The Impact of Strategic Management in Supply Chain Components of Fresh Connection

In today’s business world, Strategic Management is considered as one of the major concepts. Strategic Management refers to the process to plan, monitor, analyze and assess all the necessary aspects that are required for achieving the organizational goals and objectives (Hitt, Ireland & Hoskisson, 2012). Thus, strategic management plays an integral part in every aspect of the businesses and there is not any exception in case of supply chain processes. The inclusion of strategic management in various aspects of supply chain is likely to have positive effect on the supply chain management of the companies. In this context, it needs to be mentioned that the alignment of strategic management in the supply chain processes of ‘Fresh Connection’ has the ability to strengthen the operations of the company. The supply chain in Fresh Connection has different types of components and all of these components play integral part in the development of the financial as well as non-financial performance of the companies. There is not any exception of this fact in case of Fresh Connection. The following discussion shows the impact of strategic management in various aspects of supply chain components in Fresh Connection:

The inclusion of strategic management in the supply chain of Fresh Connection has the ability to improve the inventory policy of finished product of the company, as it is essential for the company to have stable and efficient inventory policy of finished products. There are some major factors having effects on the inventory level of Fresh Connection; they are customer service expectations, uncertainty in demands and the flexibility of the whole supply chain process (Christopher, 2016). In the presence of certain amount of demand, it becomes easier for the companies in maintaining desirable customer service standards even in the reduction of inventory level. However, in the presence of erratic demand and a short life cycle of the products, there is a need for more responsive and buffer inventories in order to meet the desired customer service level. Thus, the inclusion of strategic management in the supply chain of the company will ensure that the supply chain is responsive and there is a presence of large buffer inventories. The next major item of supply chain in Fresh Connection is the forecasting of demand (Seuring, 2013). There is an extreme need to insert strategic management in the forecasting of demand in order to make the supply chain more effective. In addition, demand forecasting helps the company to improve their financial as well as non-financial performance also. With the assistance of demand forecasting, the company will be able to fulfill the demand of their customers in a more effective way so that the highest customer satisfaction can be achieved. Apart from thus, the approach of strategic management in demand forecasting will be helpful for the company in the reduction of inventory. Thus, as per strategic management approach, there needs to be a guaranteed availability of necessary products ort components in order to meet the demand of the customers (Stadtler, 2015).

Inventory Policy and Demand Forecasting

Moreover, it is essential for the company to keep the cost of stock in minimum level, as this process is helpful in the reduction of wattage of products in the supply chain. For this reson, the lot size needs to be dependent on the cost of total stock and the total cost of transportation at the time of procurement. The next important area of supply chain is capacity planning and it is a crucial stage in supply chain management. The presence of strategic management in supply chain of Fresh Connection ensures that the company does their capacity planning in the most effective way. There needs to be certain strategies for capacity planning (Tayur, Ganeshan & Magazine, 2012). In order to avoid overflow of capacity and outsourcing, it is required for the company to optimize pallet allocation. After that, the allocation of adequate number of shifts will be helpful for capacity planning. It is necessary for Fresh Connection to reduce the variability in the production process and to ensure that there is good storage capacity of finished goods. Most importantly, the company needs to be ready to handle all demand of the customers. The next important factor is value proposition in the process of supply chain. Value proposition refers to the promise of value that is required to be delivered and belief from the customers that the value will be experienced. The introduction of strategic management in supply chain helps in the review and analysis of benefits, cost and value that the organization is able to deliver to their customers. Thus, Value = Benefits – Cost. Different strategies of strategic management ensures that Fresh Connection is able to deliver value to their customers with the help of quality products and services (Monczka et al. 2015).       

Different types of risks can be seen in Fresh Connection and all these risks are high associate with the supply chain of the company. Return on Investment (ROI) is supply chain management is an important aspect. ROI is supply chain management refers to the return from the investment made for the establishment of supply chain management. Risk related to supply chain management ROI raises when Fresh Connection fails to fetch the desired return from investment in supply chain management (Wisner, Tan & Leong, 2014). The next major risk is contamination risk as high chance of contamination can be seen in the food industry. There needs to be effective strategy to counter this risk. The next major supply chain risk is pandemic risk. Pandemic risk refers to the risk rises from the spreading of infectious diseases. There are many instances where the bacteria of diseases has spread in the foods and this risk has the ability to disrupt the supply chain of Fresh Connection (McCloskey et al. 2014). There is no need to mention that the whole production process of Fresh Connection runs with the help of power and the loss of power can cause massive disruption in the supply chain of the company. For this reason, the risk of loss of power is considered as a major risk. Water management is considered as a major part of supply chain management. One of the major component for making juice is water and the loss of water can pose a great risk for the supply chain of Fresh Connection that has the ability to disrupt the production process. It is required for the company to have enough premises in order to carry on the production process of juice. Lack of premises or perfect production place can disrupt the supply chain procedures of Fresh Connection and thus, strategic management needs to consider this risk with utmost priority. The next major risk of supply chain is the risk due to loss of IT. Large dependence of production process can be seen on various technologies, these technologies are considered as keys to success of the supply chain of Fresh Connection, and thus it is required to be provided with utmost attention (Brindley, 2017). Another major risk is loss of logistics. Poor logistics technology along with management is the major reasons for loss of logistics. In addition, change in supply and price can also be held responsible for the logistics risk. Thus, strategies need to be developed for these risks.

Capacity Planning and Value Proposition

The development of risks can be seen due to the presence of unexpected economic force. Different types of unexpected economic forces can be seen like sudden increase or decrees in demands, various environmental risks, social risks, business risks and many others. All these aspects creates different types of risks for the supply chain of Fresh Connection. Another major risk is the presence of various legislations. It needs to be mentioned that the food companies need to comply with different types of safety legislations and laws. The business operations of the companies get affected by complying with these food legislations and all these aspects disrupt the supply chain. The risk of natural disasters is considered as another major risk for the supply chain of Fresh Connection (Park, Hong & Roh, 2013). There are many instances all over the world where the manufacturing companies got effected due to the attack of natural disasters like cyclones, drought, flood and others. All these aspects pose great threat for supply chain operations of Fresh Connection. The next risk type of supply chain risk is the risk due to the fall in asset prices. Due to the presence of various economic forces like inflation, certain collapses in the prices of the assets can be seen that are very much harmful for the operations of supply chain of Fresh Connection. Major risk in supply chain can be seen due to presence of panic buying. Panic buying refers to the situation when people buy large quantities products due to the fear of price rise in near future. Panic buying leads to sudden rise in demand that have the ability to disrupt the ability of company supply chain (Sodhi & Tang 2012). There needs to be effective strategy to fight this situation. The next risk is due to the increased cost of raw materials. The increase in raw materials has the ability to disrupt the supply chain of Fresh Connection due to the rise in the price of the products. Another major risk is the increase in the labor costs. Due to the labor costs, Fresh Connection is needed to increase the price of their products and increase in the prices of the products can lead to the decline in the demand of the products. Thus, from the above discussion, it can be seen that Fresh Connection has different types of risks in their business operations.

References

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Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

McCloskey, B., Dar, O., Zumla, A., & Heymann, D. L. (2014). Emerging infectious diseases and pandemic potential: status quo and reducing risk of global spread. The Lancet infectious diseases, 14(10), 1001-1010.

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.

Park, Y., Hong, P., & Roh, J. J. (2013). Supply chain lessons from the catastrophic natural disaster in Japan. Business Horizons, 56(1), 75-85.

Seuring, S. (2013). A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), 1513-1520.

Sodhi, M. S., & Tang, C. S. (2012). Strategic approaches for mitigating supply chain risks. Managing Supply Chain Risk, 95-108.

Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Tayur, S., Ganeshan, R., & Magazine, M. (Eds.). (2012). Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media.

Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A balanced approach. Cengage Learning.