Baxter's Operations Management: Supply Chain Design for MEA Market

This report identifies and addresses supply chain issues faced by Baxter in the Middle East and Africa, focusing on challenges within the Gulf Cooperation Council (GCC) market. The primary issues include the inability to maintain product freshness due to temperature variations and costly Iraq shipments. The report recommends automating inventory management to improve efficiency, reduce operational costs, and enhance communication across Baxter's operational branches. It also suggests optimizing container usage for smaller orders and adopting advanced technologies like blockchain to improve supply chain transparency and communication. The analysis emphasizes the importance of effective inventory management, demand forecasting, and coordination to support business growth and customer satisfaction. Desklib provides access to this and other solved assignments for students.

Running head: BAXTER
Baxter Business Operations– Middle East & Africa
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Executive summary
The main purpose of this report is to identify the issues in the supply chain of Baxter. The paper
identifies two issues on a broader aspect. Those two issues are incapability to keep products fresh
in temperature variation and costlier Iraq shipment. In the Middle East countries, the temperature
is generally on a very higher side. On the other hand, Baxter’s products are very sensitive and are
vulnerable to such variation in temperature. Hence, the paper identifies this as an issue and tries
to provide possible solutions to counter this. In sea shipment, small orders are partially loaded in
containers. However, a container can be used for loading more than what Baxter normally does.
It also causes to happen unnecessary expenses being made to the logistic cost. The paper also
provides suggestions on how to effectively maintain the Iraq shipment.

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Table of Contents
Introduction......................................................................................................................................3
1. Key Operations Management issues faced by Baxter to serve the GCC market.........................3
2. Recommending the best supply chain design/model...................................................................7
3. The measures to take with all the stakeholders to ensure that the SC is supporting the business
growth not the opposite.................................................................................................................13
4. Resolving the issue with regards to the Iraq Shipment..............................................................17
Conclusion.....................................................................................................................................21
References......................................................................................................................................23

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Introduction
The supply chain can be considered to be the heart of a company’s operations. The fact
though varies from SMEs to MNCs. Despite this, only a very few firms are actually able to
utilize its benefits. Firms that struggle they are affected by their capabilities to make the best
decisions. The management in such companies fails to establish access to real-time data. It is
because they have limited access to legacy technologies, which is required to create end-to-end
transparency (1). There is a need to get rid of the traditional business model that is being largely
followed across the global supply chain operations. The traditional model of supply chain
operations can be replaced with an alternative. The recommended alternative is about supporting
a digital foundation in the operations field. The digital foundation can be formed with latest and
emerging technologies like automation, artificial intelligence, predictive analytics, and robotics.
By using this digital formation in place, firms belonging to different industries can capture,
integrate, analyse, and interpret high-quality data in real-time (2).
The main purpose of this report is to identify the supply chain operations issues of Baxter
and providing adequate solutions to counter those issues. Baxter’s products are essential building
blocks of healthcare sectors at the global level. The products and services of this company are
available to a number of countries across the globe. These products of Baxter contribute
substantially to the global stock of medications, and treatments. Hence, it is important for Baxter
to be able to supply adequate products, and services to global countries when it is needed.
However, it has constantly been facing a range of issues in its supply chain especially in the
Middle-East and the African regions. Hence, this report first identifies the issues and then tries to
propose a few way outs of it.
1. Key Operations Management issues faced by Baxter to serve the GCC market

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As noted by (3), supply chain management practices can influence the rate of customer
satisfaction for a firm. As per this article, there should exist a deeper relationship between the
employers and suppliers. Indeed, employers must be capable of working collaboratively and
having good control over the transaction between them and the suppliers. If this can happen the
rate of customer satisfaction for the concerned company will definitely go high.
The evolution of the supply chain is also very interesting. The Supply Chain
Management (SCM) term was first coined by logistics consultants in 1980s. Since then the
supply chain has kept on gaining popularity with passing days. The popularity of SCM did not
remain confined just to the practice but also extended to the scholars. Those scholars researched
and wrote a variety of journals on distribution, manufacturing, marketing, transportation,
customer management, and integration. According to (4), the introduction of the supply chain
produced a paradigm shift within and around the management literature. Individual businesses
no longer competed as autonomous entities but rather as the member of supply networks. In a
network of interconnected firms, success was not just dependent on individual operations but on
capabilities to manage the interconnected entities.
The fact mentioned in the above paragraph suggests that the success of a supply chain
depends a lot on firms’ capabilities to manage their business relationships with others in the
interconnected network. It suggests that communication between interconnected entities is also
very important. Effective communication between these entities will ensure that demands and
supplies are effectively communicated to each party. Considering these few facts, a number of
supply chain issues can be traced in Baxter’s issues. These are (5):

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1. Baxter is facing a considerable variance in the forecast between orders being
communicated to the manufacturing sites, and the orders received from the firms. It is
affecting its forecast capability on a larger note.
2. Larger orders are prepared and manufactured in different manufacturing branches. These
branches are sometimes based in different countries or even the continents. Moreover,
sometimes similar orders are manufactured from different products at the different
manufacturing branches. It shows clear communication and inventory management gaps
in supply chain operations.
3. Small orders are kept in queues until it reaches the minimum order quantity. The process
is cost-effective from operations’ perspective; which is a good thing. However, it is not
that pleasant an experience for the Baxter because it generally fails to deliver orders on
time.
4. The company does not offer a feasible container option for small orders. The container is
used to carry such products are generally made of higher containers. Hence, the container
handling cost does not get an equally good return.
5. The products of the Baxter Company are temperature sensitive. It needs to be kept
between (+15 to 25°C). The temperature is one of the few constraints in Gulf
Cooperation Council (GCC) countries. The temperature can seriously impact the quality
of the products.
6. Sudden orders create a lot of problem for the company. The delivery lead time is equal to
120 days from the date of order received. Despite this Baxter receives urgent orders to be
delivered in unexpectedly less time. They are receiving urgent orders on a regular basis.

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Understandably, they are unable to deliver products on time. It creates a huge customer
dissatisfaction, which is creating unpleasant circumstances in the company.
The issues being noted as above in bullet points indicate a huge lot of problematic areas in the
supply chain management process of Baxter. These are (6):
Baxter does not have a good management system for inventories. Inventories if not
managed properly may result in short-of-stocks, and overstocking. Short-of-stocks will affect the
ability to deliver orders on-time. On the other hand, overstocking will add unnecessary pressure
on the cost of warehouse management. Either of these situations is not healthy signs for
companies as such as Baxter. The company holds a good market reputation in and across the
globe. However, this may get spoiled if such issues continue to persist. Ineffective inventory
management will also result in a conflict between the manual entries of stocks, and the software
generated inventories entries. Such circumstances are never as good as a manual adjustment in
sales will then become tough to be detected.
On a broader aspect, the demand forecast lacks the superiority it should have considering
the reputation the Baxter carries. The company does not have a good forecast capability. They
have been into operations for so many years but still not aware of the purchase behavior of some
clients. It is due to this some orders are left in queues before it gets filled out. Once it happens
they are not able to manage it appropriately. It appears as if Baxter lacks the tools, techniques,
and training needed to accurately identify the market behaviour. Their incapability to understand
the market demands has resulted in too many issues. A lot of hospitals and other clients have
complaints against Baxter for not meeting their expectations. They have found Baxter as
inefficient in supplying the orders on an urgent basis. Baxter according to these clients misses on
critical situations. Nonetheless, this is not a reliable job from the one of Baxter’s stature.

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Communication is also a major issue in various operating branches of Baxter. The issue
is so big that they are not able to detect whether similar products are being manufactured in
different branches. Additionally, the demand forecast is also not communicated appropriately at
its different operations branches. Consequently, a number of branches of Baxter are reported to
have struggled to meet the demand factor. They have faced problems in controlling the stocks.
Ineffective stock management is an open door to either over-stocking or out-of-stock issue. Both
of the situations can affect the efficiency of manufacturing, and supply operations. Co-
Ordination is missing largely in and along various branches of Baxter.
The use of advanced technologies is another area of concern for Baxter. The era of the
fourth industrial revolution has arrived and with it, a whole lot of latest technologies have also
emerged. Some of the most talked about technologies are Artificial Intelligence (AI), Internet of
Things (IoT), Advanced Analytics, Conversational Systems, Intelligent Things, Blockchain,
Robotic Process Automation, and Immersive Technologies. These technologies will very soon
become part of the global supply chain operations. For example, Blockchain can help to avoid
communication failures in supply chain operations. It captures the point-to-point journey through
digital records. Digital records are created from unique attributes being covered in barcodes.
These barcodes can be inscribed by laser.
2. Recommending the best supply chain design/model
There is a need to work on the supply chain model, which is being followed by Baxter for
its operations in the Middle-East, and African countries. The existing model has already created
a lot of issues for the company. Baxter is being criticised for its capability to fulfill the market
demands on an urgent basis. Additionally, they have also been out-of-stock on quite many

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occasions. With regard to a range of supply chain management process issues, the following
recommendations should be implemented to design a new supply chain model (7):
Since Baxter has failed to efficiently manage the inventories, the company should
consider automating the inventory management. Automated inventory management will be
much more efficient than the traditional inventory management systems. This would not just
enhance the efficiency level of the inventory system but would also cut down the operational
costs of inventories. The cost can be depreciated by as much as 25%. An automated system will
more effectively communicate the market demands with the different operational branches of
Baxter. The level of efficiency will be in terms of quality leads, and the speed of delivery at
Baxter’s various branches. Baxter has suffered from bad leads in the past. This has caused
overstocking, and short-of-stock issues to the company. The speed of delivery of market forecast
will help in making quick deliveries to the clients. Along with quality leads, and improved
communication, there are many other benefits of automated inventory management. These
include but not limited to like operations productivity, sales and profits’ enhancement, business
integration, automation of tasks performed manually, and customer satisfaction.
To automate the inventory management, Baxter will need to identify right partners
providing the automated inventory optimising solution. It really works wonder. It can import the
demand data of customers, and classify it out in various domains like distribution, one-off spikes,
and a forecast. The technology creates a forecast using the appropriate algorithm for each of the
specific distribution patterns. Such an automated system then automatically calculates the
optimal stock on hand, the buffer stock, the presentation stock for a retailer, and plans for any
promotions or events. The system can also take into the consideration of economic order
quantities. It means the system can also go beyond the usual order limits. For example, if a

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certain channel no. is allotted with 200 units on a regular basis, and now there is an economic
order quantity of more than 200 pieces, the system will automatically calculate the differences
(8). It is user-free as it helps to plan both in the existing pattern and different than the usual
patterns. The work that had initially required a team of so many supply chain professionals, and
their constant research works and plans, can now be handled with just a few clicks of a dedicated
button.
Communication has also remained a major issue for Baxter. It is being mentioned in this
report and is also clearly mentioned in the case study on Baxter that there exists a less
transparent communication network between its different branches based in the range of
countries, and regions. It has troubled the company in major ways. There is no clear indication of
what a lot of products are being manufactured in which branch of the Company. Due to this
ineffective communication between the different branches, the cost of operations is also out of
control on most occasions. Consequently, similar products are being made in more than one
branches of Baxter. However, this is waste of time as during the same time period more products
of different nature could have been manufactured in branches being used to prepare similar
products. In addition to this, the communication does not happen through a network, which is
necessary to speed up the communication process. Indeed, Baxter follows a traditional model of
communication, which is both times consuming and also less efficient.
Facts, as stated in the above paragraph, indicate that Baxter should deploy a system to
resolve this issue. Fortunately, the company is existing in the era of the fourth industrial
revolution. Additionally, the company operates at the global platform and bears the ability to
access a major makeover in the system. It is, therefore, more suggestive, and impactful as well to
identify and apply the latest and emerging technologies that are feasible to the system.

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Considering all these factors stated in this paragraph, this can be said that the communication
inefficiency of Baxter can be resolved with the Internet of Technology (IoT) (9). An IoT will
provide Baxter the much-needed network through which communication can be established
between the branches. An IoT will help to improve communication in many ways. This is indeed
a platform using which range of the latest technologies can be applied to facilitate
communication in different ways. Over an IoT platform, technologies such as customer
relationship management (CRM) can be deployed to establish easy access to large-scale data.
These set of data can be accessed by remotely accessing to the computer system enabled with
CRM and spread over the IoT platform across the different country and region-wide branches of
Baxter. It means IoT and CRM together will help Baxter to access large-scale data in real-time.
Real-Time access with maximum accuracy will require an application of a feasible data-analytic.
Data-analytic helps to utilise required data in real-time. The benefits of using a network of IoT
and CRM will produce the following benefits to Baxter (10):
The synergy of IoT and CRM is possible and this will create an environment of
preventive and predictive functionalities for customers. In context to Baxter, clients and
customers will get a notification about a problem prior to it happens. Hence, they will have
enough information about the stock availability of medications. Consequently, in urgent
situations, there won’t be any communication gap. Indeed, clients and customers will have a pre-
mind set up for where to avail the medications. They won't require to rely anymore on Baxter in
a case when they are short of stocks. Moreover, Baxter will also be able to communicate the
issue that has affected the stocks. With all these, there would be negative or probably no negative
feedback from customers and clients regarding the communication gap.

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The three components of IoT will have a major impact on the performance of the
company. Those three components are (11):
1. Sensors
2. Wireless Internet Connectivity
3. Data Processing Capability of the system over the IoT platform
The synergy between IoT and CRM can be explained by taking a suitable business scenario.
For an example, the synergy between CRM and IoT can be implemented to the hearing aid
company. The hearing aid industry is also being fueled with innovative features to enhance its
user-level experience. They are trying to use or introduce a range of innovative features like
longer battery life, noise reduction, Bluetooth compatibility, etc. In addition, hearing aid
manufacturers are also trying to integrate smartphones with hearing aids to provide enhanced
features to customers and to control its operations. Some scenarios will make it clear about how
IoT is helping the hearing aid manufacturers.
Scenario 1: A customers' hearing aid is malfunctioning. A customer might or should
never know the exact reason for this failure. However, if the hearing aid manufacturer uses or
has deployed an IoT platform, they will get to know the exact reason for this problem. The
problem might be due to an ample number of reasons such as due to the battery is
malfunctioning. A service representative from the company's side will notify the customer of the
problem. In addition, they would also communicate the strategy to adapt to get rid of the issue.
Moreover, customers will get a notification prior to the product has met with a problem. This is
good from both customers and the company’s perspective. There would be no harassment to the
customer from the service failure as the customer already knows that a battery related issue is