Critically discuss the supply chain of the Phone Corporation and Motokiason. Illustrate with a figure. Evaluate all flows of mobile phone companies and all flows of information.
The supply chain network design of the Phone Corporation and Motokiason is manufacturer/distributer storage with customer pickup. In the supply chain of the Phone Corporation and Motokiason, the product does not flow through an intermediary or intermediate, and therefore, the costs are reduced.
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Figure 1: Supply Chain of Phone Corporation and Motokiason
Transportation costs are lower in this supply chain network because it involves using the existing delivery network. The distribution and transport of the mobile phones is made possible with the help of a third party, the Mobile Express, which is a third-party logistics provider. Similarly, the costs of facilities and handling are low because new facilities are not required, and the use of existing facilities reduces the costs. However, the handling costs at the pickup sites such as central depot to collect the used and returned phones are significant.
With regards to information, the infrastructure is yet to be built. Eliminating the wholesaler from the distribution network is not enough to gather information directly from the customers
However, the product variety, availability, and the response time of this supply chain is similar to other designs of distribution network. Due to the direct network, return-ability is easier because the pickup locations (photoshops) handle returns. The customers return their used phones at the PhoneShops which are then collected by a central depot that transports the collected phones to the Motokiason.
Samsung Distribution network and value chain
In case of a major mobile phone company, Samsung, the value chain is well-developed and involves hi-tech. The addition of logistics plays an extremely important role in this value chain. The supply chain and logistics integration are of strategic importance to the organization. It gives a high performance in results of operations of the business (Bask, Spens, Fabbe‐Costes, Jahre and Roussat, 2009). For Samsung, the activities such as research and design, product development are the primary activities, whereas these are described as secondary activities in the Porter’s value chain model.
The flow of information in the mobile phone company is also efficient. The flow of information is also referred to as the sharing of information from the customers to the manufacturers and from the manufacturers to the customers as well. The company also has a system of online feedback which provides the customers with a platform to give their opinions and suggestions regarding a product. For the purpose of efficient flow of information, social media is also used.
2. Formulate five logistics decision problems in this supply chain of mobile phones and mobile operators. Provide 2 examples on horizontal and vertical integration between local and International organizations in the mobile industry.
Mobile Supply Chain Management is an important aspect which is not only fast-growing but also reduces the costs and enhances the supply chain performance (Eng, 2006). Automation is important in the success of supply chains. This is because the technology is an essential ingredient which is responsible for integrating all the tools in a supply chain (Elfirdoussi, 2018). The most common challenges that companies face are related to the synchronization of the supply chain. The synchronization is not carried out effectively in many cases due to legal barriers and financial aspects of the business working in the industry of mobile phones. The supply chain of the Phone Corporation and Motokiason shows a cycle view of supply chain processes in which, the supply chain is divided into cycles which are performed at stages taking place between two integrated supply chain phases. Some of the logistics problems associated with this supply chain are described below. These problems are mostly associated with the dynamic industry of mobile phones and technology where the product life cycles are short, and the demand cycles keep fluctuating. The customer demand is influenced by the latest trend in the market.
The technological cycles are fast due to the breakthrough innovations in this industry. Therefore, the companies face challenges while operating in such dynamic environments. Another challenge to the supply chain is exerted by the customers influencing the demand of a product. The customers base their decisions seeking for the latest ‘hyped up” product in the market. Therefore, the uncertainty regarding the supply chain and product life cycles propagates (Agarwal et al., 2006). In this supply chain, customers are encouraged to return the used/faulty products to the PhoneShops. However, the cost is still incurred in managing the returned phones, and these handling costs result in logistics problems in this supply chain.
Another challenge is posed from the supply side of logistics involved in the supply chain of mobile phones and mobile operators. The supply side also presents a number of uncertainties specifically regarding the evolving supply. In this, the underlying technology in itself is under development and changing rapidly (Domingo Galindo, 2016). The Supplier Relationship Management (SRM) is a critical process in this supply chain of Phone Corporation and therefore, it has to be conducted efficiently to reduce the uncertainty associated in the supply chain from a supplier’s side.
The logistics challenge that is faced by many operators in this industry is related to the technological infrastructure. The technological lifecycles of the machines involved have become shorter and results in many challenges due to the use of existing technology (Fernie and Sparks, eds., 2018). The supply chain of Phone Corporation and Motokiason also faces this challenge and the logistics problems associated with this affect the processes in the supply chain.
The financial aspects are also important because logistics and supply chain management directly depends upon the financial capital involved in the process. In this supply chain, an amount of the financial capital is spent on the return cycles (Harrison and Van Hoek, 2008). The collection and assortment of used and broken phone also result in challenges of logistics in the supply chain.
Xiaomi has an R&D structure that shows a rough integration and a horizontal specialization. Huawei, on the other hand has a well-developed R&D structure and a vertical integration (Chen, Park, and Nakaoka, 2018). Xiaomi is an internet startup company which was developed a few years ago and has a short history. However, in its short company history, the organization has seen a significant growth due to its horizontal integration and outsourcing strategies. For a startup like Xiaomi, horizontal integration has been a successful strategy. In comparison to Xiaomi, Huawei has been a giant in smart phone industry, and it has had a long history. It has a vertical integration which has been equally successful for the growth of the company. The company is highly innovative and also benefits from the top filings of patents.
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3. Explain how mobile operators apply the concepts of Lean Management and Agility and explain how they can incorporate them within their strategies. Illustrate with examples.
Discuss the term Efficient Customer Response (ECR) and explain its main aims.
Lean management is a strategy through which a company can achieve a long-term growth by continuously improving the company through incremental changes. The incremental changes involve systematically making small improvements in terms of quality and efficiency. It is important that the strategies of lean management are applied at the intra-organizational aspects of a company. Lean management is also important to improve the efficiency of the complete supply chain (Martínez-Jurado and Moyano-Fuentes, 2014).
Just like lean management, agility is one the most important aspects of a supply chain, especially for firms that work in a highly turbulent and volatile external environment, where the product life cycles are shorter and the risk in the supply chain is increased multiple folds due to the uncertainty associated with the products and consumer preferences. With the help of agility, a company can master the strategy of providing the customer with the right product at the right time. This satisfies the customer and cultivates a long-term relationship which is the goal of the supply chain (Agarwal, A., Shankar, R. and Tiwari, M.K., 2007).
Lean management (just-in-time) is a concept which is now highly relevant in telecommunication and mobile phone industries. The operators use this concept to reduce the costs related to production and storage and as a result, organizational capabilities are also improved. This concept has provided the operators with an excellence by the removal of excesses and potential damages in the operations. This is made possible by curtailing the buyer, seller, organizational and the consumers’ inconsistencies. The operators exert considerable effort on the execution, scheduling expenses, resource allocation, and also remain attentive all the meanwhile (Afunwa, Agbaeze, Ike, and Isichei, 2020). Agile lean implementation is also a source of eliminating the waste while delivering quality to the customers at the same time. The practices and the processes involved are simple (Narvekar, 2018).
For example, the supply chain of Huawei, a leading smart phones Chinese company, is mainly driven by agile supply and intelligent logistics. This has resulted in Huawei shifting its strategic perspective from passive response to active perception. This has been made possible through years of transformation and agility in the supply chain.
Efficient customer response is a strategy that involves increasing the customer satisfaction by providing them with a number of increased services through a consortium of efforts by the retailers, manufacturers, wholesalers (Attaran and Attaran, 2007). The main aim is to improve the efficiency of the supply chain which eventually results in greater profits for all the participants of the supply chain. This is made possible by all the participants aiming to achieve their goals and objectives and simultaneously working in synchronization to improve the efficiency of the supply chain (Finne and Sivonen, 2008).
4. Critically evaluate the four stages involved in developing a segmented supply chain strategy in the mobile operators.
Stage 1: Planning
This is the most fundamental stage at which a time driven MRP system is utilized. The suppliers are included at this stage. Transactional communications take place involving purchase, orders and returns. This stage involves a wide range of activities which include research, checking the feasibility of the plan, and planning the whole process.
Stage 2: Source
The scope at this stage increases and often two-tier suppliers are involved. Data sharing among the participants and important flow of information takes place at this stage. Complex interrelationships are formed. For a mobile phone company supply chain, the source stage starts from extracting the raw materials such as metals and ores. China is one of the largest suppliers of these raw materials used in the manufacturing of mobile phones. Often times, the extraction of raw materials is associated with controversies regarding the environment, and poor working conditions for the employees.
Stage 3: Make
This stage is characterized by a supply chain integration which includes developing programs that benefit all the participants in the chain. This stage involves collaborative efforts between the members. The communications are beyond the level of transactional, transactional with data sharing and all types of information is integrated at this stage. This stage which involves manufacturing of the products is mobile phones through a transformation process of the raw materials. The end product is the result of the assembling of a number of different components that are produced through their own supply chains. This stage is also associated with worker’s rights abuse and other such controversies.
Stage 4: Deliver
This stage involves a demand-supply network of collaboration. Critical information flows freely throughout the network of supply chain. It is also referred to as glass pipe. This stage is critical in the supply chain management and involves complex distribution networks. Often times, the mobile phone companies opt for third party distributers to gain efficiency in logistics and supply chain.
Stage 5: Return
The last stage of the supply chain is the return stage where the customers are either encouraged to return the used/broken products keeping in view the environmental aspect of the supply chain or the customers are supposed to return the faulty products for a possible warranty claim.