Assignment on Mid–Term Exam

Course Code: SCM 3111

Course Title: Supply Chain Management

Prepared for:

...........................................

Farzana Akter
Lecturer
School of Business Studies
Southeast University

Prepared By:

Twasin Abduho Al Wares - ID No: 2015010000442

Sec: 1
School of Business Studies
Southeast University
Question Number: 1
How supply chain decisions playing an important role for making business sustainable? Briefly
explain with appropriate examples.
Answer: Companies are increasingly trying to achieve sustainability in supply chain
management (SCM). The goal is to achieve sustainable flows of products, services, information
and capital to provide maximum value to all corporate stakeholders.
The practices and structures of a globalized, capitalist world order gave rise to several challenges
for corporations. Sustainable development is undoubtedly among the most important tasks to
overcome in this new business world. There are several definitions of supply chain
management when we Google it. Dictionary meaning of the term sustainability is “the ability to
be maintained at a certain rate or level”. Or in simple terms, it’s endurance of system &
processes.
The important factors in developing more sustainability in supply chain management are to
identify the type of supply chain involved and the individual business attitude to extending
responsibility for product quality into social and environmental performance within their own
supply chain. Now the supply chain main aim is to align with business strategy in which it
operates and to align seamlessly need to have sustainability. Sustainability of supply chain is
measured by 3 main factors as shown below image.

Best sustainability in supply chain management achieved (at a common portion of 3 circles
above) when all 3 aspects (People, Profit, Environment) is achieved in right balance. If any one
aspect is unbalancing then other two aspects go off center causing whole sustainability in supply
chain management off center. Now let’s see different areas to achieve sustainable supply chain in
any organization. In my opinion following areas should achieve sustainability in the aspect of
above 3 aspects to have perfect sustainable supply chain management.
Sustainability in Supply Chain Management:

1.     Supplier Management (SRM) 

Sustainable supplier relationship management has become crucial in companies’ efforts to
achieve sustainability in supply chain management. A firm’s corporate image, in terms of
economic, environmental and social behavior, heavily depends on its supply chain and the
sustainability performance of each and every chain link, including suppliers and sub-suppliers.
Some of the leading companies in the world are intensively investing in Sustainable supplier
relationship management practices in order to manage sustainability even beyond their corporate
boundaries.

2.     Product Design 

Product design is the first step before actual birth or existence of the product in the real world. At
this stage, every organization should give a deep thought to above 3 aspects (People, Profit and
Environment) so better sustainability can be achieved.
Promoting sustainability within business operations requires sustainable products, processes, and
system, sustainable supply chains. To efficiently reduce environmental and societal impacts of
supply chains while maintaining continued profitability, it is necessary that the entire supply
chain is designed and managed from a total life-cycle perspective considering coordination
between product, process, and supply chain design. Coordinating product and supply chain
design decisions play a critical role in improving the sustainability in supply chain management.
The product design determines all its future costs, both in forwarding and reverse-flow, which in
turn depend on the supply chain configuration such as the number and location of supply chain
partners their capabilities and capacities.
Therefore, coordinating sustainable product and supply chain design decisions requires
consideration of all four product life-cycle stages and incorporating a closed-loop flow within the
supply chain.

3.     Process Design

Next stage after product design will be process design. Process planner at the organization
should again think of process mapping with PPE approach so the outcome of the process will be
sustainable. The organization should use innovative approach & use latest optimum latest
technology to perform the process. What I meant by optimum technology is organization should
not use unrequired hi-tech technology replacing human just for sake of automation.
Technology should be only used e to replace process which improves effectiveness & efficiency.
This will take care of People aspect of sustainability. Process design should be producing as less
waste as possible which will take care of Environment as well Profit aspect of sustainability.

4. Operations
While designing sustainability in supply chain management from an operations perspective, it is
important to consider aspects like:
  The Impact of Climate Change
 Demographic Evolution
 Urbanization
 Emerging New Consumers
 Smart Technologies and the Digital Factory
 Sustainable Development and Corporate Social Responsibility
Furthermore, they are many reasons for driving sustainability in operations for example:
 Brand management
 Reputation
 Cost reduction opportunities
 Customer demand and lead time expectation
 Government regulation and compliance
 Shareholder expectations
 5. Transportation 
Sustainability in transportation is high on agenda, however, according to MIT Research “Only a
very small percentage of Fortune 500 companies have tried to significantly reduce greenhouse
gas emissions from freight transportation in the supply chain through technological or
operational tactics. These 22 companies are aggressively decreasing fuel use, switching loads to
more environmentally friendly modes (forms of transportation such as rail), adopting technology
to increase shipment efficiency and effectiveness and reducing shipment volume”.
This research clearly demonstrates how much work is required to achieve sustainability in supply
chain management from the transportation perspective.
Question Number: 2
Inventory is an asset for any business. But it also costs a lot. Now, from your perspective, discuss
how it is playing a role in developing competitive strategy of any business?

Answer: A competitive advantage is what makes an entity's goods or services superior to all of a

customer's other choices. While the term is commonly used for businesses, the strategies work
for any organization, country, or individual in a competitive environment. It must be something
that our customers truly need. It must also offer real value. We must know our product's features,
its advantages, and how they benefit our customers. We must stay up to date on the new trends
that affect our product which includes new technology.

For example, newspapers were slow to respond to the availability of free news on the internet.
They thought people would continue to pay for news delivered on paper once a day. 

We can use the theory of competitive advantages to advance our career. If we were an employee,
works as if we were in business for ourselves. Our target market is our employer. Our benefit is
how we increase the company's profit. Our competition is other employees and technology. 

Communicate our competitive advantage in our appearances, our resumes, and our interviews.
Once we've got the job, continuing communicating our advantages in our work performance.
  Competitive advantage refers to the attributes that allow a company to produce cheaper
or better quality products than its competitors.
 As a business owner, we want to identify what our company's competitive advantage is.
 Heads of businesses should think about which benefits their entities provide, while also
determining their target market and competitors.
 Harvard Business School Professor Michael Porter defined competitive advantage in
order to help companies to create a sustainable competitive advantage.
 Individuals can use the theory of competitive advantage to advance their careers.

Question Number: 3
A. How your business can maximize the value of supply chain surplus? Explain Briefly.
Answer: Supply chain surplus, also known as supply chain profitability, is a common term that
represents value addition by supply chain function of an organization. Jonathan Birkin also
defines supply chain surplus as "the difference between the revenue generated from the
customers and the overall cost across that supply chain." The operational concept of it is 'sharing
the profit that remains after subtracting costs incurred in the production and delivery of products
or services. Ideally, profit is distributed to supply chain partners via transfer prices.'
Supply chain surplus is the value addition by supply chain function of an organization. It is
calculated by the following formula:
Supply chain surplus = Revenue generated from a customer - Total cost incurred
to produce and deliver the product.

For example, a consumer buys a PC from Samsung at $2,500, which indicates the revenue
supply chain achieved. All the stages incur costs to ensure the efficient transfer of funds,
information, storage of the product and transportation to the final consumer. The difference
between revenue from selling the PC and the supply chain cost represents the supply chain
surplus or supply chain profitability. Supply chain surplus is the total profit shared by all the
stages and intermediaries. The greater the supply chain surplus, the more successful the supply
chain. The success of supply chain calculated by its overall surplus not by the profit at each part
of stages.
Maximizing Surplus
Maximizing supply chain surplus is an ultimate objective of the supply chain planning. When we
look the amount of supply chain surplus, the success of that supply chain system and its future
prospects can be known. To maximize supply chain surplus, every facility that
impacts costs must be considered. However, Hugo’s said that, among those, 'the customer must
be the starting point when trying to increase the supply chain surplus because all demand, and
therefore revenue, ultimately arises from them.'
Traceability and Transparency
According to Pagell et al., supply chain surplus is related to sustainability and can be further
understood through the practices of traceability and transparency. Traceability is 'the practice of
sharing information among supply chain partners about materials that meet industry standards for
minimizing environmental risk', and Transparency is 'the flow of money through the entire
supply chain with an explicit goal of ensuring that each organization makes enough of a profit to
do more than just subsist'. In essence, traceability is concerned with how things are made
throughout the chain while transparency is concerned with keeping profits flowing through the
entire chain. To maximize surplus, it is important to ensure continuity of the supply chain system
by letting each partner in the chain reinvest, innovate, and grow.
Outsourcing
By aggregating capacity, inventory, inbound or outbound transportation, warehousing,
procurement, information, receivables to higher level, outsourcing to a third party can provide a
sustainable growth of the surplus to the firm. Sometimes, a growth in surplus may also occur due
to lower cost, higher quality, specialization or learning of the third party. A firm gains most from
outsourcing to a third party if needs are small, uncertainty is high and other firms are also
sourcing from the same third party.
Tax efficient management
To maximize supply chain surplus, the effect of tax in the design and implementation of supply
chain management is also considered. As the result of globalization, now there are so many
cross-national businesses. As different countries have different tax rates, companies may legally
optimize their supply chain and increase profits based on tax efficiency.
B. Suppose you are going to start a hotel/resort business, what will be your business’ pricing
technique and why?
Answer: I will start a 5 star hotel. My hotel will be given following facilities:

 Multilingual staff with a high staff to guest ratio. 

 A 24 hour reception desk, valet parking, butler services, a doorman greeting every guest
at the entrance, and separate concierge staff available at least 2/3 of the day.
 Separate elevators for guests and hotel staff.
 High speed Internet Wi-Fi.
 Luggage storage services with enough space to store all guest luggage out of sight - both
within guest room and public spaces.
 A fine-dining restaurant and a separate lounge or bar.
 Nightly turndown and full housekeeping services each day also available to each guest
upon request at any time. Also - laundry, ironing, dries cleaning, and shoe polishing
services.

 In-room features: room service 24 hours a day, window shades with full light blocking
features, electric safe, laundry bags, full length mirror with lighting, exercise programs,
remote controlled flat screen television, national and into' tv channels, all electronic
cables and cords hidden from view, choice of pillows (pillow menus), high wattage hair-
dryer, fully stocked mini-bar, multiple daily newspaper choices, and more.
 Spa services with at least 4 different types of treatment - and available in-room.
 Transfers and executive or house car services.
 All bedrooms with private bathroom. Amenities: bathrobes, slippers, brand name
toiletries, and large heavyweight towels.
  Meeting space choices with the latest AV technology, business services, and supports for
in-house IT.
 Poolside amenities such as daybeds, umbrellas, lotions, ice water, attendants on duty.
Food and beverage service must be available poolside.
 Vetted child-care services.
 Currency services.
 Flawless, personalized, and consistent service.

In the future, we expect the requirements for a 5 star hotel to include:

 Any and all requests can be made through text messages directly to hotel staff.
 Remote control panels for lighting, climate, and do not disturb accessible from the
bedside and the door.
 Even more outlets for personal electronics, especially with built in USB plugs.
 Enhanced and upgraded coffee machines.
 TV software will be fully high speed and include dedicated streaming services.
 Motion-sensitive controls.
 Bluetooth enabled door locks.

While everything looks smooth front of house, at the back end of the hotel, things are a little
more complex. Regardless of the type of the hotel or the number of rooms at our property a good
pricing strategy is necessary for success. Having the right pricing strategy can set us apart from
our competitors and prevent new businesses from entering a competitive marketplace. Of course,
having the wrong pricing strategy can also ruin our own chances! Having a pricing strategy that
consistently works for our business is essential to increasing our market share.

Question Number: 4

In this pandemic situation online businesses are flourishing. Suppose you have also decided to
open an online business. Now, from the perspective of supply chain, what costs you have to face
while conducting online business? And what sorts of benefits you would get to do online
business than opening retail shop? Discuss.

Answer: We don't have to run our entire business over the internet to benefit from online
business opportunities. Small businesses might only need an email address to communicate with
their clients, customers and suppliers electronically. Other businesses might use their website to
conduct their entire business online. The many benefits of online business include:

 Global access, 24 hours a day, 7 days a week.

 Improved client service through greater flexibility.
 Cost savings.
 Faster delivery of products.
 Increased professionalism.
  Less paper waste.
 Opportunities to manage your business from anywhere in the world.

Customers may prefer to visit our website to find out about our products and services, instead of
visiting us in person. They will also expect to see our website address and our email on business
cards and other promotional materials.

Online business opportunities

How we manage our business online will depend on the products or services we offer. We may
be able to use the internet to:

 Run an online shop.

 Manage our suppliers.
 Communicate with our customers, and get their feedback on our business.
 Offer services online.
 Allow customers to make reservations or appointments online.
 Manage our finances, such as online banking, tax and employee pay.
 Research competitors.

Future opportunities

Keep in mind that our business, as well as the variety of online tools available, is constantly
changing and evolving. While we might not plan to have a website immediately when we start
operating, it's still a good idea to think about whether we will need one at a later date and what
we will use it for. When we are planning the online aspects of our business, we should:

 Research our competitors and other businesses that use online tools.
 Decide what aspects of online business will benefit our business.
 Review our budget to work out what we can afford.
 Familiarize ourselves with any laws and regulations that will apply to our online business
activities.
 Consider our requirements, including what software we need and what types of computer
equipment we need to run it.
 Plan for risks, such as computer viruses, scams, data theft and loss of or damage to
hardware.
 Think about what training us or our staff might need.
 Be realistic about the time and budget we will need to manage the online aspects of our
business.
Providing our services online

We can provide a wide range of services online. Offering our services online provides
opportunities for us to reach more customers, which can help us to grow our business and
succeed in a competitive marketplace.

Providing services online is an effective way to further engage with our customers. For example,
if we operate a restaurant we can put our menu on our website. At the very least, our website
should list our contact details, usually both an email address and phone number. We should think
about our services and how we can interact with our customers to work out what elements of our
business could be offered as an online service.

Buying online

Buying products online can help us streamline the purchasing for our business and save our time
and money. Whether we need to buy raw materials, office supplies or equipment, online tools
can help us manage our purchasing process. Using the internet, you can:

 Search for information about products and suppliers.

 View product catalogues.
 Compare product specifications and prices.
 Contact suppliers.
 Place orders.
 Pay for products.

Online business tools can offer greater efficiency in dealing with our suppliers. We can place
orders at any time of the day. We can also source items that are usually difficult to find, as we
can search suppliers who are interstate or overseas and find more affordable products.

Selling online

Setting up an online shop to sell our products can be a useful and profitable way of doing
business. It allows us to operate without necessarily needing a traditional shopfront and gives our
customers more flexibility because they can buy our products at any time of the day. Online
selling can also broaden our customer base, as we can sell to people who are interstate or
overseas.

Online shopping doesn't appeal to everyone, so make sure our target market is comfortable with
buying online before we start. We might find us can reach more customers by offering online
shopping alongside a traditional shop.
Creating a website

Most customers will expect to be able to find our business on the internet. Whether we are
selling our products online, or simply want to provide some information about our business and
our contact details, having a website is almost essential. It's a good idea to think about what we
hope to achieve with our website before we start creating one. Researching our competitors'
websites can help us get a clear idea of what may work best for us. To create a website, we need
to follow 4 basic steps.

1. Register our domain name

Our domain name should reflect our products or services so that our customers can easily find
our business through a search engine. Our customers may also expect our domain name to be
similar to our business name. Our domain name will also be used for your email address. While
we can use a free email address such as Hotmail, sending emails from a business address looks
more professional.

To register our domain name, we will need to find an accredited registrar and pay a fee.
Accredited registrars are organizations who are authorized by auDA, the domain name
administrator, to provide services to people who want to register a new domain name, renew
their existing domain name, or make changes to their domain name record.

2. Find a web hosting company

We will need to find a web hosting company to get our domain name on the internet. Most of the
major internet service providers offer web hosting services. They can also provide us with
multiple email addresses. Monthly fees for web hosting vary depending on how large our
website is and how many visits us get.

3. Prepare our content

Think about what we want our customers to be able to do via our website. This will help us work
out what sections or pages we want to include. Consider what information or transactions our
customers will want and make sure the site is structured to make it easy for them to find and do
the things they need. Just as we might hire a professional to design our site, we might also want
to consider hiring a professional to write and structure our content.

A website that is well designed and easy for customers to use will help our business stand out.
Having relevant and appropriate content and images will help customers understand our products
and services and will make them feel comfortable with buying from our business.

4. Build our website

We can build our own website or have a professional web developer build it for us. Websites
need to be kept up to date, so make sure we plan for ongoing maintenance. We can use a website
publishing package to build our own website. These are similar to word processors, but also have
inbuilt features to convert our text and images to web content and send it to our website.

Having someone else build a website for us is a good idea if we're new to online business. A
professional web developer can build our site quickly and provide guidance on successful web
design. Hiring a professional can be particularly useful if we are looking at having an online
shop or offering other services through our website. We will need to design our website so it can
be easily used on smartphones and other mobile devices. Optimizing our website for mobile use
means that the growing number of people using phones and tablets to access the internet can use
our site while they are out and about.

Promoting our business online

When we are preparing our marketing plan, we should consider how we can promote our
business online. This can be more cost effective than traditional methods, such as advertising in
newspapers or on TV. It's also easy to measure the success of online promotions, as we can
collect data on the response to our promotions.

Online tools can help us reach a more targeted audience with personalized messages, which can
help us build ongoing relationships with customers.

A few simple ways of promoting our business online are:

 E-mailing our customers or other contacts to promote events, sales, new products or
services. We may consider creating a newsletter for any news associated with our
business.
 Including banner ads, similar to ads we might see in a newspaper, which are displayed on
other websites and link back to our site.
 Using pay per click (PPC) advertising, also known as 'sponsored links' or 'sponsored ads',
which generates hits to our website by having our website appear when customers type
certain words into a search engine.
 Engaging with customers through social tools such as Facebook, Twitter, YouTube or
photo sharing sites.
 Creating a blog, a type of online diary that we can use to keep our customers up-to-date
with our business.
 Using coupon sites or location based marketing tools.
 Optimizing our website for mobile devices.
 Developing or using mobile applications.
 Managing online customer reviews and feedback.
Legal obligations for online business

We must meet legal obligations when conducting business online. These are designed to protect
us and our customers.

Privacy

If we save contact and personal information from our customers, we are required, under
the Privacy Act 1988, to make our customers aware of what we are collecting. We must also
clearly explain how we will use their information.

Intellectual property

We may encounter intellectual property (IP) issues when running our online business, such as
potential copyright and trademark infringements.

Spam

Spam is electronic junk mail. It's used to send bulk unsolicited promotional emails
indiscriminately to a large volume of email accounts or mobile phone numbers. It can be a costly
and inconvenient nuisance to our business. To ensure our business keeps within the law, make
sure we adhere to these 3 points:

 Consent – We must have consent to send messages to our contacts.

 Identify – We must include clear and accurate information about our business, including
who is sending the message and how they can be contacted.
 Unsubscribe – We must include an 'unsubscribe' facility to allow recipients to opt out of
receiving our messages.

Electronic transactions

There is no legal difference between electronic and other transactions. This means the same laws
apply to the transactions made on our website as the ones we might make at the supermarket.
Before we start trading online, make sure we are familiar with the laws outlined in the Fair
Trading Act 1989 (incorporating Consumer Law).

Online security

We need to put security measures in place to make sure our staffs are using the internet safely.
Online security should be included in our business planning, particularly in our risk assessment.