Managing Integrated Global Supply Chain

Executive summary

The case is especially concerned with Rolland Clothing Co. Ltd. which is intended to make a long-term supply relationship with the global leader of retailing industry of Wal-Mart and its subsidiary UK venture ASDA. Since the conditional analysis has revealed the long history of Rolland for becoming a permanent partner of Wal-Mart for securing a supplier contract from Wal-Mart, several factors have been working as obstacles to doing so.

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By struggling upon a previous couple of the years, Rolland had been able to introduce a new form of garment product with an extra clarification of providing the best quality standards of outdoor apparel unique in terms of technology and fashion as a result of the continuous effort of the company’s designing team that had eventually been successful in attracting the selected retailer’s attention while finalization of the supply contact targeted as for 5 years is a matter of further verification, judgment, and inspection.

By considering all of those facts, now Rolland is to develop several sophisticated versions of logistics and supply chain tools that can be started by the adoption of lean or agile concept in its operational functioning. Next, the company needs to develop desired clothing by incorporating standard quality management into them in terms of total quality management, ISO 9000:200, ISO 14000, six sigma, statistical quality control, etc.

In an inventory management system, the firm is responsible to make a close insight on various techniques regarding tracking inventory, demand forecasting, reducing lead time variability, classification of storage along with the introduction of a selection of appropriate warehousing strategy along with the utilization of some upgraded logistical tools, like- DRP, EDI, ECI, POS, UPC, etc.

Assessment of cross-functional approaches relative to both firms will make a transparent vision of CPFR modeling while Wal-Mart acts as a buyer, Rolland as a supplier, and end consumers as an original motivator for pulling demand. To ascertain the entire supply flow, a strategic partnership is required to be formed between the two mentioned parties while the establishment of B2B information system within Rolland will facilitate its functional capability.

Implementation of modern technology in tracking activities will focus on Wal-Mart’s use of the RFID technology that is also required and applicable in Rolland’s context. And finally, Rolland must run all of its manufacturing and supplying operations within an ethical boundary concerning its buyer, suppliers, employees, and the local community. The final part of this report will enlighten some constraint factors existing in Rolland’s supply web which can be minimized or abolished for achieving the intended outcome.

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Introduction

To advise Rolland’s manufacturing company regarding the potential influence of securing a supplier contact from Wal-Mart which is recognized as one of the largest retailers in the world through ASDA that is one of the subsidiary companies of Wal-Mart, it is first essential to have a transparent view both about the proposed supplier and retailer companies. As we know that Wal-Mart had been established in 1962, the company is now operating its worldwide profitable operation with the vision of letting people the opportunity to save their money for a better living.

On the other hand, ASDA had been evolved in 1999 as an acquired venture of Wal-Mart by reflecting the leader company strategy; it is positioned as the second-largest superstore chain having merely 17% of market allocation in the UK. And finally, Rolland is presented here as an apparel manufacturer which is concerning with market or sells its technologically enriched and fashionable cloths by using the wider ranged established Wal-Mart and ASDA channels for huge retail acceptance with the added competitive advantage of low price, high-quality products in the competitive global marketplace for the forthcoming five years.

Required issues

According to the proposed supply chain requirement, several important aspects with those parties are as follows-

Adoption of lean and agile methods

Rolland can adopt a lean or agile view of the supply chain for production or supply in the conditions below-

Agile approach

Christopher, M. G., (2005) mentioned that Agility normally indicates the company capacity of a quick reply to the intended scope and demand factors or otherwise a running a flexible procedure for making an instant response to the changed demand situation for the served items. Rolland can specifically adopt this strategy for staying competitive for the acquisition of shorter growth times for its improved quality of clothes. This technique will have lower visibility of showing the output of Rolland’s process view since the supply network performs as a basic function. Several agile processing tools that Rolland can use are- subversion or CVS which are limited but can be very much effective. Bowersox, D. Closs, D., and Cooper, M. B., (2002) argued that this conceptual applicability can be idealized through the performance of several criteria, as: –

  • It will assist the management of Rolland in terms of safety, control, and identification of the assets in producing cloths.
  • It will be helpful to adopt and target all types of changes necessary in quality production.
  • It will have more consistency and loyalty for intended output through managing modern software.
  • It will also assist in managing the challenges of being a “world-class” manufacturer by delivering the outdoor clothing at a global level as the vibrant and competent and successful supplier in Europe and the UK.
  • It will bundle supply chain tasks with lower costs accompanied by active expansion.
  • It can be effective in incremental inspection in production.
  • Help in a positive designing bolt.
  • Perform with “stage” through the utilization of a pre-shaped binary system.
  • Formulation of continuous development in production and supply.
  • Bring the differential advantages in time, cost, quality, equipment, innovation, and product mix.

In short, if each person of the supplier company puts the complete effort and is equipped to be agile about the orders, components, and ingredients, the whole system of production and supply will run easily.

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Lean approach

By this, Rolland will be able to utilize a low volume of certain assets through less space, workforce, and inventory for supplying a large volume of clothing. Bowersox, D. Closs, D., and Cooper, M. B., (2002) stated that it will encourage the company to use a competent working group with flexible instruments for accumulating the benefits of both mass and craft production for generating required quality. It will especially be accurate for displacing worthless inventory and time. So, it will pull the supply network for drawing back the manufacturer by supplying orders that have been presented to Wal-Mart. Here, delay-making variables should be estimated as non-worthy ones as well as when Rolland occupies to fill the target within more time like 5 years, then a lean approach would be applicable.

Adoption of quality management

Rolland can apply quality management by conduction a close vision on different aspects of quality involving cost-benefit analysis of quality, an understanding result of bad quality along with ethical aspects in managing that. However, it can ensure product quality based on 8 dimensions like-performance, unique features, aesthetics, durability, reliability, serviceability, and perception. Stevenson, W. J., (2006) added that, to ensuring service quality, it should concentrate on convenience, responsiveness, tangibles, reliability, and assurance, courtesy, and last time. The needs of implementing several quality tools by Rolland are as below-

TQM

Since Rolland has decided to enhance the quality of its outdoor clothing, then it needs to decide the implementation procedure of this decision. According to Cohen, S., and Roussel, J, (2005) here, the adoption of the TQM (Total Quality Management) approach will be reasonable as it is the practical and meaningful endeavor by the company for modifying its entire approach to business for making quality as an instructive factor in maintaining a continuous flow of relationship as a reliable supplier of Wal-Mart and ASDA. Thus, the basic ingredients of TQM regarding Rolland can be shown as below-

TQM

ISO 9000:2000 and ISO 14000 standards

ISO 9000:2000 is a combined standard that has been composed by International Organization for Standardization which was amended and updated by the year 2000. By adopting this standard, Rolland would cover different areas of testing of products, training of the workforce, maintaining a record, back-end supplier relations and reforming policies and actions to make a supply to Wal-Mart. Through ISO 9000, the company will guarantee its manufactured clothing according to Wal-Mart’s necessities.

By using such certification and listing process, this supplying company would get benefit through the guidelines system development and motivating it as innovative one. On the other hand, by using ISO 14000, Rolland will prepare the documents regarding the more efficient use of raw materials by pollution management and reduction of environmental influence.

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So, it can go forward several ISO 9000 standards, like- process, asset, management, realization and corrective requirements.

ISO 9000:2000 tools may involve-

  • Continuous improvement
  • System view
  • Factual view for making a decision
  • Reciprocally profitable supply connectivity
  • Leading
  • HR planning
  • Customization
  • Process view

Adoption of ISO 14000 will result in benefit in the following criteria-

  • System management
  • Functional management
  • Environmental concern

Six sigma

By adopting such an approach, Rolland will ensure that the produced clothing has not more than 3.4 deficiency per million. Griffin, R. W., (2006) pointed out that this broader term directs to the function for the decrease of errors for gaining lower expenses for improving buying satisfaction. Furthermore, it can be preferred for upgrading quality, saving time, and deducing costs through the implementation in manufacturing, inventory and delivery.

SQC

Thompson, A. A., and Strickland, A. J., (2003) argued that by adopting Statistical Quality Control, the venture can show primary concern for quality management as it is a set of particular statistical techniques by which Rolland can monitor quality. Acceptance normally concerns sampling finished cloths for making certain that given standards have been achieved. Other SOQ techniques include in-processing sampling that will yield the advantage of detecting errors before accumulation.

Other approaches

To ensure quality, Rolland can also go through some conventional but effective techniques, such as benchmarking, value-added analysis and reduction of cycle time which will enable it consequently for improving target quality in an exceptionally sophisticated manner, eliminating wasteful tasks without endangering customer satisfaction and developing, allocating and creating converged time cycle for introducing client-oriented quality assessment.

Impact of inventory management

Inventories or stock of clothing goods take a major role in Rolland’s overall supply chain management by performing a lot of functions including a meeting of predictable demand of ASDA- Wal-Mart, flatting manufacturing requirements, security beside the stock-outs, adopting order cycle benefit, the equivocation of price escalation, meeting benefit of quantity concession, etc.

Chopra, S., Meindl, P., (2008) expressed that for effectively managing inventories of the company, the governing board should take two primary functions regarding maintaining track of pieces in stock and deciding over the actual quantity and time of making an order. Additionally, the board should consider the issues below-

  • System introduction for keeping track of stocks.
  • Demand forecasting involving the measure of forecast error.
  • Information of lead time and predictable variability.
  • Estimation of holding, ordering and shortage expenses.
  • Categorizing module of inventories.

All of that system implementation can affect Rolland in following ways-

  • The periodic counting system of inventory can be prepared at monthly or weekly intervals of time for deciding the quantity of order for the specific item while the perceptual inventory system will be useful for keeping a record of disposals from stock continuously by checking the updated level. The perceptual system can also yield two different parts regarding the two-bin system and Universal Product Code which could assist Rolland in withdrawing the necessity of tracking each departure.
  • At the demand forecasting issue, POS or Point- of- sale is a modern approach that can be assigned to electronically track the original sales that will assist management in assembling essential modifications in restocking.
  • The A-B-C technique can be employed in classifying inventory regarding some important actions as well as assembling regulatory efforts. Here, cycle counting can also be applicable for the physical counting of stock.
  • The question in relation to the quantity of an order places the implementation of EOQ or Economic Order Quantity model for indicating the selective amount of order for deducing the sum of specific annual costs fluctuate with its size concerning three versions of basic EOQ model, EPQ model and quantity discount model.

Other considerations are-

Warehousing

Corporate Watch UK, (2004) that warehousing plays a major role in maintaining the stability of supply performance. Moreover, selective warehousing strategy also covers-

  • Present and industry synergies
  • Operating and location flexibility
  • Economies of scale

Distribution and logistics

Graham, N. (2008) pointed out that traffic management is commonly used for supervising incoming and outgoing shipments. Several other approaches are-

  • DRP or Distribution Requirements Planning is a scheme for managing inventory stock and distribution layout which is the extended version of MRP or Material Resource Planning beginning from demand by offering support to the warehouse system.
  • EDI or Electronic Data Interchange is a positive, computer- to- computer transformation of electronic operations for generating various facilities, like- huge productivity, displacement of paperwork, deducing lead time and stock, introducing JIT system, e- shifting of funds, better control in functioning, deducing clerical support and improving accuracy, etc. while satellite networking can be used.

Introducing cross-functional approaches

Richard, S. (2003) explained that for introducing cross-functional approaches within their own supply network, both Rolland and Wal-Mart will need to use the drivers of such functioning namely information, sourcing and pricing. KJR Consulting, (2007) mentioned that CPFR is or Collaborative Planning, Forecasting and Replenishment is an important viewpoint here that can be started by contact between Rolland and Wal-Mart for developing a combined marketing initiative of continuous supply of quality apparel suitable to use in all weather for satisfying global demand with the agreement of individual policy and plan.

Such a plan will focus on the selected clothing to be delivered, promotional strategy along the significant time boundary. Here, Rolland is permitted to plan modification within fixed parameters while Wal-Mart will provide approval and negotiate Rolland’s initiative of producing quality wearing.

Richard, S. (2003) also addressed that the system implementation of CPFR strategy from both of the company’s aspects can be explained by a typical model view. In the case of retailing products like outdoor clothing, Wal-Mart as a buyer will act in buyer role, Rolland in the role of selling party and finally, consumer means the end-user. The central of this relationship is a consumer-focused circle of Wal-Mart and the external ring of its proposed supplier. Every ring performs various activities of the CPFR model as the buyer expresses demand for outdoor clothing while the retailer performs the function of providing those.

Rolland will supplier to ASDA and Wal-Mart stores with apparel as demand for that is being dragged through the network from a consumer. CPFR synchronizing process is also different for the presented retailer and supplier since Wal-Mart is to emphasize on assuming responses of end-users to promote, participants and shifting from existing sales line while Rolland is required to concentrate on efficient manufacturing as with conducting effective replenishment cycle, implementation of CRM, APS and ERP while the most selective issue will be a collaboration with its personal vendors by which competence is formed through the reduced expenditures for commodities, stock, logistics, and transportation crosswise all trading associates.

Finally, the consequence of such collaborative relationship can broadly be emphasized by ECR for generating total savings of 10.8% for a retailing agency that can be adopted by the following model-

Hypothetical development of ECR model of collaboration.
Figure 2: Hypothetical development of ECR model of collaboration.

Strategic partnership

Thompson, A. A., and Strickland, A. J., (2003) stated that by a strategic partnership, we generally understand a recognized alliance formed in two companies through one or multiple corporate agreements in terms of the short-ranged official partnership, group, or business affiliation.

Such partnership can also be formed within Wal-Mart and Rolland for building a normal link in the commodity supply chain, the two firms constitute a deep relationship by participating in numerous functions like- marketing, product improvement, promotion, and inbound and outbound flow of supply which can yield a number of advantages for Rolland such as formulation of option value for better positioning as an indication of a larger scope of opportunities and utilization of Wal-Mart’s image for making it successful in future. Other consequences would be-

  • Continuous flow of finished all-weather serving clothing will be available to ASDA and Wal-Mart which will enable them to create availability of such version of a unique item at their retail outlets by ensuring an easy and smooth inbound flow of material.
  • Development of such partnership with Rolland will be helpful as a supplying alliance for ascertaining the inbound flow of raw materials continuously for a longer time by establishing a collaborative agreement with its vendors.
  • In terms of outbound material supply, Wal-Mart will be able to meet instant customer demand by conducting strong ties with its supplier for delivering and replenishing orders according to such demand, etc.

Impact of B2B information system

Xiao, S., & Zhang S., (2008) argued that B2B transaction can pick up the visibility of the supply network to business associates from individual access for assisting the emerging order of general standards for scheduling, codes of production, and location as with functional criteria. So, the B2B marketplace may require-

  • Financial issue: Serving financial and other assets for web-based commerce.
  • Technology: Serving software, proficiency, and application according to the necessity.

Analytically, Wal-Mart’s special requirements in terms of B2B information system to Rolland may focus as following-

  • Establishment of integrated and automated system communication system within the supply chain network.
  • The capability of communicating those linkages with in-house implementation.
  • A better-quality and potential way of exchanging information over the Internet for guaranteeing material delivery and replenishment schedule.
  • Introduction of intelligence system in such interactions.
  • Capacity development to be qualified by a quick and easy adoption and learning their specialized technologies for the formulation of swift “electronic bondage” to them.

According to Xiao, S., & Zhang S., (2008) for responding to such requirements, Rolland can establish and modify its existing B2B information channels through the development of certain strategies, such as-

Rolland’s B2B information system model.
Figure 3: Rolland’s B2B information system model.
  • To enhance internal satisfaction and assurance, Rolland should introduce the motto of doing business via the Internet.
  • To introduce self-regulation in B2B internet.
  • To develop an information center for deriving links from each page of its website.
  • With the information site, the company should explain the after-sale service in case of any defective material.
  • Introducing intranet for internal communication purposes and extranet for making better conduct with its suppliers to making an immediate order, order replenishment, etc.
  • Before the placement of an order from Wal-Mart, it should deliver information regarding order availability.
  • Setting a software scheduling plan for providing information to the client with an adequate concern of security along with privacy policy.

Use of newer technology

Graham, N. (2008) argued that to tracking material flow throughout the supply chain of Rolland, RFID is one of the most updated technologies which stands for Radio- Frequency Identification emphasizes the utilization of an item as a tag for incorporating into a material or product to track or identify through the use of radio waves which can particularly be used in an organizational context for developing inventory tracking and control competence. Manufacturers like Rolland can frequently use this RFID or HFID or High FID tags for tracking badges while Ultra- High FID/ UHFID, UHF can also be used for the identification purpose of pallet, distribution container, trailer, and truck.

Since its trading partner Wal-Mart has already been adopted the RFID technique in 2003, from 2005 it has been influencing its mega- suppliers for starting wireless tracking inventory instruments regarding chips adjusted to materials as well as warehousing scanners. Although RFID is costly, it is effective for serving long-run advantages for replacing the use of bar code readers for allowing materials to be traced on-site shelves. According to a current estimation, Wal-Mart can save 6%- 7% yearly costs for warehousing, transporting, and tracking materials less than previous incurring of about 10% that can be accounted as $1.3 to $1.3 billion of savings. Thus, an EPC RFID tag used by this retailer can be viewed as-

Scheme

KJR Consulting, (2007) addressed that RFID tags will be prospective for streaming line and improving inventory execution by allowing Rolland to efficiently entrancing and locating the flow of products since this technology allows the venture to insert a bunch of materials to the inventory function with no package of a cartoon as with scan every unit individually. An RFID scanner is able of singling out from all the components in a locked box better than bar code while its extension technology namely Electronic Product Code or EPC is also expert in tracking functioning. With a rise in quantity, prices will be decreased although Rolland will not be benefited from this rather than sourcing of tagging or to be successful Wal-Mart should offer positive promotions or terms to them for a particular adoption of such technology.

Environmental impact and ethical considerations

Rolland should obey product liability for improving the designs of its outdoor clothing indicating its liability for any harm, loss, or damage to the retailer, government, or general community because of its defective apparel. Chopra, S., Meindl, P., (2008) expressed that, Corporate supply flow can affect the environment in the following way-

Decision type Possible effect on environment
Location of the facility Effect on natural atmosphere through an influence on ecosystems, community, animals or other kinds of pollution.
Flow of materials A decision can affect the movement of materials with memorable impact on energy utilization inclusive for all levels.

Several guidelines are

  • Supply Wal-Mart the expected value.
  • Ensuring safety and health factors through production and distribution by eliminating risk issues for end-users, retailers and internal employees.
  • Consideration of possible environmental harm.
  • Development of communication system both in internal and external extent concerning corporate suppliers, retailer partner, and the local public to the codes of conduct, advantages, possible output, etc.
  • Offering ethical training of buying to be forward linkage related to the procurement cycle by showing awareness of ultimate negotiation based on labor standards.
  • Development of collaboration with local trade unions, employee representatives, and other agencies for contributing ethical trading via global partnership.
  • Ensuring the selected retail chain with the required level of apparel by continuous development accompanied by innovative expertise of the company for achieving sustainable development throughout the supply web.
  • Rolland needs to go forward with economic, ethical, legal, and philanthropic responsibilities for supplying apparel to Wal-Mart, operating trading in such a way to be adjusted to the intended beliefs of the society, obeying laws, and active involvement for community relationships apart from general business tasks.

Conclusion

Although Rolland is facing some barriers ranging from its inventory management to some internal friction and confusion, calculative measures can remove all of such barriers, like- making certain the level of quality from the first phase of production so that rejection occurs seldom, reduction of crowding at warehousing level along with reduction of dispatch timing of finished merchandise, strict maintenance of order filling and delivering procedure through a systematic production planning, removal of logistical problem by eliminating the trend of late or non-delivery of emergency flow of materials by restructuring sewing machine and use of upgraded cloths as raw materials, ensuring protection of breaking down of machine in the manufacturing criteria by withdrawing extra pressure on stuffs rather than establishing modern ones, modification of existing labor incentive planning, better equipped HR at production, establishment of hyper information system both in internal and external working environment of the company for generating a flexible and optimistic supply relationship throughout all the members within the channel.

Bibliography

Bowersox, D. Closs, D., and Cooper, M. B., 2002, Supply Chain Logistics Management, 1st ed., McGraw-Hill/Irwin: London, ISBN-10: 0072351004.

Chopra, S., Meindl, P., 2008, Supply Chain Management, 3rd Edition, Pearson Prentice Hall, India, ISBN: 81-317-0401-7.

Christopher, M. G., 2005, Logistics and Supply Chain Management, 3rd Edition, Pearson Education: London, ISBN: 0273681761.

Cohen, S., and Roussel, J, 2005, Strategic Supply Chain Management, 2nd ed., McGraw-Hill: London, ISBN-10: 0071432175.

Corporate Watch UK, 2004, ASDA/WAL-MART: A Corporate Profile. Web.

Griffin, R. W., 2006, Management, 8th Edition, Houghton Mifflin Company, Boston New York, ISBN: 0-618-35459x.

IATA, 2009, Strategic Partnerships. Web.

KJR Consulting, 2007, CPFR Baseline Study — Manufacturer Profile. Web.

Newland Graham, 2008, The Potential Impact of RFID on the Retail Enterprise. Web.

Shim Richard, 2003, Wal-Mart to throw its weight behind RFID. Web.

Stevenson, W. J., 2006, Operations Management, 9th Edition, McGraw- Hill Company, ISBN: 0073041912.

Stoner, J. A. F., Freeman, R. E., & Gilbert, D. R. 2006, Management, 6th Edition, Prentice-Hall of India Private Limited, ISBN: 81-203-0981-2.

Thompson, A. A., and Strickland, A. J., 2003, Strategic Management: Concepts and Cases, 13th ed., Irwin/McGraw-Hill, ISBN-10: 0072443715.

Wal-Mart, 2008, Wal-Mart’s 2008 Annual Report. Web.

Xiao, S., & Zhang S., 2008, The Role of Supply-Chain Management in E-commerce. Web.

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