Introduction
It is important to consider the local specifics regarding supply chain optimization to gain the overall competitive advantage, which will allow a company to reduce costs and increase profits. The given case will revolve around a bottled water company, which can be considered as a highly competitive niche due to the relative simplicity of the business model. Therefore, the competitive advantage of such a company can be greatly enhanced through the execution and adoption of effective supply chain strategies. The latter needs to be adjusted to the target city by considering its infrastructure and geographical accessibility. The given case will analyze two cities, which are Tumon, Guam, and Accra, Ghana. Both cities possess open access to the Atlantic Ocean, which makes it easy to transport goods as imports. However, the analysis will revolve around the internal infrastructure of these cities, which will seek the most optimal supply chain strategies for each. For Tumon, the most effective strategy of supply chain optimization is in cooperation with third-party companies due to the already established framework. In contrast, for Accra, the most plausible strategy is to invest in a long-term solution by creating a proper network of distribution.
Tumon
Tumon is a city of Guam, which is an isolated island with a relatively small territory. The strategy involves cooperating with the local supply chain companies due to the overall high reliability. The local supply chain network is highly resistant to any major disruptions, which makes it more appealing to use this infrastructure by partnering with existing third-party companies. It is evident because Guam’s supply chains were not affected by even large-scale crisis events, such as the COVID-19 outbreak (Daily Post Staff, 2020). This indicates that the local distribution network is strong and reliable, and thus, a bottled water company needs to consider using these networks to deliver the goods. There are many third-party logistics providers, which eliminates any form of monopolization and makes the cost of service affordable.
Logistics is a function that is responsible for the material flow that goes from suppliers to the organization, passing through operations within the organization, and then goes to consumers. Moving materials from suppliers are called inbound logistics, and moving materials to customers and consumers is called outbound logistics. For all these purposes, activities and organizations use different names. When the emphasis is on operations, the process is meant, and when marketing is a target, the company focuses on the logistics channel. However, when it comes to satisfying demand, the main goal focus is shifted in demand fulfillment. In this discipline, the emphasis is on the movement of materials, and accordingly, the most general concepts of the purpose of supply are used.
The purpose of deliveries consists of a number of activities and organizations through which materials pass during their movement from entry-level suppliers to the final consumer. Supply chain structure – the easiest way to present the goal of supply is to show how a product moves through a number of organizations. If one considers the process of moving materials from the point of view of an individual organization, then the types of activities that are carried out before it is previous types of activities, and those that are carried out after the materials leave the organization are subsequent. It is stated that a lack of proper supply chain management leads to inferior customer service, which significantly reduces the company’s competitive advantage (Zeimpekis, 2011). Thus, cooperating with third-party logistics providers will be an optimal strategy, because they have a reliable and well-established distribution network. Since each product has its supply chain, the total number of goal configurations is large. Separate supply chains connect with each other to meet the demand for a wide variety of consumers.
Supply chains in Tumon arise not only to improve the quality of customer service but also to bridge the gaps that arise when suppliers are located at a great distance from consumers. This allows the company to conduct operations that are performed or can be performed in places located at a great distance from consumers or sources of materials. In addition to moving materials between geographically distant supply chain operations, it is vital to eliminate the mismatch between supply and demand.
The advantage of using third-party providers in Tumon is the fact that well-planned supply goals are that the operation is carried out in the best places for this, regardless of the location of customers, and by concentrating operations in large structures, manufacturers can save on scale. Manufacturers do not store large stocks of finished products, because they transfer these products along the supply chain closer to customers, and wholesalers place large orders. In contrast, manufacturers reduce costs per unit of production, which makes it possible to provide customers with discounts. In addition, wholesalers store stocks of many suppliers, which allows retailers to choose the goods they need, and wholesalers are placed closer to the retailers and respond more quickly to their orders. If wholesalers reliably supply products, then the inventory of retailers can be small, and retailers can carry out small operations that allow them to respond more quickly to consumer requests. Transportation is simplified and cheaper, as fewer large batches are transported, and organizations can gain experience with specific types of operations. Supply chain management includes not only the responsibility for the movement but also the storage of materials during the passage of the chain.
Accra
In the case of Accra, there is a relatively higher risk chance of disruptions, which are costly for the operation of the company. It is stated that most instances of such disruptions in Ghana occur due to poor packaging, delivery delays, and logistical issues, such as road quality (Dey, 2016). In addition, although petroleum gas is cheaper in Accra, there are possibilities of shortages, which makes the functional reliability of local third parties unstable (Dey, 2016). Therefore, the most suitable strategy for Accra will be investing in establishing the company’s supply chain network, which needs to be flexible and long-term. It is stated that in the case of African cities, such as Accra, one needs to prioritize service and reliability above the costs by taking part in developing the local supply chains (Avasthy et al., 2020). Although they are several third-party logistics providers available, the main cause of disruptions is the result of systemic issues, which cannot be resolved by these firms. The strategy is an optimal one because both Accra and local competitors lack reliable distribution networks, and therefore, the company needs to establish its own. Thus, it is important to understand that the gradual process of establishing a reliable and resistant supply chain network can be highly rewarding because it will give the company a considerable amount of competitive advantage. This is not true in the case of Tumon because the latter already possesses an outstanding distribution system, whereas Accra lacks it.
The functioning of supply chains is an extremely dynamic process, accompanied by structural dynamics, changes in the properties and parameters of the network in the decision-making process. In the process of functioning supply chains in Accra, deviations from the plan and its changes are inevitable. One of the supply chain management tools is monitoring. This necessitates the improvement of the monitoring system for logistics operations occurring in the supply chain links, which consists of the analysis of deviations, development of regulatory impacts, and decision-making on the correction of deviations. It is stated that planning for the future can be a correct strategy, which is coherent in the case of Accra (Kosk, 2013). Therefore, the bottled water company needs to invest in the development of its own infrastructural base heavily. Possessing an efficient supply chain in Accra will allow the company to become one of the top firms with high levels of competitive advantage.
Conclusion
In conclusion, it is critical to be able to analyze the strengths and weaknesses of each city in order to select the correct strategic approach by utilizing these factors. In the case of Tumon, the city already possesses a strong and reliable supply chain, which renders it useless for the company to attempt to establish its own. In addition, Tumon has a high number of third-party logistics providers, which makes the cost of using their network relatively cheap and affordable. In the case of Accra, it is important to understand the local issues of the supply chain and the causes of disruptions. The latter is mainly manifested in the factors, which cannot be resolved by a particular company and logistics provider because these issues are systemic. The company needs to establish its own supply chain by investing in long-term solutions because it will provide a high level of competitive advantage. The main reason is the fact that the local supply chains are unreliable, and many competitors’ customer service is infringed by the lack of proper solutions.
References
Avasthy, A., Dekhne, A., Malik, Y., & Weydringer, J. (2020). Chamber: Guam’s supply chain intact. Supply Chain Quarterly.
Daily Post Staff. (2020). Chamber: Guam’s supply chain intact. The Guam Daily Post.
Dey, C. K. (2016). Strategies to reduce supply chain disruptions in Ghana (Publication No. 3089) [Doctoral dissertation]. Walden University.
Kosk, N. (2013). Get out of the distribution blind spot. SDC.
Zeimpekis, V. (2011). Goods distribution management in city logistics environment: A systemic approach. Advances in Management and Applied Economics, 1(1), 151-170.