Factors Affecting Supply Chain Flexibility

Introduction

The success or failure of a business enterprise is largely dependent on several factors. A viable business will remain in profitable operations as long as there is a steady and sustained cash flow. In addition, proper management of company funds is critical in determining its success. A business, in whichever type of ownership and scale of operation, does not exist entirely as a sole venture. It is composed of suppliers, manufactures, storage/distribution centers, retailers who get the final product or service to the intended consumer. These are the major stakeholders who define the major business operation of an enterprise. A myriad of complicated challenges affect the relationship of business with the players in the supply chain and therefore affecting the operations within the business. Major factor to consider in the flexibility of a supply chain is the environment; both internal and external in which the business is operating in (Geunes, 2012).

Internal Environment Factors

The environment in which the business operates in can be subdivided into two major categories, namely; the internal and external environment. The internal environment defines all the internal business factors that are within the control of the business. For instance, the human resources management, the ethics, and culture of a company are all factors that largely affect the success of a business. Before reaching out to suppliers, the management personnel should do their due diligence so as to contract reliable suppliers. Getting into business contracts with unreliable and unethical suppliers could be quite detrimental towards the business brand (Master, 2013). Major scandals have emerged tainting the name of major business outlets nationally. The complexity and the extensive nature of supply chains makes it difficult to determine which suppliers are being subcontracted to deliver goods or services. It should, therefore, be addressed with caution. 

Building trust among the supplier cultivates a healthy environment to conduct business. Suppliers can choose to extend our credit facilities to businesses that have a great history of conducting their payments on time. The financial performance of the business is consequently improved. With such a relationship, production of goods and services is guaranteed. Further down the line of supply chain, customer satisfaction is also guaranteed. On the other hand, businesses have a direct control over their workforce. For example at my workplace, all employees act as brand ambassadors to a certain organizations. It, therefore, goes without saying that hiring qualified and professional personnel is of great value towards the overall business success (Master, 2013). 

External Environment Factors

The external environment factors define all the business operations and policies that are out of control of a business. The external environment is mainly modeled out by the government regulations. Government regulations such as raised taxes are a great hindrance to progressive business operations. Another form of trade regulation could be imposed in form of import tariffs. The government could hinder the trade, manufacture or the import of certain products due to many reasons. For instance, nurturing the local businesses by restricting imports from competitors. In close relation, the government can also put a ban on harmful substances such as tobacco and drugs by putting a higher margin of the tax payable. The State also has mechanisms put in place to promote trade in some sectors. The government can achieve this in form of subsidies and funding (Geunes, 2012).

External environment factors are also composed of other players in the supply chain. Many businesses have to outdo other businesses who are in competition to reach out to the same market segments. Healthy competition among companies is advantageous to the final consumer who gets the benefit of prize reductions among other promotional rewards. Cost pressures can, however, result in low quality of goods and services. This can be attributed to the high fixed costs of production. Geographic clustering of industries serving the same market could see the disastrous calamities, for example, the Japanese Tsunami. Therefore, climatic conditions are another form of factors that are out of the control of businesses (Allen, 2013).

Conclusion

The business environment is always dynamic. Business organizations should, therefore, put in place mechanisms that ensure they adapt with the emerging trends. Globalization has made communication easier and cheaper. Social media has also redefined the way in which organizations carry out their marketing campaigns as they reach out to new markets. Technology still remains one of the transformative and beneficial investment organizations should look into to ensure enhanced operation environments for their continued sustenance.

References

Allen, A. (2013). Seven factors of supply chain failure - Supply Management . Supply Management . Retrieved from https://www.cips.org/supply-management/news/2013/june/seven-factors-of-supply-chain-failure/

Geunes, J. (2012). Demand flexibility in supply chain planning (2nd ed., pp. 56-77). New York: Springer.

Master, N. (2013). 5 Factors to Consider for Effective Supply Chain Optimization . Rfgen.com . Retrieved from http://www.rfgen.com/blog/bid/299773/5-factors-to-consider-for-effective-supply-chain-optimization