Barriers of Going Global, Research Paper Example

Abstract

Businesses are usually established with an aim of gaining dominance in the market so that they attain their set goals. The firms will strive to become globally known due to their high levels of performance in terms of their products and services. It is the pride of a company to conquer the world market and prosper in relation to the company’s vision and mission objectives. Strategic leadership is the main reason behind the success of global companies (Gully, 823). The company has taken their ability to develop and apply cutting edge technological advancements with best practice operations within their supply chains to create a value added network of logistics to their business model. The focus on taking a traditional cost center and turning it into a tool to deliver high quality products while also increasing value through visibility, production, supplier interactions, financial dependencies and other key business intelligence allows The company to derive a benefit in their business.

Barriers to Entry and the Tools to be Successful

Six Sigma and Lean Management. Quality is ingrained within the company culture. This entrenched focus to continually improve and provide quality products to the customer has led to the adoption of lean management and the Six Sigma methodology. Many of the large manufacturing and assembly companies have created, enhanced and promoted total quality management, Six Sigma and lean management methodologies.

Lean management’s purpose is to limit or eliminate waste from the creation process that does not bring value to the customer. The purpose is achieved through a set of tools whose sole purpose is to provide insight and direction to help those in the manufacturing process make better decisions to eliminate waste.  Lean management helps facilitate the use of the tools to create a repeatable and sustainable manufacturing process to remove wasteful activities such as holding too much inventory, rework of product and extraneous transportation costs are just some of the wastes companies experience in the process of managing a supply chain and are exacerbated by the lack of lean processes. Lean supply chain management is not just a project to temporarily relieve the pain points experienced by a temporary issue.  Lean supply chain management is a way to run a business to the point in which lean thinking and lean actions are ingrained into the daily activities of every employee. Lean is a way of life and not just a fly-by-night operation. It takes time and commitment to implement and more importantly sustain in the manufacturing environment. Lean management, when implemented successfully, will be ingrained into the culture of the company from the leadership of the company down to the front lines of the business where the company touches the suppliers and customers.

The lean management tools are utilized to drive out the waste from the process at the root cause of the issues the company is facing. The root cause is quality issues in the manufacturing process. By addressing these issues on the line they can be eliminated. By eliminating the issues at the source they will not come back as re-work which leads to more costs associated with the product. The lean management methodology will need to become a cultural staple in the company’s manufacturing process. By promoting and driving the lean culture, the leadership will create a sense of accountability and buy-in across the company which will facilitate the positive results from a lean implementation.

Lean management and Six Sigma are often used to better the company efforts to increase productions, capability, efficiencies or effectiveness. In this case, for the company’s business processes, the focus is on Supply Chain Management (SCM). Both are similar in that they are structured frameworks to help solve issues and improve the performance of their respective the company. Lean management is used to reduce waste and improve efficiency of a process while Six Sigma is utilized for the reduction in variances and improved performance. For example with lean management the focus could be on processing times, improving safety, utilization of resources and process improvements. These increases in efficiencies will not help prevent products from failing quality checks or missing other specifications on the requirements.  This is where Six Sigma would be used.  In essence, Six Sigma methodologies push the company to make the product exactly the same without defects every single time.  It does not mean that the process is efficient but it does force defects from the operation.  Both could and should be used in a synergistic approach.  For example while working through the lean management tool set which uncovers inefficiencies, the root-cause could be caused by consistent rework or scrapping parts due to defects in which the Six Sigma methodology would come into play.  Lean management is a great place to reduce the waste in the processes before implementing a Six Sigma approach.

The goal of implementing a lean management methodology is to help eliminate the processes, actions or lack of actions that are causing waste throughout the process.  Lean management is a set of tools designed to help eliminate the multiple areas of waste and ultimately drive a manufacturing process that produces quality products to the consumer. In order to implement a lean manufacturing methodology, it is imperative that the implementation team understands the process and purpose of what lean manufacturing entails. The basis for the entire lean methodology is to limit or eliminate any action or functions from the manufacturing process that does not create value to the end customer.  Lean is a set of tools that can help provide the necessary means of reducing waste through the manufacturing process.  This set of tools focus on eliminating the different kinds of waste which are transportation, inventory, motion, waiting, overproduction, over processing and defects.  Of all of these wastes some are more apparent and receive more attention than others.  Implementing the lean management methodology includes designing of the lean process, training, awareness, communication, lean leadership, tool box preparedness, continuous improvement, cultural awareness, philosophical buy-in and team management.

“Lean management implementation is continuous process that requires a change in the way the company conducts their business” (Pettersen,2009). The company must identify a need within their processes or a need to reduce the waste to better utilize their limited resources.  While the focus here is on lean management methodologies a key to success is integrating lean management philosophy as a cultural attribute.  One of the major tasks of the team is to bring in leadership and ensure that the culture change is pushed from the top down to not only kick off the culture change but also create a sustainable environment for the lean culture. Implementing lean management is often like opening a tool box and selecting the correct tool for the job. Lean management is also in a continuous state of improvement so that it must also be understood that while there should be recognizable gains from each lean management activity to goal is to continuously improve and strive to draw down the wastes in the manufacturing process. There are two basic methods to implement lean management projects (Hanover, 2006). The first method is a tools based approach and the second is a flow based approach. Both implementations work through a repeatable process which results in an improved area that contains a repeatable and sustainable process improvement.

When managing a product through the product lifecycle there comes a time when certain decisions must be made as whether or not certain aspects of the plan will need to be completed or not. There are other times when a solution to the problems the product launch is facing does not exactly fit into what the expectations held by the key stakeholders.  In these cases there must be an analysis completed to fully understand what trade-offs are worth compromising over and what other actions could be taken to mitigate the risks and still deliver the requirements to the end user. With any plan there comes a time to make revisions and continually improve the plan to remain agile in the implementation. Through the product launch of the brand there were specific scenarios in which the initial plan had to be modified in order to fully realize the opportunities available to the company. The first revision of the plan is the initial thought to mitigate costs by establishing a manufacturing plant in Chile. While the logistics of the operation would mitigate costs the real reason to establish the heart of the operations in Latin America is to establish a presence and potential loyalty to a localized operation.  Many of the other manufacturing operations are sourced outside of Latin America and are imported.  By becoming closer to the point of sale and those consuming the product a sense of loyalty could be leveraged in future operations.  The next area of concern is the timing of the operations.  The plan is to move at a relatively quick rate in which we establish a hub of operations in Chile in the first period and then expand every third and fifth period.  This timeline will ultimately vary depending on how fact the operations can be established in Chile.  If a facility already exists the operations could be set up for production in a shorter amount of time but if the facility needs to be built and configured the timeline will change and the opportunity costs may inhibit launch in other countries.  To mitigate this risk the distribution channels can be established while the initial plant is being built and production runs are passing their quality requirements.

Challenges in Latin America

There are two main challenges entering the Latin American market. The first is the competition that is already established.  The goal was to enter markets that did not have a high level of market ownership by other commodity providers.  The problem with this is that there is already an established set of large the company’s spanning the key geographical areas in which the company is planning on launching. The launch of the product will require specific competitive advantages to be created in order to be successful.  Each area will need these key benefits to be communicated and exposed to the consumer so that the consumer will choose the product over the already established commodities.  Each market entry will need to have an established plan specific to the entry and sustainment of the product within each country.  The first example would be that of Mexico.  Mexico does not have a regulatory screenings on toothpaste and the plan is to exploit that deregulation as an opportunity for growth. The company will offer a product that meets higher quality standards and offer that to the consumer. The plan would need to include the management of those costs associated with increased quality, a plan for marketing the quality as a value add to the product and a return on investment for these efforts that exceed the increased cost.  As with Mexico, all markets need to have the specific plans for creating a competitive advantage and how to sustain the market share.

One key aspect of the company’s success in standardizing operations includes the utilization of the virtual supply chain.  A virtual supply chain is a supply chain that is taking advantage of the wealth of information and processing capabilities that the technological advances in computing, accessibility to information and process improvement opportunities.  The virtual supply chain takes advantage of not only the physical network of the supply chain but also leverages the information layer of the supply chain. The virtual supply chain allows a greater granularity of command and control in an ever increasingly complicated global market. The traditional linear supply chain would have a very difficult time managing multiple vendors across the globe while also forcing focus on quality, timeliness and integration. With a virtual supply chain the information is presented to all the parties involved ranging from the sourcing agents to the vendors and back to the customer. The virtual supply chain leverages information to create areas of opportunity to drive out cost and to focus on quality.  The main function of the virtual supply chain is to enable the vendors to provide the parts or products on time and within specification.  It does this by placing the interaction between the suppliers and the sourcing agents onto a web-based solution that allows key data points to be pulled from the system as opposed to being pushed from one end of the supply chain to the other.

The virtual supply offers a core supply chain system that is based on flexibility and scalability based on the needs of a complex logistical supply chain.  The focus on complexity and allowing the system to validate data while also presenting a clear picture the supplier is a bright spot regarding the advantages of virtual supply chains.  The web-based model of virtual supply chains also allows for easy implementation and adoption among the parties involved in the supply chain.  This implementation revolves around driving the requirements in the system, setting up the users and ensuring a web-based portal is available.  This real-time updates of requirements and demand also creates an environment for collaboration and concerted efforts to address issues and drive out cost from the entire supply chain.

The disadvantages are very similar to that of a linear supply chain that is trying to leverage global integration into the supply chain. While a web-based portal that is available 24 hours a day for seven days a week does not provide the inherent ability for the supplier to be able to adequately utilize the system.  There are barriers in communication, time zones and culture that would need to be addressed prior to any implementation.  There is also a focus on training that would take resources from the business in the beginning but would be required to get the virtual supply chain operationalized.

Globalization and extending the focus on how and when parts or products are purchased is a main focus area for the company.  This is specifically true for businesses trying to enter new markets or trying to optimize their current relationship with the foreign vendors.  The virtual supply chain is providing the tools necessary to take those relationships to the next level and move from parts supplier relationship to a collaborative team effort to reduce cost, increase quality and provide the product to market when it is needed.  The main point of collaboration may not be to necessarily drive all of the cost out of the logistics of the supply chain but there are also other ways the virtual supply chain is moving the market.  By allowing information to flow freely and to precisely describe the demand, due dates, shipping times, specifications and other key data the suppliers can lessen the time to market and allow products to create a competitive advantage by entering the market first and capturing that market share.

Risk Management.  Risk management incorporates the identification, assessment and prioritization of risks and takes those results and establishes a mitigation plan to limit or negated the effects of the risk.  The risk management process extends throughout the lifecycle of a project or circumstance and the root cause of those risks can stem from a multitude of sources.  Risk mitigation or the management of the risks can be handled in just as many varied ways.  The most common actions to reduce the risk exposure are to transfer the risk to another entity, avoid the risk altogether, reduce the probability of the occurrence or just accepting the risk.  Depending on the goals and objectives of the implementation team there are different ways to handle the risk.  There is a basic construct on how to analyze a risk and thus understand which risk assessment method would be appropriate.  The overall project is to implement an enhancement website that is ultimately replacing a legacy website that is no longer capable of meeting the requirements of the company.  Through the project there are inherent risks associated with the project’s execution, transition and sustainment.  These risks will be outlined in a risk assessment matrix and a strategy for mitigating those risks will be defined.

Risk in project management is the perceived implications of an uncertain event impacting the project or the company as a result of the project’s deliverables.  Within each of the risks there are varying degrees in which the impact, severity and likelihood will occur.  Each of these factors plays a role into the risk mitigation plan of the company.  These risk mitigation actions incorporate the risk itself as well as the tolerance of the company and the benefits of accepting certain risk models to achieve certain objectives (Cooper, Grey, Raymond, and Walker, 2005).  The risk adversity or risk acceptance of the company is interdependent with the goals and objectives that the company wants to achieve as well as the activities that are necessary to achieve those deliverables.

Conclusion

The company has established itself through hard work and dedication to effectively and efficiently creating an environment for success within a collaborative supply chain management operation.  This includes providing those within the supply chain the appropriate tools to accomplish their objectives as well as placing a significant emphasis on core capabilities and business optimization.  These aspects are engrained throughout the company across all functional areas. The focus on standardized operations across business units, synergistic approaches to supply chain management and metrics for managing performance create the best possible scenario for success within the supply chain. The company’s business philosophy for solving tomorrow’s problems places a direct emphasis on continual improvement. This philosophy is a direct correlation between the company’s cutting edge supply chain and their successes in multiple product markets.

References

Cooper, D. F., Grey, S., Raymond, G., & Walker, P. (2005). Project risk management guidelines, managing risk in large projects and complex procurements. John Wiley & Sons.

Gully, S.M., et al. (2002). A meta-analysis of team efficacy, potency and performance: interdependence and level of analysis as moderators of observed relationships. Journal of Applied Psychology, 87, pp. 819-832.

Hanover, B. (2006). Deliciously lean – a mouth-watering introduction to lean manufacturing for printing professionals and sandwich makers alike. SGIA Journal Fourth Quarter. Web: http://tpslean.com/pdfs/introtolean.pdf.

Pettersen, J. (2009) Defining lean production: some conceptual and practical issues. The TQM Journal, 21(2).

Wren, D., Bedeian, A., and Breez, J. (2002) The foundations of Henri Fayol’s administrative theory. Retrieved from: http://bus.lsu.edu/management/faculty/abedeian/articles/Fayol.pdf

Zenger, J. H., & Folkman, J. (2009). The extraordinary leader, turning good managers into great leaders.. New York, NY: McGraw-Hill Professional.