Supply chain management is the key activity which is performed in relation with many business houses and it is related with a band of activities which are carried out in a sequential manner. Supply chain management is related with several activities which are constituted in form of a network and are related with organizational felids of distribution and supply of goods and services so produced with in a company up to the final consumer sop destined for them. The main task to be performed in this report is related with critical analysis of two main activities of logistics and supply chain management department which are strategic alliances and lean thinking. (Breitman and Lucas 2007).
For this purpose literature review section will be the next which will explore about the information available in this arena with use of appropriate example. Along with supply chain management it is important to have an idea about the scope of logistics before the critical analysis. There are several definitions again to explain about logistics but the basic definition explains it to be form of science which is related with planning. The scope of planning extends up to the execution of the planned events along with the feedback implementation is the devised action plan as per the performance in each and every field is realized with time.
The logistics and supply chain management function is very crucial for companies as it is related with the most important activities which are carried out in organizations in light of the most common objective of any company which is perpetual succession. The two main tasks associated with this field, which are strategic alliances and lean thinking, will be the focal point of discussion but some light needs to be thrown on all the tasks which are performed in the scope of logistics and supply chain management department associated with all the organizations. As stated in the introduction part logistics is believed to be a science which relates with planning and execution both and the functions performed can be defined as design and development of the acquisition plan, procurement of the raw materials as per the needs and concerting the raw materials into semi finished then finished goods and ultimately supplying them to the final consumers.
Logistics are also defined as the management processes which are related with flow of goods and information and on basis of flow that is whether the flow is into the organization or it is out from the organization they are classified into two types. The logistics function is generally categorized under two broad headings which are termed as inbound logistics and outbound logistics. The inbound logistics is related with activities like restoration and procurement activities in the light of propagation of goods and information. While on the other hand the out bound logistics are related with activities like movement of all the materials which are related with storage, shipping and allocation of final goods to the organizational consumers (Cohen and Lee 2011).
In other words the logistics and supply chain management functions are related with the organizational goods and information from the very first point of beginning and they keep association with the till the very last point of the ending of the whole process. In case of supply chain management the scope of activities is very wide and it covers a huge network in form of logistics. There different activities which are performed in the name of supply chain management are related with tasks like procurement of the raw material (Ballou 2009).
There is crucial list of managerial decisions which are associated with supply chain management function and the importance of this organizational department can be realized in the light of the fact that it is present in both type of organizations like service industries and the manufacturing industries. Along with the above stated facts it is very important to state that the importance is high for the industries and companies but the complexity involved in the supply chain management process varies from one company to the other.
The managerial decisions which are to taken in the light of logistics and supply chain management department are related with different organizational levels. The decisions taken can be termed as location decisions, product decisions nd the inventory decisions. Importance associated with all the decisions is very high as these decisions will decide about the efficiency and effectiveness so realized in the performance of activities in the concerned areas. The two separate topics in the supply chain management functions to be discussed here with use of appropriate examples are strategic alliance and lean thinking. Let us first consider about the scope and purpose of strategic alliances in the contemporary competitive business world (Geoffrion and Graves 2009).
Strategic alliances are believed to be saviors as there are several examples in which they have proved out to be miraculous for survival of companies. In the last two decades the importance and need for such practices has increased greatly because of the trends like globalization, liberalization and privatization of the world economies. In addition with this the increased use of information technology and related activities has lead to more number of strategic alliances being carried out within companies (Vollman, Berry and Whybark 2008).
As the name itself suggests the strategic alliances are carried out in the light of specific organizational purposes and the association of two companies with each other is planned out in such a manner that it proves out to be beneficial for both these companies in a long run. At times these alliances are not choice of the companies but an option to remain competitive in the global business arena so as to meet up with the consumer’s demands and sustain the cut throat competition pervading in the external world. This reality of strategic alliance exposes the unhealthy side of this lucrative option as to make forced and imposed strategic alliance there are surely certain compromising factors which are to be considered by either of the participating firms which are not as beneficial as they were ought to be (Geoffrion and Powers 2009).
While on the other hand it is generally stated and believed that the main purpose of such practices is to create knowledge and resource pool with which the available opportunities can be captured in a better manner. There are several types of strategic alliances which are carried out in order to fulfill various organizational purposes like increasing marketing share in the existing market place, making entry into a new market place and also to increase business opportunities.
To get a clear insight about the scope and function of strategic alliances the definition needs to be considered here. As per the definition strategic alliance is believed to be a form of cooperative management among companies. The aspect of cooperative management is realized among companies which are determined to attain a strategic goal so decided by them in a mutual manner. The strategic alliances are classified into two types and they are based on equity and non equity based strategic alliances (Cooper and Ellram 2003).
The first category which is equity based is related with sharing of minority stock investments, joint ventures, and the extreme end, majority investments while on the other hand the non equity based strategic alliance can be defined as a contractual arrangement that specifies the responsibilities of both the parties involved in a different manner. The major aspects covered in this category of a strategic alliance are related with organizational expansion or annihilation. Along with all the facts so stated above it is very important to highlight the key feature of any strategic alliance which states that the companies taking part in any such activity will not lose their independency and strategic sovereignty. But at the same time the chance of impact created on their strategic direction as a result of strategic alliance so formulated cannot be rule out altogether (Cohen and Lee 2011).
There are many industries in which the activities related with strategic alliance have carried out great transformation in both positive and negative aspects and the concept can be better explained in light of a relevant example which explains of the better and worst parts of it. To consider a strategic alliance here let us talk about the great example of Lojack and Micro Logic. Both the companies are operational in the technical field and their association was supposed to be great hit. Lojack was concerned with producing anti theft mechanisms and devices for the cars while the other company in this case is Micro logic which was concerned with production of software updates t match with client’s specifications in a unique manner (Lee and Billington 2012).
The key perspective of the Micro logic company was to devise such products which were easy to handle and efficient at the same time. In light of a particular strategic approach of individual companies both came together to establish a strategic alliance. The first company Lojack was efficient in case of creative devices while the other company Miocro logic focused on innovation. Both when got associated the focus shifted on establishment of cost leadership in the market place with which they aimed to meet up the consumer needs in the most effective manner (Houlihan 2008).
The association or the strategic alliance brought about certain strategic changes which were realized by both the involved parties. In case of Lojack the organizational change so carried out can be evidently termed as revolutionary in nature. As from meeting up the customer needs in ordinary manner the focus got shifted on strengthening the sales and marketing effort of the company so that more and more of customer support can be generated. The aftereffects of this strategic alliance can be categorized in both opportunistic manner and the losses which took place. The opportunities which were realized was capturing the greater degree of market share but the same time threat was also there of losing individual identity in the eyes of consumers.
Apart from strategic alliances the second element of logistics and supply chain management function to be discussed within the scope of this report is lean thinking. Lean thinking is defined to be an advanced manufacturing technique which is associated with best products at a lowest possible price. The approach was initially used and established by famous car manufacturing company Toyota in the time period of 1980’s. The approach followed in case of lean thinking is also termed as lean manufacturing and is associated with delivering best value to the consumers with best price. In the last decade the use and popularity of lean thinking approach has increased in a great deal and much software has been launched in this regard too.
Lean thinking is believed to be a supreme class mechanism of managing and dealing with the organizational activities in order to improve efficiency and effectiveness of the companies. Mostly the Japanese and American companies are inclined towards the use of lean thinking and within its scope they have managed to improve their performance and the quality of products they are offering to their consumers (Stenross and Sweet 2011).
The best manner to explain this approach which is popularly being used in several companies is with use of an appropriate example and what will be best than to explain about Toyota and its practices, which is believed to be original innovator of lean thinking prospects. In case of manufacturing industry and companies like Toyota the lean thinking is also believed to be the process of world class manufacturing or high performance manufacturing. It is an evident fact that Japanese automobile manufacturer, Toyota, was the first company to pave way for lean manufacturing and there are certain principals of lean manufacturing. Toyota focuses on the wastage elimination to the maximum possible extent so that the highest degree of productivity can be achieved in turn.
In case of manufacturing process which is followed at Toyota it is believed that waste is something unnecessary which accounts for hindrance in the process of value addition which is elementary. The value addition process is inclusive of transferring the raw materials into finished goods which are appropriate for consumer use. Customers are believed to be the final and ultimate authority to judge about the value addition process as they are the ultimate users of it. The whole thinking so described above is followed at Toyota and it is defined to be lean thinking.
In the light of lean thinking there are several benefits which are realized by organizations and these benefits can be termed as improvement in the organization focus towards performance. Along with this the company will also manage to control all the activities which are being carried out in the organizational scope so that a streamlined flow can be maintained among all the essential activities and the waste ones can be eliminated at an increased pace. All the control related activities must be carried out the shop floor level this is the most highlighted principal of lean thinking as all the activities re progressed for there.
There are certain principals which are agreed upon in concern with implementation of lean thinking in the companies at various levels of functions. The very forte aspect to be stated in this regard is related with the follow up of batch and queue model of operation which accounts for efficiency associated with each and every worker working for the company and the equipments too. In addition with there is one more principal which is inclined towards the one piece flow idea of working. This will save redundancy at various levels and a systematic flow will also account for cost reduction and time allocation (Arntzen, Brown, Harrison, and Trafton 2008).
One more principal in light of the lean manufacturing adopted at Toyota can be explained in relation with transformation of the entire enterprise on fundamental basis and this will help in the cultural transformation of the organization which is very important to follow a global approach in the contemporary business scenario. There are several services tools which are followed in this context and they can be named as value stream mapping, quick changeover reduction, single minute’s exchange of Dies (SMED), Kaizen, total productive maintenance, Kanban systems and the likes.
Apart from Toyota now lean thinking is being applied in various activities which are performed in the scope of different companies and these are related with using lesser amount of each and every resource which is available with the company for production. The general principals of lean manufacturing also indicate about the optimization of the productivity concerns.
There is no scope for wastage and in case of lean thinking defining about the value which will be provided to the consumers has to e defined very precisely. One more aspect to be defined in light of lean thinking talks about three major business activities which are product and service definition, information management and focus on value-creating steps. Along with the above stated points the practice of zero defects is also focused in lean manufacturing (Masters 2010).