SG7001 Managing Strategy Operations
Activity 2: A concise report on business relations in operational management
1. Introduction
The report includes the supply chain management (SCM) in operational management along with the implementation of the Kraljic matrix.
2. Discussion and Analysis
SCM refers to the company’s ability in managing and retaining suppliers for longer. For supply chain management, the factors include capacity, inventory management and financial stability. For this, the company has ensured to deliver Total Quality Management in their products and has also maintained delivery performance. For quality and regulatory compliance, the company has always aimed at materials management systems, quality culture and regular review of product quality (Abdillah and Hasibuan, 2021).
2.1 Supply chain management
The supply chain has to be managed in a way that drives growth and reduces costs. Risks are unavoidable but can be minimized by improving visibility, adapting to new technologies and responding to shocks by early anticipation. During local conflicts and natural disasters, there is a high risk of shortages because the company sources critical materials from limited regions and suppliers. Therefore, the company has to diversify the sources of materials and then aim to enhance domestic production (Foster, Patel and Skiba, 2021).
With supplier relationship management, the company ensures streamlined processes for getting relevant supplies by establishing mutually beneficial relations with suppliers. This in turn, helps the company in gaining a competitive edge and maximize supplier values.
2.2 Kraljic matrix
- Leverage items include pharmaceutical items like antiretrovirals, and antibacterial and tyrosinacinase inhibitors. Their strategic impact is high and the supply risk is low.
Because there are numerous suppliers and replacement medications available, the leverage category has a low supply risk.
- The strategic items in the Kraljic matrix include chemicals like Sodium Chloride, Low-Density Polyethene (LDPE), and High-Density Polyethylene (Abdillah and Hasibuan, 2021). In general, the strategic items include antivirals. Therefore, the strategic impact is high along with a high supply risk. A high strategic effect necessitates a large number of purchases, and demand is anticipated to expand soon. It also entails a higher risk to patients’ lives in the event of a stockout. The establishment of long-term agreements with the providers of medications in this category based on information exchange is advised by specialists (at strategic and operational levels).
- The non-critical items in the Kraljic matrix include chemicals like Calcium Chloride Dihydrate, Potassium chloride, and Sodium lactate solution of 50% (Abdillah and Hasibuan, 2021). In general, the critical items include medicinal gases, nervous system-related medications, antifungals, electrolytes and enzymes. Therefore, the strategic impact is low with a low supply risk. Products of low value and frequent purchases fall under the non-critical category. The company’s approach in this market segment is to standardize and aggregate pharmaceuticals in order to reduce logistical and administrative complexity.
- Lastly, the bottleneck items have a high strategic impact and a high supply risk. That is why, they include medicines of the breathing system, eye disorders, and cardiovascular system along with medical ultrasounds and intoxications antidotes (Arantes and Alhais, 2021).
Due to the limited number of providers and lack of a suitable substitute, the bottleneck category carries a significant supply risk. Due to their small purchase volumes and the little effect that rising demand has on the organization, they also have a small strategic impact.
3. Conclusion
The report has highlighted the importance of supply chain management, need of managing supplier relationships and has applied Kraljic matrix in understanding the strategic impact and supply risk.
References
Abdillah, Y. and Hasibuan, S. (2021). Supplier selection decision making in the pharmaceutical industry based on Kraljic portfolio and MAUT method: A Case Study in Indonesia. [online] Available at: http://www.ieomsociety.org/singapore2021/papers/746.pdf.
Ajayi, O. (2022). Moroccan businesswoman Lamia Tazi’s Sothema records over $217 million in revenue in 2021. [online] Billionaires.Africa. Available at: https://billionaires.africa/moroccan-businesswoman-lamia-tazis-sothema-records-over-217-million-in-revenue-in-2021/ [Accessed 16 Jul. 2022].
Arantes, A. and Alhais, A. (2021). Development of a Purchasing Portfolio Model for the Health Sector: A Case Study of a Central Hospital. Proceedings of the 10th International Conference on Operations Research and Enterprise Systems. [online] doi:10.5220/0010225903290337.
Foster, Patel and Skiba (2021). Four ways pharma companies can make their supply chains more resilient | McKinsey. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/industries/life-sciences/our-insights/four-ways-pharma-companies-can-make-their-supply-chains-more-resilient.
Sothema (2022). About – Alatlas. [online] Available at: https://atlasglobal.ly/about/#our-vision [Accessed 16 Jul. 2022].
Wadhwa, S., Madaan, J. and Saxena, A. (2007). Need for Flexibility and Innovation in Healthcare Management Systems. Global Journal of Flexible Systems Management, 8(1-2), pp.45–54. doi:10.1007/bf03396519.
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