Dissertation Title: Leadership Strategies for Improving Performance of SMEs in Saudi Arabia
Despite governmental support, healthy international trade and application of varied leadership styles, small and medium businesses in Saudi Arabia continue to struggle and are unable to sustain their operations. One of the factors that contribute to the decline of such firms is poor management. The study adopted the use of both quantitative as well as qualitative approaches in exploring the leadership strategies for improving the performance of small and medium enterprises in Saudi Arabia.
It uses surveys as well as secondary sources from various literatures to determine the leadership strategies that successful businesses in the Saudi Arabia have used to survive, especially during the tough financial times. The conceptual framework that is used in investigating the particular leadership strategies is the transformational leadership theory.
The theory has four tenets, which comprise of idealized influenced, individualized consideration, intellectual stimulation, and inspirational motivation. This research makes use of all these to determine particular ways of enhancing the profitability hence sustenance of the small and medium enterprise in the country. The intention of the study is to recommend the best leadership practices for small and medium enterprises.
The general objective of the study is to do a comprehensive study on Leadership Strategies for Improving the Performance of Small Businesses in Saudi Arabia. There exist various leadership strategies that when implemented have the potential of shifting fundamentally the organizational dynamics as well as the various strategic approaches to managing critical functions of small and medium businesses. The research will be guided by the following research questions:
How can leadership strategies be a tactical tool for enhancing success in the organization?
What are the leadership strategies that enhance the achievement of strategic business objectives?
What is the impact of strategic leadership on strategic development of SMEs in Saudi Arabia?
How do leaders drive organizational innovativeness as a strategy to implement change in the small businesses in Saudi Arabia?
How does ethical leadership influence the success of small businesses in Saudi Arabia?
Leadership Strategies Dissertation Contents
1 – Introduction Context of SMEs Background of the Study Key SME Enablers in Saudi Arabia Definition of SME Strategic Management Problem Statement Objectives of Study Research Questions Importance of the Study Limitations of the Study
2 – Literature Review Organizational Innovativeness as a component of Leadership Leadership versus Management Strategic Leadership Effective Strategy Implementation Ethical Leadership Theoretical Framework Great Man Theory Trait Theory Contingency Theory (Situational) Style and Behavior Theory Skills and Characteristics of Strategic Leaders Strategic Management Paradigm in Small Businesses in Saudi Arabia Proposed Research Framework
3 – Research Methodology Leadership Perceptions of small businesses in Saudi Arabia Research Design Case Study Research Data Collection Method and Period of Study Sample Population Data Analysis
4 – Presentation of Findings Gender Measure of Age Central Tendency Education Level Years of Experience in Business Area of Work Strategic Leadership Skills key to SMEs Commitment of Entrepreneurs The effectiveness of Monshaat Support Center Tactical Significance of Business Strategies Significance on Monshaat to Strategy Development Technology as an Essential Component of Growth Influence of Ethical Leadership Innovativeness Inferential Analysis ANOVA Model Summary Testing the Relationship between Response and the Explanatory Variables
5 – Analysis of Findings and Discussions
6 – Research Discussions Strategic Leadership Framework in SMEs Monshaat Support Center Organizational Innovativeness Information Technology Capability Presence of Monshaat Support Center Effective Strategy Implementation Ethical Leadership as a Strategic Tool for Growth
7 – Recommendations and Conclusion Recommendations Conclusion
Globalisation and Diversified International Patterns of Consumption
Title: With the evolution of human communication and transportation modes over decades and centuries, this world is squeezing smaller and smaller day by day in terms of interaction among people of different regions, ethnicity, races, and obviously different mind-sets. This changing characteristic of the world is perceived as the globalisation and the world is seemed to be a global village. The globalisation of this world has changed certain patterns of its villagers in terms of their thoughts, lifestyle, communication, buying and selling trends, and also their patterns of consuming the goods and commodities. The contemporary and recent researches on the cultural issues targeted the process of cultural change among migrants and minority people within the mainstream strata of a given culture; however, limited research is conducted on the behavioural transformation as a product of globalisation (Sobol, Cleveland, and Laroche, 2014).
This research essay is purposefully written to explore the underlying scenario related to this topic by including and referring to different literature and viewpoints of the scholars and experts. The theme of this essay will be to discuss and assess the aftermaths of globalisation on transforming the behavioural patterns of the people towards consumption of goods.
The term ‘globalisation’
not only encompasses the economic and trading practices, but also the human
agents or the practitioners whose behavioural
attributes can impact the globalisation
phenomenon itself. In this way, the globalisation curtails the influence of
cultural or societal differences related to paradigm development and also widens
its scope while including the economic and financial activities regarding
consumption of services and products. Another understanding of the world globalisation can be established by considering
it as the international transfer or exchange of public, money, commodities,
knowledge and the cultural norms, which resulted in the boosting the awareness
level of people in the two last decades of the last century (Jadoon, Butt, and Hayat, 2016).
In the context of social sciences including culture,
sociology, political science, and also economics, the term globalisation is treated as comprising the
international classification, electronic media, and the international treaty
World Trade Organisation (Cornwell and Drennan, 2004).
It is explored through researches
that the globalisation directly
influences the patterns of consumptions and the society. The consuming trend
and style a society adapts mostly rely on the development of thoughts and their
needs. The significance of technological revolution in guiding the consuming
patterns is pertinent for consideration. Moreover, the online shopping system
has impacted the traditional trends and patterns enormously (Jadoon, Butt, and Hayat, 2016).
As per Ruediger
John (2005), globalization process does not ensure the one’s freedom and
security. It also lacks the definition of nations-wise social values along with
the enforcement of global law pertaining to address human psychology and behaviours. Moreover, instead of politically
addressing the cultural developments, the emphasis of globalisation is more on the spread and sharing of technology and economical boom (John, 2005).
Divid Howes (1996) in his book used the term
homogenization which refers to the unity in the global village. The terminology
depicts the paradigm of cultural and social influences in the international
markets are due to the intrusion of commodities and products in the form of
imports based on the knowledge gained through globalisation.
This paradigm also emphasises the need to
understand and accept the rise in the cultural and social differences occurred
due to the export of domestic goods and the import of goods mostly produced in
the western world. One contemporary contextualisation
of the consumption patterns of people in
the global village is the motivation of consumers or the people to choose the
goods as per their own liking and disliking instead of being a blind victim of globalisation. This is because the people of
the underdeveloped countries are often
influenced to purchase those products which are not only new and alienated but
most of the time also serves as damaging the local culture rather replacing it
with the imported culture (Howes, 1996).
There is a need to go deeply to understand that the consumers’ attitude is influenced by both internal and external factors in the form of domestic culture and the consequences of globalisation respectively. Several types of research have been continuously conducted to examine the consumers with the help of examining their lifestyle. A consumer’s lifestyle is the agent of the tendency of adapting the change in behaviour for consuming items and products of a single or multiple manufacturers. It is again the globalisation which enforced manufacturers all around the world to be indulged in an extensive competition in order to win the consumer’s satisfaction. This ultimately helped the consumers in terms of having competitive quality in products (Dunn, 2015).
An argument in the work of Elena Kell (2012) supports
that the globalisation forms and leads to
a consumption based society in which consumption has become indispensible and along with its ethical
practices. Consumers are generally unaware of the supply chain and operations
management involved in the availability of products imported from foreign
countries. Hence the ethical aspect of consumption addresses the consumer’s
responsibility to be updated of the steps involved in the processes (Kell,
McCoid (2010) differentiate the consumption in its
three shapes. According to that categorisation, the consumption of goods will
not remain sustainable if the resources are used more than what exactly
required, and this is called overconsumption. This mechanism often leads to the
lower quality of life and damages the environment. On the contrary, the
under-consumption is the utilisation of
resources much less than the required, hence causing poor quality to health the
lifestyle. It is observed that the main cause of under-consumption in the age
of globalisation is the inequality in the
social distribution of resources. Both
forms of consumption do not contribute to
sustainability. The sustainable consuming patterns,
however, do not cause the environmental damage and the human health. In order
to develop the consumption pattern in a sustainable way, there is a need to
accept the relationship of over and under consumption with the globalisation, because in a global village, the
under-consumption of most groups causes
the over consumption of few groups (McCoid, 2010).
On a critical side, the contemporary consumption
patterns have negatively impacted the development of human wellbeing on the individual as well as on societal levels. This change happens in a way that it spread the social
inequalities among groups and even countries through globalisation. The inequalities are spread due to the differences
in the quality of products and services for all different social classes within
a certain society or the region. The global consumption pattern is also
promoting and supporting the flow of resources to a limited class of people and
groups who have much more wealth to spend on even luxurious items instead of
just the basic needs, hence the poor class of people in the world continues to
suffer the lacking of even basic needs due to the lack of resources. Similarly, the globalisation
has intruded the consumption of food based items which are most of the times
either not synchronised with the eating
habits of the people of a particular country or are much expensive than their
local alternatives. The adaption of
foreign goods and items also often creates environmental problems in the form
of waste disposal and discharge (Khor, 1998).
The increase in the free trade between countries has
also enhanced the availability and quantity of goods and services for the end
users. This scenario was for sure cannot be imagined the effectiveness of
various global trade pacts, agreements, and the role of unions worldwide. With
the increase in the quality as well as a variety
of products through globalisation, the
consumption pattern among people has drastically changed. People pay due
importance in conducting a preliminary survey, physical or online, regarding
the particular product they are going to buy. Moreover, unlike before, the brand has been given comparatively less
importance by the consumers (Scriven, 2014).
The technological advancement, globalisation and the integration of countries around the world
have significantly changed the consumption pattern of people all over. The
internet facility got the users of around fifty million in only five years;
hence it is pertinent to accept that through internet lives of thousands and
millions of people in all countries evolved positively. The comparative survey
has become much easier through the internet
for everyone regarding any product before its purchase. Everyone in the global
village can be informed of the patterns of the lifestyle
of any other person or group in other parts of the world (Kónya and Ohashi, 2004).
This research essay has explored different theoretical
perspectives of various authors to explore the aftermaths of globalisation on transforming the behavioural patterns of the people towards
consumption of goods. It can now be concluded after a comparative analysis of
various viewpoints on the topic, that the globalisation has certainly opened
the door of opportunities for not only sharing of knowledge, technology, and goods, but also played and has
been playing a significant role in designing and changing the behavioural
patterns of consumption among consumers and end users all around the world in
this global village. Some paradigms consider it as positive while the other as
the negative role of globalisation because,
in some perspectives, it has also led towards social and financial inequalities
among societies and classes of people.
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Did you find any useful knowledge relating to globalisation and diversified international patterns of consumption in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.
Benefits and Risks of Outsourcing to Low Cost Countries
Apparel and luxury value chains have come up with strategies so as to be cost competitive, increase the income, and expand the market for their goods. Outsourcing the end-to-end supply chain means that activities of an organization are carried out by an external company that specializes in these activities (Pickles et al., 2015). More so, a company can pay attention to its key competencies satisfy consumers, and be more flexible in maintenance and operation of its supply chain.
Apparel and luxury industry is very volatile today, frequent changes in expenses, risks, and demands for materials and goods as well as the changes in factors like international business environment are some of the challenges affecting the end-to-end supply chain. Anything that halts or reduces the movement of material, as well as the apparel and luxury goods, are considered a problem to the supply chain (K3SoftwareSolutions, 2017).
Apparel and luxury companies have been able to expand their supply chain to many different countries and migrating to outsource manufacturing which has seen reduction in the cost of production. This strategy has promoted division of labor throughout the end-to-end supply chain by allowing company to concentrate on principal business undertakings. The organization is allowed to concentrate on its core competencies while specialist suppliers are given non-core undertakings (Handfield, 2017).
Suppliers who can carry out the processes more efficiently are tasked with this role and therefore outsourcing in low cost countries helps make the supply chain more effective. International brands have been allowed to create a completely responsive supply chains as well as bringing apparel and luxury products of low price to the shelves of stores (Handfield, 2017). Low priced goods are as a result of using external company’s expertise, knowledge and links to make cost-effective plans. Besides, time is economized since the time taken in designing, and delivering new clothes and luxury products to the market has been reduced from over a year to only a few weeks (Handfield, 2017).
Through outsourcing in low-cost countries, companies have been able to achieve effective processes, low-priced goods, and consumer satisfaction leading to outstanding performance and strategic advantage. Supply chain also becomes more flexible as the company has freedom to choose who they can do business with. Also, outsourcing enables the end-to-end supply chain of the organization to be more traceable (Robinson, and Hsieh, 2016).
Despite the benefits, an organization exposes their brands to great risks through outsourcing because it becomes a supply chain against supply chain. When going after cheap labor, apparel and luxury companies have been putting immense pressure on the suppliers who in turn are ready to reduce their invested capital to have low costs (Handfield, 2017). So as to compete with other businesses in the low-cost countries, suppliers forwent investments and labor practices that reduces the safety standards in a company and this is likely to damage the brand image of the apparel.
Poor working conditions in the apparel and luxury industry so as to maintain common local codes in low-cost countries is a disadvantage to the supply chain (Handfield, 2017). Another challenge to the supply chain is the abroad manufacturing delays. Apparel and luxury stores that are in western countries are progressively relying on the clothes and accessories from countries like China. Most newcomers to the industry may be found off guard by the delayed manufacturer (K3SoftwareSolutions, 2017). Moreover, damaged shipments and some that get lost is another menace to the apparel and luxury industry. Possible unseen costs such as inflated shipping price can result.
Besides, there are possible setbacks to the supply chain for instance late receiving of inventory leading to consumer dissatisfaction, loss of income and problems in the end-to-end supply chain. Problems may also arise during integration of the two Apparel and luxury companies affecting supply chain. If the hired company economize, use cheap materials or even fail to assess risk fully, the supply chain will be affected due to decreased sales and brand equity (Meeken, 2013).
in low-cost countries helps Apparel and luxury companies be more efficient in
their operations because they concentrate of core competencies and they can
produce cheaper clothes and accessories as well as satisfying consumers,
therefore, affecting supply chain positively. However, there are risks involved
such as pressuring suppliers to reduce investment capital to keep low costs.
More so, companies adopt common local standards which can ruin the brand image
and problems in the hired company can also affect the organization negatively.
Handfield, R. (2017, August 23). Needed: A New Way to Manage Risk in Low Cost Countries. Supply Chain Resource Cooperative.
K3 Software Solutions, (2017, December 8). Supply Chain Challenges in Apparel Industry and How You Can Fix Them. Fashion ERP.
Z. (2013, June 13). The Risks and Benefits of Outsourcing Supply Chain
J, Plank L, Staritz C, Glasmeier A (2015) Trade policy and regionalisms in
global clothing production networks. Camb J Reg, Econ Soc 8(3):381–402
Robinson, P. K., & Hsieh, L. (2016). Reshoring: a strategic renewal of luxury clothing supply chains. Operations Management Research, 9(3-4), 89-101.
Huawei Operations Management Concepts and Practices and their Application in Real Business
Huawei – Operations management has been expanding to a broader notion of service and production management hence signifying the principalities of operations management concept in the transformation of raw materials to finished good ready for delivery to the consumer. The increasing recognisability and importance of operations management in organisations have led to growth and exploration of techniques and concepts fundamental in production and service delivery. Therefore, the effectiveness and efficiency of operations and service delivery in organizations are determined by how well they apply operations management concepts and practices in their endeavor.
Operations management scope ranges across various enterprises where people are involved in production and service delivery activities such as product and service design, technology selection and management, system design, process selection, quality improvement etc. (Kunchala). These concepts and functions entail many interrelated activities including scheduling, quality assurance, inventory management, capacity planning etc. fashioned toward effective and efficient production and delivery of goods and services.
Huawei Technologies Corporation, being among the leaders in the production and sale of mobile devices, they need to maintain a high-end operations management through the application of the latest and best operations concept in operations management. Besides, various factors necessitate the organization to facilitate streamline operations management. These factors include the quantity and quality of production, market diversity, change in technologies, competition, and the ecosystem.
Huawei, for instance, is inculcating the user-centric operation initiative which is aimed at digitizing their product while improving quality and user experience. This, therefore, entails the use of market research in their quest to deliver quality products which are user-friendly and well-paced with trend and technology (Huawei). Since the organisation uses make to deliver production approach, their market research should involve an in-depth analysis of the consumer preference and inculcate them during the planning, design, and production of various products.
The organization applies a generic and multistep product development process where they are technologies pushed product and platform products. For instance, the production of the Huawei GR5 product was a platform product as it was built around the pre-existing technology subsystem of the Huawei GR3. Besides, the Huawei Y series is built along a product platform where they use already pre-existing technology. Due to the overly increasing enormity and complexities due to technologies advancement, Huawei, therefore, enhances management transformation as they resort to a lean operation to accommodate customer requirement to improve production efficiency while controlling costs.
To cope with the competition and rapidly changing technologies, the organization applies the quick-build products which entail the rapid modelling and prototyping. To achieve a seamless and quality production, the organization integrates the operations and management organisation with the resources, platforms, and expertise through centralized processes. (Mingwei, Yaling & Feixiang) This highlights the importance of the effective layout decision within the organization.
Facility layout is essential in the realization of a seamless and lean production process in the Huawei Corporation. This entails determining of the arrangement and placement of workgroups, workstation, departments, inventory etc. to reduce possibilities of waste such as motion, movement, inventory, and quality accruing. It is worth noting that Huawei implements a Quality First strategy as they seek to enhance sustainability in materials and suppliers through performance appraisal.
As a contract manufacturer, Huawei has a high-end procurement decision-making team aimed at strengthening customer and supplier’s sustainability. For instance, the organisation has posited a procurement quota to enhance supplier sustainability hence minimizing the risks in supply while facilitating customer satisfaction hence boosting supply chain a competitive advantage. The organizations evaluate supplier eligibility based on compliance with the established supplier Huawei Supplier Sustainability Agreement, laws and regulations.
Further, the procurement process in Huawei is value oriented which entails adhering to the supplier’s regulations, transparency, and scientific procurement which is aimed at building a seamless and healthy s(secure, reliable, and competitive) supply chain. Besides, to facilitate the procurement process, Huawei facilitates a joint innovative, strategic cooperation with a win-win and benefit sharing process. This is achieved by enabling and encouraging mainstream partners to engage in the initial stages of product research and development to assure supply and competitiveness during the process (Tao).
Being a contract manufacturer, the organization needs to outsource various parts and or services and maintain robust industrial relations to enhance operational efficiency and effectiveness. This is critical as it enhances reasonable profit distribution within the industry thus ensuring key partners and suppliers gain sizeable and reasonable profits hence enhancing a success shared, competitive, and sustainable supply chain. A comment by Huawei’s Consumer Business Group chief, Yu Chengdong, “We are laying out plans for all our key smartphone parts. Huawei might not manufacture these components directly, but it does not mean we do not own technology to manufacture them ourselves” indicates the commitment and appreciation by Huawei to outsource their non-core competencies and dwell on competency for efficiency and effectiveness in their operation after the flash memory incident (Tao).
Additionally, while the organization seeks to facilitate lean manufacturing which is eco-friendly and sustainable, the organization should conduct regular value analysis and sensitivity analysis. These analyses are essential as they enhance the better performance while adhering to customers’ requirement. Lastly, Huawei has prioritized quality as the quality control department is fashioned to make the products synonymous with high quality. The objective is Huawei to win on quality through provision of high quality services and products consistent with their requirements.
MI global started operating in an already competitive market across China and the world. Various challenges culminated which had led to the organization to fall to a ‘unicorns’. Initially, the organization faced a slump supply chain associated with the rapid organizational growth which made the organization to retreat from overseas markets. Additionally, Mi had several organizational challenges that critically influenced their operations hence overall performance.
The organization has facilitated their design and manufacturing process through the application of an innovative business model which differentiate itself from other manufacturers at every phase of the customer journey. First, the organization has facilitated the production and development process of their products as depicted by their CEO, Lei Jun as “Mission Impossible.” Their manufacturing process is unique as they do not have a single physical factory as compared to Huawei which indicates a radical shift from the traditional approach in inventory management. This is vital toward the achievement of lean manufacturing as wastes are reduced in the production process. Xiamo’s make to stock production process inculcates customer requirement as depicted by the research and development process (Wang). The organization adopts a different strategy to reach client which entail cloud sourcing and application of social community to create awareness while at the same time gather information from the customers.
Different organizations have varying strategies and operations in their manufacturing and distribution. In comparison with MI, both organizations applied quick bound product development process where sample and prototypes are designed which includes the mix of the shape and the identity of the line design while depended on the outsourcing various components. Therefore, Huawei and Mi can be described as contract manufacturers.
Mi started operating in an already volatile and competitive market which necessitated differentiation. First, the organization MI Global prompted to restructure their operations through the adoption of more seamless and effective operation management practices. For instance, they restructured their smartphone hardware, supply chain, quality management as well as Research and Development initiative. Besides, the marketing of the end product and delivery to the consumer was exclusively online which made it inaccessible to many less tech-savvy clients (Kline). The organization had to implement therefore a unique and multistep production system which was more platforms based to facilitate production and supply. After their fall, the organization has become one of the super houses in tech in China competing with Huawei. In contrast, Huawei’s also invested greatly in research and development but they had a different marketing strategy which was both through outlets and online platforms.
Besides, the production design and development entail outsourcing of various components including processors, casing, or camera from other organization for profound and seamless manufacturing. This process culminates with detailed quality tests which are critical in value and sensitivity analysis. Each phase of product development is closely monitored, and any mishap is remedied accordingly before mass production and supply of the product to the final consumer.
Additionally, Xiamo has been a market leader in terms of competitive prices on high quality products. This has been enhanced by sustainable and value-based procurement of components facilitated by quality controls and value analysis. For instance, the Mi3 has a Sony Camera with a sharp LG display and Phillips flash. The organization, however, is purposed toward zero inventories as they only manufacture based on orders hence inventory holding cost is automatically reduced. They procure components only when they get orders (Ghong). This has enhanced the effective alignment of their business model and operations hence meteoric rise.
various strengths as compared to Mi in terms of and manufacturing and
distribution. For instances, their approach on stock-to-order was favourable in
term of logistic and inventory management. Mi implemented a zero inventory
management practice where they solely depended on customer orders to procure
components. Although this method can save a lot of inventory cost, it can be
constraint in case of inventory shortage or delays in delivery. In addition,
Huawei had a clear procurement and tendering scheme which facilitated the
selection of supplier hence facilitated suppliers’ involvement in the
Adoption and implementation of seamless and profound operation management concept in the production and delivery of goods and services is a blueprint to the organizational success. They main operations management principles and knowledge adopted by the company included; the principle of reality where Huawei didn’t focus only on lean management or total quality management but rather focused on tools and time-based approaches to provide nearly universal successful operations management.
Besides, the principle of organization is clearly highlighted in the case study. Both organizations had organized their production process coherently as manufacturing, marketing, and distribution are interconnected set of processes. Other principles addresses in the study were the principal of variance, change hence the manufacturing and distribution must be bound with struggles with regulations, benefits, and wages to facilitate competitive advantage. Besides, the concept of lean manufacturing and inventory management are greatly highlighted in the Huawei and Mi manufacturing process. Additionally, the quality assurance and research and development are critically addressed. For instance, these principles enhance the process of procurement through manufacturing to delivery of the final product to the customers.
First, the organization is able to achieve or move toward lean production hence facilitating reduction of wastes which in return results in the eco-friendly operation and competitive advantage in the market (Onwuka, Ugwu & Ndife). For example, Xiamo was able to cut the cost of its products through inventory management and quality control initiatives. Reduced inventory costs and effective supply chain strategy enhances more competent, faster, and accessible products (Francis). To sum-up, adoption of operation management concepts and practices will enhance organizational efficiency, effectiveness, quality, lead time, capacity utilization, and cost objectives through value creation and value addition when transforming inputs to outputs.
Feixiang, Mao et al. “Making
Manufacturing Productive Again With Iot – Huawei Publications” Huawei,
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Kline, David. “Behind The Fall And
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of Operations Management and Its Impact on Improved Logistics Control”.
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Tao, Li. “Huawei To Improve Supply
Of All Key Smartphone Components”. South China Morning Post, 2018.
Wang, Lucy. “Xiaomi – Mobile Disruptor from China – Technology And Operations Management”. Rctom.Hbs.Org, 2018.
Supply Chain Mapping is crucial to any organisation regardless of its size, specialization or region. A typical supply chain system is composed of resources, activities that facilitate the movement of products from the supplier to the client and vice versa, i.e., upstream and downstream (Kozlenkova et al., 2015). However, the keeping track of all these supply chain activities, i.e., delivery and supply of necessary materials, information and other elements is getting complicated day by day.
Henceforth, it’s essential for organizations to manage these activities through visualizations which can help in identifying supply risk factors for necessary actions to be taken (Ho et al., 2015). And this is where supply chain mapping comes in handy. Supply chain mapping refers to the use of visual maps in monitoring the activities linking suppliers and customers. The supply chain map shows how all partners and actions are connected such as supply, transport, warehousing, retailing and so on.
Moreover, a supply chain map takes into account the transactions and information exchanged by all parties, both upstream and downstream (Jayaratane et al., 2018). Breaking down the composition of the supply chain mapping reveals interesting factors such as how it’s mapped, parts that are included in the map and criteria used to select. This paper thus discusses these elements of supply chain mapping in addition to the implications of various types of integration in the supply chain management.
Supply Chain Mapping Deployment
Mapping is meant
to reveal opportunities and obstacles so that an organization can be able to
formulate a winning strategy. To do so, a supply chain map has to indicate two
crucial components; the supply chain flow and supply chain entity (Dujak,
2017). This can be achieved by following these steps.
Mapping the Physical Structure
An existing supply
chain model already has physical locations that contribute to its value stream.
These include the warehouses, factories and retail stores that support the
movement of products and services upstream. However, the networks that support
that these facilities can be at times complex, even for established
organizations. For instance, it may be hard determining who supplies to the
Which facilities or methods do suppliers or producers use to ensure that the raw materials are produced legally and ethically? This requires an organization to step up its involvement by in its analysis of supply chain structure. Nuss et al., (2016) claims that identifying the relevant physical structures during mapping helps in determining the degree centrality of the supply chain.
Degree centrality is used to determine the level of physical sites that a particular organization owns. This, in turn, determines how the level of control they have on the supply chain and associated risks.
Networking Environment and Context Analysis
that a company operates comes in handy in understanding the supply network
system that they can tap into. Rodriguez
(2016) claims that this stage of supply chain mapping entails determining four
different types of ties: similarities, relations, interactions and flows. These
elements affect how a company is perceived by the society that it operates in.
For companies to
successfully succeed in this state, they should take into consideration factors
Cultural and ethnic
The geography covered,
Politics and legal systems
within the target markets,
Expectations of the end users.
The environmental protection
A company that
understands these factors will experience more success since it will be able to
determine the trends, the drivers and conditions that affect the flow of goods
and service both upstream and downstream.
should consider any unique factors which present in the supply chain to
determine if they are risks, threats or opportunities. This affects how the
organization responds (Rodriquez, 2016). For instance, an organization can
Whether to standardize or
customize the products:
The complexity of the products
Customer tastes and preferences
Bureaucracy and complexity
within the organization
Cost of switching for customers
The degree of Competition in
All of these factors affect the type of supply chain an organization selects. The more complex and customized the products are, the more complex the supply chain will be.
Considering the Buying Process:
This organization must consider how many hands the raw material or finished product pass through before reaching them or their target client respectively. For instance, the company should determine if it buys the products directly from the producers, or from brokers and third-party companies. To do so, a chart is created, showing how the current transactions and exchange of products are carried out in the supply chain. From this, the organization can determine which parties that they can away with to loosen up the supply chain model.
Dujak (2017) claims this part of the analysis can be classified under the extended value supply map. Brokers and re-suppliers can at times be adding no value to the whole production process, especially if the main producers of raw materials are within reach. In addition to hoarding products and inflating prices, brokers may also become unreliable parties when transacting with them. For instance, if products are not delivered on time despite being paid for, should you hold the broker or the producer accountable?
Can you eliminate the broker and purchase directly from the producer or supply directly to the final clients? Analyzing these elements will help determine how to approach non-value adding-component of the supply chain such as bypassing them.
Supply Chain Mapping – Accounting for Transparency of Information
Mapping a successful supply chain model entails ensuring that the information being passed across the various parties is consistent and credible. For this reason, a company has to define the types of reports that it expects from all the actors in the supply chain. The expectations will be based on the type of contract that an organization has with these parties.
The suppliers should provide information on their production process and their transport mechanisms (Gardner et al., 2015). Passing information on sample products or services ensures that expected standards have been met before the commercial production start. In this case, the information being passed down or up the stream covers concepts such as order status, product testing and such. There two ways of ensuring consistency information flow, i.e., manually or electronically.
Moreover, each actor should be provided on information about their expected roles and limitations (Gardner et al., 2015). When all these factors are considered, the supply chain mapping will be based on the transparent information. This implies that each of the party will be accountable and responsible for any issues that they are expected to handle. This stage is usually called the current state map.
Should the map include connected firms or primary firms?
The supply chain map mandates that every activity within the supply model must be accounted for. In doing so, the visualization of how the raw materials are produced to how they reach the final customer must be accounted. Henceforth, this takes into account all the primary and secondary activities that facilitates this process. For this reason, it’s essential to include the connected firm in the supply chain map
Means of determining who should be part of the supply
entails identifying the main company priority regarding the products that it
produces. Each activity of the firm is assigned a grade/ colour/size in the
order of its overall importance to a company. In doing so, the company can be
able to trace the main parties behind such activity. The parties that become
part of the supply chain are those whose roles are found to be invaluable to
the company, i.e. those whose grades are much higher (Bryan, 2015). Regarding this, the supplier of a company has
a high priority since the raw materials that they provide; facilitate normal
running activities within the firm.
The degree of Risk:
Oliveira et al., (2017) claim the supply chain activities are proliferated with operational threats due to uncertainty in business environments. Such threats can lead to immense losses for a firm. For instance, Boeing suffered a loss of $2.25 Billion, while Cisco lost $2.25 Billion due to supply chain problems (Oliveira et al., 2017). Henceforth, when considering who to include in the supply chain, the main question should be if the party selected is ready to partake in the losses due to risks?
Secondly, how can the party help in mitigating risk? How accountable is the party in the organisational objectives? If a party feels the wrath of consequences related to risks and threats, then they should be included in the supply chain map.
Florian et al.,
(2015) break down this concept by assigning each risk category with the
composition of risks that may proliferate it. All of these activities have a
domino effect on the whole supply chain, any parties supplying these activities
must be included in the supply chain map.
Production Risk: Equipment
failure, overproduction, poor quality outputs (Florian et al., 2015).
From the above,
it’s evident that these are high-risk issues that may face an organization. Henceforth,
an organization should monitor all activities carried out by these parties to
ensure everything goes as planned. Moreover, when an issue arises, it can be
easy for the organization to track through the use of an already established
supply chain map. Henceforth, under this criteria, the supplier, the transporters,
warehousing companies and marketing agencies must be included in the supply
If a company wants to have a successful supply chain, it must study its competitors or other companies who have established a successful supply chain model. This is where benchmarking comes in handy where a company studies the processes, performances and products from the best practices (Routroy et al., 2015). This strategy helps a company select the right partners for its supply chain model, who are more likely to help it achieve its objectives fast.
Hettiarachchi (2016) claims that Apple Inc. has probably the most successful supply chain strategy due to how it has mastered mapping and visualization technologies in monitoring the movement of all products, both upstream and downstream. Once the company has benchmarked other companies supply chain maps, it then decides on how it can visualize its map for maximum benefits. The bigger the firm and the more complex its activities, it might find itself integrating even the secondary parties to the map, just like Apple Inc does (Hettiarachchi, 2016). On the other hand, if the company activities are just simple and use basic raw materials, its supply chain map should include the basic parties, i.e. supplier, warehouses, the firm, and the retailers.
The Importer-Exporter Criteria
The Importer (Buyer): This is a connected firm who supplies to the
organization supplier. The importer is usually the source of goods within that
region if he got them from the foreign nations. The importer negotiates
purchase terms with the main supplier, which affects the final price of the raw
materials when the reach a firm. This
party offloads and inspects the shipment to ensure that all the products that
had been ordered are in place. This importer is categorized as a source to pay
(S2P) within the supply chain map.
Supplier (Exporter): Usually categorized as an Order-to-Cash Component
in the Supply chain map. The exporter
receives the purchase order from company clients and validates their
credentials. After confirming the order,
they fulfill their services by shipping the goods to the clients. He then
collects the payment from the clients and reconciles them for analysis. The
reason the exporter is accounted for in the Supply chain map is that he can
help a company determine the level of demand from customers. The exporter is a
connected firm within the supply chain model.
Exporter (Supplier): This type of exporter falls under the connected
firm category and is a Fulfill-to service component. This supplier is in charge of fulfilling the
order of all the raw materials scheduled for production. The exporter procures
materials from their direct sources and delivers them to the company for
processing. This type of exporter is placed in the Fulfill-to-service
Implications of a Good Supply Chain Management Practice
More Control: Under this
arrangement, the company control major activities within its supply chain, e.g.
Apple Inc. As a result, the company can
make amendments or any changes in the supply chain with minimal tussles
(McCandless et al., 2015). For instance, when a manufacturer acquires its
product retailers, he can be able to dictate the prices of all the products,
just like he would if he were to acquire the supplier. As a result, they may
have more bargaining company than the customers’ especially if there are no
Having more control over the distribution
channels, retails outlets, production materials inputs can enable a company to
distinguish itself from competitors. Consumers may be able to notice these
differences which can be leveraged upon further by clever marketing tactics.
Higher Profit and Revenue margins: Upstream and Downstream markets such as selling products to the
customers or accessing raw materials directly from the source may become new
sources of revenues. For instance, a
company can also supply raw materials or provide transport and warehouse facilities
to other companies on a fees basis. Moreover, having access to these elements eliminates
middlemen and intermediaries who usually hike the prices by the time the
products are reaching the company or end users. Henceforth, eliminating these
intermediaries implies all these profits they were enjoying will be redirected
to the firm.
Higher Level of Certainty: Florian et al., (2015) claimed that the more the parties involved in
the supply chain, the higher the risks due to reduced control the company may
have in overseeing all the activities. With vertical integration, all the
acquired companies are acting as subsidiaries to the main company; hence it may
be easy to standardize products and regulate their quality. This implies that a
company is guaranteed of quality raw materials, quality freight and transport, warehousing
and even retailing of goods.
Supply Chain Mapping Horizontal Integration
integration refers to the process of acquiring business activities that are at
the same level. For instance, a fast-food company can try to gain a footing in
another country by merging with another fast-food company in that nation. This
enables a company to have a larger market share, which in turn leads to more
revenues and profits for a company. The supply
chain model also becomes flexible and loosens up, since they can experiment
with different supplier simultaneously to determine the best one.
merging of two similar businesses implies that their bargaining power also
increases. As a result, they can use this power to set the market prices for
their products, set standards for customers as well as dictate the quality they
expect from their suppliers and prices.
This is an immense power which may lead to more third-party
vendors focusing more on such companies due to being assured of continuous
contracts and high demand for their goods.
of Scale: An
integrated company will be able to order quantity raw materials, engage in more
productive activities at a much lower cost than if it were ordering low
quantity products. This may in turn,
lead to bigger profit margins and optimal use of all the facilities within the
Differentiation: if the company continues acquiring and merging with
businesses along with all lines it operates in, it can have more control over
the features of its products. For
instance, the products may be either cheaper, high quality, long lasting in a
way that other companies which have not integrated themselves cannot replicate.
Better relations with consumers: Under this structure, the company has a direct contract with the
end users (Wang et al., 2016). This may help the company gain more trust and
loyalty, leading to repeat sales from customers.
Better insight for better marketing and product
strategies: The company taps to first-hand
information from clients from matters about complains, suggestions that they
may have on the type of services provided. The company may use this information
to re-align and strategize itself so that it meets their demand or needs
Increased Accountability of suppliers and
distributors: Since the company has contact with
the end user, it may also provide guidelines that their vendors should follow
to provide the best quality services and products for their customers. This may
lead to the company monitoring the activities within the supply chain more
closely than with other forms of integration (Wang et al., 2016). This may lead
to a domino effect where the suppliers and other service providers to the
company are also more keen, leading to quality products in the end.
In conclusion, it’s evident that supply chain mapping is very crucial for companies. It supports information distribution, shows channel dynamics and enhances strategic planning process for an organization. This enables the company can track all activities. It helps companies get more insight on all activities that are crucial to its functioning, be it upstream or downstream.
How can a supply chain mapping be successful? Well, the answer lies in who is the parties that are included in the map, criteria used to select them and their contribution to overall organizational goals It’s also worth noting that the supply chain map will be dependent on the type of integration that a company uses in its acquisition and delivery of goods/services, both upstream and downstream.
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