Running Head: Journal Review 5
Emilia Roy
Journal Review Five: Supply Chain Opportunity in an Uncertain Economic Recovery
BUSI 613
Liberty University
ROY1
Running Head: Journal Review 5
Statement of Author’s Purpose
There are several components such as ordering from suppliers, producing ready to ship
products to customers, and obtaining the ability to be flexible enough to adjust the the market
demands that organizations use to create value for the company. Olson (2010) mentions in his
article ways that an organization can recover and rejuvenate their supply chain in the event of an
uncertain economy by increasing or decreasing their operations to create revenue margin. By
doing so, organizations are able to detect those operations so that they are prepared when the
demand for their product(s) increase. In the article, Olson (2010) also discusses that
organizations cannot base their operations on the worlds economy. Olson (2010) also provides an
inside perspective on how organizations utilize flexibility and scalability when preparing for
economic recovery and building space. The article provides an outlook regarding how flexibility
and scalability can be cost efficient and achievable even during a recession, as well as how both
factors benefit organizations looking to rebuild their supply chain operations (Olson, 2010).
The third level of supply chain information system functionality describes the ability and
opportunities organizations have for developing and refining their supply chain. This provides
managers the ability to review the benefits of flexibility and scalability (Young, 2017). Having a
supply chain that is flexible allows managers to be able to predict potential issues in the market
and then be able to discover methods to tackling those issues. In Olson’s (2010) article, he goes
over the four-step approach that organizations can use to identify and take advantage of the
opportunities that their supply chain can benefit from. The purpose of the authors article is to
provide organizations the information regarding the benefits of using flexibility and stability
during economic uncertainty so that the organization can continue to develop when their product
receives increased demand.
ROY2
Running Head: Journal Review 5
Background Information
Not only do recessions cause issue among consumers, businesses also suffer from the
effects. When consumers have less spending money, businesses feel the effects of lower demand
for their product which can result in businesses closing their door permanently. Therefore,
businesses are left with the choice of lowering internal costs to keep their doors open to
consumers. When the economy experiences a downfall, organizations are left with the decision
to scale back on their operations and supply chain capacity. Although, Olson (2010) explains that
when the economy is experiencing growth, businesses are then able to have increased flexibility
and scalability in their supply chain design which assists their ability to grow operations during
this economic growth. The supply chain design and management performance coincide with
economic uncertainty (Sun, Hsu, Hwang, 2009).
Application
A financial crisis can expose the vulnerability of our global economy. Therefore, it is
necessary for organizations to develop the tools needed to improve supply chain management in
order to recover from an uncertain economy. The financial crisis in 2008 had often been referred
to as the worst crisis since the Great Depression in the 1930s. “It rapidly developed and spread
into a global economic shock, resulting in a number of European bank failures, declines in
various stock indices, and large reductions in the market value of equities and
commodities” (Oliveira, Sousa, & Claro, 2013). The results of the crisis was felt internationally
as industrial industries experienced a decline in production, unemployment rates reached record
highs, and diminishing living standards, among other effects, exposed the vulnerability of our
society.
ROY3
Running Head: Journal Review 5
Supply chains are often characterized by globalization through systems such as
outsourcing. In the automotive industry, supply chains are usually more complex because of the
top-down structure (Oliveira et al., 2013). Organizations within this industry have several
components to consider beyond customer satisfaction. Government regulations, investments, and
adaptability to environmental changes are ways the organizations prepare for uncertainty or risk
management. “Companies need therefore to pay attention to several “international” issues with
a strong impact on multinational networks” (Oliveira et al., 2013), otherwise the uncertainty
associated with demand can increase risk exposure.
Managerial Implications
From a business perspective, alterations within the supply chain team should be able to
adapt from being reactive to planning, risk avoidance to management, and control behavior
amount all supply chain members. Various studies have acknowledged the direction and trends in
which supply chain management are headed and future obstacles that managers will face. As
cited in Prajogo & Sohal (2013), the supply chain within technologies encompass six major areas
that include: “strategic planning; virtual enterprise; e-commerce; infrastructure; knowledge and
IT management; and implementation.” When supply chain managers use the internet, it provides
them with the ability to be agile. Factors such as adjusting inventory levels, tracking shipments
more accurately and improving production scheduled assist in lowering the redundancy within
the supply chain.
Organizations must be aware of the necessity to build integration among supply chain
partners. When the supply chain is integrated, the competition shifts from the organizational
level to the supply chain level. “This means that the competitiveness of individual firms is no
longer solely determined by their individual capabilities, but also significantly influenced by
ROY4
Running Head: Journal Review 5
their supply chain network” (Projogo & Sohal, 2013). Additionally, being aware of future
challenges that could become and then developing a plan to approach those challenges is a key
component to supply chain management. Managers in this role require vast knowledge on
technologies from both internal and external resources. “More importantly, it is essential to
understand that supply chain competencies should be customized and utilized in different ways
to create different performance advantages across the various business environments” (Projogo
& Sohal, 2013).
Summary
There are several options for organizations to choose from when rebuilding the supply
chain through an uncertain economic recovery. Olson (2010) reveals that scalability and
flexibility benefits are achievable when organizations rebuild out of financial crises simply due
to the cost incurred from the initial response to the downturn. When organizations do not take
measures to adjust their supply chain in the current moment, the organization risks not being able
to do so in the future.
ROY5
Running Head: Journal Review 5
References
Oliveira, L., Pinho de Sousa, J., & Claro, J. (2013). Dealing with uncertainty in modern supply
chains: vulnerability and risk management. Conference Paper. 24th.
Olson, E. G. (2010). Supply chain opportunity in an uncertain economic recovery. Supply Chain
Management, 15(6), 488–492.
Prajogo, D., & Sohal, A. (2013). Supply chain professionals: A study of competencies, use of
technologies, and future challenges. International Journal of Operations & Production
Management, 33(11/12), 1532-1554. doi:10.1108/IJOPM-08-2010-0228
Sun, S., Hsu, M., & Hwang, W. (2009). The impact of alignment between supply chain strategy
and environmental uncertainty on SCM performance. Supply Chain Management: An
International Journal, 14(3), 201-212. doi:10.1108/13598540910954548
Young (2017). Supply chain management (Custom ed.). New York, NY: McGraw-Hill Create.
ISBN: 9781309072783.
ROY6
Powered by TCPDF (www.tcpdf.org)
