Different supply chain strategies
Executive summary
The two organizations under consideration are Starbucks and Adidas. The two companies embrace different policies, practices, and strategies in the supply chain. For instance, Starbucks’ supply chain is centered around sourcing, supplier relationship, manufacturing and distribution, and delivery and sale. An organization like Starbucks has to instill supplier relationships through equitable treatment and high-quality initiatives. Technology is well integrated into the supply chain. For instance, logistics and supply chain functions are also well synchronized in the company courtesy of a singular DSS system called Oracle, which generates monthly reports on which important decisions are based. Companies have also leveraged e-commerce to build lean supply chains.
Contents
Suggestions of systems or mechanisms to maintain business and supplier relationships. 9
List of figures
Fig 1. Starbuck’s supply chain attributes………………………….6
Fig 2. Adidas’s supply chain attributes…………………………….7
Fig 3. Potential benefits of supplier relationship management……9
Fig 4. Some platforms used by Starbucks………………………….11
Principles of Logistics and Supply Chain Management
The different supply chain strategies, policies, and practices implemented by various organizations
Supply chain management strategies, policies, and practices include the need to decide on the supply chain structure and the activities every stage of the supply chain is supposed to perform. It also entails such decisions as selecting the capacities and locations of the facilities. It also takes into consideration the choice of the modes of transportation and the source from where the information is supposed to be collected. The decisions, policies, and practices also take into consideration the market uncertainties.
Since the year 2008, Starbucks has been able to reinvent and reorganize its supply chain. Since the company was growing up tremendously, the company’s supply chain system could not keep up with the company’s global growth, which led to a situation where the company had to incur more transportation expenses. Over a half of the store orders were also not delivered on time. The company was also depending heavily on the outsourcing arrangements. Based on the various weaknesses, the management of the company developed a transformation plan, which entailed the supply chain reorganization, improving processes, and looking into the future (Tien et al., 2019). The supply chain reorganization entailed simplifying the supply chain by leaving the necessary roles divided into functional groups: deliver, make, source, and plan. There was also an attempt to improve processes in the sense that every functional group got a task to look at as far as improvement is concerned. The sourcing group looked at the various factors that were leasing to the price increases. As such, the organization was able to improve the quality of service by putting in place the weakly scorecards with metrics such as safety, savings, cost, and productivity (Monczka, Handfield, Giunipero & Patterson, 2015). Starbucks’ supply chain is centered around sourcing, supplier relationship, manufacturing and distribution, and delivery and sale. The company has standards and requirements that must be adhered to by the suppliers who work with them. The long-term relationship with these suppliers is underscored. The company stores are spread over six continents, and it has six central storage facilities that make it possible to streamline logistics across over 25,000 stores across the world. Technology has also been integrated into making orders, paying, and finding stores, among other things. The flow chart below depicts some of the key attributes of Starbuck’s supply chain.
(Monczka, Handfield, Giunipero & Patterson, 2015)
Fig 1. Starbuck’s supply chain attributes.
Adidas’s supply chain is multi-tiered and varied, and it portrays a more systematic and detailed approach to managing relationships with the suppliers. Apart from the employees of the company, workers in the suppliers’ factories are actively involved in the sustainability program. There is a supply chain code of conduct, which also covers the workers’ safety and health and the provisions tailored towards ensuring fair operations that are environmentally sound. There are multi-level enforcement and monitoring process in place. This entails an innovative rating system meant for the assessment of the suppliers. By the year 2018, 84 percent of the strategic suppliers had already worked with Adidas for over 10 years, and almost a half of them had a tenure of over 20 years with the company. For Adidas, most of the production work has been outsourced. About 700 independent factories around the world manufacture the company’s products, and it is present in over 50 countries (Monczka, Handfield, Giunipero & Patterson, 2015). Other attributes of Adidas’s supply chain include risk mapping, onboarding new suppliers, training and empowering the suppliers and monitoring the suppliers’ performance through audits, among other initiatives. There is stringent enforcement to deal with non-compliance. The chart below gives an overview of the company’s supply chain strategy and policy.
(Coyle et al., 2016)
Fig 2. Adidas’s supply chain attributes
An evaluation of the effectiveness of various supply chain strategies in maintaining supplier relationships
There is a move by the companies to embrace various strategies in order to leverage supplier relationships. An organization like Starbucks has been able to instill supplier relationships through equitable treatment and high-quality initiatives. Starting with equitable treatment, Starbucks practices equitable and diverse treatment in all the areas they engage business with. The areas include communities, suppliers, customers, and partners. Considering the partners, who are majorly employees, the company seeks out and engages with the very diverse partners, just as the communities they serve. As for the customers, the company’s public image incorporates their ability to respond and recognize the companies’ unique preferences and needs. The company invests and supports the local neighborhoods and the global communities through strategic partnerships and economic development opportunities, which has contributed to deepening their ties in the various communities in which they do business. A supplier diversity program has made it possible for the company to increase its business relationship with the minority (Johnson, Leenders & Flynn, 2016).
Both Starbucks and Adidas embrace high-quality practices that are anchored on product quality, economic accountability, social responsibility, and environmental relationship. There are measures in place to ensure humane and fair working conditions, protect the rights of workers, preserve biodiversity, conserve water and energy, among other initiatives. These initiatives go a long way in solidifying the relationships that the companies have with the various stakeholders.
Starbucks underscores the need for workplace standards that inform the supply chain code of conduct, which also covers the worker’s safety and health provisions to ensure environmentally sound factory operations. Multi-level monitoring and innovative rating systems are also used in this regard. The company also participates in other programs that bring the stakeholders on board, such as the Fair Labor Association (FLA) (Neeraja, Mehta & Chandani, 2014). The figure below indicates some of the performance relationships of supplier relationship management.
(Johnson, Leenders & Flynn, 2016)
Fig 3.Potential benefits of supplier relationship management.
Suggestions of systems or mechanisms to maintain business and supplier relationships
Starbucks and Adidas have been actively involved in maintaining business and supplier relationships at all levels. At organizational levels, the organizations have put a mechanism in place to ensure that employee welfare is taken good care of. Starbucks goes to the extent of ensuring that there are farmer support measures. The primary objective of farmer support programs is to give them incentives so that they reduce the environmental impact of coffee production. There are support centers and loan programs to help the farmers be involved in production activities at lower costs. The supplier code of ethics undergirds the supplier relationships of the company. At the community level, the companies are well committed to sustainability. They have found a healthy mix of sustainability aspirations and profitability (Lysons & Farrington, 2016). The relationships with suppliers are safeguarded by having a supplier code of ethics that ensures that each party’s interest is taken good care of.
Even though Adidas has also outsourced most of its production functions, there are also guidelines in place to ensure that the suppliers are reading from the same page (Myerson, 2012). The company gets into contractual relationships with the partners, ensuring that most of these relationships are long-term. There are also frequent audits that help in keeping the partners on track.
An analysis of how information technology can assist in integrated supply chain management and logistics
Supply chain and logistics integration is the process of creating cohesion and increasing connectivity throughout the whole value chain, from procurement to planning of production, to the process of logistics. As opposed to letting each function exist on its own, the process brings together disparate functions to promote collaboration and reduce disconnect (Long, 2003). The process can be achieved through the solutions, which help centralize cross-operational data to increase cross-operational visibility. Starbucks relies heavily on digital technology to manage the supply chain. There is an automated information system in place, which allows it to monitor inventory, demand, capacity, and scheduling in real-time. Functions of logistics and supply chain are also well synchronized in the company courtesy of a singular DSS system called Oracle, which generates monthly reports on which important decisions are based. There are also point-of-sale data warehouses incorporated in the technology.
An analysis of the application of e-commerce in supply chain management and the concept of multi-channel supply chain management
Ecommerce refers to buying and selling goods and services or transmitting data or funds over an electronic network, which is primarily done through the internet. In supply chain management, e-commerce revolves around the procurement of raw materials, distribution, and manufacturing at the right time (Christopher, 2011). It includes order entry, inventory tracking, among other things. For instance, Adidas has incorporated AI chatbots into its site. In turn, these give instant responses to consumer queries before and even after a purchase. The technology has helped in building a lean supply chain. Multi-channel supply chains provide customers with many purchasing options, e.g., brick and mortar stores and placing orders online. For example, Starbucks diversified growth platforms across multiple channels, capturing a large share of coffee consumption by the customers, irrespective of where they are. The figure below shows some of the digital platforms used by Starbucks.
(Christopher, 2011)
Fig 4.Some platforms used by Starbucks
Conclusion
Supply chain management and logistics are important facets of an organization. Supply chain management links major business processes into a high-performance business model, which drives competitive advantage. Logistics has to do with storage, the flow of goods, and movement inside and outside the organization. Starbucks and Adidas have been able to implement supply chain initiatives, which have to a greater extent worked for them. Supply chain relationships, Information technology, e-commerce, and integration of logistics and supply chain have been leveraged in both instances, as evidenced by the above examples.
Reference list
Christopher, M. 2011. Logistics and Supply Chain Management. New York: Wiley.
Coyle, J. J., Langley, C.J., Novack, R. A., & Gibson, B. 2016. Supply chain management: a logistics perspective. Nelson Education.
Johnson, P. F., Leenders, M. R., & Flynn, A. E. 2016. Purchasing & Supply Chain Management. McGraw-Hill.
Long, D. 2003. International Logistics: Global Supply Chain Management. New York: Springer.
Lysons, K., & Farrington, B. 2016. Procurement and supply chain management. Pearson.
Monczka, R.M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. 2015. Purchasing and supply chain management. Cengage Learning.
Myerson, P. 2012. Lean supply chain and logistics management. McGraw-Hill Education.
Neeraja, B., Mehta, M., & Chandani, A. 2014. Supply chain and logistics for the present-day business. Procedia Economics and Finance, 11, 665-675.
Tien, N. H., Anh, D. B. H., & Thuc, T. D. 2019. Global supply chain and logistics management. Dehli: Academic Publications.
