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Introduction to Supply Networks

Question:

Write an essay on Supply network improvement.

Compared to academic literature supply networks are also prevalent, complex, and dynamic in nature thus the need to improve the supply networks on a regular basis. Supply networks are a string of supply chains that are interconnected and entail cooperative relationships at both downstream and upstream levels. Companies are usually a part of the supply network process; that starts from raw material acquisition, manufacturing, and assembly, which are the production process, and the process involved to the delivery into the hands of the end consumer. In the competitive markets, companies have to ensure that their supply networks are managed since proper relationships between the consumers and suppliers is a guarantee to good business (Oliveira &Gimeno 2014). Researchers have focused their energy on the relationships in the supply networks over the past few years. The managing of relationships in the supply network involves establishment and maintenance of successful relationships in the supply chain network (Blanchard 2010). It is important for companies to look for ways of improving the supply network in the ever-changing markets globally. Companies have to focus on improving the efficiency, effectiveness, and the sustainability of the supply networks, as they will lead to large market share in than their competitors and thus rise in the profit index for the company (Kalsaas 2011). 

For most companies putting the supply network efficiency as part of their improvement strategy should be paramount. The efficiency of a supply network is the process by which the parts of the network integrate and function together to fulfill its objectives. Several aspects come into play in determining the efficiency of supply networks and the improvement of the same. Proper information, proper time management, and location or places are the aspects that are considered in the process of improving supply networks for fashion retail groups such as Inditex, which is the largest in the world regarding fashion retail.

Time is a major factor in ensuring improved efficiency of the supply network. Time management is important, as Inditex has to ensure that it works in time. Proper time management is improved through ensuring that the business model used in the company is fast. A good characteristic of the business model is that it should have a high degree of integration on a vertical scale as is characterized in Zara. The model should allow control of the supply networks in the phases involved. For example in Inditex, the business model should be controlled starting from the design process, production phase, logistics, storage, and finally the customer. Through this, the company will ensure that it puts its focus on its production and that of the suppliers about their tendency to change. Because of increased competition and the dynamic nature of the fashion and design market, Inditex has to ensure that its business models are modified at regular basis to fulfill the needs of high efficiency and innovativeness. Inditex Company has to consider the best period in the financial year where they gain most profits and maximize on this period. The company needs to analyze the trends as a marketing strategy. Change in weather over the year often leads to different clothes that are worn and thus proper timing will always ensure that the company gains profits through changing what they produce at particular times. Design and manufacture of bikini wear during the summer period is a bad idea for the company as it might lead to losses. For the company to be able to minimize this aspect of poor productivity, the company should have employees that always focus on the weather patterns in the world to know which designs to produce at what times and the shipment strategy to other parts of the world. This makes time a major factor in ensuring efficient supply networks.

Importance of Improving Supply Networks

Proper locations or placement of the stores always ensures efficiency as it creates easy access to both the customer and the supplier. Proper locations often minimize the issues of late restocking; Inditex’s deliveries often arrive in stores twice a week and often have new styles to ensure constant refreshment and updates of the style. The locations of Inditex stores has led to an efficient system where it takes 24 hours between the time orders are placed and when the clothes are delivered to the stores in Europe. For stores in Asia and America, the period does not exceed 48 hours making the company efficient. Also, the central hub location is an important aspect to ensure efficiency, especially in the shipping process. For instance, if a company’s central hub is located in Australia, there is an advantage if way of ships delivers the merchandise. However, to fasten this process the use of air transport is much faster and this is what makes Inditex an efficient company. To further improve the efficiency of the company through the location aspect, the company must put its resources to ensure that its stores are located near airports or port harbors to ensure faster delivery of the merchandise to its stores. In summary, good locations of stores or a company’s business warehouses can lead to improved efficiency due to faster delivery of goods to the stores thus ensuring that the business or company never runs out of stock.

Finally, acquisition of proper information will always ensure that there is efficiency in the supply network. Proper information can be circulated in the supply network only through proper communication and therefore its dependence is in the mode of communication used by the company. For Inditex, the design of new fashion collections is usually redirected into the point of sale because of timely information the company receives on the current fashion trends and the preference of the customers. Inditex success depends on the current market trends and the ability of the company to be flexible and adaptive to the rapidly changing fashion trends. New designs are constant in the fashion business because the company needs to satisfy the needs and preference of the customers. Without proper information, the company will not be able to have knowledge of the market trends and therefore can produce old-fashioned designs. Decisions on the design and production process in the company need to be made based on the information received thus proper communication is essential for the efficiency improvement supply networks for not only Inditex but also any other business company out there.

The effectiveness of the supply network is another aspect that has to be put into consideration and improved to ensure a company’s proper functionality in its aim of achieving its goals and objectives. The effectiveness of a company’s supply network is measurable with benchmarks just as that of the company. An effective supply network has to ensure that it satisfies all the needs and demands of the stakeholders at the same time meet its goals and objectives. To create an effective supply network, some factors have to be put into consideration, including resilience, risk management, responsiveness to change, and innovation(Barney 2014).

Improving Supply Network Efficiency

The resilience of the company and the supply network is the ability of the company to respond and reestablish itself after facing difficulties and disruptions. The resistance of company is dependent on the effectiveness of the supply network. It starts from the manufacturer to the supplier, and finally to the customer. When facing disasters, there is always a disruption in the supply network. For example, Inditex has a more centralized system as it is located mainly in Spain. If any disaster, for example, an earthquake occurs in Spain, most of the company’s stores will suffer, and if the supply network is resilient, then the company will automatically be able to bounce back. It is recommended that companies have contingency plans as a way of dealing with any disasters or accidents that might occur. In this case, for example, fire or even airplane accidents might occur, and the contingency plans come in handy to solve the mess. A good contingency plan in the supply networks will enable companies to feel minimal impacts in their businesses and ensures that there is little disruptions in the process. Creation of a good depth level for each supplier is often a good plan to ensure continuity of the company in case one of the suppliers is faced with disaster. Good relations and equal measurement of merchandise and raw materials suppliers give to the company is important. Ensuring that the supply network is resilient is a proper way of ensuring effectiveness in the supply network and the company as a whole (Leung 2013).

The degree of responsiveness of a supply network is another important aspect to be put into consideration regarding the effectiveness of a supply network and company. The degree of the responsiveness is how fast a supply network or company can react and adapt to the dynamic market. In the fashion and design industry, there is a change in regular basis concerning trends and new clothing lines. Companies in the fashion and design industry should always have new technologies and methods of ensuring that they create new designs to satisfy the new trends in the market. The supply network especially the suppliers of the raw materials should always have the new technology that will enable them to supply raw materials needed to develop the new designs. Inditex’s Company success is ultimately dependent on its ability to spot and adapt to any change in the fashion trends. Because the fashion trends change rapidly, the company should be able to design and produce new merchandise to satisfy the needs and preferences of the customers. For each season, the company develops over fifty thousand items, which are entirely different, and each is special in its way. The company has over six hundred designers, and two fifty of them are found in Zara. The designers get their inspiration from the changing market trends in the fashion industry and from the feedback they get from the customers that visit the stores. The ability of a company to react fast to changing fashion trends is dependent on the ability of the supply network to react to the same changes. This, therefore, makes the effectiveness of a supply network depend on the responsiveness. Any company that needs to be responsive to any changes in the market has to ensure that it has the proper resources to achieve these requirements.

Improving Supply Network Effectiveness

Innovation, which is somehow similar to the degree of responsiveness, is another aspect that ensures that the effectiveness of a supply network is achieved. Proper communication in the supply network, in particular between the manufacturer and supplier, is an aspect that has to be put into consideration regarding the aspect of the innovation. Designing in the fashion industry requires innovation and development. A supply network can control what new designs can be developed in the industry as most of the designs are aimed at satisfying the needs and preference of the customers. Since the customers are part of the supply network, it is clear that the new designs needed in the fashion industry and any other industry are dependent on the supply network. However, innovation is dependent on the technology of the company since for new designs there is a need for resources to develop the new designs. Fashion lovers might insist on particular designs and the company will need the personnel and equipment to implement the new designs. In summary, to ensure the effectiveness of a supply network, innovation is an important tool of consideration. All companies have to make sure that they have an innovative supply network to ensure that they remain competitive in the dynamic markets.

Risk management is the last aspect of consideration in ensuring that the supply network is effective. Risk management ensures that there are minimum losses in case of poor decision making in the supply network system(Gurnani, Mehrotra& Ray 2012). Ensuring that that the supply network often has news regarding the risk before trying to fix any issues is always a better method of managing risks. Risk management entails toleration, treating, transferring, and finally termination. These steps can always be followed in case of any problems in the supply network. Risk managers in the supply network will always be able to create a proper way of fixing any problems in the network after careful assessments. Toleration and treatment of risks have often proved to be effective, however, fixing the issue becomes expensive. The ability of a supply network to tolerate a risk is efficient and at the same time cost effective. If a risk occurs in one part of the supply network and it is not dealt with, leading to it being transferred to other parts of the network, there will be dire consequences. Treating and tolerating risks are often the best methods that supply networks will often deal with the risks that normally occur in the system. Risk management, therefore, form an effective way that will ensure that supply networks deal with their problems.

Cultural awareness forms an important part of the effectiveness of supply chain systems. For the fashion industry, cultural awareness automatically forms an important point of focus. Inditex needs to consider all the cultural aspects of the world in the creation of their designs, as not all cultures support the same designs. Also, the cultural relationships between employees in the supply network are an important aspect in ensuring its effectiveness. To satisfy the cultural needs of its customers the supply network has to study the cultures at first and ensure that they create designs that will be able to satisfy these needs. Designs and production for the Asian market are different from that of Europe and America, and therefore, the supply network has to put this aspect into consideration to ensure that it is effective.

The Role of Communication and Information

Sustainability of the supply network is the final aspect that will ensure the growth and competitiveness of any company. Sustainability is the ability of the supply network to remain present regardless of any issues or problems that it can be faced with. Many benefits can be achieved through sustainability as it allows for the production of fewer wastes and enabling saving on costs through turning the waste into important products through recycling and reusing(Camarinha-Matos 2010). Supply networks are often affected with sustainability problems especially the manufacturers and producers of the products. The suppliers and customers often have few sustainability problems though they are not completely safe. Sustainability of companies and their supply network can be achieved through several ways including the use of good fuels in production, recycling, and reuse.

Managers and decision makers have great control in the sustainability levels of supply networks. There is need for any supply network to go green; this can be achieved through a greener product production, green supply process, and a greener waste disposal system. Firstly, the company can decide to rank and select its suppliers of raw materials based on their ability to observe the green policy through the production of fewer waste products. Secondly, the company can join forces with other companies to achieve environmental friendly objectives and when the green aspect of the environment is achieved; all aspects of the supply network will achieve sustainability. Going green is the way for many companies and their supply networks in the recent global market and therefore a more sustainable process for the manufacturers, suppliers, and the consumers.

Over the past two decades, climate change has been a major debate globally and therefore each company has to ensure that they do not add to the already dire situation at hand. Because of several accidents for example storms and hot temperatures several companies have had their supply networks disrupted thus leading to losses and even closure of some of the companies. Climate change has most of its effects from the manufacturing companies through the release of dangerous gasses to the ozone layer and even poor waste disposal systems that can lead to pollution of water bodies. Also, from a safety perspective, the employees of these companies can have problems in working in the dangerous conditions for example hot weather or extremely cold weather conditions. Without the personnel, there is no supply network, therefore, no businesses. Accidents often lead to companies and its employees going to their insurance policies, and this often leads to the companies having to pass the costs to the customers or retailers, and this leads to the costs spreading all through the supply network. Inditex, therefore, has to consider going green in all of its aspects of the supply network. A good example is through the reduction of the carbon footprint. Proper locations of stores and distribution hubs will greatly aid in this process as the aspect of saving fuel comes into consideration.  Location of stores in convenient areas that for example do not require driving of cars will greatly aid in reducing fuel consumption thus ensuring a greener society. Shipments of merchandise can be done in a way that there are low fuel emissions and also, this will lead to saving of costs.  A greener society6 and environment will often lead to a sustainable supply network.

The Role of Location in Supply Networks

Conclusion

In conclusion, the growth of companies in the fashion and design industries is dependent on the efficiency, effectiveness, and sustainability of their supply networks. Several aspects come into play in determining the efficiency of supply networks and the improvement of the same. Proper information, proper time management, and location or place are the aspects that are considered in the process of improving supply networks of companies. The effectiveness of a supply network is its ability to ensure that it satisfies all the needs and demands of the stakeholders at the same time meets its goals and objectives. To create an effective supply network, some factors need to be put into consideration, including resilience, risk management, responsiveness to change, and innovation. Sustainability of companies and their supply network can be achieved through several ways including the use of good fuels in production, recycling, and reuse. Ensuring that all the three aspects of a supply network are improved and perfected should be the goal of all the companies whether in the fashion and design industry or any other industry(Pegels2011). 

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