Supply Chain Management in Managing Performance Gaps

Added on - Dec 2020

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Thesis
Table of ContentsCHAPTER 1: INTRODUCTION....................................................................................................11.1 Background of study..............................................................................................................21.2 Problem statement.................................................................................................................41.3 Rationale of research.............................................................................................................51.4 Significance of research.........................................................................................................61.5 Research scope.......................................................................................................................61.6 Project Structure....................................................................................................................6CHAPTER 2 – LITERATURE REVIEW.......................................................................................8Theme 1: Role of supply chain management in managing performance gaps............................8Theme 2: Factors leading to performance gaps in Tesla...........................................................10Theme 3: Alternatives taken by firm in performance gap.........................................................13Theme 4: Cost, quality and capacity related to supplier and their efficiency............................15Theme 5 Strategies to resolve performance gap........................................................................16CHAPTER 3: RESEARCH METHODOLOGY...........................................................................19Introduction................................................................................................................................19Research philosophy..................................................................................................................19Research type.............................................................................................................................20Research approach.....................................................................................................................21Research design.........................................................................................................................22Data Sampling...........................................................................................................................22Data collection...........................................................................................................................22Data Analysis.............................................................................................................................23Ethical consideration.................................................................................................................23Reliability and validity..............................................................................................................24Chapter 4 Data Analysis................................................................................................................254.1Introduction...........................................................................................................................254.2 Role of SCM in performance gap........................................................................................254.3 Factors leading to performance gap.....................................................................................274.4 Alternative taken by firm.....................................................................................................294.5 Strategies to resolve performance gap.................................................................................31
Chapter 5 Discussion and Conclusion...........................................................................................35Discussion..................................................................................................................................35Conclusion.................................................................................................................................38REFERENCES..............................................................................................................................41
TITLE-How to help supplier improve or resolve the performance gap in term of capacity,quality and cost – A maturity level and efficiency evaluation.CHAPTER 1: INTRODUCTIONIn recent time, technology is playing a crucial role in growth and development oforganisation. It has provided a platform to expand into different markets and increase theirefficiency. Almost in every business functions technology is implemented which has enhancedspeed of operations as well as evaluating performance. Supply chain management is a functionwhich control and manage inflow and outflow of goods and services. It is divided into severalother functions such as logistics, stock management, supplier management, etc. So, to effectivelymanage logistics technological tools and equipment’s are used (Cannavacciuolo & et.al., 2015).Through this, companies are able to evaluate performance of suppliers. Thus, deviations aredetermined and measures are taken to resolve it. Consequently, firms have made certain changesin selecting supplier. Moreover, they are able to analyse cost and capacity of suppliers and thentaking decisions.For a company supplier play a significant role in operations and purchase. It is becauseany variation in quality of raw material will highly impact on operations. Similarly, efficiency oforganisation depends on supplier products. The role of supplier is to meet requirements ofcompany, supply raw materials in specified time, etc.A company production department isentirely dependent on logistics of materials. The inflow of materials at right time helps inproducing goods in right time to meet market demand. Moreover, enterprise is highly dependenton supplier to maintain efficiency within operations. It is very important for business to selectappropriate supplier so that quality of raw materials as well as finished goods is preserved. Everycompany have a proper and systematic method through which they select supplier. The methodscan be changed to safeguard quality of raw material.It is essential for company to evaluate performance of supplier so that cost can bereduced and return on investment of finished good is increased. Furthermore, it gives a detailedreport about overall performance of supplier. In addition to it, enterprise identify why there isgap in performance and the reasons behind it. This is useful in eliminating those gaps so thatcapacity as well as quality. In every there are number of suppliers through which raw materialsare purchased (de Sousa Jabbour & et.al., (2015). It is ensured by company that each supplier iscapable enough to meet requirements of enterprise in critical times. This is ensured by evaluating1
performance of supplier on basis of certain elements. They are cost, quality and capability. Butthere occurs a situation where supplier is not able to meet high demand of raw materials. So,company have to switch to another supplier to fulfil their needs. There occurs a situation whichleads to performance gap. It might occur due to change in variables such as cost or quality.In present time a lot of issues have occurred over performance of suppliers in auto mobilesector. There has been rise in performance gap related to cost, quality and capacity. The suppliersare not able to meet specific needs of companies. It has affected their efficiency to a great extent.Thus, it has enforced business to focus on supplier selection and reducing performance gap.There are many reasons due to which gap has increased. For instance, ineffective selection ofsupplier, rise in cost, capacity assessment, etc.Business is having a global network of suppliers interconnected with each other. For eachone their capacity, cost and quality are different.The organisations are having their specifiedprocess and methods of managing overall activities of suppler (Liu, Wang & Huang, (2017). Insimilar way, the impact on efficiency also varies on supplier as well as business. There arevarious methods to evaluate performance gap and resolve it. For example, Recently Tesla faced asituation in which supplier was not able to supply components on time. Thus, they broke contractwith that supplier. It affected entire operations of Tesla and resulted in performance gap. In orderto resolve it, there are three options which enterprise can follow. First is switching to newsupplier, insourcing those components and last helping supplier to resolve performance gap.Similar case happened with Nintendo where company supplier ran out of supply in March 2017.Due to this company sales and profits were highly affected.1.1 Background of studyIn today's world, Supply chain management is basically the flow of goods and servicesthat perform different functions such as storage of raw materials, inventory process and finishedthe good from its origin point.It alsodesigning, planning, control, monitoring and execution ofsourcing activities throughproper objective. In this way, it helps for increasing competitiveadvantages in the global marketplace.The quality cost and capacity of organization is based onthe supplier to handle each and every task in proper manner(Zhu and et.al., 2018). Theorganisation is connected to the supplier and create strong bond that help for maintain the costand quality of product in proper manner. Supplier is used the supply chain management thatintegrated with the business process, from the raw materials supplier through the end point. In2
this way, the supplier is captured the opportunity for reducing the gap between the performanceand their capacity. Supply chain management system is a process that always maintain thequality and cost according to the market condition or situation (Whipple, Wiedmer & Boyer,2015).A supplier is responsible for delivering high quality of products within specified timeperiod. It enables in proper flow of materials and information which is required in managingoperations. There is a great relationship between suppliers and operations of business. Anyinterruption in flow of goods impact on operational efficiency.In today’s competitive business environment many companies are outsourcing theiractivities. this has eased their operation process and made it efficient enough for them to producevariety of products in short time. The outsourcing industry is at boom. It has made it easy fororganisation to assemble goods at one place and deliver it in market.Enterprises have begun to outsource its manufacturing activities because of the number ofadvantages it has. Outsourcing activities are different in various organisations, it has variant offorms based on the location from where it is hiring the services. Onshoring, nearshoring andoffshoring are three basic forms of outsourcing (Cao and et.al., 2010). Enterprises with highavailability of resources may afford offshoring activity irrespective of funds and investments.Similarly, enterprises with high rate of supply and demand may opt for nearshoring outsourcingto overcome time constraints.Enterprises may undergo from different outsourcing models to ensure better results andeffectiveness. High outsourcing activities are carried out by enterprises these days because ofincreased workload and demands among the customers. There are many advantages anddisadvantages of outsourcing which are described below :-ADVANTAGESSave and reduce cost of the company:By outsourcing certain manufacturing activities,the additional cost of company that incurred in installation, maintenance, logistics andprocurement of machinery get reduced instantly.Increase focus of company:Outsourcing deliver strategic focus to specific plan andprocedure of the company (Handfield & et.al., 2015). Besides of focusing on productionand related activities of transportation, dealing with suppliers and retailers, the companycan easily drive its focus towards own strength and competencies.3
Access of company's resources to other departments:The remaining resources thatcould be utilized before outsourcing can be used in the development of other functionalareas of the company.DISADVANTAGESIncrease dependency:The enterprises that are highly involved in outsourcing itsactivities becomes extremely dependent on other manufacturers and suppliers. It reducesthe effectiveness of company in terms of its performance and productivity.Risks related to strategic decisions:The enterprises have a considerable risk of losingits key decisive policy of success during high involvement with outsourcing agencies.Risk of inefficient results:The enterprises are not aware of inefficiencies of outsourcingagencies that drive undesired results to the company and affect the market image ofcompany and quality of products.Based on the derived disadvantages of outsourcing, a threat of performance gap hasoccurred in logistics. Ineffective outsourcing strategy may result into performance gap amongsuppliers. The gap arises when the suppliers are not providing the fixed quantity and amount ofraw materials that are specified by the company (Gligor, Esmark & Holcomb, 2015).Furthermore, the standards of parent company and hired supplier must be aligned with eachother. Performance gap also arises when the cost incurred by supplier is high and the qualitydelivered by it is comparatively low. Another concerning factor that affects the performance isreal time delivery by supplier. If enterprises do not receive goods on time, it hampers the furtherongoing processes and operational efficiency.1.2 Problem statementFrom the past years, suppliers are playing crucial role in contributing in maintainingefficiency of business. But there is increase in performance gap among suppliers. It might be dueto many reason or factors that is impacting performance of suppliers. This is impacting onoperation of company. Along with it, many firms prefer outsourcing manufacturing activities sothat cost per unit remains low. Also, it is useful in meeting market demand and generating highrevenue. Another issue which has arose is auto mobile companies are not able to evaluatesupplier performance. The efforts taken by them to improve performance has not generatedeffective outcomes. Hence, it has hampered on operational efficiency. Besides this, severalstrategies are been followed in evaluating supplier performance.4
Supply chain is playing a significant role in improving efficiency of auto mobilecompanies. The organization have laid down a proper network through which distribution ofgoods is been done. But since advancement in technology firms are facing many problemsrelated to maintaining efficiency in supply chain. It has resulted in rise in performance gapsbetween suppliers and companies. Due to this more cost is incurred on purchase of rawmaterials. Also, quality is been degraded from supplier’s end (Srai and Lorentz, 2018).Therefore, this thesis will focus on why suppliers are not able to deliver car component on time.also, why there is rise in cost of battery and what impact it has on overall budget of Tesla.Furthermore, what impact will it have on cost, quality, etc. in production process when AI willbe implemented. Thus, it will provide roadmap to companies engaged in auto mobile sector tominimize gap in terms of cost, quality and capacity. They will develop and implement strategiesby making changes in business process.AimTo evaluate measures to resolve performance gap with regard to cost, quality andcapacity of suppliers and enhance their efficiency. A case study on TeslaObjectiveTo access role of suppliers in managing performance gapsTo analyze factors leading to performance gaps within suppliers in TeslaTo evaluate how cost, quality and capacity is related to supplier and their efficiencyTo recommend what measures or actions can be taken to resolve performance gapResearch questionWhat strategies can be followed to select appropriate supplier?What is the impact of performance gap on efficiency of business?How performance gaps can be reduced by taking effective measures?1.3 Rationale of researchIn present time supply chain and logistics plays a vital role in growth and development ofcompany in auto mobile sector. They help in proper delivery of finished goods in differentmarkets in right time. Besides this, it is essential for organization in industry to reduce theirsupplying cost and maintain quality of products. When supply chain efficiency is maintained ithelps in smooth flow of buying raw materials and managing stock. The major part of company5
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