Order 1079275: Entrepreneurship - opportunity analysis video game industry in Australia

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2 Literature review

2.1 Supply chains and competitive advantage

As competition in the 1990s intensified and markets became global, so did the challenges

associated with getting a product and service to the right place at the right time at the

lowest cost. Organisations began to realise that it was not enough to improve efficiencies

within an organization, but their whole supply chain had to be made competitive (Li, Ragu-

Nathan & Rao 2006). Furthermore, they began to realise the decision to outsource allows

businesses to focus on core competencies rather than managing details of manufacturing

subcomponents (Rossetti & Choi 2005). As a result, in the past two decades outsourcing to

suppliers has increased significantly.

Increase in technological knowledge, globalisation and advancements of communication

systems has amplified competition among organisations on the international platform, and

reduced costs. Thus, it is important to understand that effective and efficient supply chain

management (SCM) has strategic significance in achieving a competitive advantage

(Kirovska, Joseifovska & Kiselicki 2016). As demonstrated by Gumus and Loves’ (2013)

supply chain cost efficiency model), a cost efficient supply chain provides competitive

advantage to the business.

Competitive advantage can be measured in terms of cost but also in terms of quality and

delivery. SCM practices include supply chain sourcing, managing strategic supplier

partnerships, customer relationships, level and quality of information shared and

postponement (Anatan 2014). In particular, supply chain sourcing is vitally important as

supplier selection impacts how well supply chain management activities occur directly

affecting the organisation’s competitive advantage (Anatan 2014).

The role that supply chains play is in the sourcing of goods from suppliers to satisfy the

needs of downstream customers (Gumus & Love 2013). The authors developed a SCM

framework. They propose that SCM practices have an impact on organizational performance

both directly and also indirectly through competitive advantage. Although the concept is

straightforward, there are many imperative elements that the supply chain team must

consider in ensuring the downstream customers, both internal and external, are kept

satisfied. This highlights the significant role of sourcing activities. The outcome of sourcing

Comment [DK1]: The literature review will be Section 2 of your Final Report

Comment [DK2]: Creating appropriate sub-sections helps the reader. In this example, the first subsection overviews the literature relating to the topic, critically evaluating its main themes. Note, this structure is only provided as a guideline.

Comment [JM3]: A short introduction paragraph is optional

Comment [JM4]: PLAGIARISM: this is an in-text reference that was copied/pasted into the text. Inverted commas should have been used in conjunction with providing the authors, date and a page number. Even better, the point should have been paraphrased.

Comment [JM5]: Topic sentence. Check AIB style guide page 3 for more information on writing paragraphs.

Comment [JM6]: Supporting sentence #2 with 1 reference

Comment [JM7]: Conclusion sentence

Comment [JM8]: Having only one reference in a paragraph makes your argument weaker. Having two provides an opportunity to compare and contrast.

Comment [JM9]: Supporting argument #1 and title sentence at the same time

Comment [JM10]: The terms ‘theory’, ‘model’, and ‘framework’ are a clear indication that you are identifying relevant theories that you could apply in your project.

Comment [JM11]: Needs to be referenced, is it from Gumus and Love (2013) or Rosetti and Choi (2005)?

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activities is to establish a buyer-supplier relationship with the strategy to increase the

buyer’s priorities of price, quality and delivery for a competitive advantage (Rosetti & Choi

2005).

2.1 Sourcing practices in aerospace

Aerospace supply chains are required to function to a high standard depicted by the Federal

Aviation Authority (FAA) and thus are regulated by strict standards. Thus, the cost is much

higher and demands a thorough sourcing process in choosing the right supplier. A relevant

example is the Boeing 787, a modern airliner where over 50 percent of manufacturing was

outsourced to its supply chain. Sourcing activities were crucial for Boeing. However, the

outcome was not entirely successful and resulted in Boeing having to purchase one of its

suppliers to continue manufacturing (Elahi, Sheikhzadeh & Lamba 2014). Although the

outsourcing activity was strategic, the sourcing process was not effectively carried out.

There is much to learn from Boeing’s sourcing failures.

Intense competition within the aerospace industry puts pressure on companies to achieve

more with less. Saving on costs is crucial especially when organisations invest more money

in Research and Development (R&D) to gain a competitive edge through innovation. As

Stevens (2014) pointed out, in Australia a reduction of 1 percent in supply chain budget

could mean an increase of 12 percent in innovation. Thus, researchers such as Agus and

Hassan (2008) have suggested that understanding supply chain management is a

prerequisite for staying competitive in the global race for profitability.

Suppliers play key roles in the successful management of supply chain activities including

quality and delivery (Khorramshahgol 2012). Hasanian and Hojjati (2016) provide a

framework for understanding that suppliers are critical components to organisations and

greatly affect the performance of organisations and their products.

Sourcing practices require experienced personnel from various functions of the organisation

to establish a sourcing group to carefully select the right suppliers in meeting the needs of

the organisation. In addition, relationships within aerospace supply chains are intended for

long terms. Long-term suppliers are willing to work with buyers in improving transactional

efficiencies to reduce costs (Rossetti & Choi 2005).

Comment [JM12]: Analysis or description?

Comment [JM13]: Supporting argument 2

Comment [DK14]: This second sub- section discusses the application of the theory to practice (in the aerospace industry).

Comment [JM15]: Researched evidence is a great way to show how theories have been applied and what are the results. Good example here.

Comment [DK16]: It would have been good if the author had expanded on this point by summarising the key failures.

Comment [DK17]: Reputable newspapers are a good source of facts to illustrate your points.

Comment [JM18]: This paragraph is incomplete. Follow the structure of a paragraph. Here the arguments needs to be explained and or contrasted.

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Sultana, Ahmed and Azeem (2015) explain that supplier selection plays a significant role as a

strategic feature within an organisation and provides an analytical method for selecting

suppliers for the best possible customer satisfaction. Numerous studies into supplier

management have concluded the importance of supplier selection and effective supply

chain management in the organisation’s business (Hasanian & Hojjata 2016). Sourcing new

suppliers is an integral step in developing and growing organisational supply chain (Moeller,

Fassnacht & Klose 2006). Ensuring pre-requisites are fulfilled is no longer the only selection

criteria. In today’s and tomorrow’s supply chain cycle, the relationship and an

understanding of mutual goals are fundamental to gaining competitive advantages with

further ideas in aftermarket support (Rossetti & Choi 2005).

Sourcing of good suppliers is important for organisations. Supplier selection is based on

some key indicators. Ho, Xu and Dey (2010) concluded that organisations are primarily

concerned with quality, delivery and cost. However, to achieve the result of quality and

delivery it is crucial to evaluate a supplier’s key working practices; their culture,

manufacturing knowledge and experience. Scheible, Bodurow and Daun (2015) discuss a

vendor evaluation model via defined vendor selection considerations which are made easy

using a vendor capability matrix to harmonise sourcing decisions with sourcing strategies.

Research, as well as practice in industry, supports the need for organisations to make an

effort in their sourcing to stay competitive and reduce the cost of supply chain

management.

Comment [JM19]: A short transition paragraph would help introduce the following section.

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References

Agus, A & Hassan, Z 2008, ‘The strategic supplier partnership in a supply chain management

with quality and business performance’, International Journal of Business and Management

Science, vol. 1, no. 2, pp. 129-145.

Gumus, M & Love, E C 2013, ‘Supply chain sourcing game’, Journal of Innovative Education,

vol. 11, no. 1, pp. 3-12.

Anatan, L 2014, ‘Factors influencing supply chain competitive advantage performance’,

International Journal of Business and Information, vol. 9, no. 3, pp. 311-334.

Elahi, E, Sheikhzadeh, M & Lamba, N 2014, ‘an integrated outsourcing framework: analyzing

Boeing's outsourcing program for dreamliner (B787)’, Knowledge and Process Management,

pp. 13-28.

Hasanian, S & Hojjati , SMH 2016, ‘A framework for supplier selection criteria in 'LARG'

supply chain based on literature review’, International Journal of Management, Accounting

and Economics, vol. 3, no. 8, pp. 502-519.

Ho, W, Xu, X & Dey, PK 2010, ‘Multi-criteria decision making approaches for supplier

evaluation and selection: A literature review’, European Journal of Operational Research,

vol. 202, no. 1, pp. 16-24.

Khorramshahgol, R 2012, ‘An integrated strategic approach to supplier evaluation and

selection’, International Journal of Information Technology & Decision Making, vol. 11, no. 1,

pp. 55-76.

Kirovska, Z, Joseifovska, A & Kiselicki, M 2016, ‘Efficient management of supply chain in

achieving a significant competitive advantage in the market’, Journal of Sustainable

Development, vol. 5, no. 14, pp. 5-22.

Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S., & Subba Rao, S. (2006). The impact of supply

chain management practices on competitive advantage and organizational

performance. Omega, 34(2), 107-124.

Moeller, S, Fassnacht, M & Klose, S 2006, ‘A framework for supplier relationship

management (SRM)’, Journal of Business-to-Business Marketing, vol. 13, no. 4, pp. 69-94.

Comment [JM20]: REFERENCING ERROR: where is the reference for the AFR article?

Comment [JM21]: REFERENCING ERROR: must be in alphabetical order.

Comment [DK22]: REFERENCING ERROR: the journal’s volume and number are missing.

Comment [DK23]: REFERENCING ERROR: While the reference has been provided, it is in a style that is inconsistent with the other references.

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Rossetti, CL & Choi, TY 2008, ‘Supply management under high goal incongruence: an

empirical examination of disintermediation in the aerospace supply chain’, Decision

Sciences, vol. 39, no. 3, pp. 507-540.

Scheible, LS, Bodurow, C & Daun, K 2015, ‘Developing and optimizing a logical sourcing

strategy’, Applied Clinical Trials, vol. 24, no. 8/9, pp. 20-29.

Sultana, I, Ahmed, I & Azeem, A 2015, ‘An integrated approach for multiple criteria

selection combining Fuzzy Delphi, Fuzzy AHP & Fuzzy TOPSIS’, Journal of Intelligent & Fuzzy

Systems, vol. 29, no. 4, pp. 1273-1287.