RUNNING HEAD: SUPPLY CHAIN MANAGEMENT 1
Supply Chain Management Journal Article Review #4
Article: Future Challenges and Areas of Development for Supply Chain Management
Felicia Bauder
November 24, 2019
Liberty University
SUPPLY CHAIN MANAGEMENT 2
Supply Chain Management Journal Article Review #4
Statement of the Author's Purpose
The author's purpose in writing this article was to address the change in the spread of new
technology solutions in the delivery of goods and the significant impact on the logistics process
that is faced by changing tasks and challenges in supply chain management (Oláh, Zéman,
Balogh, & Popp, 2018). According to Olah et al. (2018), supply chains are becoming more
complex due to the changes in volume and the geographical shift of goods traded and the
distribution flow. They are attempting to analyze the effects of these changes from multiple
perspectives, and believe that information technology tools can influence and boost economic
processes. Olah et al. (2018), believe that globalization processes have increased the uncertainty
about how markets will evolve, and they think that it is important for companies to be aware of
their roles in the supply chains.
Background of the Issue
Globalization promotes the growth of supply and distribution logistics. The management
of the links among supply chain members is important and their roles have been strengthened
lately. This is why production and sub assemblies are manufactured separately and why it is
carried out at the sites that are the most cost-effective. Companies can reduce costs and
inventories and increase efficiency by developing their supply chain and creating partnerships
that will allow them to optimize processes. According to Liberty University (2019),
Olah et al. (2018) found that many companies are now offering integration of services
with their products. The companies are adding value to their products in order to increase
differentiation and to get a high level of customer satisfaction in order to compete in today’s
marketplace. When using the Just-in-Time strategies companies find it beneficial to outsource
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globally with low-value and repetitive production processes, and to keep high-value-added
activities close to the final customer. According to Olah et al. (2018), close collaboration
between production, service, and logistics is necessary to meet the complex and rapidly changing
consumer demands. Long-term relationships among companies in the supply chain are based on
trust and bring benefits such as understanding the intentions of partners, sharing expertise, joint
creation of knowledge, reducing costs and creating value.
Information Technology will continue its uninterrupted development, and the spread of
revolutionary innovation technologies will have an impact on ever more modern logistics
solutions. In addition, timely access, ability, confidentiality, popularity, and robustness
also contribute to the secure deployment of supply chains, which enable companies to
survive in the longer term. At the same time, when supply chains compete with each
other, we must create the opportunity to manage chains across a company boundary
(Olah et al, 2018 pg 133).
Application of Supply Chain Management Theory Relevant to Article
The SCM theories relevant to this article include Just-in-Time Purchasing where the key
lean principles center on people, efficiency, postponement, and the elimination of waste. All of
these have an effect on the function of purchasing. According to Liberty University (2019), just-
in-time approaches for manufacturing, planning and control are a key building block for modern
approaches to manufacturing, planning and control.
“Just-in-Time approaches for manufacturing, planning, and control come at the cost of
more tightly coordinated manufacturing processes--both inside a company and with supplier
firms.” Olah et al. (2018), believe that having a small number of companies involved in the
supply chain can reduce transaction costs, and by reducing stock the manufacturer can get more
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accurate forecasts of demand and can sense it continuously. This allows companies to get rid of
excess inventory and keep the level of products appropriate. When companies align logistics
and e-commerce it gives customers a large range of products and allows a company the ability to
simplify and track orders.
Just-in-Time offers the potential for eliminating or sharply reducing inventories,
incoming quality control, receiving, ittting, paper processing associate with deliveries and
shipments, detailed scheduling done by central staff, and all the detailed tracking
associated with classic production activity control systems (Liberty University, 2019, pg
268).
Managerial Implications
The first piece of direct advice for a manager to consider would be that if they want to
make changes in the ways manufacturing is managed and executed, just-in-time requires changes
in the computer-based systems. Since just-in-time offers managers the ability to reduce
inventories and incoming quality control, receiving, and paperwork associated with the
shipments and deliveries if managers adopt this strategy according to Olah et al. (2018) they will
be prepared to succeed in the future.
The speed with which data are generated and utilized is essential as real-time or nearly real-
time information makes it possible for a company to be much more agile than its competitors.
Taking this into account, having and using real-time (RT) systems can play a central role in
SCM, considering their ability to generate new business-related insights that not only improve
performance, but also facilitate competitive advantages (Lechler, 2019).
Another piece of direct advice for a manager to consider would be to think carefully
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about reward systems and managerial scorekeeping. If a manager is to be successful at
implementing a just-in-time strategy they will need to change the focus from production and cost
accounting to the material velocity where there is a reduction of inventory and a compression in
lead time. According to Bandaly, Satir, & Shanker (2016), a reduction in lead time can yield a
substantial improvement in performance. They also found that risk-taking or risk-averse
managers need to understand that eliminating lead time variability may not be justified in cases
of low variability. “A manager willing to take higher risk is rewarded with higher performance
improvement when variability of lead time is larger (Bandaly, 2016).” Managers need to
understand that when lead time variability is highly uncertain that it is less compelling for the
company to work on reducing lead time. “This can be explained by the fact that the action of the
supply chain in response to an increase in demand uncertainty would also mitigate the effects of
lead time variability (Bandaly, 2016).”
The final thing managers need to be aware of is the challenge to create the appropriate
climate in the organization. The top management challenge of organizational climate is the
ability to lead manufacturing first through the necessary changes and create an environment
where a just-in-time supply chain management has the best chance at success.
Summary
When it comes to just-in-time systems cost accounting and measurement of performance
should not only reflect a shift away from labor as the primary source of value being added, but it
should also focus on the whole person and what every person can do to improve performance.
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Effective just-in-time systems require stabilizing and leveling of production schedules. Also
attaining short lead times can help support responsiveness and customer service.
Managers should be aware that because there is a potentially positive impact, reducing
lead time variability is a good goal to have. Various supply chain members can contribute
differently to these goals, and even if their contributions are not equal the challenge for the
manager would be to align these efforts with benefits that could be gained.
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References
Bandaly, D., Satir, A., & Shanker, L. (2016). Impact of lead time variability in supply
chain risk management. International Journal of Production Economics, 180, 88-100.
doi:10.1016/j.ijpe.2016.07.014
Lechler, S., Canzaniello, A., Roßmann, B., von der Gracht, H. and Hartmann, E. (2019),
"Real-time data processing in supply chain management: revealing the uncertainty
dilemma", International Journal of Physical Distribution & Logistics Management, Vol.
ahead-of-print No. ahead-of-print. https://doi-org.ezproxy.liberty.edu/10.1108/IJPDLM-
12-2017-0398
Liberty University Online. (2019). Supply Chain Management. Lynchburg, VA: McGraw-
Hill Education
Oláh, J., Zéman, Z., Balogh, I., & Popp, J. (2018). Future Challenges and Areas of Development
for Supply Chain Management. LogForum, 14(1), 127–138. https://doi-
org.ezproxy.liberty.edu/10.17270/J.LOG.2018.238
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