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МАРКЕТИНГ И ОРГАНИЗАЦИЯ СБЫТА
DISCUSSING GLOBAL CHALLENGES IN THE SUPPLY CHAIN Y.V. Kachina, V.V. Kachin and T.V. Shchegoleva
The article discusses major challenges that face suppliers and their procurement departments in the global environment today. Even though cost reductions and timely deliveries of goods and services across the global supply chains still represent their highest strategic priority, international corporations have started to pursue a holistic approach to developing their supply chains today. The holistic approach adds value to a corporate business strategy while representing a great challenge. Economic instability and political volatility have comprehended risk assessment. China and other developing countries also move towards the holistic business strategies that create precedents of more cost-attractive domestic sourcing. Global transparency prompts development of cross-cultural and intellectual diversity in the domestic procurement departments. Ethics and sustainability indicators have elevated in suppliers' performance evaluation. The prime discussion concerns green purchasing initiatives and trade -offs of being a supplier of high-tech companies
Ключевые слова: supply chain management, global integrated supply chain, global sourcing, procurement, holistic approach, cross-cultural diversity, sustainable procurement, green purchasing, supply chain risks
Even though global sourcing offers companies incredible advantages in terms of economic gains and costs reduction, it is extremely challenging as well. Over the recent years, procurement departments have been purposed to work on cost reductions and timely deliveries of goods and services across their global supply chains. Such low-cost strategy in acquiring goods or services overseas continues to be the highest priority for American companies due to increase in vulnerability and competitive pressure. However, to be successful and effective in achieving this goal, experts suggest focusing on a holistic approach while developing global supply chains [4].
Companies that establish holistic strategies face various challenges. First, with amplified political volatility, currency exchange fluctuations, and commodity markets instability, risk management represents a great challenge for globally active companies today. It would include comprehensive and continuous risk assessment and creation of contingency plans to support nonstop operations. Second, a trend on price increase on goods from China and other developing countries has been driving companies to focus on achieving harmony between global and domestic sourcing. This strategic goal would stimulate widening a circle of potential suppliers, reconsideration of assessment procedures in terms of evaluation criteria and weights assigned to them, and more careful
supplier appraisal. Third, ethical considerations and sustainability concerns have expanded to the global procurement. As a response to global environmental changes, companies involve into various green purchasing initiatives in order to improve their impact on the planet by reducing waste and consumption, enhancing human health, and increasing safety [3]. Also, procurement departments have started to develop firmer ethical standards and pursue their foreign partners to establish special policies of corporate conduct. With the challenges previously discussed, strategic collaboration within a global supply chain has become a vital and essential objective. It aims value added activities within the entire supply chain and drives both internal and external integration. Finally, people-related concerns challenge the global sourcing departments as they work in a more and more globally transparent and extensively communicating society and deal with diverse environments [2].
To navigate across those challenges, procurement and supply chain managers need to develop cross-cultural and intellectual diversity in their departments. It assumes attracting and hiring the best talents who can perform specific supply chain functions as well as analytical and cross-cultural communication tasks that drive cooperation. Speaking different languages is essential; however, emotional intelligence and intercultural communication skills would repre-
sent the key value. Suppliers would need to accept these challenges and actively participate in collaboration initiatives generated by any organization in the supply chain in order to achieve synergy, leverage operational flexibility, and fulfill their individual objectives more efficient. In terms of key elements, the global integrated supply chain should be based on: (1) regional teams or representatives across the global operations that are capable of carrying cross-functional supply chain activities and inter-culturally competent; (2) standardization of products and processes; and (3) a unified globally integrated information system, including customer relationship management, enterprise resource planning, and communication [7].
Among all the challenges discussed above, critical role belongs to green sourcing. Green purchasing practices have emerged over last decades as a response to global environmental problems. The National Association of State Procurement Officials (NASPO) identifies green purchasing with environmentally preferable purchasing that assumes procuring sustainable products - products with improved positive or decreased negative impact on the environment, human health, and safety, when compared with the similar product categories offered in the market. The product sustainability primarily means its capability to conserve energy or natural resources as well as to recycle, re-use, or incorporate recycled materials. In the recent decades, green purchasing has become valuable part of companies' strategies, their reputation drivers, and even a requirement for entering some supply chains [6, 9].
Green initiatives can be implemented across the entire value supply chain starting with acquisition of sustainable raw materials and finishing with the sustainable product disposal. Green sourcing practices not only benefit the planet's survival and flourishing but also increase efficiency, drive economic stability, eliminate waste, and even help companies saving money. In general, environmentally preferable procurement practices involve acquisition of the following goods and services [3]: (1) sus-
tainable products for distribution and retail; (2) sustainable raw materials, components, and parts to utilize in products and manufacturing processes; (3) sustainable package materials; (4) green office supplies, including cleaning and facility maintenance products; (5) green construction and landscaping products; (6) green office furniture; (7) equipment that helps decreasing waste, pollution, energy consumption, and emission; (8) alternative fuels for the company fleet; (9) wind credits; (10) recycling services. In addition, green procurement includes identifying, evaluating, and selecting sustainable suppliers as well as developing and implementing the sustainable procurement policies within the company and the entire supply chain that encourage innovation, lean management, and sustainable outcomes [5].
A great example of the company that pursues sustainability as the core value of the corporate strategy and implements multiple best green purchasing initiatives is Whole Foods Market, Inc. First, its procurement policy encourages sustainable organic and biodynamic agriculture. The suppliers' evaluation system emphasizes participation in recycling programs, water and energy conservation, reduced packaging activities, paperless ordering systems, and other environmental stewardship initiatives. Also, the company buys wind credits and supplements the regular energy sources with solar power supporting clean energy industry and reducing pollution. In addition, it procures trucks that use biodiesel fuel and are equipped with aerodynamic aprons and fuel-saving systems, which significantly decrease the negative impact on the environment. Some Whole Foods Market stores procure eco-friendly cleaning and maintenance products. One of the most recent green purchasing practices of Whole Foods Market refers to support for Produce Traceabil-ity Initiative (PTI) across its national and global supply chain. The PTI assumes implementation of an electronic traceability system that provides capability to track produce from the field to the grocery shelves. The benefits include lower risks of procurement decisions due to improved
food safety control, faster recall process because of automated traceability, and value-added transparency within the supply chain. In addition, the PTI enables the company to reduce costs while increasing accuracy and flexibility. It provides a real-time inventory management that empowers sales to make requisition orders more accurately and cuts labor-intensive tasks for procurement people. Finally, support for the PTI puts greater emphasis on social responsibility that positively impacts purchasing practices.
Another interesting approach has been implemented by Best Buy. In partnership with the Center for Sustainable Procurement, in 2012, the company started improving their in-store displays procurement practices in order to reduce the negative environmental impact. Best Buy purchasing teams were engaged into discussions with key suppliers and discovered that they already had utilized several "green" improvements, including application of light-weighting content that preserves structural integrity, recycled components, and end-of-life retrieval of electronic components in displays as well as sustainable materials and methods in packaging [8,12]. Anheuser-Busch green procurement practices include special trainings for purchasing teams that inform about the current concerns and regulations, create awareness of the green sourcing value, and engage in brain-storming exercises developing the green purchasing mindset [1].
In addition, consumer pressure for innovative technological goods and high as ever competition in the high-tech field create greater challenges for suppliers to win the contracts and produce parts and components for such giants as Apple. For instance, while the market was waiting for an Apple iPhone 6, the Apple screen suppliers were working on redesign of a crucial component of the panel production in a limited time before the expected launch. To compete in the industry by creating the best and never seen devices - the thinnest phone in the discussing case - Apple sets very tough specifications and terms for the suppliers increasing their risks. In 2014, two supply chain companies suspended
screen assembly for part of June and July because of the problem with insufficient backlight due to omitting the second layer of film in the screen design. To compete with Samsung Electronics, Xiaomi, and Lenovo Group, Apple set up goals for the thinnest phone possible and initiated the cut back in film layers in the LCD screen; however, the results were disappointing. As a result, suppliers faced uncertainty, idle time, and possibly inventory management and logistics difficulties in addition to crashing the critical path afterwards to assemble on time when the design had been changed. Also, according to experts, the suppliers depend on Apple revenues, so any drawback can potentially decrease their stock prices as it happened to Japan Display. Eventually, the problem with screen in-cell technology was resolved [10]. Even though a delay occurred in the production schedule of the iPhone 6 5.5-inch version, Apple was able to launch the new product in limited quantities [11].
In terms of relationship with suppliers, Apple and similar companies are located in the downstream of a value supply chain, next to the customer, representing the drum that produces a beat upstream. The suppliers depend on Apple and similar companies in their desire to deliver the best value for the customer and capture the market. Digital technologies move fast, so it is essential for the supplier to adapt at the same pace as Apple and similar customers do anticipating and accepting high risks. Since the tech market is tough as well as competition among suppliers, Apple and similar companies would provoke challenging requests for proposals enticing suppliers to take even higher risks and develop more challenging proposals, including production schedules, lead time, and costs, in order to win the bid. On one side, these high risks go along with high awards for the suppliers that wish to make parts for the tech brand leaders. On another side, risks are associated with strong responsibilities and obstacles to fight while managing operations.
Working in the high-tech industry assumes a very strong bullwhip effect. Changes made by
Apple and similar companies develop a huge wave in the upstream direction. For the suppliers, they relate to inventory management and sourcing from the upstream links. The suppliers for Apple and similar companies need to have wise and skilled procurement department. Eliminating or implementing a component in the downstream link may cause unnecessary inventory or stock-out problems in the upstream links. Therefore, suppliers in the industry continuously work with trade-offs between inventory obsolesce and stock-out. Operations management that purposes lean strategies, including just in time, may meet obstacles related to inability to achieve this important goal both in manufacturing and logistics. With a higher risk of uncertainty, the companies can struggle with a variety of waste ranging from overproduction, waiting time, and idle time to extra inventory in order to avoid stock-out which could mean going out of a certain supply chain and business as well. For the suppliers of Apple and similar companies, it is vital to have multiple sources of materials and partnering relationships with different upstream suppliers. In addition, when the risk of uncertainty in schedules is high and different adjustments can be implemented during the last milestone, the suppliers need to develop partnering with logistics providers in order to have an opportunity to vary a delivery lead time in both outbound and inbound channels. Consequently, the suppliers for Apple and similar companies activities involve the following major trade-offs: (1) between high risks and high rewards; (2) among stock-out costs, setup costs, and inventory carrying costs; (3) between idle time costs and overtime time costs. The position held by this group of suppliers in the value supply chain requires flexibility, smart purchasing strategy, and close collaboration and communication with companies in both upstream and downstream directions: product manufacturer, second tier suppliers, and logistics services providers. The discussed group of suppliers needs to be involved in continuous improvement of operations, including but not limited to R&D facilitation, strategic capacity man-
agement, inventory management, and planning and control.
References
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2. Burton, Niul. Procurement 2025: 10 Challenges that Will Transform Global Sourcing. Industryweek. Penton. 24 Apr. 2015. Web. 28 Nov. 2015.
3. Identify Greener Products and Services. 2epa. United States Environmental Protection Agency. N.d. Web. 13 Nov.2015.
4. Levi, Olivier. Navigating the New Challenges of Global Sourcing. Linkedin. Linkedin. 23 Apr. 2015. Web. 25 Nov. 2015.
5. McCarthy, Shaun. The 10 Primary Principles of Sustainable Procurement. Supplyman-agement. Chartered Institute of Procurement & Supply. 28 Feb. 2014. Web. 12 Nov.2015.
6. NASPO Green Purchasing Guide. Naspo. The National association of State Procurement Officials. N.d. Web. 13 Nov.2015.
7. Nix, Nancy, et al. Global Integration of Supply Chain Process. Logistics Quarterly: Ideas for Leadership in Logistics and Transportation Strategies 2.3 (2005):15-7. Web. 28 Nov. 2015.
8. Procurement of Display Units as an Opportunity for Improved Sustainability in Stores.// BRS. Business for Social Responsibility. 25 Aug. 2014. Web. 13 Nov.2015.
9. The PTI Vision: Supply Chain-Wide Adoption of Electronic Traceability. Pro-ducetraceability.org. Produce Marketing Association. N.d. Web. 13 Nov.2015.
10. Reiji, Murai. "Exclusive: Apple iPhone 6 Screen Snag Leaves Supply Chain Scrambling. Reuters. Thomson Reuters, 24 Aug.2014. Web. 10 Oct. 2015.
11. Welch, Chris. "iPhone 6 Release Date September 19th, Prices Start at $199 for 4.7-inch, $299 for 5.5-inch." Theverge. Vox Media. 9 Sep. 2014. Web. 12 Oct. 2015.
12. Щеголева Т. В. Логистический подход к организации сложного наукоемкого производства // Вестник ВГТУ . 2012. №8. С.77-80.
Y.V. Kachina, Lindenwood University, Saint Charles, Missouri, USA, [email protected] V.V. Kachin, Lindenwood University, Saint Charles, Missouri, USA, [email protected] T.V. Shchegoleva, Voronezh State Technical University, Voronezh, Russian Federation, [email protected]
К ВОПРОСУ ПРОБЛЕМАТИКИ ГЛОБАЛЬНОГО РАЗВИТИЯ ЦЕПИ ПОСТАВОК
Качина Юлия Вячеславовна, кандидат экономических наук, доцент, магистр делового администрирования, Офис Международных Студентов и Исследователей, бизнес-ассистент, Линденвудский университет (г. Сент Чарльз, Штат Миссури, Соединенные Штаты Америки), [email protected]
Качин Владимир Владимирович, магистр делового администрирования (МВА); Офис Международных Студентов и Исследователей, бизнес-ассистент, Линденвудский университет (г. Сент Чарльз, Штат Миссури, Соединенные Штаты Америки), [email protected]
Щеголева Татьяна Васильевна, кандидат экономических наук, доцент кафедры экономики и управления на предприятии машиностроения, Воронежский государственный технический университет (г. Воронеж, Российская Федерация), [email protected]
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Ключевые слова: управление цепью поставок, глобально-интегрированная цепь поставок, глобальный сорсинг, закупочная деятельность, системный (целостный) подход, кросс-культурная диверсификация, устойчивое развитие, «зеленые» инициативы, риски цепи поставок
