Essay Example on the Palm Oil Supply Chain: Managing Upstream and Downstream Processes

Paper Type:  Essay
Pages:  7
Wordcount:  1778 Words
Date:  2023-04-09

Question One

Supply chain management is the organization of the extensive series of processes that lead to the conversion of raw materials to a final product or service. Palm oil is a comestible vegetable oil acquired from the fruits of oil palm. The demand for palm oil has amplified worldwide since it is one of the commonly used vegetable oil in the world. The upstream supply chain management of the palm oil industry includes millers, palm oil fresh fruit bunches dealers, and smallholders, while the downstream supply chain includes refineries, manufacturers, and exporters. The supply chain operation reference model (SCOR) is used in the palm oil industry since the five areas of the model, that is, plan, source, make, deliver and return, are observable from its upstream a downstream of the supply chain.

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Planning in the palm oil industry is achieved by putting strategies to make the desired output. Indonesia and Malaysia are the largest producers of palm oil. Other countries that produce palm oil include; Thailand, Colombia, Nigeria, and Guatemala (Lyons-White 303), and Knight Manufacturers and refineries engage in converting palm oil to other products such as peanut butter, ice cream, margarine, and soap products. Exporters play a vital role in the function of delivery to ensure palm oil gets to the consumer when needed. Return process occurs when there is an error in the quality or quantity delivered whereby the products are taken back to the supplier.

Customer relation is a strategy in supply chain management used to emphasize creating customer satisfaction, thus building a long-term association with the buyers. Creating customer relations enables an organization to gain loyal customers; therefore, a competitive advantage is created, ensuring increased efficiency in the supply chain. The buyer-supplier relationship also facilitates the free-flow of information between the two parties, thus enhanced coordination between them.

Information sharing in a supply chain that can be formal or informal, categorized into three categories, namely, quality information, content information, and technology support. Support technology is mostly the hardware and software used in information transfer. The information content is the details communicated between producers and buyers of in production. Technological support is necessary for proper record keeping in the supply chain.

Organizations that carry out supply chain have a leadership hierarchy, and some may lack senior leadership support in supply chain activities due to different objective bearing between them. Supply chain management is after customer satisfaction, unlike the senior leadership, which is interested in profit maximization. When top leadership support is not wholly for the supply chain activities, then they may limit the financial investment in the supply chain department, thus affecting its performance. The supply chain can face opposition from other departments, also due to the different goals and objectives of the department.

Inventory management is one of the areas that require development and improvement in the supply chain. Overproduction or underproduction leads to an extra cost due to excess stock output in the warehouse or loss of buyers due to unreliability and damaged reputation (Slack and Brandon-Jones). Manufactures have to arrive at the best balance of stock. Setting par levels are one-way companies can improve inventory management since they can analyze the minimal amount of capital to have and thus set reorder points. Developing a system of first in first out can enhance inventory management in an organization since it will avoid spoilage of stock due to overstaying in warehouses. Flexible strategies improve stock management. In some cases, demand for a specific product may fall when the organization has plenty of its stock, to facilitate quick selling; the company has to develop sound marketing strategies to avoid loss. Although accurate demand forecasting is close to impossible, measures must be put in place to ensure close to assurance forecasting to give room for inventory management.

Distribution is another crucial potential area in the supply chain that can develop and improve. Organizations can put up software that can communicate with the production manager, warehouse manager, and even transport manager to ensure delivery of goods where required (Hugos). A tracking system that keeps watch of the delivery systems can build to avoid fraud. Distribution can improve through cluster delivery of products to ease the task of tracking specific organization functions. Setting up a devise distribution system, an organization stands a higher chance of achieving growth in its profit as their product is available to more customers. Supply chain management is being adopted by many organizations worldwide, thus making them profitable and competitive in the market today simply because the supply chain system puts customer satisfaction into consideration.

Question Two - Logistics

Logistics is the incorporated organization's vital activities to transfer goods over the supply chain, which ranges from a raw material source, manufacturing, dissemination until the point the consumer uses the product. The logistic activities include; material management, stock management, storing, and load carriage, which allow customer satisfaction at a minimal cost(Murphy and Knemeyer ). Outsourced logistic services involve outdoor logistic service suppliers, or a third party logician being engaged in the running of logistic affairs. Environment-friendly or sustainable logistic activities are also known as green logistics, and they aim at reducing the environmental pollution resulting from the logistic activities of the supply chain. Green logistics ensure measures are taken to lower the negative ecological impact, thus creating a bearable equilibrium between economic and environment proficiency.

Green logistics support a reduced cost of handling activities in the supply chain. Since environment-friendly logistics advocate for minimal use of motor vehicles for transportation by engaging bulky shipping, this lowers the value used of fuel used as opposed to the compact movement. Recycling and reuse are tactics of green packaging to reduce waste released in the environment. Green logistics promotes the use of natural sources of energy rather than burning fossils fuel for energy (Aktas, Bloemhof, Fransoo, Gunther, and Jammernegg). The natural sources of energy are cheaper, therefore, minimize the cost of production.

Reliability is assured in natural sources of energy, unlike when using electricity, there could be power loss. On-time delivery creates a good relationship between the supplier and the client. Therefore there is a need for a reliable mode of transport which has the least impact on the environment like air and road transportation. Even as just in time delivery is observed, there should be a flexible means of transport that will be able to serve all the consumers regardless of their location. The way of transportation should emit the least carbon (IV) oxide to support a suitable environment.

Green logistics creates a competitive advantage for the organization over its competitors since the consumers tend to appreciate the organization that is working towards establishing a friendly environment. The customer is more likely to have an interest in the goods that are produced via green logistics since they are free from chemicals and are healthy for consumption. Customer satisfaction increases sales, thus boosting the financial position of a company.

Outsourcing logistic services have improved the environment credential of the business in the following ways; first of all, the company gets to concentrate on the primary goals since it has plenty of time to establish its vision and goals. Factors that are essential for long-term business success may remain unattended to when all the concerned personnel is engaged in the activities of logistics in the supply chain.

Individuals who offer outsourced logistic services are experts in that field and have high-quality facilities or equipment that some companies may not afford; therefore, delivering quality results that yield excellent output to the company. Right quality products attract more customers; thus, the company enjoys a competitive advantage. Better quality products also reduce the spoilage rate of finished, and this reduces the cost of production resulting from sudden production to meet the demand.

Outsourced logistics allow flexibility and compliance with the altering demand without the risk of going against the legal labor laws and regulations, with today's uncertainty in the economies and requirement, such flexibility is essential. Outsourced logistics also reduce the risk associated with financial investment in facilities, equipment, and tools in case of business failure. Many people are gaining the confidence to engage in business due to the availability of logistic outsourcing services (Hwang and Kim 533). One of the benefits of outsourcing logistics is that you get the job done quickly. The individuals engaged in outsourced logistics are expertise, thus know how to accomplish tasks issued within the shortest time. With such assurance, management gets peace of mind and can, therefore, concentrate on other urgent issues.

One challenge that outsourced logistics has, it leads to loss of control of the logistic procedure by the management. Since the company transfers the responsibility of logistics to the service provider, it may be hard to track all the activities done concerning logistics, and this may lead to reduced quality control. There could be hidden costs that the outsourced personnel may inflate on the company that has hired them, thus the cost of production increases.

Outsourced logistics can lead to the security uncertainty of the company's information since the third party involved has access to the company's data, and they can choose to use this authority to pass essential data to the opponent company. The outsourced party can cause financial burdens to the company that has employed them; Therefore, it is required there be clear contracts between the two parties regarding financial liability to avoid exploitations. The arrangements are expensive to set.

Question Three - Lean Management

The restaurant that I will reference my discussion from is McDonald's, which is a fast-growing and world's icon food service provider. McDonald's was founded in 1940 in the United States of America and has more than 35,000 outlets worldwide. Like any other restaurant, McDonald's faces some obstacles as discussed below, and lean management has some principles that can help curb these problems. Lean management is the approach that facilitates an organization's concept of constant improvement, with systematic long term changes that result in increased efficiency and quality. The five principles of lean management are; identifying value, stream mapping of value, creation of workflow, which is continuous, putting up a pull system, and ensuring continuous perfect advancement.

Setting up menus and recipes that are fit for the different outlets of McDonald restaurant is a challenge since the founders are from the USA. With the different currency values across the outlets of McDonald's, management encounters difficulty on how to price their different foods and even payment of their employees. For every business, the most important thing is profit maximization, and for McDonald's, this may be a challenge due to the globalization of its company operations.

The principle of value identification from lean management makes it easy for McDonald's restaurant to handle thi...

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Essay Example on the Palm Oil Supply Chain: Managing Upstream and Downstream Processes. (2023, Apr 09). Retrieved from

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