Supply chain
Order Instruction
| Contents | Page No. |
| Executive Summary | 3 |
| 1. Introduction | 4 |
| 2. Factors leading to breakdown of relationships between members of the wheat supply chain | 5 |
| 3. Supply Chain Management Processes using SCOR model | 9 |
| 3.1. Supply Chain Operations Reference (SCOR) model | 9 |
| 3.2. Supply Chain Solutions that would have prevented the second contamination | 12 |
| 4. Importance of Collaboration in the Australian Agri-food market supply chain | 13 |
| 5. Justification of the robustness of the supply chain of Western Australian in grain suppliers | 14 |
| 6. Recommendations | 15 |
| 7. Conclusion | 16 |
| References | 17 |
Executive summary
As global bulk grain markets continue to be dynamic and highly competitive, the respective supply chain management processes ought to make sure that the required quality standards threshold are always met prior to dispatching any vessel loaded with export whole grains or their finished products. This means that the supply chain management are among the concepts that presently dominate the debates with regards to companies, especially on the wake of operational effectiveness due to the previous shortcomings associated with supply chains among many organizations that have led to a myriad of challenges including those faced the Western Australian grain suppliers who supplies many destinations across the world probably Saudi Arabia and Japan. A magnitude problem resulted from neglecting essential supply chain management process since the Saudi Arabians required that their grains be added carmoisine a food additive as a preventative measure, whereas Japan forbidden carmoisine and classified it as an objectionable contaminant. This case study involves the study of how a company’s or port’s supply chain management processes can be appropriately handled, particularly using the SCOR model to ensure that all actors in the supply chain were satisfied. Hence, failure to adhere to this, Western Australia grain marketers and bulk handlers faced problems regarding to the unacceptable wheat grains delivered to Japan, an issue which was avoidable if proper quality standard measures within the supply chain were incorporated.
1. Introduction
As global bulk grain markets continue to be dynamic and highly competitive, the respective supply chain management processes ought to make sure that the required quality standards threshold are always met prior to dispatching any vessel loaded with export whole grains or their finished products (Rottig, Koufteros & Umphress, 2011). This is attributable to the fact that various countries have different quality standards and some elements that are obviously allowable in some markets are strict objectionable contaminants in other markets. Hence, for the purpose in ensuring that the needs of each market are effectively met without compromising the quality standards of the exported whole grains, the need for an appropriately operating supply chain management has become inevitable. In addition, the efficiency of the supply chain management is not only further stretched by the high threshold of quality standards in the global bulk grain market, but also due to the ever increasing demand for whole grains across the globe attributed to significant reductions in the whole grain production levels in some regions of the world probably due to climate change (Simchi-Levi, Kaminski & Simchi-Levi, 2008).
Therefore, it can be succinctly stated that climate change effects and consequences as well as the requirement for adoption of practices that significantly drive supply chain transformation. However, considering the robustness of the Western Australian supply chain robustness, it is essential to reflect on various factors for relationship breakdown in the supply chain using the actors in the supply chain. The factors could be operational, technological, cultural, food commodity as well as communication factors. Therefore, as a result of this case study and the repercussions that ensured in terms of tangible losses and intangible losses, the need for making that all actors within the Western Australian bulk grain supply chain collaboratively work together is obviously not in doubt if the export market for its whole grains, especially wheat has to be maintained. This is due to the fact that in this scenario, Western Australian whole grain (wheat) marketers had the responsibility of making sure that clients’ needs were satisfied without conflict with either by stringently adhering to the present export contract requirements.
- Factors attributed to the breakdown of relationships between members of the wheat supply chain
In order to ensure that the relationship between all actors in any supply chain remain vibrant, there is need for trust, honesty and accountability among each of the actor. This is mainly attributed to the fact that, even though all other actors in the supply chain play their role effectively with exception of one, chances of conflicts to ensue are usually very high since a single mistake by anyone actor in a supply chain can result to unrecoverable losses (Bolstorff & Rosenbaum, 2012; Benton, 2013). For instance, it is evidently clear that in this case study not all actors in the supply chain contributed to the breakdown of relationships, but just a few mistakes of some actors and not all actors in the supply chain. Hence, this makes the need for collaboration between all actors in the supply chain highly essential for the avoidance of mistakes which could have permanently cost Western Australia a consistent customer as well as denting its reputation among wheat importers across the globe.
A critical consideration of this scenario, it is evidently clear that the factors that led to relationship breakdown in the supply chain from the perspective of the actors in the supply chain a varied since they include operational, technological, food commodity as well as communication factors. This can be attributed to the fact that, after the wheat cargo which had been shipped to Japan was eventually rejected after quality control tests confirmed the presence of carmoisine (a food colour additive) on the Western Australian’s noodle wheat a scuffle ensued between the supply chain actors, in particular the grain marker playing the role of selling wheat and the bulk handler at the port responsible for the cargo assemblage and loading. This incident was an eye opener among the supply chain actors for them to realise how important it was for them to work collaboratively for the protection of Japan customers who were definitely highly valued (Bolstorff & Rosenbaum, 2012; Benton, 2013).
From the perspective of these incidents, communication factors were significantly attributed to the relationships breakdown among the wheat supply chain members since a blame game ensued between the grain marketer and the bulk handler. In particular, the bulk handler blamed the grain marketer for not fully revealing the details of the contract of wheat export to Japan which strictly prohibited presence of carmoisine in its whole grains, while the grain marketer blamed bulk handler for carelessly handling and assembling wheat grain cargo resulting to presence of carmoisine traces in the wheat meant for Japan destination, which in the country is classified as an objectionable contaminant. Since carmoisine is not allowed in Japan and several other countries across the world mainly because various studies have attributed it to hypersensitivity in infants failure of effective communication between the grain marketer and bulk handler resulted to this problem considering the bulk handler was previously and the wheat cargo that eventually resulted to this scuffle. The bulk handler admitted that was not aware whether carmoisine in banned in Japan, while the grain marketer was privy of this information. This means that the bulk handler would have thoroughly cleaned the supply chain conveyors after handling and assembling Saudi Arabia cargo where carmoisine is allowable prior to handling the wheat cargo destined for Japan if the grain marketer has fully revealed the details of the contract.
This is attributable to the fact that there is addition of carmoisine to about 1% of whole grains exported to Saudi Arabia to alleviate black market grain market. Hence, in the case of Saudi Arabian wheat cargo in order to make sure that the grains are added the food additive which is red in colour is done by making sure that the supply chain conveyer belts are sprayed with the food additive in order to ensure that they are unique from those of the black market. However, the Saudi Arabian grain cargo was loaded the loading conveyer belts were not decontaminated or cleaned thoroughly and this led to the contamination of the wheat cargo destined for Japan by contacting the carmoisine on the conveyer belts, which is an objectionable contaminant in the country. The Japanese quality tests that are highly strict detected the presence of carmoisine eventually resulting to a huge scuffle with regards to Australia’s grain exports quality. Subsequently, the entire wheat grain cargo was rejected by Japan and led to significant demurrage costs as well as tangible and intangible losses on the side of Western Australia. The situation was even worsened more, when a second incident of similar nature occurred again within a short irrespective of the assurances offered to the side of Japan from Western Australia regarding quality of wheat grains, which worsened the trade relations between the two countries even though it was eventually resolved.
Operational factors were undoubtedly the other cause of the relationship breakdown in the supply chain from the perspective of the actors in the supply chain because the bulk handler was not supposed to assume the quality standards for various market destinations to avoid thorough cleansing and decontamination of the supply chain conveyor belts. It should always be a thumb rule for the supply chain conveyor belts to be thoroughly cleaned handling or assembling any cargo not its type or destination prior to handling any other cargo. Hence, there was an operational failure of the cargo handler to ensure that this procedure was adhered based on an assumption that the quality standards for the destinations of both cargoes of wheat were the same. This incident acted as an eye opener to them, to always prioritise the appropriate supply chain management processes which require thorough cleansing and decontamination of the supply chain conveyor belts after handling any batch of containing any additive that is not universally accepted among all the destination markets.
Furthermore, technological factors especially the absence of high edge and prompt techniques for the quality control and assurance was another factor definitely led to relationship breakdown in the supply chain from the perspective of the actors in the supply chain. This is attributable to the fact that, if the bulk handler had the top notch quality testing technologies, it would have been easier to detect the presence of carmoisine in the wheat cargo and avoid loading it to the vessel prior to confirming whether the additive was acceptable in Japan. This issue would have been amicably solved between the grain marketer, bulk handler and grain producers and avoid the eventual losses both tangible and intangible that ensued later (Bolstorff & Rosenbaum, 2012; Benton, 2013).
3. Supply Chain Management Processes using SCOR Model
Over several decades after the inception of the supply chain management, the appropriate alignment of the processes of the grain supply chain with respect to the SCOR model has been a crucial practice aimed at streamlining its operational functions. However, with respect to this project there is need to establish appropriate measures that would not only ensure that, the operations of the supply chain management are sustainable, but also effective especially from the perspective of an organization’s processes, services and products so that they can be aligned in ways that are responsible (Bolstorff & Rosenbaum, 2012; Benton, 2013; Hoejmose, Brammer & Millington, 2013). For instance, considering the supply chain between Western Australia and Japan, the supply chain demanded trust along with integrity amongst partners within the supply chain making the terms of business highly sensitive compared to the supply chains involving other partners (Amaeshi, Osuji &Nnodim, 2008).
3.1. SCOR model
Any supply chain consists of various participants who act distinctly, but are interrelated (Leppelt, Foerstl & Hartmann 2013). The activities that take place throughout the supply chain can be easily categorized using the SCOR model into planning, sourcing, creation or making, delivering as well as returning. This involves managerial operations’ aspects such as procurement, inventory, transportation, manufacturing, as well as orders. This means that the SCOR model offers a structure for the description of linked metrics and processes the supply chains operations and supervision towards more efficient activities through consistent evaluation (Amaeshi, Osuji &Nnodim, 2008).
Therefore, the SCOR model is considered to be the front runner in the world’s supply chain framework, which links performance metrics, business processes, as well as people skills and practices into a unified structure. This means that adoption of the SCOR model in this scenario could have significantly improved the supply chain operations by increasing the system implementations speed, improving inventory turns, as well as supporting organisational learning goals. However, the SCOR model processes includes: planning, sourcing, making, delivering, returning as well as enabling. Furthermore, the SCOR model metrics includes the perfection of order fulfilment, order cycle time fulfilment, flexibility of the upwards supply chain, adaptability of the upwards supply chain, adaptability of the downwards supply chain, as well as working capital and fixed assets of the supply chain returns (Bolstorff & Rosenbaum, 2012).
As a result, the SCOR model should have been embraced by the bulk loader and grain marketer for a more efficient operation of the supply chain which could have evaded the incident that eventually ensued. The figure shown below illustrates the SCOR processes framework in order to elaborate on essential supply chain management processes:
Figure 1: SCOR processes framework
Source: Supply Chain Council
The capacity to manage supply chain activities that are varied cost effectively has progressively continued to pose a challenge to many exporters in their attempt to remain competitive (Bolstorff & Rosenbaum, 2012). As a result, electronically-enabled supply chains (ESC) have been providing potential towards attaining the objectives of supply chain actors through improved operational efficiency (Majumdar & Nishant, 2008; Bolstorff & Rosenbaum, 2012).
3.2. Supply chain solutions that would have prevented the second contamination
From the fact that, all actors of the supply chain were conversant with the Japanese regulations with regards to presence of carmoisine in grains from the first contamination incident, the subsequent contamination could have been effectively avoided (Bolstorff & Rosenbaum, 2012). Therefore, in order to make sure that the second contamination was avoided several measures could have been adopted such as:
- A different supply chain loading conveyer belts should have been utilised for loading wheat cargo destined for Saudi Arabia and Japan in order to significantly reduce carmoisine contamination chances.
- Thorough decontamination and cleansing of conveyor belts measures should have been implemented after every Saudi Arabian grain shipment is handled.
- Appropriate quality standards testing to ensure that no traces of carmoisine are available in any cargo destined for Japan, which classified it as an objectionable contaminant.
4.Importance of collaboration among members of the supply chain
Collaboration in supply chain within the exportation markets involves the element of working together in unison among the actors (Morali & Searcy, 2013). According to Morali & Searcy (2013) a stakeholder is defined as the entity or individual affected by or may affect the operations of a firm. For instance, in the case of a supply chain, stakeholders involve farmers or producers, suppliers, regulators and clients. To start with, the supply chain section in Western Australia would have requested for the presence of Japanese officials in their port to monitor their commitment to high quality standards delivery. This is mainly because the upstream supply chain is of great significance. However, integration of suppliers entails vital competencies’ consideration associated to crucial suppliers’ synchronization. The objective of making sure that all members in a supply chain work together collaboratively is to ensure there is sustainable generation and delivery of product to the market (Majumdar & Nishant, 2008; Rottig, Koufteros & Umphress, 2011; Bolstorff & Rosenbaum, 2012). As a result of this, it is important to note that through collaboration information sharing should be an essential component of making sure that all actors within the supply chain are working (Rottig, Koufteros & Umphress, 2011; Wolf, 2011).
- Justification of the robustness of the supply chain of Western Australian in grain suppliers
An argument can be raised that Western Australian grain exporters had robust and effective quality management measures throughout its supply chain. This can be attributed to the fact that no quality standard problem which ha been detected over a long period without even a single occurrence of carmoisine contamination. Secondly, considering the trade scuffle which had ensued after the occurrence of the first contamination, it can be observed that the second contamination of noodles could have been purely accidental. Furthermore, the regulation of all the sectors of the supply chain as statutory authorities of the government including the quarantine services, railways, ports, grain handlers and grain traders as statutory monopolies in order to complement each other needs ensured that the supply chain operated optimally among all the Western Australian ports such as Albany, Fremantle, Geraldton as well as Esperance, which also ensured that the destination ports were highly efficient.
6.Recommendations
Embracing supply chain management processes in the conventional business environment conditions is unavoidable for any supply chain actor. However, some firms have adopted ineffective supply chains management processes, while others are yet to meet this urgent requirement. Thus, it is usually recommended that these companies adopt the following measures:
- Companies must align their production to effective practices such as using processes that are cost effective.
- Every firm must ensure that its supply chain actors adhere to the set effective practices (Tripathi & Petro, 2011; Bolstorff & Rosenbaum, 2012; Benton, 2013).
- While making sure appropriate supply chain management process are established, incorporation of the views of all stakeholders is of essence, which enables adoption of a strategy that do not conflict with other factors within the supply chain.
- Technology adoption is of great essence to a company interested in the persistence of an effective supply chain management processes since technology ensures the assessment of issues such as efficiency and quality and quality (Rottig, Koufteros & Umphress, 2011).
7. Conclusion
In conclusion, Western Australian grain producers, grain marketers and bulk handlers faced numerous problems due to the ineffectiveness of their supply chain management processes. This mainly accrued from negligence since it not only happened once, but twice. As a result bulk grain handling and assembling as well as marketing companies are increasingly being required to adopt a effective supply chain management processes in order to keep up with the rapidly changing markets. Though some bulk grain exporting firms in the past deemed this to be an expensive endeavour presently all of them do not have any other choice, but to adhere with the norm in order to survive in business. This has over the recent past being making the stakeholders to increasingly put pressure on companies to ensure that effective processes of producing or delivering products are put in place. It is presently clear that many companies have adopted supply chain management processes that are effective in order to make sure that they continue to operate efficiently.
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