Decision Tools of GSCM
Marketing should be emphasized by global supply chain managers to create customer value, satisfaction, and loyalty. Customer value, satisfaction, and loyalty lead to improved profit margins, which in turn leads to overall corporate growth. Managers need to think about their strategies and the implication of the strategy on the entire supply chain.One market strategy that is commonly used among businesses with global supply chains is the customer perspective strategy.
Taking a customer perspective towards marketing strategy means focusing mainly on customers. This perspective focuses on understanding the complexity of customer values. This perspective involves understanding and how a customer defines and develops their values. By understanding how a customer sets their values, a company is able to make changes to appeal to the customer base’s values which in turn leads to greater profit.
There are four common and critical challenges that managers face when attempting to design and implement a marketing strategy that best relates to customer values. The first issue that managers face is the challenge of understanding exactly what customers value in a global supply chain. Understanding customer values in a global supply chain focuses on the task of identifying what supply streams customers value most. The second challenge is having to understand the constant changes in customer values throughout global supply chains. Since customers are constantly changing what they value, staying ahead of the trend and attempting to predict changing values is increasingly difficult.The third challenge is having to deliver values in a new environment that has never seen this level of marketplace. The global market is becoming increasingly prevalent which companies are taking advantage of, therefore the challenge of attempting to deliver values in a country/region that has never been exposed to a marketplace such as this before arises.The final challenge is creating and staying committed to the solutions designed to address these issues. Solutions to these challenges are implemented and it is a challenge within itself to stick to these solutions especially as businesses have increased emphasis on cost reduction efforts.
When managing a global supply chain, it is important to place emphasis on logistics performance as there has been an increase in business-to-business international marketing. Logistics is inherently difficult and complex for a global supply chain as it deals with trade regulations, shipping distances, and cross-currency issues. Companies and/or organizations who place an emphasis on logistics management can find themselves with a serious competitive advantage as it has a clear visible impact on customers.
Focusing on customer preferences when implementing and managing a companies logistic services has proven to provide the organization with several benefits. One of the major benefits is cost reduction. Costs can be reduced if the company identifies all the necessary logistic segments and then eliminates unnecessary and redundant. Customizing logistics not only reduces cost, but it also increases revenue by appealing to the customer base which in turn stays loyal to the business.
To stay competitive, organizations need to develop global logistic strategies that appropriately and effectively appeal to the customer’s needs. By doing this, companies are able to take advantage of the increasingly profitable global market.
Supply management deals with the development and management of the critical business and supplier relationship. As the market becomes progressively global, the strategy of outsourcing suppliers has increasingly used. Outsourcing suppliers has several benefits for a business if they can effectively develop the relationship.
The 21st-century logistics framework
The 21st-century logistics framework is a global supply-chain management theory that was developed at Michigan State University and was introduced to the business world in 1999. The framework identifies six business competencies that are necessary to operate a global supply chain. There are multiple underlying capabilities for each competency which influence management decisions. The six competencies are: customer integration, internal integration, material/service supplier integration, technology and planning integration, measurement integration, and relationship integration.
The capabilities that are attached the competency of customer integration are: segmental focus, relevancy, responsiveness, and flexibility. Segmental focus refers to the ability to develop customer aimed programs that are specifically designed to achieve maximum customer success. Relevancy refers to the ability to maintain and modify customer focuses to reflect the constant changing expectations. Responsiveness refers to the ability to accommodate unique and unforeseen customer requests/requirements. Flexibility refers to the ability to appropriately adapt to any unexpected circumstance.
Cross-functional unification, standardization, simplification, and compliance are the underlying capabilities that are associated with the internal integration competency. Cross-functional unification refers to the ability to put potential co-operative activities into manageable operational processes. Standardization refers to the ability to implement policies/procedures that address any concurrent operations. Simplification refers to the ability to identify, adopt, implement, and improve the best possible business practices. Compliance refers to the ability to follow any established policies.
The capabilities that are related to material/service supplier integration are: strategic alignment, operational fusion, financial linkage, and supplier management. The ability to develop a corporate culture or common vision that create a shared responsibility is defined as strategic alignment. The ability to fuse systems together to reduce redundancy is defined as operational fusion. Financial linkage refers to ability to join financial ventures with suppliers to achieve common goals. Supplier management refers to the ability to extend management to include the hierarchical structure of suppliers.
Information management, internal communication, connectivity, and collaborative forecasting and planning are the capabilities that encompassed by technology and planning integration. The ability to use seamless transactions across the entire chain to allocate resources throughout the chain is called information management. Internal communication refers to the ability to communicate within the business in appropriate manner. The ability to communicate and exchange information between the business and the external supply chain partner is called connectivity. Collaborative forecasting and planning refers to the ability to collaborate with customers to identify and develop shared visions.
The capabilities that underlie measurement integration are: functional assessment, comprehensive metrics, and financial impact. Functional assessment refers to the ability to develop and implement an appropriate performance measurement tool. Comprehensive metrics refers to the ability to implement cross-business performance standards. Financial impact refers to the direct link between overall supply chain performance and the results of the financial measurement.
The capabilities that underlie relationship integration are: role specificity, guidelines, information sharing, and gain/risk sharing. Role specificity refers to the ability to clearly define leadership and establish a set of shared and individual responsibilities. Guidelines refers to the ability to create and implement policies/rules that govern everyday interactions. Information sharing refers to the willingness to share important information (often including financial, technical, or strategic information) throughout the supply chain. Gain/risk sharing refers to the appropriately divide and allocate rewards/penalties.
The 21st-century logistics framework allows managers to identify and implement the most important underlying capabilities that are encompassed in the six business competencies. The framework gives managers the freedom to decide what they believe to be the most important capabilities that need to be implemented to run a successful global supply chain.