How to implement an effective supply chain risk management process within a small sized company? The case of FyBox Company located in China.

Details

Supervisors

Blome, Constantin

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

ABSTRACT Purpose – This research paper aims to propose an effective Supply Chain Risk Management (hereinafter “SCRM”) process within a small organisation taking into account an international dimension in the relation buyer-seller focusing on reducing vulnerability and ensuring continuity. To address these issues, the following empirical question will be explored through a specific business case : “How to implement an effective supply chain risk management process within a small sized company: the case of FyBox Company located in China.” Design/methodology/approach – Three steps will be followed : In first instance, a review of the SCRM literature will be conducted. In second instance, an analysis will be done of how FyBox Company handles the business relationship with its Chinese suppliers and the risks experienced when sourcing in China will be identified. In third instance, the pratical implications/solutions will be presented and discussed. Findings – The case study and the analysis highlight the fact that FyBox company is facing three main issues to the business continuity by sourcing in China: quality, communication, and trust. The first one, “the communication issue”, is due to the cultural differences between China and Western countries. The second one, “the quality issue”, is the result of a lack of strict quality control implemented with both the supplier and the focal firm (the buying organisation). The third one, “the trustworthy issue”, exists because FyBox Company did not build a strong relationship with its suppliers and was not part of the Guanxi (kind of networking in China). As a result, such issues prevent FyBox Company from guaranteeing product excellence and business continuity. Practical implications – Managing risk in a global supply chain in many cases requires accounting for and bridging the differences in culture, language, values and organisational behaviour which create, communication, quality and trust issues. By managing and mitigating such risks (i.e. lack of communication and quality, trust and cultural differences), FyBox will be able to improve the relationship with its suppliers. For instance, in order to create efficient and strong cooperation between the supplier and the focal firm, FyBox should implement a supplier development plan, the collaboration process with specific suppliers on a one-on-one basis to improve their performance, processes and product manufacturing capabilities (in one or more of the following areas: cost, quality, delivery, time-to-market, technology, managerial capability, financial viability and environmental). Originality/Value – The FyBox Company case provides a concrete application of an SCRM process within an SME. This study sets out the supply chain risk management practices and presents the solutions to improve the collaboration with the suppliers and the quality of the products in a challenging Chinese market. Keywords – SCRM, Emerging market, China, SME’s, Quality issues, Lack of communication, Trustworthiness, Buyer-Seller relationship and Guanxi.