of continuous improvement. Carlos and Prado (2009) asserts that continuous improvement involves a ‘planned, organised and systematic process of ongoing, incremental and company-wide change of existing practices aimed at improving a company’s performance’ (p. 301) . The need for continuous improvement arises from the dynamism in the contemporary business environment that calls for businesses to be responsive to the changing market demand (Carlos & Prado 2009). According to Noori (2004) continuous improvement ensures that the diverse players in the supply chain are adequately satisfied.
The success with which an organisation entrenches continuous improvement in its supply chain is influenced by the degree of employee involvement (Fredendall & Hill 2016). Additionally, it is imperative for organisation’s management team to ensure that the continuous improvement process is based on a comprehensive view of the system. Thus, managers must understand the existing interaction between the diverse components of the organisation’s supply chain. The second element in entrenching continuous improvement entails formulation of effective performance measures, which enable the organisation’s management team to determine whether the continuous improvement approaches implemented contribute to attainment of a sustainable supply chain. The performance results on continuous improvement provide organisations’ managers insight on the supply chain areas where corrective action is necessary (Leeman 2010).
Benchmarking is one of the best techniques that managers can adopt in evaluating the effectiveness of its supply chain (Corominas 2013). Benchmarking can be achieved by comparing the efficacy of a firm’s supply chain to that of other firms in the same or related industries. For example, with reference to supply chain, an organisation’s management team can benchmark the efficacy of its supply chain with reference to how it makes a firm agile. According to Ding et al. (2014), ‘an agile enterprise is founded on the processes and structures that facilitate speed, adaptation and robustness in delivering outcome in an environment that is highly unpredictable’ (p.4). The results from the benchmarking activity should be used in making a decision on the most appropriate continuous improvement action to undertake.
Customer satisfaction comprises one of the fundamental priorities that organisations should focus on in the pursuit for long term sustainability. The rationale of pursuing customer satisfaction is underlined by the fact that increasing the level of customer satisfaction contributes to improvement in a firm’s level of profitability (Taghizadegan 2006). According to Taghizadegan (2006), lean six-sigma entails a business strategy that is aimed at enhancing an organisation’s profitability and level of level of customer satisfaction. Conversely Antony, Kumar and Banuelas (2006) accentuate that six-sigma increases the level of customer satisfaction by ensuring that effective process and quality improvement tools are entrenched throughout an organisation. Therefore, lean six-sigma constitutes one of the fundamental supply chain practices that can enhance an organisation’s success in delivering customer value.
Drohomeretski et al. (2014) argue that ‘the lean six-sigma practice is concerned with enhancing an organisation’s bottom-line through identification and elimination of the core causes of errors or defects in business processes by concentrating on activities that are relevant to clients’. Success in implementing lean six sigma practice is influenced by a number of the extent to which the core components are entrenched. The first component entails development of a high degree by the top management in implementing the practice. Secondly, the requisite supporting infrastructure must be implemented. Thirdly, the final aspect entails implementation of effective training and statistical tools to assess its success.
In the implementation of lean six-sigma, it is vital for organisation’s management team to entrench effective methodologies that will contribute to improvement in the operational processes hence eliminating errors or waste (George 2002). One of the lean six-sigma methodologies that an organisation should consider in the quest to attain sustainable competitive advantage entails the DMAIC methodology, which is integral in system improvement and problem solving (Haik & Al-Aomar 2006). The DMAIC methodology focuses on ensuring the causes of errors are successfully eliminated. Nevertheless, to achieve this outcome, the operations manager must ensure that the problem in the manufacturing process is optimally defined and effective performance metrics integrated. The analysis phase of the DMAIC methodology involves determination of the gaps between the current and the desired level of performance by analysing the data collected (Haik & Al-Aomar 2006). The analysis phase is essential in ensuring optimal prioritisation of opportunities on how to make the necessary improvements. Haik and Al-Aomar (2006) asserts that the improvement phase entails implementation of the necessary adjustments on the supply chain process.
Drohomeretski et al. (2014) affirms that to succeed in employing the DMAIC methodology, effective tools must be applied. Some of the tools that can be employed in the definition phase entail conducting a pareto analysis and adoption of a project charter, while measurement can be actualised by employing descriptive statistics. The fish-bone diagram can assist an organisation in analysing the problem or causes of error. Jie, Parton and Cox (2012) recommends that implementation of the most viable improvement option should be based on extensive experimentation on the degree to which experimentation will contribute to improvement in elimination of causes of errors hence increasing the level of customer satisfaction. In a study to determine the correlation between supply chain practices and attainment of competitive advantage in the Australian agribusiness industry, Jie, Parton and Cox (2013) recommend that firms in the Australian beef industry should integrate lean thinking. However, to succeed in attaining competitive advantage, the industry players should develop a comprehensive understanding on the fundamental aspects that contribute to creation of customer value. Jie, Parton and Cox (2013) emphasise that by employing lean six-sigma, the Australian beef companies will be able to enhance their competitive advantage by creating customer value. For example, the lean six-sigma will enable the firms to eliminate wastage that occurs between and within the respective value-adding activities.
Strategic supplier partnerships
Urbaniak (2015) is of the opinion that supply chain management is a critical component in enhancing an organisation’s competitive advantage. Developing strategic partnership with suppliers constitutes one of the supply chain practices that enhance the chance of attaining sustainable competitive advantage. Rigby (2011) asserts that suppliers can directly affect effectiveness of an organisation’s supply chain and hence competitive advantage. For example, frequent change in the suppliers’ strategy and plan can affect the reliability of the supplier in distributing the requisite law materials hence negatively impacting an organisation’s production capability. On the contrary, building strategic partnership with suppliers can amount to significant reduction in the lead time hence minimising the cost of long lead time. The value of building strategic partnership with suppliers is further underlined by the fact that a firm is able to share with the suppliers on the best supply chain management or logistics practices. For example, sharing knowledge on operational improvement tools and philosophies such as quality management tools, continuous improvement and lean management can strengthen the contribution of a firm’s supply chain in attaining sustainable competitive advantage (Urbaniak, 2015). Nevertheless, in the pursuit for sustainable strategic partnerships, there are a number of aspects that organisation managers should take into consideration. Amongst the notable elements entail nurturing a relationship that is based on trust.
In developing strategic partnership with suppliers, it is important for organisations managers to be concerned on establishing a win-win situation (Urbaniak 2015). One of the techniques that an organisation can pursue in achieving a win-win outcome between a firm and its supplier entail ensuring that the strategic partnership is based on well formulated policies and procedures (Simerson 2011). By establishing a win-win situation between an organisation and its suppliers, an organisation can positively improve the likelihood of achieving a high level of customer satisfaction. For example, the relationship between a firm and its suppliers influences the suppliers’ commitment in complying with the stipulated requirements for the raw materials. This aspect can influence an organisation’s ability to offer customers quality products. Simerson (2011) is of the view that ‘supplier partnership can enable organisations develop innovative solutions that improve the level of customer satisfaction by integrating effective practices that enable a firm to meet and exceed customer’s expectations and requirements. This assessment indicates that developing a high degree of collaboration with the suppliers is a critical element in entrenching a sustainable supply chain.
Supply chain performance indicators
Ambe (2014) define supply chain performance indicators as the key tools adopted by organisation’s management team in assessing the effectiveness of its supply chains in enhancing attainment of sustainable competitive advantage. Therefore, employing supply chain performance indicators provides an organisation’s management team critical insight on the most appropriate supply chain aspects to consider in pursuing long term sustainability. Ambe (2014) further assert that ‘supply chain performance indicators links supply chain partners to achieve breakthrough performance in satisfying end-customers needs and provide feedback regarding customers’ needs and supply chain capabilities’ (p.277).
Supply chain flexibility
Supply chain flexibility can be examined by integrating the Supply Chain Operations Reference (SCOR) model. The flexibility indicator measures the agility of an organisation’s supply chain in responding to market and environmental changes. Assessing the flexibility dimension of the supply chain provides an organisation’s management team insight on its capacity to respond to dynamic customer needs. One of the strategies that firms managers can adopt in assessing its flexibility of its supply chain entail examining the support of the respective supply chain partners in assisting the firm develop a new product. For example, an organisation’s management team can undertake a comparative analysis on its flexibility in developing a new product relative to that of its competitors. A high degree of flexibility in developing and introducing a new product into the market indicates that a firm gains adequate support from different supply chain partners such as designers, marketing personnel, and engineers. Bowersox, Close and Cooper (2010) is of the opinion that the degree of flexibility within the supply chain can also be measured by evaluating the supply chain response time, which refers to the duration that the firm’s supply chain takes in responding to the dynamic market needs without leading the firm to incur cost penalties.
Supply chain quality management
Evaluating the quality aspect of a firm’s product or service constitutes another performance indicator that operations managers can use in evaluating the effectiveness of its supply chain. Schonsleben (2016) argues that quality entails the degree to which a firm’s products or services conform to the stipulated requirements for it to be considered fit for consumption or use. Integrating effective quality management approaches as the product progresses through the supply chain is essential in ensuring that the final consumer attains the intended level of satisfaction. However, Thongrattanna, Jie and Parton (2011) assert that managing quality within the supply chain should be a shared responsibility by all the partners in the supply chain. In order to succeed in managing quality, it is imperative for an organisation to implement effective quality philosophies. Additionally, the organisations’ management team should ensure that process of managing quality is focused on meeting the customers’ expectation. Some of the indicators that an organisation can adopt in enhancing optimal quality management in the supply chain entail the quality assurance measures, integration of statistical measures, and six sigma limits. By adhering to the stipulated quality specifications, an organisations management team can enhance the success with which the supply chain contributes to a high level of customer satisfaction. In order to sustain the effectiveness of the quality control indicators, organisations management teams should consider formulating a comprehensive quality control programme.
Supply chain responsiveness
In addition to the above supply chain performance indicators, organisations can evaluate the effectiveness of their supply chain by integrating the responsiveness indicator. Cohen and Rousell (2005) define the supply chain responsiveness to include the efficiency with which an organisation’s supply chain ensures that customers receive products in time. In employing this indicator, organisations’ management teams should evaluate the time that lapses between when a customer makes an order and when the order is actually delivered. Bolstorff and Rosebaum (2003) corroborate that ‘order fulfilment lead time is an important measure for supply chain responsiveness and measures the number of days from order receipt in customer service to delivery receive at the customers’ dock’ (p.51). In measuring the degree of supply chain responsiveness, organisation managers should consider measuring the prevailing lead time variability.
Conclusion and recommendations
The review of literature indicates that implementation of effective logistics or supply chain management practices can assist organisations attain sustainable competitive advantage. Nevertheless, achieving this outcome is influenced by the efficacy with which an organisation’s management team implements effective supply chain management practices. Some of the notable supply chain management practices that a firm’s management team consider include incorporation of continuous improvement, lean six-sigma, and development of strategic partnership with the suppliers. Focusing on continuous improvement is essential in ensuring that an organisation’s supply chain adds value to the organisation’s competitive advantage. Lean six-sigma practice will aid in eliminating the causes of errors. Effective implementation of the lean six-sigma practice can be achieved by employing supply chain management models such as the DMAIC model. This model will aid in ensuring that the causes of errors of defects are effective identified and rectified. Thus, the likelihood of maximising the level of customer satisfaction will be improved substantially. Conversely, establishment of strategic partnership with suppliers is essential in enhancing the efficacy and efficiency with which an organisation’s supply chain improves the likelihood of the firm meeting the customers’ expectations.
In addition to implementing the best supply chain management practices, it is imperative for organisations management team to integrate effective supply chain performance indicators. Some of the key performance indicators that an organisation’s management team should consider integrating include assessing the degree to which the supply chain is responsive to customer needs. Secondly, organisations management teams should consider implementing effective quality management indicators. For example, in managing quality, an organisation may consider formulating quality benchmarks that the respective parties in the supply chain should adhere to. The degree of adherence to quality benchmarks can be achieved by implementing conducting a comprehensive quality assurance assessment. This approach will aid in identifying deviations from the set benchmarks. The effectiveness of the supply chain can further be evaluated by measuring the degree with which the respective parties in the supply chain are supportive in assisting the organisation respond to the prevailing market dynamism.
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