Does The Perspective on Supply Chain Management Implementation in Your Organization Help or Hurt Business Performance?

I just sat down on my seat on a flight back home from the United States' east coast one Friday evening a few months ago. I was about to get my headset on and continue my reading. The irresistible aroma of a large cup of white chocolate mocha coffee with whipped cream made the end of a long week more relaxing and unwinding in some ways. Then I suddenly heard a gentle voice. “That’s pretty serious reading. How do you like it?” Yes, you guessed it correctly! It was a friendly conversation from a gentleman who sat next to me. “I love it. It’s fun.” I calmly replied. I was reading a Springer book of Briefs in Optimization titled, “Networks Against Time-Supply Chain Analytics for Perishable Products.” The warm dialogue continued, the gentleman has been working in the hi-tech industry for decades. We enjoyed exchanging thoughts and perspectives on technology, supply chain management, the evolving business landscape in the global markets, and the impacts that we perceive. It was a surprisingly insightful and constructive conversation. One thing has kept my mind pondering, was a perception he shared. “Is supply chain management outsourcing to other countries?” he asked. And as you can imagine how I or any of passionate professionals, who see the supply chain management as a solution, that helps the business operate more competitively in the markets, would find ways to describe it. And, I’m sure this may happen to many of us, to encounter people with different perspectives on the impacts of supply chain management. Such as fear of job loss and displacement. Or others who may not realize the potentials in supply chain management as part of the competitive advantage in business. 

Why does it matter? It matters because if the perception of business leaders sees supply chain management as a threat instead of a facilitating mechanism. Then it explains the reasons. Despite the benefits, we have seen strong performance leading organizations that have been successfully implementing their supply chain. And yet, why some organizations have not explored this option? What makes the perspective of implementing supply chain management appear to be obstacles? What is it meant for a supply chain professional where some organizational leaders may not view supply chain management as a solution? And if so, have you ever wondered, if it is helping or hurting business performance? 

Trade and commerce play a significant role in civilization developments. It affects economies, political, cultural, innovation, social interactions, and business management relationships between regions. It is a major source of global employment and coherent knowledge sharing. Global trade between nations has come a long way since the silk road era. International trade and foreign investments have shifted significantly over recent decades. From where countries traditionally exchanged finished products made within their home capability. To internationally dispersed production networks where needed resources or talents are accessible. Furthermore, evolving business innovations, foreign regulations policies that facilitate growth in the new international opportunities, expand their traditional market boundary to reach more customers. Global supply chains are complex business networks. It also links with other networks in finance, government services, talents, and available resources around the globe. These interdependent relationships of economic components in the global supply chains form a complex adaptive global market system that impacts lives beyond geographical perimeters. They bring along the equally unknown challenges to the business people, communities, academia, and trade policymakers around the world. 

In case you wonder, what is Supply Chain Management?  

O'Sullivan, S. (2019), "Supply chain management is the management process responsible for identifying, anticipating and satisfying customer requirements, at a profit, through the optimization of all known channels".

As much as the wealth and risk of global trade opportunity have to offer, this adaptive market force is stronger than any economic system can harness. The leading firms, as well as nations that perform well on a global scale, are often well equipped with sufficient supply chain management. Other supporting factors that also empower its success, such as industry competency, business innovation, technology, infrastructure, banking, government regulations, as well as trade policies. However, whether the parent firm makes a strategic decision in offshoring to relocate the production to foreign countries or reshoring for better-enhancing productivity and resource allocation to produce and serve the market locally. Or outsourcing to buy products or services from specialized vendors in their home or foreign country. The key drivers are to lower operating costs and increase performance agility to its market demand. Success in business not only means sustaining but also flourishing in this fast pace global economies. It is where the trade-off factors are carefully weighed-in to achieve competitive advantage and sustainability. Moreover, with more dynamic noble business and prosperous nations gaining from trade, it promotes well-being, creates more jobs and opportunities both in domestic and foreign countries. 

Impact of Trade and Supply Chain Management on Labor Market

World Trade Organization (2019) reported that "Trade is a major source of employment in advanced economies. Estimates suggest that exports supported 12 million jobs in 2014 in the United States alone. Exports may account for almost 50% of jobs in Ireland and around 30% of jobs in Germany. Mandel (2017) demonstrates that U.S. sectors involved in supply chain activities associated with e-commerce have generated a significant amount of employment over the last decade - over twice as much as the reduction in employment in store-based retailing occurring at the same time and reasonable well-paying, and to some extent look like the old factory jobs in manufacturing which became less numerous during the period 1979-2010. Specifically, Mandel (2017) finds that from December 2007 to June 2017, e-commerce jobs in fulfillment centers and e-commerce companies rose by 400,000 jobs, substantially exceeding the 140,000 jobs decline in brick-and-mortar retail jobs. On a country by country basis, fulfillment center jobs pay 31% more than brick-and-mortar retail jobs in the same area".

Perceptions of Supply Chain Management Implementation and Its Impact on Organizations Performance

As a professional in the field, I view supply chain management as a solution. Supply chain management obsesses with customer's needs and ties back to the original core principle of why the business has ever existed since the first place. It starts with the customer and ends with the customer. To facilitate the right performance and flexibility to respond and adapt to constant changes in market demands. And sustain the organization's future growth. In turn, it improves customer satisfaction and more profit gains from drive-off non-value added processes. The success of supply chain management implementation can measure business results and their position in the market. 

There are both internal and external factors affecting an organization's business performance and competitiveness in the market. Despite benefits gained by implementing supply chain management in an organization, none will occur if the perception towards supply chain management is not as a solution. In which, it implies ignoring solutions to become more competitive.

Well again, Does this Perspective towards Supply Chain Management Hurt or Help Your Organization?

Globalization presents both challenges and opportunities to businesses around the world. Choosing to engage in supply chain management functions to overcome the complexity and help to strengthen the coordination of the fragmented operations that disperse around the world, helps businesses gain more competitive advantage and perform better on a global scale. And, even viewing it as a solution, supply chain management implementation in an organization cannot be successful without a strong and capable leadership team with the presence of supply chain executives. Furthermore, business and its supply chain functions need a larger capital investment for facilities, talents, tools to grow and expand its operations in foreign markets. Larger sized enterprises with more capital power and resources to invest in people and tools to successfully implement supply chain management that helps them cope with their global business challenges. Small and medium-sized businesses with less than 250-500 employees are known to be a lifeblood of economies in many countries in terms of jobs and employment, that view supply chain management as a solution may find it more difficult to have access to sufficient needed capital investment compared to large enterprises. 

More evidence supported this conclusion is a 2013 publication of World Trade Organization and Fung Global Institute mentioned "Arend and Wisner's 2005 study of more than 400 senior managers, which found that 'small and medium-sized enterprises more likely to perform well chose to engage in supply chain management, which was a choice that hurt small and medium-sized performance'".

Bring It All Together

Indeed, perspective on supply chain management implementation has an impact on the organization's performance. It can be a solution to successfully compete in the global market if it strategically implements appropriately. Similarly to other business management, the success of supply chain management implementation starts with a strong and capable leadership team with supply chain executives. To set the organizational foundation of the supply chain functions, perform strategies alignment as well as translate it into needed business operational context throughout the organization. And in turn, ideally, supply chain management fulfills the customers' needs by facilitating the smooth flow of products and services through its well-coordinated operational excellence. Contrarily, lacking leadership and capable supply chain executives can lead to inefficient coordination to smooth the flow of products and services, the supply chain management teams can face both internal and external obstacles in implementing and executing strategies to deliver the expected results. It's still a challenge in many organizations that do not have supply chain executives in the leadership team. Therefore, the business decision to outsource, offshoring, or reshoring back home is ultimately made by organizational leadership. In terms of job loss or displacement, changes due to the evolving business landscape and new emerging technologies. As of 2017, in the United States, new 400,000 jobs created by the supply chain in the e-commerce and fulfillment sector surpassed the amount of 140,000 job losses from the retailing sector. 

O'Sullivan, S. (2019), "Supply chain management is a critical solution to operate through the complexity of the global network. Therefore, supply chain management implementation is not a choice for organizations that are in the global market. It's physically impossible without supply chain management regardless of perspective. Whether the organizations do it well or not is a different matter. If you want to compete globally, then you need to implement supply chain management as a priority. Maximizing your business performance or expansion through supply chain management implementation".

• How about your own experience in supply chain management implementation? 
• What would you do if you find yourself in an organization that does not see supply chain management as a solution? 
• How can you leverage the best supply chain management practices with your team?

Thank you,

Jit Hinchman

?About the author

Jit Hinchman, M.Eng, M.Sc, CSCP, CLSS is an inspiring Supply Chain Adviser??, creative problem solver, stabilizer agent with the ability to bring a sense of continuous accountability for achievement.

?References:

• O’Sullivan, S. (2019). Supply Chain Disruption: Aligning Business Strategy and Supply Chain Tactics. Kogan Page Publishers.
• World Trade Organization (2019). World Trade Statistical Review 2019.
• Park, A., Nayyar, G. & Low, P. (2013). World Trade Organization and Fung Global Institute. Supply Chain Perspectives and Issues: A Literature Review.
• World Trade Organization (2019). Technological Innovation, Supply Chain Trade, And Workers in a Globalized World: Global Value Chain Development Report 2019.