Supply chain development in Thai firms.

Author:Phothong, Lersak
Position:Report
 
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  1. INTRODUCTION

    Supply chain has become the central organizing unit in today's global industries. The supply chain is a structure network of independent and autonomous entities (Wadhwa, Bibhushan, and Chan, 2009). The hypercompetitive environments in which competition is among supply chain networks rather than individual firms. Firms are challenged by the need to effectively manage increasingly extending supply chain activities beyond the boundary of the firms (Lee et al., 2010). Firms invest in the supply chain system is to share and collaborate between suppliers, dealers, customers, and partners. In a collaborative supply chain environment, the supply chain members work together, share important information, and collaborate on activities efficiently and effectively. The implementation of a collaborative supply chain system needs the integration of business processes and information exchanges which has been facilitated by information technology instrument (Morya and Dwivedi, 2009).

    A supply chain is defined as (1) a set of products or services and related processes, (2) a acquirement of the inputs into these products and services, (3) a distribution and consumption for products or services, and (4) disposing of these products and services (Melnyk et al., 2009).

    One strategy to overcome the stiff competition is to reduce cost of production to be the cost leadership in the market. The supply chain is a factor that enhance or implede the implementation to reduce the firm's cost. An efficient and effective supply chain will have benefits such as reduced inventories, increase inventory turns, reduce cost, and increase customer service (Loong and Keng-Boon, 2008).

    Major part of the world's manufacturing takes place in South East Asia such as Malaysia, Indonesia, the Philippines, and Thailand. This would create opportunities in this region to bring about substantial environmental burden. To address this problem, many large corporations have started encouraging, guiding and even funding their suppliers to link.

    In Thailand, the supply chain was introduced into the country for decades and few companies are actually able to implement. Thailand has always believed in achieving objectives in whichever aspect--through relationship building and networking. A business network is now considered to replace the social network which is very strong from the tradition, norm and beliefs, in doing business in the country between manufacturers and suppliers or distributors. Supply chain promotes the sharing of knowledge, which is considered a source of competitive advantage. The business network in Thailand cannot be changed immediately or fully adopted in emerging markets, as most local suppliers/ distributors are small and medium enterprises (SMEs). Producers prefer to decrease complicated parts and need technical and financial support from big manufacturers or multinational enterprises (MNEs) to improve their infrastructure and production capacity. In moving towards the partner relationship paradigm, developing suppliers' and distributor's capabilities and manufacturer-suppliers-distributors trust become critical issues nowadays.

    There has been limited research on the supply chain development in Thailand. Previous research addressed factors that are important to supply chain management or strategies and the trend of supply chain management. However, these researches focused on manufacturing firms on either the downstream or upstream production. This study is concerned with both downstream and upstream production. The supply chain is able to formulate and in particular implement a credible and adequate set of linkage and supplier/distributor development policies. This study determines factors of supply chain in manufacturing firms in Thailand.

    The objectives of this research are to understand the development of the supply chain in Thai firms and to approach the suitable model for supply chain to develop the supply chain system in manufacturing firms in Thailand.

  2. LITERATURE REVIEW

    Supply chain has known since Porter's (1986) introduced to public about the definition of value chain. The value chain models as a series of interlink activities, and groups these activities as main (primary) and support (secondary) activities. The main activities are related directly to the production/creation of the business' product or service and include production, marketing, logistics, and after-sales functions. The support activities provide support to the primary activities and include procurement, firm infrastructure, human resources management, and technology development. A manufacturing firm's supply chain is presented in Figure 1.

    [FIGURE 1 OMITTED]

    Thomas and Griffin (1996) reviewed the traditional mathematical programming to coordinate supply chain. They concluded that supply chain supports two planning decisions which are operational and strategic planning. Beamon (1998) classified four types of supply chain in literature view which are deterministic analysis, stochastic analysis, economic, and simulation. Min and Zhou (2002) used Beamon's study to integrate supply chain models and classified four types of supply chain which are deterministic models, stochastic models, hybrid models, and information technology driven models. Later, Chen and Paulraj (2004) criticised a wide range of supply chain researches and analysed those researches from two viewpoints which are critical elements of supply chain management and supply chain performance. Given information above, there are four supply chain management elements which are (1) strategic purchasing, (2) supply chain management (SCM), (3) logistics management, and (4) supply chain network coordination.

    Supply chain expands on the value chain model (Porter, 1986) by explicitly acknowledging the interdependency of several business entities that carry out these activities to provide an end product or service. As a result, supply chain management (SCM) emphasises integration of functional activities across organisational boundaries. The...

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