According to Lambert and Cooper (2000), Supply Chain Management (SCM) is the oversight of finances, information, and materials as they move from the suppliers to manufacturers to wholesalers to retailers and eventually to consumers. Additionally, Seuring and Müller (2008) observe that strategic supply chain management (SSCM) involves the coordination and integration the flow of goods and services both within and among companies. Notably, SSCM also encompasses designing, planning, executing, controlling, and monitoring of supply chain activities with the aim of leveraging worldwide logistics, building a competitive infrastructure, synchronizing supply with demand, creating net value, and measuring performance globally. It also involves the task of coordinating material flow and information flow across the supply chain. The main goal of coordinating such activities is to reduce inventory. As such, DiethelmKellerSiberHegner (DKSH) comes in handy to streamline the supply chain management of various companies. DKSH provides market expansion services to most Asian companies who wish to grow their existing markets as well as expand to new ones. The company provides solutions in value chain support to help companies achieve their extensive supply chain network, distribution network, and growth and expansion objectives.
The main objective of this research is to find out how DKSH utilizes innovation as a value proposition to enhance supply chain management. In addition, another objective is to find out why many customers prefer to seek for services of DKSH. The last objective is to determine the supply chain gaps that DKSH can fill to meet the demands of various customers across Asia and other parts of the world.
Reasons why customer buy the DKSH product/services
According to Spenner and Freeman (2013), customers can keep on buying a particular product or service from a company because of the customer service they provide, products or services on offer, and competitive pricing. These preferences were very common when Corporate Executive Board carried out a market research to determine why customers tend to stick to particular companies (Spenner & Freeman, 2013). Other studies conducted by Lee-Kelley, Gilbert, and Mannicom (2003) reveal that customers are becoming sensitive to product and services they request. Prices and accessibility play an important role to maintain existing customers and attract new ones. In particular, customer loyalty and customer perception are very integral to business survival.
All said and done, DKSH specializes in helping companies to grow their businesses in existing markets and expand to new ones (DKSH, 2018). The company achieves this goal by delivering accustomed services that businesses need to achieve their goals and marketing expansion. Nonetheless, DKSH provides a comprehensive package of services along with value chain which involves sourcing, market analysis and research, distribution and logistics, marketing and sales, and after-sales services. Li et al (2006) observe that an efficient supply chain management is vital in winning new customers and retaining the existing ones. Besides, when customers can relate to a particular company, then, they will endeavor to support it repeatedly by offering business opportunities. This explains why DKSH has operated for decades with a broad customer base. Since supply chain is the core driver of any business, DKSH is banking on this theory to make sure that it captures the market, and as such, it boasts of operations in over 36 countries.
Research conducted by Hendricks and Singhal (2003) shows that many businesses have a problem of penetrating the market. Many startups die before their third birthday owing to the fierce completion in the global market. Advancement in technology has opened the markets which have made it difficult for businesses to survive. As such, DKSH comes in handy to these businesses by providing sales, market research, and analysis, logistics and distribution on their behalf. This explains why most organizations and businesses procure the services of DKSH.
Kumar et al (2016) argue that experience in the supply chain enable entities to support a particular brand marketed and sold by established brands. With 780 business locations in 36 countries and; 1500 clients, 4000 supplies, 500,000 customers and 150 distribution centers, DKSH is a force in the market that customers would like to associate with. The established brand name acts as a marketing tool for its products. Coupled with automation of its supply chain system, small and big businesses can monitor the sales and flow of their products at any time and thus harnesses trust and loyalty. For this reason, customers would prefer DKSH for deals as they seek to expand their products and services.
According to DKSH (2018), the company has a true service philosophy which goes beyond exchange and promotion of goods. They anchor their operations on profound responsibility for the goods and brands of its clientele. They take a proactive approach in providing strategic advice based on a network of experts, know-how, and experience for long time operations. Such a philosophy enable the company to provide a detailed and up-to-date information, which surely help businesses, grow and expand based on their objectives. In addition, customers prefer DKSH since they offer tailor-made services with an aim of delivering seamless end to end solutions for business challenges that customers face, be it small or large scale companies. To add, DKSH endeavors to organizations reduce fixed costs and complexity, increase market share and penetration, and top and bottom line growth that at the end of the day leads to growth and efficiency in supply chain management.
How DKSH is the company delivering the value proposition
Staying competitive in providing market expansion services by DKSH is taking a path of outsourcing for clients and customers. Adopting innovations has helped the company achieve its goals in supply chain management both in the short-term and long-term goals. This has helped DKSH stay competitive in the market by staying ahead of the game while maintaining high operational benefits. Ideally, innovations such as digitization/automation are the primary driving force for long-term success in any industry (Chesbrough, 2007). Digitization of market expansion services is helping consumers in the local markets, industrial customers, wholesaler, and retailers to achieve business growth over time (DKSH, 2018). In particular, digitization of services leads to efficiency gains, business development, and organic growth. Considering the broad scope of DKSH businesses, this study will cover digitization/automation of services and logistical activities.
According to Chesbrough (2007), technological progress is enabling service innovations at most levels of business operations. It creates platforms on which market expansion services providers explore innovative service offerings that meet customers' emerging demands. For example, DKSH has digitized its information that allows linking of data across the value chain that are often transmitted in real time to intended destinations. For this reason, Chesbrough (2010) argues that digitization of services is a milestone to easing operations and cutting cost which eventually reflects in profits and efficiency.
Furthermore, adopting service innovations such as product demonstrations in the field of sales services, cash collection, pricing, certification, testing, product customization, market research, and product delivery have been utilized effectively by DKSH to carry out their operations. Dodgson, Gann, and Salter (2006) also observed that transformational and evolutionary service innovations are the key to achieving greatness in an open market. Besides, there is improved delivery of new and existing services to customers who are the major players in the business industry. Activities such as key account management, product licensing, promotion management, and brand management are the core of service delivery in an existing supply chain.
Supply chain automation
The main goal of a supply chain is to meet the demand of customers in the market (Hoek & Harrison, 2008). It is therefore imperative that goods and services reach the customers at the required place and time. Intrinsically, Hoek and Harrison (2008) note that the main supply chain activities are warehousing, inventory management, demand planning/forecasting, and customers' service. Besides, other activities include packaging and transportation, packing, material handling, and logistics communication. Additionally, Habib (2014) found out that the concept of SCM is similar to the concept of logistics activities. Therefore, achieving such myriad of activities in the SCM requires innovation (Noche & Elhasia, 2013). According to Elhasia, Noche and Zhao (2013), innovation techniques can help companies to cost-effectively and respond much more rapidly to declining product life cycles, intensifying competition, and accelerating technological changes. One of such innovative techniques is automation of the supply chain processes across companies and markets.
Emerging technologies can help create strategic opportunities for companies to stay at the edge of competition and achieve competitive advantage in many functional areas (Kampstra, Ashayeri & Gattorna, 2006). Some of the areas which companies can improve upon include supply chain management and logistics among others. In the same line of thought, Baker and Canessa (2009), observes that innovations, in particular, automation, is a way through which business organizations can enhance performance and competitiveness. Specifically, innovations play crucial roles in ensuring the improvement of the overall efficiency of the supply chain which ultimately results in the effectiveness of the logistical system. Even though there are some areas that DKSH has automated, there are some areas where people take a lot of time to initiate processes which cause inconveniences in terms of time management. Moreover, Baker (2006) found out that logistics and modem services encounter challenges in product flow, planning and controlling freight, and other related information. As such, supply chain comes in handy in ensuring efficient resource allocation. Coupled with modern day automation, then, DKSH can be one of the leading SCM companies in the world, which will expand its operations beyond Asian markets.
Automation of supply chain services has the tendency of encouraging resource redistribution within the company. As such, companies that seek to expand their marking scope and grow its operations can really benefit from an efficient SSCM. However, automation comes at the cost of training the staff to operate the systems (Baker & Canessa, 2009), it helps logistics companies in the long run. Overall, bringing modern technologies in the supply chain help increase the number of experienced, skilled, and competent professionals who ensure that business, both big and small achieve their growth objects as far as access to the market is concerned (Baker & Halim, 2007). In most business environments, implementing organizational or operational improvement plans are often clouded with uncertainties that have cost implication to businesses. As such, DKSH offers tailor-made services to companies and organizations which ensures that there is control in operational cost in a bid to achieve business goals. In another word, DKSH uses digitization where various customers can interact with the company on a platform to enhance service delivery.
Additionally, standardization of mass production, i.e., handling many customers with unique needs have a higher probability of being digitized/automated (Tseng, Yue, & Taylor, 2005). Evangelista, McKinnon, and Sweeney (2013), also share the same sentiments by alleging that it is easier to establish standardized automated solution at an affordable cost when there is demand in flexibility with higher product volume. ideally, choosing the right system to operate on enables seamless business operations by meeting various needs of customers to expand their businesses (Kherbach & Mocan, 2016). The same principle is the adoption of DKSH services which has ensured their steady growth over the years. From that innovation perspective, DKSH has a competitive advantage over that explains their tremendous growth. As such, automation/digitization is key in realizing organizational goals and objectives. It is, therefore, prudent for small and big companies to embrace automation of service delivery.
Nevertheless, DKSH has come up with a comprehensive package of services which help provide partners with a specialized range of services such as sourcing of materials, market analysis and research, marketing and sales to distribution and logistics as well as offering after sales services. Such innovation to provide the many services help them gain a competitive advantage in the market. Apart from offering general services, the company also offer customized services in every case that helps meet the unique needs of customers.
For DKSH to meet their customer's demand, the company can achieve automation while considering the following phases; pre-project, implementation, and post-project phase (Baker & Halim, 2007). Each and every step of automation of the logistics system have various factors that need consideration such options and scope definition, comparing conventional and automated options and the organizational requirements. Some other considerations include board approval, operational specifications, and commitment of the top management. The company also engages in installation, testing, commissioning, and training of individual business managers in the line of their service delivery. This helps the company bond with their clients which ultimately harness the relationship among themselves.
Supply Chain Gaps
Jonsson and Holmström (2016) observed that the introduction of supply chain planning (SCP) by retailers, wholesalers, and companies when they attempted to improve operational performance and better align supply chain partners and operations and business strategy created some gaps between practice and promise. Tuomikangas and Kaipia (2014) and Stank et al. (2012) supported the sentiments by echoing that the process of integrating demand and supply at times creates gaps that do not meet business expectations. In particular, the scholars highlighted operations planning maturity levels, higher sales were rarely implemented in practice, and managers are often lost on the requirements of such dilemma. Additionally, Johnson and Mattsson (2013) also observe that vendor managed inventories were for a limited amount of time. To address this, many methods and models have been developed to optimize supply chain multi-echelon stock decision and master planning but several of them are inapplicable (Jonsson & Holmström, 2016). Furthermore, there are also gaps between the plan, source, make, and delivery process that hampers the seamless flow of goods and services. And as such, DKSH is not an exception to this dilemma that rages across most supply chain channels.
Taking into account the business model of DKSH, a planning gap may exist between the business owner and DKSH. It entails analysis of information and forecasting the market trends of various goods and services. Various business departments such as finance and marketing can carry out the process monthly or yearly. Lack of coordination between the two partners can interfere with operations and ultimately hurt businesses. Aidoo-Sam and Sloan (2007), suggest that closing such gaps require innovations and simplification of the supply chain process. Such strategies will help eliminate lack of understanding on how specific contexts produces implementation outcomes. Lambert and Cooper (2000) further argue that developing interventions that rely on systems and processes are best suited to solve the planning dilemma between the two business partners during the planning stage. The duo also suggests that classifying stock keeping units across the inventory can help eliminate inefficiencies when DKSH is customizing the system for individual business.
The scope of DKSH business operations involves sourcing. A procurement system seeks the use of a procurement model. Activities under this model involve searching, negotiations, and evaluating agents with the aim of amending supplier selection, negotiation, and evaluation (Delipinar & Kocaoglu, 2016). Owing to the high competition that companies face today, sourcing of materials is challenging since different qualities exist selling at varied prices (Delipinar & Kocaoglu, 2016). Putting in place a supply chain operations reference (SCOR) is key in eliminating sourcing problems at various business levels. This strategy will help DKSH and others integrate their process and make comparisons for a reliable acquisition of materials and suppliers.
Making or manufacturing products can become to supply chain companies that are not prepared financially to do so. Manufacturing of goods does not only involve the production belt and batch but also time (Delipinar & Kocaoglu, 2016). When venturing into production and marketing like DKSH, there is a need for organizations to work in connection with other market players. Moreover, Bolstorff et al. (2012) found out that companies wishing to move together and improve efficiency in the supply chain should move together which will eventually eliminate misalignments. Adhering to this strategy can help the business avoid loss of market share, the constrained growth of profits, unexpected costs, high inventory, and poor service. Trkman et al. (2010) support the argument that getting the right people to do business with help improve organization performance and gain competitive advantage.
Another gap that exists in the supply chain is the delivery of processed goods. Many organizations delicate the delivery of their products to other companies. It is worth noting that outsourcing such services comes at a cost and in extreme circumstances, can hurt the operations of the business. Many logistics firms thrive in this sector, DKSH being one of them. Delipinar and Kocaoglu (2016) suggest that SCOR model works best when it comes to delivery of such services. Companies that have resources to meet delivery demands of the many companies can make a fortune for it. Smart business operations of DKSH have seen it survive for decades. Other firms can also come to take the advantage of other unexploited markets and bring efficiency in the supply chain of various products.
Trkman et al. (2010) note that returning of products, processes involved in receiving of goods and returning of products is a challenge to some entities. Once goods are delivered to a particular destination and somehow, they are defective, then returning them to the manufacturer is necessary. In such a circumstance, there is an opportunity for exploitation. Usually, contracts are reached to deliver products but not return. As such, this a gap that needs investment and consideration by supply chain players to create efficiency in the sector (Wang & Lestari, 2013).
Alignment of supply chain activation requires combining business, information technology, and performance measurement to effectively streamline the process (Delipinar & Kocaoglu, 2016). The same sentiments receive backing from Zuñiga, Seifert, and Thoben (2013) who asserts that SCM and IT are key in business management, economics, telecommunications, simulations, artificial intelligence and information systems. Further aligning information systems with supply chain management is vital in increasing revenues of each player in supply chain like DKSH. Besides, other industries like pharmaceuticals, automotive and textile require alignment and standardization through information systems to improve their supply chain (Mason, Lalwani & Boughton, 2007).
Moreover, Sakka et al. (2010) note that organizations and entities cannot be in rival business if information technology strategies are not linked. As such, strategic alignment is achievable when IT is incorporated, combining companies' goals, activities, and processes with information systems. Taking such strategic steps can form new opportunities in the service sector (Du et al., 2005), more so to DKSH as they undertake market expansion service. Firms requiring to gain stability in profits and business operations, therefore, need to embrace IT in their supply chain system. Overall, companies can achieve supply chain transformations when synergistic effect and complementary variables are aligned together to achieve the greater goal of supply chain management.
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