Global Supply Chain Management in the Food Industry

This study focuses on the design and implementation of supply chain strategies in the food industry, configuration of supply chain through collaboration, lean principles and agility, and utilization of advanced technology to maintain competitive advantage. It discusses the evolution of supply chain management, supply chain design, and the importance of collaboration, agility, and lean principles in supply chain configuration. It also highlights the utilization of advanced technology to gain a competitive edge in the market.

Running head: GLOBAL SUPPLY CHAIN MANAGEMENT
GLOBAL SUPPLY CHAIN MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The aim of this study is to understand the concept of supply chain management in the food
industry and analyse the design and implement the supply chain system that is done in the
food sector. This study further focuses on the aspects of collaboration, agility and lean
principles to configure the supply chains. It finally focuses on the usage and importance of
advanced technology in the development of the competitive edge of an organization.

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Introduction
Supply chain management is the process of managing a fixed network consisting of
several interconnected businesses who are involved together with the ultimate goal to deliver
the product or service to the desired customer with the proper packaging system (Christopher
2016). Supply chain management is mandatory to survive and compete in the worldwide
market. Supply chain management have gone through a major evolution process since its
inception in the early 1980s. At the beginning supply chain management included various
changes, re-engineering and the establishment of various cost reduction techniques (Cohen
and Roussel 2013). The second stage in the evolution of supply chain management was the
establishment of the Electronic Data Interchange (EDI) in the 1960s which went on to be
developed in the 1990s by introducing the system of Enterprise Resource Planning (ERP)
(Jacobs, Chase and Lummus 2014). Specific attention was given to the relationships between
suppliers and expanding the supply chains nationally to other continents (Monczka et al.
2015). Around the 1990s, the different business sectors in the market began to shed off their
vertical integration and sold off those operations which were not a core part of their business.
These businesses started to outsource their services and functions to other businesses
(Seuring 2013). The supply chain specializations started around the 1980s when companies
started different services such as warehouse management, transportation brokerages along
with logistics and transportation for managing their performance, collaboration and planning
of supply (Wisner, Tan and Leong 2014). The study focuses on the design and
implementation of the strategies of supply chain the food industry and configuring the supply
chain through lean principles, collaboration and agility. It also focuses on the different
utilizations of advanced forms of technology to maintain the competitive advantage of the
sector.
Design and implementation of supply chain strategies
Supply chain design is the process through which a company will design and manage
the supply chain so that there exists a perfect balance between the manufacturing cost,
transportation and inventory. Supply chain design is used for creating a balance between the
demand and the supply by managing the inventory in an effective manner (Waller and
Fawcett 2013). For an effective supply chain design it is required to station the assets so that
the profitability of the company is enhanced and value of the shareholder. The market
situation needs to be considered and the strategies needs to be formed so that the best

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financial performance is derived from the supply chain. The maximal number of distribution
centres, warehouses and plants needs to be identified so that the long term profit can be
maximized (Baghalian, Rezapour and Farahani 2013). There are various strategies that could
help companies to form a perfectly designed supply chain. Supply chain design is used to
align to the capabilities of the supply chain and the designs of the product. In recent times, it
is necessary to adopt strategies which will enable the complete satisfaction of the customers,
reduce the total cost and increase the flexibility that is needed to solve the unplanned issues
that emerge. It is very important to understand the different mechanisms that is present in a
supply chain system (Farahani et al. 2014). There are various advantages to the supply chain
management of an organization. Firstly, the efficiency of the organization increases when
they are able to deliver the products on time because of the operation of the supply chain
management. Secondly, the risks can be managed properly due to the supply design if it is
implemented properly. Thirdly, the company will be able to meet all the demands of the
consumers. However, there are also certain limitations to the supply chain management.
Firstly, since the risk is no more visible due to the increase in the complexity of the system, it
does not mean that the risks are eradicated. Secondly, the supply chain can cause damages in
other sections as well if the other areas are not managed in a proper way. Thirdly, the supply
chain design tools are not always capable of averting the risks that appear in the organization.
The food industry is a competitive sector or market which is dependent on the time and
capability of the farmers or producers who has the responsibility to supply the product top the
customers. The companies who carries this supply chain management has to understand that
the innovations of supply and differentiation in services would help to retain the customers
and to gain more revenue for their services. To get this it is important to design a supply
chain especially for procuring the product to meet the demands of the customers and to
decrease the risks without having to create any extra inventory or the capacity for keeping the
products (Eskandarpour 2015). The supply chain design in the food industry is a frameworks
where the participants are inter dependent on each other from the farms to the consumers of
those food. Supply chain takes into consideration all the functions that is present in a
traditional logistics model and also the activities that are included in logistics such as
marketing, finance, new product development and customer service. Food industry is
important to bring together a majority of aims which would provide an understanding of the
supply chain and support those individuals who would help to manage the different parts of
the supply chain and make the development of the research activity more efficient. The
supply chain is divided into three parts namely inbound logistics, outbound logistics and intra

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facility logistics. The food industry supply chain have a broad planning process, organizing
and controlling the outflow of services and materials from the suppliers to the consumers in
the end. A few functions that are important in the supply chain management are managing the
inventory, selection of vendors, storage and transportation (Holweg and Helo 2014). The four
important areas which involves strategic decisions are location, inventory, production and
transportation. Location is the geographical location of the facilities which produces the food,
the points of stocking the food and the points of sourcing the food. This is the first step in the
supply chain design. The location of the facility is very important as it should be for a long
term. Once the location is fixed, the other paths that would automatically start flowing in a
normal manner due to the establishment of the other paths which leads the produced product
to the end user. There are various decisions which needed to be made to form a basic strategy
which will help to cater to the demands of the end consumer. The decisions have to be based
on various factors such as cost of production, taxes, drawbacks of duties, local content, cost
of distribution, tariffs, limitations of production and many others. The decision also have to
be aligned with the location so that there are no implications in the level of operations.
Production have to assess factors such as the areas which is best for the production, allocating
land for the growth of raw materials to produce the food, allocating the suppliers to the
distributers and allocating the distributors to the consumers (Mota et al. 2015). The decisions
of production has a major impact on the revenue generation of the company, the costs
incurred and the levels of customer service of the company. Inventory is the place where the
raw materials, the semi-finished products or the finished products are being stored between
the location of the production unit and transportation to the end customer. Transportation
decisions is the strategic decision to choose the mode of transportation that would be used to
transport the product form the inventory to the distributors. There are various companies such
as Nestle, Magnolia and Unilever who has a great hold over the supply chain management
system to deliver their products to the various distributors which can ultimately reach their
end customers.
Configuration of supply chain through collaboration, lean principles and
agility
The greatest challenge that is faced by companies is the need to meet the growing
demands of the consumers. Due to the shortening of the life cycle of technologies and the
increase in the competition between different organizations there emerges an immense
pressure for the companies to meet the changing consumer demands. To achieve success

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organizations have to make sure that there is good compatibility and coordination among all
the other participant companies present in the supply chain. For this organizations have to
maintain agility towards their functions and have to respond to the issues and demands within
a short span of time (Liu et al. 2013). This means that they have to give quick outputs to meet
the growing demands of the customers and to switch quickly between different variants.
Agility is known as the capability of an organization to meet the supply with the demand that
the market is producing. Agility is not the same as leanness however it does follow the lean
principles which align with the agile practices points. Agility is an important factor in the
organization’s success as it pressurizes the competitors of that organization to perform more
efficiently under a pressure which is created in the market. Agility has originated from the
concept of flexible manufacturing systems (FMS). Flexibility in manufacturing have been
understood from the rapid changes which occur and the quick responses to those changes in
the volume of the product and this agility in the demand and supply have led to the spread of
the idea in the environment of the business (Yusuf et al. 2014). Leanness, on the other hand,
is used as a method of lean manufacturing is that the inventory is reduced. Lean principle
focuses on the optimum output with the least reduction in waste. The practice of lean has
helped organizations to manufacture high quantity of products and efficiently achieve this
target with the optimum use of their resources thereby increasing their economies of scale. In
those markets where the demand is not certain, the variety is comparably high and the volume
of the stock keeping is low, a different kind of practice is needed to respond to that demand.
Efficiency is needed during those times, but along with it the quickness to meet the demand is
also required. This means that rather than producing a large volume of products for a market
segment it is advisable to produce a smaller but more variety of products for a bigger market
segment. There are four dimensions of agility which have been derived namely enrichment of
the customers, enhancement of the competitiveness, organize the change and the uncertainty
(Gligor, Esmark and Holcomb 2015). Lean strategy derives the efficient use of resources,
elimination of waste, providing the shortest time for lead with the minimum stock and
spending the minimum total cost. Lean approach has five major principles. Firstly, value
means designing such a product which holds a great value from the perspective of the
customer. Secondly, value stream is designing the best possible way to manufacture the
product by effectively setting the requirement. Thirdly, value flow means that there is a
smooth flow of the materials produced through the supply chain by ensuring that there is
efficiency in the flow of materials, elimination of waste, waiting, interruptions and detours.
Fourthly, pull means that products will only be manufactured when there is a demand for the

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product among the customers. Lastly, aim of perfection means that there must me a
continuous system of improvement in the supply chain so that the organization is able to get
close to the set goal to achieve their operations by specifying the areas where waste is mostly
found and eliminate those areas (Dües, Tan and Lim 2013). There are six areas of supply
chain which contains the most waste. Firstly, the external or internal quality which is very
poor to satisfy the customers. Secondly, wrong production capacity or level means having the
king of capacity for a product which is not required at the time. Thirdly, poor process means
having operations which might be too time consuming or complicated and even unnecessary
at times. Fourthly, waiting means to wait for the production to start or to finish, wait for the
arrival of the raw materials, wait for the repairing of the equipment and machines and such
other activities. Fifthly, movement means the unnecessary movement that is made by the
products during the period of operations. Lastly, stock means having a large quantity of stock
on hold and having an increase in the complexity and increasing the costs (Martínez-Jurado
and Moyano-Fuentes 2014). Collaboration means the working together of all the contributors
of the supply chain so that the process of supply from the manufacturer to the user is smooth
and without any complexities. It is a strategic work to maintain the collaboration between the
participants of the supply chain so that all of them can bring about a competition and engage
in combined actions so that they can contribute to the profitability of the networks present in
supply chain (Manzouri and Rahman 2013). Hence, supply chain can be configured by
selecting the suppliers, processes and transportation at every stage of the supply. The aspects
of collaboration, agility and lean principles can be integrated in the supply chain to configure
it according to the current demands of the customers. For example, companies like Nike,
Caterpillar Inc are the ones who follow lean and agility principles in their supply chain.
Utilization of advanced technology to maintain competitive advantage
Increasing the usage of technology in supply chain management can be beneficial for
the organization as it will help to gain competitive edge over the other organizations.
Upgrading the organization to use more advanced technology will assist them to achieve the
goals faster and create an impact on their business strategy. Therefore, the evolution of
supply chain can help businesses to gain competitive edge in the following ways (Ross 2016).
Firstly, manufacturer’s strategy should align with the warehousing strategy through the
supply chain technology. Supply chains can have differences in their scope and size,
however, their functions remain the same. It starts from the manufacturers who manufactures
the products and then those products are sent to the warehouse where they are stored till the

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time they are ordered by any customers (Rushton, Croucher and Baker 2014). However, the
strategy followed by the manufacturers does not align with the warehouse strategy. This is
where the modern supply chain system comes into being as it can eradicate the gap between
these two sections by the sharing of data. The result of this technology is that the issues of
overstocking and overproduction is decreased and this saves a lot of cost of the organization
which they can spend in their product improvement or reducing the risk or in their marketing.
Secondly, advanced technology can help in the promotion of supplier collaboration with the
guides of inbound routing. Vendors are a major issue in warehouse strategy and in the
achievement of competitive edge. When the suppliers or vendors fail to follow the prescribed
guide of inbound routing then the cost increases for the obtainment of each product (Waters
and Rinsler 2014). The result of this is that the consumer cost increases and this leads the
consumers to purchase the product from the organization’s competitors if the price of the
products of the organization increases. In this instances there are new technologies which can
be leveraged to ensure that the suppliers are following the lowest carriers of cost and
transportation modes when the stock is being sent to the facility by them. Thirdly, decreasing
the implementation costs by increasing the usage of supply chain technologies which is cloud
based. The development of this cloud based technology is one of the easiest technology to
implement in the modern times. In this technology there is no requirement to manage the
system of the entire IT department, rather, organizations can take advantage of their
competitor’s system by using a software-as-a-service (SaaS) of the third party (Fahimnia,
Sarkis and Davarzani 2015) . The previously held benefits and rates of the big retailers can
also be accesses with this technology. Lastly, the new systems of technology can help in the
enhancement of the collaboration across all partners of the supply chain. Enhancement in the
collaboration helps to keep all sections of the supply chain in continuous communication. The
advancement in technologies will help in setting up a predictive supply chain model which
will prevent the organization from making investments in new factories, distribution centres
and warehouses that is not operable so that there is a reducing in the cost of overheads.
Therefore, the new facilities can be simulated which will create an impact on the profits and
costs before taking any action. Due to this the overall cost that is incurred by the company
will decrease which will in turn increase the competitive edge of the organization. Other than
these technologies there are various other forms of information which would have a great
affect on the supply chain management and thereby creating a competitive edge for the
organization. Technology is required in the development of supply chain management so that
they can be beneficial in decision making and planning various strategies. There are various

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software for supply chain management which makes the functioning more able and smooth.
Electronic commerce is used to interchange electronic data, e-mail, electronic publishing,
electronic transfer of funds, image processing, database sharing and capturing magnetic or
optical data. Electronic Data Interchange (EDI) is referred to as the exchange of documents
of business from one computer to another in a standard format. There are various benefits to
EDI which are quickly processing information, reducing the paperwork, improving
expedition and tracing, competitive advantage, better service to customers, increase in the
production, efficiency in cost and improvement in billing (Ross 2015). With the use of
Electronic Data Interchange, the partners present in the supply chain will be able to overcome
the problems that they have been facing in the supply chain previously such as magnification
of information regarding demand and supply by enabling improvements in the technologies
and making them more advanced (Silvestre 2015). The advancement of technology will help
to meet the demands of the consumers and also perform all the operations in the right manner
and at the correct time so that there are no unnecessary waste of resources or time. Other
technologies like big data, analytics, internet of things and cloud computing are needed in the
sector of supply chain management. These advanced technology helps in the management of
the supply chain and the operations that follow with it. These technologies help to manage
without the scope of any error and hence are adopted by the companies. For example,
companies like American Express, Amazon and Capital One use these technologies.
Conclusion
It can be concluded that supply chain management is a very important part of an
organization which enables the proper operation of company especially in the transition of it
products from the stage of manufacturing to the delivery of the products to the end
consumers. In the food industry supply chain begins from the time when the raw materials are
collected from farms and then sent to facilities for production into food. This produced food
is then sent to warehouses for storing till they are ordered by any customer. When the order is
received they are transported from the warehouse to the distributors or retailer who then sells
the food product to the final customer. This is the basic supply chain of the food industry
which is similar for all companies irrespective of their size or market value. On the other side,
there are various technologies which are used for the development of the supply chain
management. These advanced technologies helps to make the work easier and also
contributes to making the system more efficient and fast so that organization can make the
most use of their resources in lesser time and cost.

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