Cases
Supply Chain Management:
The Big Picture
Cyber Logic Systems is a successful regional company in the United States that specializes in cyber security. Because of the dramatic increase in the hacking of business and government databases, Cyber Logic Systems believes this is the moment to expand its operations. Elmer Armstrong, chief executive officer, met with the board of directors and explained his vision for the company. Mr. Armstrong planned to aggressively expand into Europe and South America. The board of directors gave Elmer the go ahead.
Elmer called a meeting of his senior staff and explained his vision to them. He asked what major issues they saw that required immediate resolution before Cyber Logic Systems could proceed with such an aggressive expansion. Rhonda Mendoza, director of operations, said that their current supply chain structure would not be able to support such an expansion. She further stated that the supply chain structure would collapse under the strain, thus endangering their regional business, as well as the expansion. Elmer tasked Rhonda with developing a plan on how to get the supply chain structure robust enough to move forward with the expansion.
Rhonda began analyzing their supply chain management needs by reviewing the four foundation elements—supply, operations, logistics, and integration. As she performed her analysis, Rhonda realized that not all their current suppliers had the capabilities to support Cyber Logic Systems’ operations in Europe and South America. Ms. Mendoza decided to perform a detailed supplier evaluation on each supplier. Through this evaluation she determined that some suppliers could easily support European operations, while others were better suited for the South American operations. Furthermore, some suppliers, who were a tremendous asset to Cyber Logic Systems, would only be capable of supporting their current regional business.
Each market area, United States, Europe, and South America, had regulations with differing standards for cyber security. The technical specifications for the systems Cyber Logic Systems would install varied significantly between the three marketplaces. Rhonda decided this could be a considerable problem. Her solution was simple yet elegant, supplier certification. Supplier certification would ensure that the suppliers supporting the specific operational markets would be qualified to meet the particular regulatory requirements.
Although the systems Cyber Logic Systems installed were primarily software, often new hardware was required to support the software. Ms. Mendoza understood that their current distribution network was insufficient. They needed to redesign and build a more self-sustaining distribution network in order to ensure timely product delivery. They truly needed to move from the mindset of a regional distribution system to a global supply chain. This requirement would mean sourcing from suppliers who were close to the customers. When a customer has a cyber security issue, time is the enemy. The new systems must be in place as quickly as possible to avoid further damage to the customer’s databases and to enable them to continue operating.
Rhonda believed she had identified the key elements that must be improved before they could move forward with the expansion. The last hurdle was how to guarantee that the three foundation elements, supply, operations, and logistics, worked as one smooth global supply chain and not as disjointed parts. This was the biggest challenge of all. If Cyber Logic Systems didn’t solve this issue, the chance of failure was high.
Ms. Mendoza reflected on her studies in operations and supply chain management. The answer to the issue was process integration. She knew that they had a challenge ahead. They must convince each supply chain partner that this supply chain management structure must be part of everyone’s strategic planning process. Only then could they ensure that the individual pieces, purchasing, inventory, operations, logistics, quality, etc. would work together as a single well-oiled machine. Ms. Mendoza was ready to outline her plan to Mr. Armstrong and the other members of his senior staff.
Discussion Questions
1. When analyzing the supply chain management foundation element “supply,” what are some of the specific issues Cyber Logic Systems must address?
2. When analyzing the supply chain management foundation element “operations,” what are some of the specific issues Cyber Logic Systems must address?
3. When analyzing the supply chain management foundation element “logistics,” what are some of the specific issues Cyber Logic Systems must address?
4. When working on process integration, what type of issues must a company overcome for true integration to be achieved?
