Logistics is a crucial element of supply chain management that involves various risks and depends on global market forces. The area of goods production and the related business activities impact the world on environmental, social, and economic levels. The involvement of many parties makes them dependable on each other, meaning that each action taken by one of them may directly affect others. Thus, various practices related to sustainable supply chain management have been developed to help those parties manage the business and ensure its effectiveness. As the supply chain core, a supplier needs to exploit various strategies as they are subjected to the influence of global market forces and disruption risks and involved in the product development chain.
Global Market Forces
Global market forces represent various powers, organizations, and possible events that may influence the global market and its participants on different levels. They affect global operating strategies by making companies seek a broader market to sell its product. Global market forces can include government, currency, supply, demand, and social and cultural factors, but competition is the most significant for suppliers (Sanchez-Flores et al., 2020). The competition among suppliers involves changes in the cost and quality of their goods and services and is explained by the desire to gain the most customers. The model of market competition was designed by Michael Porter and included several forces: the threat of new entrants and substitutes, suppliers’ and customers’ bargaining powers, and competitive rivalry (Kabeyi, 2018). Suppliers have to sustain and even improve the quality and costs of their goods to avoid being overthrown by their competitors. However, they should also consider other global market forces since they can impact supply chain management.
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Supply chain management is constantly at risk of disruption because of the increasing complexity of global supply chains. As primary members of those chains, suppliers may suffer a decrease in their general performance rates due to management disruption risks. Furthermore, the rapid development of the world economy provokes significant increases in risk levels for suppliers: the related events occurred 36% more often in 2018, according to EventWatch Report (as cited in Xu et al., 2020). Those risks include but are not limited to natural catastrophes, human-made threats, and severe legal disruptions. Xu et al. (2020) state that the related events can “cause structural dynamics in supply chains and a ripple effect, which refers to disruption propagation in supply chains and the disruption-based scope of changes” (p. 3508). Suppliers may not only receive significant damage to their supply chains but also risk losing them entirely. Researchers recommend proactively enhancing supply chains’ robustness, creating risk mitigation inventories, and building backup facilities (Xu et al., 2020). A proactive approach can be highly efficient in preventing severe damage and improving supply chains’ safety.
Product Development Chain
Although suppliers are less involved in product development than manufacturers, they still depend on it and may have to adjust their supply flows following the needs of their customers. Pandey et al. (2019) report that the rapidly expanding global market makes organizations focus on new product development to survive and compete in the economic arena. Firms constantly present new goods and services, which has become possible owing to the world’s technological growth. Companies must be more demanding of their suppliers during new product development since supply chain strategies should match the new product’s characteristics (Reitsma et al., 2021). Suppliers should constantly evaluate the movement of materials and change their flow path when necessary, planning everything and minimizing shipments and inventories. Additionally, suppliers contribute to development chains “by ensuring that potential product designs result in the point of differentiation being positioned after the customer order decoupling point” (as cited in Reitsma et al., 2021, p. 1). Overall, a supplier’s role in the development chain is significant and cannot be ignored.
The supply chain is the most crucial element of global logistics from the supplier’s perspective. According to Koberg and Longoni (2019), suppliers’ operations can directly affect the environmental, economic, and social outcomes of companies’ activities. Thus, sustainably managing the supply chain should be a top priority of every supplier. The primary challenge associated with supply chains is the distance between buyers and suppliers, which grows because globalization makes firms depend on remote suppliers (Koberg & Longoni, 2019; Reitsma et al., 2021). That distance makes it more significant for suppliers to maintain a sustainable supply chain. Additionally, the sustainability of supply chains improves product quality, unlocks new markets, and increases consumer engagement (Bird & Soundararajan, 2020). That is why a supplier should do everything to ensure that the supply chain functions perfectly from their side.
Using proper strategies can help a supplier maintain their influence and value in the market. Michael Porter has recommended strategies guaranteeing sustained profitability, including concentrating operations in the areas with weak competition, taking advantage of market changes, and manipulating competitive forces (as cited in Kabeyi, 2018, p. 40). Suppliers can use these strategies to overcome their competitors and take leading positions in their fields. Another set of strategies focused on customer satisfaction suggests selling low-cost products to price-sensitive consumers and producing goods that are unique for a specific market (Kabeyi, 2018). Both approaches also imply gaining a competitive advantage in the market. Overall, suppliers should exploit those strategies to beat their competitors and gain customers’ trust.
Overall, a supplier exploits many strategies as they represent the supply chain, falling under the influence of global market forces and disruption risks and getting involved in the development chain. The main task of suppliers is to maintain the sustainability of their supply chains and ensure customers satisfaction. Suppliers should consider different environmental, social, and economic factors and react appropriately to avoid risks. They have to do everything in their power to confront the competition and satisfy their customers. The most effective way to achieve that involves following generic strategies for maintaining a sustainable supply chain.
Bird, R. C., & Soundararajan, V. (2020). The role of precontractual signals in creating sustainable global supply chains. Journal of Business Ethics, 164(1), 81-94. Web.
Kabeyi, M. J. B. (2018). Michael Porter’s five competitive forces and generic strategies, market segmentation strategy and case study of competition in global smartphone manufacturing industry. IJAR, 4(10), 39-45.
Koberg, E., & Longoni, A. (2019). A systematic review of sustainable supply chain management in global supply chains. Journal of Cleaner Production, 207, 1084-1098. Web.
Pandey, N., Patwardhan, A. A., & Rao, S. (2019). Four decades of new product development research: An integrative review. International Journal of Product Development, 23(1), 1-14.
Reitsma, E., Hilletofth, P., & Johansson, E. (2021). Supply chain design during product development: A systematic literature review. Production Planning & Control, 1-18. Web.
Sanchez-Flores, R. B., Cruz-Sotelo, S. E., Ojeda-Benitez, S., & Ramírez-Barreto, M. (2020). Sustainable supply chain management – a literature review on emerging economies. Sustainability, 12(17), 6972. Web.
Xu, S., Zhang, X., Feng, L., & Yang, W. (2020). Disruption risks in supply chain management: A literature review based on bibliometric analysis. International Journal of Production Research, 58(11), 3508-3526. Web.