Global Operations Management: Plastic Bottle Supply Chain Challenge - Essay Sample

Introduction

The current logistics network of the company has a problem with how to go global. The decision of the company is to go global with the plastic bottle's product. However, there is a challenge where the supply chain of the plastic bottle is different compared to the existing products that are supplied by the company. The network to be created needs to take care of the supply network such that it aligns with the products of the company and ensure efficient control of global operations management systems.

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The future supply network for the company will involve a system that defines operational and managerial processes to support standardization, clearing interfaces, and creates a business framework that is as uniform as possible for the plastic bottles. This way, it will guarantee management, control, and operational efficiency if the company supplies its new product. With such an approach, it will enable the implementation of a global plan that will guarantee the ability to localize the business as per the operational demands.

The future network also has to include global logistics offered by logistic suppliers based on locating local suppliers according to the needs of the organization. The responsibility of the worldwide supplier goes beyond identifying the suppliers and includes management of delivery, supervision of activities, and settling accounts. The logistics team will be involved in the selection of local suppliers that will guarantee commitment to managing the supplier.

Ethical and Legal Considerations in Logistics Management

Logistics management forms a part of a complex business framework that involves planning, organizing, and delivery; hence the need to be aware of ethical and legal considerations. One ethical principle in logistics is honesty, where one is expected to communicate and present information without deceit, offer complete transparency in their knowledge of the expertise, and ensure accurate recording of all data and information (Cowton & San-Jose, 2017). The organization needs to be able to grow rapidly within the global market because the world is getting smaller with the advancement in technology. Other ethical principles to consider include integrity, leadership, respect, accountability, openness, fairness, and selflessness.

Legal considerations in logistics management include understanding the application of Uniform Commercial Code laws in regulating sales and business transactions. Purchasing professionals need to ensure that the contract protects the interests of the organizations. They also need to be aware of the vital skill of the ability to understand contract clauses. Such legal considerations benefit the organization by ensuring improved goods-contracting capabilities, minimization of risks of entering into contracts that are unenforceable, having the ability to identify as well as include critical terms in good contracts. The organization will be in a position to minimize the risk of committing to unreasonable contractual obligations as well as have increased confidence in asserting contractual rights.

Impact of Exchange Rate Fluctuations on the Supply Chain

Exchange rates pose risks to businesses, especially when they buy in a currency with a high valuation then sell in a weaker currency. In case of significant changes that affect either of the currencies that will impact profit margins. Issues in exchange rates also include where currency changes are adjusted for differences in inflation, and it happens that there are mismatches between costs and investment (Bruno et al., 2018). It is quite challenging to predict changes in exchange rates. Exchange rate fluctuations cause portfolio risks, primarily if the business operates in a foreign currency. The nature of the supply chains will have the exchange rate fluctuations causing an impact on cash flows.

Currency fluctuations also cause structural risks that occur when the cash flow of the business coming in and cash flow going out reacts differently. Such risks are hard to manage because there is a fundamental mismatch in cash flows that is difficult to correct. Another impact of exchange rate fluctuations is that of causing transaction risks. Understanding the way fluctuations affect the business in different areas is helpful in planning for offsetting any risk as well as aiding in the effective management of the risk. These fluctuations are a result of economic uncertainty hence the need to be knowledgeable of economic conditions and predict otherwise.

Importance of Cultural Considerations when Negotiating Supply Chain Contracts

Organizations need to accept cultural differences in the development of strong working relationships in the network. If organizations do not accept cultural differences, they may have problems such as loss of money, misunderstandings, and also loss of contracts (Chunsheng et al., 2019). An example includes the fact that contractual conditions are different in each country. Some countries have constantly changing customs, tariffs, and labor conditions hence the need to build into flexibility in agreements as it is a condition for success. Negotiating supply chain contracts will involve the organizations considering the customs of different nations, especially where they need to go global. Organizations need to develop multi-cultural teams to handle the issues of the business. The importance of such units is that they create unity and implement projects across boundaries by making them more creative and developing better decisions.

References

Bruno, V., Kim, S. J., & Shin, H. (2018, May). Exchange rates and the working capital channel of trade fluctuations. In AEA Papers and Proceedings (Vol. 108, pp. 531-36).

Chunsheng, L., Wong, C. W., Yang, C. C., Shang, K. C., & Lirn, T. C. (2019). Value of supply chain resilience: roles of culture, flexibility, and integration. International Journal of Physical Distribution & Logistics Management.

Cowton, C. J., & San-Jose, L. (2017). On the ethics of trade credit: Understanding good payment practice in the supply chain. Journal of business ethics, 140(4), 673-685.