Global Supply Chain of Latex Glove

Global Supply Chain of Latex Glove Free Essay

Risk of Global Supply Chain of Latex Glove

Over the past few decades, supply chain management has found its root in most companies thriving in every opportunity available to them. Companies have been benefiting a lot from this sector of business development and product management. A modern business environment portrays a complex and dynamic nature of incorporating supply chain in their activities. Despite the uncertainty nature of business, most supply chain management has tried to achieve their set objective and goals, however, risk and challenges are still inevitable. Supply chain whether from small or colossal companies is subjected to varieties of risk or problems more than other sectors of business. The risk is a fact of corporate entity that cannot elope in any business environment. Hence supply chain of latex glove is not exceptional when it comes to assessing risk and challenges in the supply chain. There are three focal points of interest when addressing the risk encountered in supply chain management. These risks include supply risk, demand risk, and operational risk. The current paper will assess these broad categories of risk encountered in the global supply chain of latex globe and provide mitigation measure used to counter each risk.

The global demand for latex is high, covering a broad range of applications in different industries and sectors of business related avenues. Its supply chain is traced all the way from Brazil and produced in Southern Asia and distributed to all corners of the world with its leading shipping being Seattle, Toronto, China, and Atlanta. This global supply chain comes with different challenges or risks that eventually affect its distribution, production, and consumption at a global scale. Moreover, such factors as environment, technology innovation, and customer demand constitute a global risk faced by the supply chain of latex gloves (Choi, 2012). The production and consumption of this product at world contexts is influenced by the changes in social, economic and political trends of the global market, and these contribute to the risk faced in its supply chain.

Supply Risk or Supply Disruption

One of the risks that latex glove supply chain is facing is the supply risk where supply being directed to customers is defined by quality and quantity of the latex glove as the end product. In the case of consumer dissatisfaction with the final product in terms of its quality or quantity then this amount to supply risk. During the outsourcing of the end products of latex, the market is keen on its brand, compliance, and valuable to consumers. The entire product line can be affected by the standard of production during the latex supply chain. Global markets are keen on the quality standards of the end products they consume. (Choi, 2012). If a company produces latex glove that is sub-par or fails to deliver raw material to the expected market destination, then there is a risk of supply disruption.

Supply disruption or risk is faced majorly by purchasing organization responsible for supplying latex at a global scale. These purchasing organizations face supply risk outcome, which is a result of their inability to meet their clients’ requirement either regarding quality or quantity. Additionally, supply chain risk can arise from the end product being a threat to the customer health or life and hence affect the rate of demand and consumption. Latex glove global supply risk can be as a result of producing allergic latex gloves that are not fit for the public consumption.

The quality of latex glove determines the supply risk experienced during its global supply chain. Most manufacturing industries responsible for distribution of latex have failed to provide quality latex that is fit for consumption. Hartalega is one of the world leading latex glove manufacturers; their product is determined by the quality and quantity of latex they provide to their clients. Producing high-risk latex glove products have resulted in major risk in global supply risk (Manuj & Mentzer, 2008). Consumers’ health is in jeopardy when manufacturing companies provide purchasing companies with unfit latex product such as the high-risk powdered latex gloves that have allergic reactions and contain harmful chemicals dangerous for human health and fitness. Such complication arises to supply risk experienced in the quality of latex gloves that provide allergy reaction affecting the market distribution and consumer interest.

Demand Risk or Demand Disruption

Another risk encountered by the global supply chain of latex glove is demand risk or demand disruption. This risk is caused by the unpredictable demand of the end consumers concerning the products they receive. During the production of latex gloves, manufacturing companies take into consideration their customers’ demand and need, and their greatest target is to fulfill their expectations. However, in most cases, this is not the final expectation. Consumers have diverse interest and demand that is hard to fully satisfy and as a result poses a tremendous challenge during supply chain management. The unpredictable and misunderstood nature of customer demand arise to different factor in between production and consumption.

Demand risk in the supply chain of latex glove stems from the shift in consumer interest or preference, change in consumption lifestyle where clients change their use due to quality standards. Consumer interest towards utilization of latex glove products can affect the demand risk. In the case of high demand from consumers for a particular latex product, a risk is less likely to occur. However, when users change their preference to a better alternative, the global supply chain of latex glove is also affected. Conclusively, the global market depends on consumer interest and choice of product to consume.

Demand risks are perpetuated by over or under specification by manufacturing companies to their customers. Producing latex gloves that are high tech and more efficient increases the expectation of their consumer, however, the changes in production affects the consumer demand. Missteps in output and supply of latex in global market arise to increase in demand risk. Another contributing factor of demand risk encountered in the global supply chain of glove latex is demand volatility. This is whereby latex glove companies in high-volume industries such as medical institutions are faced with an unpredictable demand from their consumers. As a result, they do not meet their real-time demand, affecting the supply chain of latex glove to such markets. Additionally, market competition is another underlying factor that significantly contributes to demand risk during supply chain of latex gloves. There are different latex glove companies worldwide that compete in terms of quality and standards of latex they produce. This poses a significant demand risk in a global market as it becomes difficult to meet clients’ expectation in the world market. Competition affects the demand and distribution of glove latex in the market jeopardizing its availability and rate of consumption.

Operational Risk

The global supply chain of latex glove is also faced by operational risk where products are assessed in terms of its ability to meet the required time, cost, and quality. The most significant factor impacting operational risk is the ability of the outbound element to meet the standard requirement and still maintain a high level of operation. During operational risk, global chain supply of latex gloves is exposed to poor performance such as ongoing supply quality, lead times during production and distribution as well as financial constraints. The global strategy can be challenging for most latex glove related companies; this is due to their demand and complex need to meet consumers’ requirement.

Operational risk in the global supply chain of latex glove is determined by how latex companies prioritize their products to meet their demands. This optimization will depend on the cost of transportation, the location of the market whether global or local as well as the organization functionality. Usually, operational risks are risk associated with human activities or contribution towards an organization. They occur due to human error in management and exploitation. Such risks depend on the particular industry or market location, but result from poor decisions made during supply chain. Operational risk encountered in a global context can be as a result of inadequate transportation of latex glove from one region to another and high cost of operation. Nevertheless, operational risks include legal risk faced during supply chain. Legal policies and regulation vary from different global markets, and this can affect the global supply chain of latex glove from state to state. Latex companies can encounter high taxations and complex globalization of financial system that eventually affects the cost of supply and operation. Businesses can face massive losses due to operational risk while operating from a global perspective.

Mitigating Risk in Global Supply Chain of Latex Glove

There are many things that can go wrong during global supply chain for latex glove if not well managed. The risk can become intolerable and multiply over the duration of time within a global environment if not addressed promptly. As a result, these challenges can lead to severe damage to an organization. First, it is important to identify the risk and then manage them accordingly. Before developing any mitigation measure, one must determine whether the risk being faced is internal or external and its impacts on the global supply chain of latex gloves. As a result, it is appropriate to develop risk focus management to help identify and analyze the risk to come up with a solution that is either short term or long term. There are different possible ways to mitigate risk in global supply chain management. The three selected methods that are applicable in this case are the following: understanding the cultural and operational dynamic, visibility, and developing a collaborative approach.

 Understanding Cultural and Operational Dynamic

This method of risk mitigation is significant when mitigating both external and internal risks such as supply and market risks. Therefore, it helps understand the trends and the nature of business in a new geographical location. Latex glove companies that are venturing into a new market should identify the culture of a new geographic location to enable them acclimatize quickly. By applying this method of risk mitigation in the global supply chain of a latex glove, companies are able to learn trends in business and market globally. It is useful in building networks, trust, and relationship significant for latex companies (Manuj & Mentzer, 2008). This approach helps to solve complication that might arise from culture dynamics. For instance, when latex gloves are shipped to new markets in China or Africa from North America, this mitigation measure will help to resolve complication that might arise from external risks such as geographical risk, supply risk, and market risk.

Visibility

This is considered to be the simplest method of risk mitigation that can be applied in the global supply chain of latex gloves. It involves cross culture management of similar organization or product lines. This mitigation approach is significant in controlling risk, which might arise from internal risks such as implementation risk, communication, distance, leadership, etc. For example, a latex company operating in India can face communication risks and leadership complication when supplier from China brings more products. Visibility help mitigates such difficulties.

Collaborative Approach

This form of risk mitigation involves combining or creating a mutual coexistence between two different supply locations. It helps to solve both internal and external global supply risks, experienced by latex companies in new geographical locations.

Financial Statement/ Operating Data of a Company (Dipped Products PLC)

Operation Data of Dipped Products PLC

Financial ratio analysis

CLGN, 2007

Transportation cost reduced 10%

Warehouse cost reduced 10%

Inventory reduced 10%

Profit Margin

7%

7.24%

7.06%

7.12%

Return on assets

7.24%

7.49%

7.3%

7.42%

Inventory turns per year

8%

8%

8%

8.89%

Transportation as % of sales

4%

3.6%

4%

4%

Warehouse as % of sales

1%

1%

0.9%

1%

Inventory carrying as %of sales

2%

2%

2%

1.80%

 

 

 

 

 

 

 

 

Adaptive Forecasting

This forecasting method was selected to help identify various outcomes that could arise from a company set in a new geographic area. The method provided possible results that could be gauged to analyze and determine the best cause of action to take when dealing with the global supply chain of latex in different geographical locations (Roberts & Whybark, 2007). Adaptive forecasting is important in managing supply chain through providing information or data that can be used to help in decision making and determining the right cause of action during supply networking.

Role of Aggregate Planning Strategy

The forecast method can apply aggregate planning strategy to help calculate the total cost of operation of the global disposable glove market.

The aggregate plan is useful in determining the input used during forecasting.

  • It provides information about the resources used (natural rubber, nitrile glove, as well as vinyl and polyethylene gloves).
  • It helps to calculate the cost of resources and recording of inventory.
  • It assists in determining cost of production and time or duration of planning.

The aggregate plan strategy applicable in the case of global supply of latex glove is the chase plan strategy. This approach helps companies operating at a global scale to minimize their product inventories and keep the balance of demand fluctuations. It is applicable in this case as it helps level input and output of glove companies at global markets.

The strategy balances supply and demand through keeping pace with the market or demand fluctuations by minimizing their finished product inventories.

Geographical Location (Distributors and Warehouses)

Distributors and warehouses are strategic locations during supply chain networking of latex gloves. The disposable glove market geographical location depends on distributors who are in charge of dispersing latex glove product to different geographical location. However, before they are dispersed, they are stored in the warehouse. Distributors and warehouses fit in supply chain network as they act as the focal point through which latex glove by-product are stored and dispersed to respective suppliers and consumers. The pros of distributors and warehouse are their ability to provide end to end solution, act as a bridge between consumers and manufacturers, as well as help in inventory management and order fulfillment to clients and suppliers. Its cons are significant disruption in product value and quality over time, insecurity and lack of product standardization.

Transportation System

The primary method of transportation is through ocean freight and airlines. Ocean freights are the most convenient due to their ability to supply latex glove to a great quantity though duration may take time. Ocean freights are flexible, cover a longer distance and carry tons of products to their target destinations. The other network designs that can be used is through airline transportations, which is fast and more convenient, flexible and lead time.

Sourcing Strategy

Multisourcing is the best sourcing strategy that could apply in this case. This strategy would improve supply needs through increases performance, and it would impact the total cost of ownership through promoting personal engagement and relationship between consumers and suppliers. Multisourcing strategy would affect cost, flexibility, and product inventory.

Evaluating and Recommendation to Improve Performance

The three ways to improve global supply chain of latex glove is through establishing a number of suppliers, enhancing modern form of transportation and technology use and lastly improving the mode of communication to facilitate smooth interaction from suppliers to customers. Integrating the new use of technology in the supply chain will also be appropriate such as inculpating e-business, IT and ERP system into the supply chain.

Effect of Improvement

New changes in the global supply chain such as the use of technology would enhance the general performance and ease mode of supply and communication during global supply chain. Integrating IT or ERP system into supply chain would improve the general performance and boost the quality and quantity of work

Conclusion

A major issue for global supply chain for latex glove in the recent past has been the rapid drift in consumer demand and preference. This has continued to affect the level of the supply chain of latex glove all over the world market. The disposable glove markets outlook indicated an estimated shift in the use of latex glove from different countries. Global demands are not particular to the use of latex glove for medical purposes but orders varieties of glove for a couple of uses. This has caused drift in the manufacturing of medical glove to industrialized latex gloves that can be utilized for other activities like farming. This has increased the global supply chain that is expected to escalate in the next years by 12% (Beske & Seuring, 2014). Both non-medical and medical latex gloves are growing in global supply, in terms of geography, regions like North America and Europe record the highest use of both non-medical and medical latex increasing their global supply. With risk mitigation put in place, the level of the global supply chain is set to improve steady, adopting a new business system and technology.


Go to our Order Page if you want to buy essay help on this or any other topic.
Live Chat
Online