Procurement Management and Global Sourcing - Report Writing - Management Assignment Help

Assignment Task:

1. Introduction

Supply disruption is a major aspect that goes into planning out supply chains. Throughout history supply chains have had to grapple with a host of disruptions caused by natural disasters, economic downturns and today, a pandemic. By analysing various articles, comparisons and differences can be made on supply chain disruptions and how to mitigate this issue. Along with this, relating the articles to relevant case studies gives greater insight in a best practice way to navigate supply disruptions which increases market share and revenue.  

2. Comparative Summary of Research Articles:

Supply disruptions are seen as a major breakdown in a businesses supply chain. Supply chain disruption is a constant concern for manufacturers, logistics firms and businesses alike. The underlying threat of disruption keeps supply chain specialists forever updating the methods by which they follow. Currently, with Covid-19 being a major disruption to global supply chains, businesses are scrambling to deal with the crippling effect the pandemic is having on the industry. Unfortunately, the Covid-19 pandemic isn’t the only major issue that’s been faced by supply chains; in 2011, the japanese earthquake crippled Japan’s automotive industry, and; in 2000, a fire ripped through one of Nokia and Eriksson’s main production plants in New Mexico, just to name a few. By analysing three articles chosen, conclusions can be made for similarities and differences on the issue of supply disruption. A few key aspects which the articles align with one another are risk management, mitigation through proper planning and analytics, as well as contingency sourcing. 

Supply chains manage risk daily, whether it be delays caused by weather, risks of machinery breakdown or something more serious like terrorism or a large scale disaster. Risk management in a supply chain setting isn’t an exact science when it comes to supply chain disruption, but being flexible and proactive in choosing contingency/backup suppliers increases the likelihood of avoiding loss in business revenue. In 2000, a fire went through a Nokia and Eriksson manufacturing plant in New mexico causing large scale disruption to production. By using backup suppliers, Nokia was able to work through the supply disruption and record a greater market share the following year. ‘While Nokia adopted a contingent sourcing strategy immediately, Ericsson reacted to the incident passively. As a result, Nokia survived and extended its market share by three percent one year later, whereas Ericsson ultimately withdrew from the mobile phone market’. (IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, Pg.201, Feb, 2020) The above example shows that being agile and implementing contingency sourcing mitigates supply disruptions and ultimately enhances a businesses growth both internally and externally. 

Furthermore, the use of descriptive analytics taken over many years can aid companies in accurately predicting when business will peak and trough. The information collected means businesses and procurement managers engage backup suppliers to produce a portion of the materials needed, when demand is at its peak, to fill orders while still using tier one suppliers for the majority of manufacturing. This gives the procurement team flexibility to should a manufacturer encounter problems during production. Although engaging added suppliers becomes costly during peak periods, the risks of low stock flow and loss in market share greatly outweighs the added expenditure. ‘The dual-source procurement strategy does not necessarily reduce the cost of manufacturers under supply disruption risks. However, if the supplier fails to deliver on time, it will hinder the manufacturer’s normal production, which leads to an unpredictable loss that affects service level.’ (Journal of Intelligent & Fuzzy Systems 33, Pg. 2637, 2017) Along with using data analytics, risk management and assessment is another avenue undertaken to mitigate supply disruption. 

Currently, Covid-19 is the largest disruption to supply chains world wide. Manufacturing in China, India and Europe has ground to a halt. While in Australia, and other countries, panic buying products like toilet paper and pasta is driving up demand. Luckily for Australia, the majority of products like toilet paper is made in the country meaning demand can be met.  Due to the nature of the pandemic, using risk management, analytics or contingency sourcing isn’t feasible thus there is a gap between supply and demand. A Melbourne University article states that, ‘this panic-buying provides us with a prime example of something called a ‘demand risk’ to supply chains – or a sudden surge in demand that catches manufacturers and retailers by surprise.’ (Melbourne University; The Covid-19 shock to Supply Chains, Pg. 1, 2020) Being better prepared for a situation like this is difficult but doable. As the pandemic unfolds, looking at countries like Singapore and Taiwan,  being prepared to stop the spread meant downtime for manufacturers was shorter therefore, the loss of market share and revenue was far less. On the other hand, the United States and Italy we hit very hard on both the economic and social front meaning the eventual recovery will take much longer with a great chunk of revenue and market share lost.

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