Introduction
CB&I is an American construction and building company that also supplies raw materials to various small and medium-sized firms. The problems of the development of CB&I’s logistics structures and, in particular, supply systems for manufactured products have been analyzed in sufficient detail. However, the question of creating highly integrated supply chains and forming an effective supply chain capable of ensuring a quick and high-quality supply of products remains insufficiently studied. Consequently, a more detailed overview of this problem and the development of recommendations on the planning and formation of the supply chains are of considerable interest from the point of view of the theory and practice of modern logistics.
Inventory
CB&I’s logistics is becoming one of the main competitive strategies for the development of a group of enterprises united by a single supply chain. The company’s inventory management is mainly manifested and embedded in the structure of the logistics system, supply chain management covers all areas of logistics, from the source of the initial raw materials to the final consumer (Shovityakool et al. 4). Supply chain management is a broader concept than the logistics process itself. By supply chain management, it is essential to understand a process that can be simultaneously attributed to controlling the movement of material flows, and at the same time, to correlate with the organization of relations between intermediaries from the moment of receipt of the raw material to the arrival of the goods by the final consumer. The effectiveness of the logistics system directly depends on the impact of those costs that have to be faced in moving the material flow from the source of raw materials to the final consumer.
The size of CB&I’s logistics costs determines the areas of economic activity of the participants of the logistics. Industrial enterprises, usually make up 10-15% of the total costs of production and sales of products, and at trade organizations, they can make up 25% of the total expenses (Charehzehi et al. 48). CB&I’s concept of supply chain management focuses on the application of the idea of total costs. The purpose of applying supply chain management is to coordinate the distribution and production activities of enterprises participating in the logistics system to save costs and improve customer service. In the framework of the concept of total costs, all cost items of various logistics participants are considered together. With the help of new tools that came into the business along with informatization and optimization of communication processes, new models of logistic management were developed that allow determining the necessary volumes of inventories (Touboulic and Walker 306). In order to use the concept of total costs, it is possible to integrate all the processes in the supply chain and to achieve effective implementation of the just-in-time system.
Strategy
An efficient logistics strategy can be built that will quickly adapt to environmental changes, will be able to carry out process adjustments based on the feedback mechanism, will efficiently perform certain logistics functions and operations, and ensure the normal functioning of all its subsystems in conjunction with the environment. It should be noted that the application of a CB&I’s supply chain management strategy is usually accompanied by the use of effective information support for the enterprise resource planning (ERP) class of products (Shovityakool et al. 11). Thus, the management of coordination processes and the implementation of specific logistics processes and operations, as a rule, are carried out in the information environment of modular complexes for decision support and enterprise management.
Corporate information systems, and later Internet technologies, made it possible to significantly increase the effectiveness of coordination of processes in the supply chain. Information technology was, on the one hand, a medium for ensuring and increasing the efficiency of the supply chain, and on the other hand, a powerful tool for the development of new concepts of supply chain management in construction (Charehzehi et al. 52). The practice of supply chain management has proven the effectiveness of building and analyzing a business based on an integrated review of all areas and elements of the process of creating the value of a building product. It should not include only the costs and profits of construction companies without taking into account the impact of inter-organizational relations with suppliers and relationships with customers.
Production
It is critical to understand that CB&I ‘s overall production is mainly outsourced or coordinated with other factory-owning firms. Currently, CB&I production and supply chain management has already clearly marked the transition from simple information coordination and operational cooperation to holistic interaction in supply chains, which leads to an understanding of supply chain management as a concept of business management. Serious confidence crises can be observed in CB&I’s supply chain, which will lead to significant informational isolation of partners, negatively affecting the level of awareness of the system (Touboulic and Walker 325). The level of information freedom is one of the determining factors in the functioning of the supply chain. Environmental problems can also be a factor in the separation of logistic participants, since they all use their environmental standards and, therefore, have different levels of environmental risks in the implementation of their activities. It should be noted that when managing the supply chain, several barriers arise that have a negative impact on their development.
Supplies
The main criteria for evaluating the supply activities of each participant in the CB&I’s chain are quality and value-added. Both of these concepts are extremely important in the planning and formation of supply chains. Consumers are not inclined to tolerate supply chain errors and, if they become more frequent, will turn to compete with logistics structures. In the CB&I’s integrated supply chain, there is more opportunity for the development of effective traffic patterns and the implementation of such transport systems that would ensure a high degree of cargo safety and high-quality delivery (Shovityakool et al. 9). In such structures, it is possible to significantly reduce the level of transport risks, which are completely impossible to avoid completely in logistics activities.
Overcoming the coordination barriers of the participants in the logistics system allows CB&I to offer the consumer a range of logistics services, according to which the consumer will be able to more fully realize their needs. The development of such supply chain capabilities will allow them to compete mainly with the same complex supply chains and achieve significant competitive development potential. The selection of the most suitable supply chain for the product/customer segment should be based on meeting the optimal balance between the required levels of customer service and the total cost of providing this service (Charehzehi et al. 61). After that, company executives can make a rational decision about the key outcome indicators related to the strategic position of their business about the market and competitors.
Transportation
In general, CB&I ‘s each transportation chain of any product can proceed from different development conditions and use different strategic decisions regarding the location of logistics facilities on the ground and the choice of specific types of storage structures used to ensure uninterrupted supply of all products at all points of consumption. CB&I’s integration of logistics participants in the transportation chain is carried out based on the needs of the entire chain and is built on mutually beneficial relations of partners. When it comes to choosing supply chain and logistics schemes, many companies are adopting a strategy that can be called “one size fits all”( Touboulic and Walker 336). The use of a single approach usually arises from an attempt to reduce costs in the supply chain and maximize its return. Both buyers and goods have distinctive features, respectively, and the supply chain should be different. CB&I’s managers should try to understand better these differences in order to align individual pricing and transportation chains with well-defined customer segments. Such compliance can bring benefits that go beyond simple cost savings and can significantly increase a company’s competitiveness.
Capacity
Serious capacity crises can be observed in CB&I’s supply chain, which will lead to significant informational isolation of partners, negatively affecting the level of awareness of the system. The level of information freedom is one of the determining factors in the functioning of the supply chain. Environmental problems can also be a factor in the separation of logistic participants, since they all use their environmental standards and, therefore, have different levels of environmental risks in the implementation of their activities. It should be noted that when managing the supply chain, a number of barriers arise that have a negative impact on their development.
The main criteria for evaluating CB&I’s capacity expanding activities of each participant in the supply chain are quality and value-added. Both of these concepts are extremely important in the planning and formation of supply chains. Consumers are not inclined to tolerate supply chain errors and, if they become more frequent, will turn to compete for logistics structures (Shovityakool et al. 17). In the integrated supply chain, there is more opportunity for the development of effective traffic patterns and the implementation of such transport systems that would ensure a high degree of cargo safety and high-quality delivery. In such structures, it is possible to significantly reduce the level of transport risks, which are completely impossible to avoid completely in logistics activities.
Forecasting
Overcoming the forecasting and coordination barriers of CB&I’s participants in the logistics system allows the firm to offer the consumer a range of logistics services, according to which the consumer will be able to more fully realize their needs. The development of such supply chain capabilities will allow them to compete mainly with the same complex supply chains and achieve significant competitive development potential. The selection of the most suitable supply chain for the product/customer segment should be based on attaining CB&I’s optimal balance between the required levels of customer service and the total cost of providing this service (Charehzehi et al. 47). After that, company executives can make a rational decision about the key outcome indicators related to the strategic position of their business in relation to the market and competitors.
Conclusion
In conclusion, each supply chain of any product can proceed from different development conditions and use different strategic decisions regarding the location of logistics facilities on the ground and the choice of specific types of storage structures used to ensure uninterrupted supply of all products at all points of consumption. Integration of logistics participants in the supply chain is carried out based on the needs of the entire chain and is built on mutually beneficial relations of partners.
Works Cited
Charehzehi, Aref, et al. “Building Information Modeling in Construction Conflict Management.” International Journal of Engineering Business Management, vol. 21, no. 4, 2017, pp. 41-65.
Shovityakool, Patra, et al. “A Flexible Supply Chain Management Game.” Simulation & Gaming, vol. 1, no. 1, 2019, pp. 2-19.
Touboulic, Anne, and Helen Walker. “A Relational, Transformative and Engaged Approach to Sustainable Supply Chain Management: The Potential of Action Research.” Human Relations, vol. 69, no. 2, 2016, pp. 301-343.