Production and

Operations Management

MAHZAIB QADIR
20181-24175
SIR FAHAD BIN ABDULLAH
Contents
EXECUTIVE SUMMARY....................................................................................................................2
What is Supply Chain Management?.............................................................................................3
Types of Supply Chain Management..........................................................................................3
Functions of Supply Chain Management...................................................................................4
How and When Supply Chain Grew?..............................................................................................5
Impact of Globalization on Supply Chain.......................................................................................6
Impact of Environmental Sustainability and the "Green" Movement on the Supply Chain.......7
Sustainability and Profitability...................................................................................................8
Sustainability and Competitive Advantage................................................................................9
Implementation and the Challenges of GSC..............................................................................9
SCM & PAK – CHINA Economic Corridor........................................................................................9
Economic Belt............................................................................................................................10
Advantages to Pakistan............................................................................................................11
References.....................................................................................................................................12
 EXECUTIVE SUMMARY

Covid-19 has resulted in creating bottlenecks and blockages that organizations and countries
were never ready for. Given this unprecedented supply chain disruptions, this report will look at
supply chain management: its evolution over the years, the sustainability of our current supply
chains, the role of the supply chain in global political and economic affairs, the impact of covid
-19 on our understanding of supply chain management and furthermore the analysis of what
CPEC is and its influence on Pakistan’s supply chain management.  
The report was prepared by an extensive search of secondary sources, including newspaper
articles, journals, and peer-reviewed reports. Information from secondary sources was the
subject of my own critique. 
What is Supply Chain Management?
Supply chain management is a process that includes planning, sourcing, production, logistics
and reverse logistics that are involved in the production of the product, to reach its potential
consumers. Supply chain management maximizes customer value and creates a sustainable
competitive edge [CITATION Rob20 \l 1033 ]. It includes all the activities of traditional logistics
and incorporates new sources of marketing, finance, and development resulting in a wider view
of the concept of the supply chain [CITATION mhu20 \l 1033 ]. Due to this being such an
extensive and complex task, each partner, from supplier to the manufacturer and beyond,
much communicate and work together to manage risk, create efficiencies and adapt to changes
quickly [CITATION Mar20 \l 1033 ].
There was some criticism that the term “supply chain management” should be called “demand
change management” to reflect the fact that the channel is driven by the market itself rather
than by suppliers[CITATION Chr11 \l 1033 ].

Types of Supply Chain Management

There are three types of SCM: Direct supply chain, extended supply chain and Ultimate supply
chain.
Direct supply consist of 3 particulars i.e business, suppliers and customer who are involved in
simple supply chain of products or information that is either catered on a large scale vertically
or a small scale due to the insufficient resources [ CITATION Men01 \l 1033 ].
Extended supply chain is a form of traditional supply chain. This includes participants that have
suppliers of suppliers and customers of customers for either the supply chain of product or
information [ CITATION Men01 \l 1033 ].
The ultimate supply chain consist all the systems involved in all the supply chain of goods,
services and information from the end supplier to the end customer [ CITATION Men01 \l
1033 ].
Figure 1: DIFFERENT TYPES OF GENERIC SUPPLY CHAINS. SOURCE: ADAPTED FROM MENTZER ET AL.

Functions of Supply Chain Management

Elements of SCM include Product development, Marketing operation, Distribution, Finance, and
Customer service. This system chain helps the company reduce the price of the product,
increase its efficiency, and increase its profitability. The following figure shows how these
functions are categorized.

Supply Chain Management Functions. Source: http://eil.utoronto.ca/wp-content/uploads/public/papers/iscm-intro.pdf

How and When Supply Chain Grew?

Figure 2: The Evolution of Supply Chain Management Source: https://transportgeography.org/?page_id=4438

The concept of logistics and supply chain management has evolved over the decades, a
heightened awareness has led to development in this area. The history of SCM started some
100 years ago, which originally only involved basic labor-intensive methods, but later more
complex and advanced networks are added in this area.
At 1950s, the focus of the logistic area was till warehouse, racking and layout. This was also
called the “unit concept”. Transportation management was also added where the ships, rails
and trucks were also transported. This set the stage for supply chain globalization [CITATION
Fla15 \l 1033 ].
In 1960s the “physical distribution” became the need. There were two big organizations,
National Association of Purchasing Management (NAPM) and National Council of Physical
Distribution Management (NCPDM), who published journals and studies for awareness
purposes about the logistics. Prior to 1960, labor-intensive data keeping and dealing were the
custom until computerized data created logistic planning possibilities and novelties, such as
random warehousing of warehouses, trucking and stockpiling optimization [CITATION Fla15 \l
1033 ].
By late 1970s and early 1980s, Georgia Tech of Production and Distribution Research Centre
was made because even though there was a transition from manual to computerization, there
were many difficult aspects that needed to be solved as things differ in theory and practically.
These centers looked at the different issues of technology and how could that be made easier
and accessible[CITATION Fla15 \l 1033 ]. Logistic was also recognized as a strategic function.
During 1980s, the technology was well incorporated in the logistic system. Computers were
used to do better planning, spreadsheets were made for flexibility, and huge improvements
were seen in inferences and also overall logistics. In 1985, Council of Logistics Management
(CLM) was given to what previously was known as the National Council of Physical Distribution
Management (NCPDM) [ CITATION Fla15 \l 1033 ].
By 1990s, the Enterprise Resource Planning System (ERP) was introduced due to which the
current level of efficiency took a boost. Big companies started incorporating the system into
their companies which resulted in high levels of accuracy and availability of large database
[ CITATION Fla15 \l 1033 ].
By the mid-1990s, there was an increase in the globalization of manufacturing, especially in
China and the USA. There was also an increase in logistics due to the increase in complexity.
The term Supply Chain Management started existing because of incorporating different
complex strategies and combining more issues than just logistics[ CITATION Fla15 \l 1033 ].
After 1994, the supply chain began to be studied as a holistically managed function with several
solar functions and problems sun-functions and issues [ CITATION Sou11 \l 1033 ].
By 2000, SCM became common and work was done both academically and professionally to
understand it better. There were number of articles, journals, books written on it. On other
hand, many small and big businesses were benefiting from the strategies and notion of SCM
[ CITATION Fla15 \l 1033 ]. Service industry also experienced the application of Supply Chain
Management for example O’Brien and Kenneth proposed SCM in educational department
where the study was concentrated on students and employees. [ CITATION Mam11 \l 1033 ]
The systematic analysis of the supply chain and the logistical performance of companies in
multiple sectors and countries provides extremely valuable information that had led to the
revival of business world and educational advancement.

Impact of Globalization on Supply Chain

Supply chain management has led to major changes in the corporate world. As the world
emerged as a global village, its activities became more complex and challenging. Supply Chain
Management (SCM) is immensely important to a lot of companies and plays a major role in
their success and to satisfy their customer [ CITATION Zde20 \l 1033 ]. In the history of 100
years of supply chain management, companies have gone from being strictly labor-intensive
and selling locally to being extraordinarily advanced and selling around the globe. With an
increase in globalization, companies are faced with an extreme competition from all around the
world. The concepts of specialization, comparative advantage, etc has all been caused by the
opening boarders of trade [CITATION Glo06 \l 1033 ].
One of the major impacts that have been caused by the globalization and supply chain is the
“global sourcing”. Large enterprises have divided their manufacturing processes into different
tasks performed in different countries around the world. These separate production activities
are linked together within a so-called global supply chain. Multinationals have setup their
production process in developing nations like Bangladesh, China, India etc whereas the
headquarters that remain of strategic importance are located in developed countries like US,
UK etc. One of the major example is of Apple, who outsources its manufacturing facilities from
the plants that exist in China. It is not involved in the production directly but gives order to
Contract Manufacturers (CMs) and Original Device Manufacturers (ODMs) [ CITATION Pat19 \l
1033 ]. This is just one example and there are similar supply chain structures across a number
of countries and cooperation.
As businesses seek to capitalize on the benefits of globalization and supply chain management,
they lose sight of the risk that lies ahead. As the company operates internationally, it is exposed
to increased competition. They need to be updated, effective, and streamlined as much as
possible if they are to survive in the global supply. As the global supply chain increases,
complexity will also increase due to the risk associated with material unavailability, customer
satisfaction, and natural disasters such as COVID-19, etc. All of these have potential elements to
halt and the demise of the corporation. The very late example of COVID-19, which has
swamped the cooperation and had led to disturbed supply chains in the world-wide economic
system. While there was an increase in the demand for necessities at this time, the lockdown
was imposed in almost all of the countries. According to Fortune, 94 percent of Fortune 1000
companies have seen their supply chains disrupted as a result of this pandemic [ CITATION
Iva20 \l 1033 ]. These massive disruptions have created a debate about sustainability, resilience
and agility of our current supply chains with businesses and government, both of which include
gaps in our current understanding and delivery of supply chain systems [ CITATION Iva20 \l
1033 ].

Impact of Environmental Sustainability and the "Green" Movement

on the Supply Chain
Over the past several decades, the business world has undergone a huge transition. At the
same time, environmental issues have also increased, as have concerns in this regard. Rapid
depletion of resources, global warming, the scarcity of fossil fuels, and greenhouse gas
emissions are some of the problems that have been caused over the last few decades.
Industries are confronted with the challenge of sustainability, to find a balance in economic,
social, and environmental circumstances. The companies realized they need to change the
strategies and make an eco-friendly decision. 
“Green Sustainable Supply Chain Management" is an idea can be possibly described where
those inputs are used that are ecosystem friendly and then are converted into those outputs
can be reused and recycled once they are expired. A sustainable supply chain is all about
reducing costs and helping the environment [CITATION UKE18 \l 1033 ]. Managing the green
supply chain is still considered an emerging structure in business supply chain operations and it
will take some time to improve and absolutely establish it. A number of authors expressed their
views on this developmental structure; As Handfield defines the Green Supply Chain as the
implementation of environmental management principles that include activities involved in the
design customers' order cycle, manufacturing, assembling and packing, logistics and
distribution. In addition, Zhu describes the green supply chain as an opportunity to boost
market dominance and profitability with a new perspective of environmentally-friendly
enterprise. While Srivastava defines the green supply chain as the integration of environmental
philosophy within the management processes and functions of the supply chain. This includes
product design, material sourcing, manufacturing process, outgoing logistics, and even end-of-
life product management[CITATION Sha18 \l 1033 ].

Figure 3: Green Logistics Source: https://transportgeography.org/?page_id=6497

Sustainability and Profitability

Sustainability has contributed to cost savings. The most common view is that being eco-friendly
increases the burden on business, which is wrong. This is described as one of the powerful tools
to reduce overall costs. According to a consultant's analysis, A.T Kearney, these companies that
adopt sustainable practices have generously saved money. Pepsico is among the many
examples reported by A.T.Kearney. They cut their unit costs by 16% at a beverage plant by
more than $60 million and an additional $44 million by using reusable plastic bottles instead of
corrugated bottles. Other major companies include Dell who saved more than $20 million
annually, Texas Instruments saved around $8 million, Raymour & Flanigan reduced their cost by
more than $15 million etc [CITATION UKE18 \l 1033 ]. Sustainability may be economically
viable. Advances in the efficiency of transportation, operation, raw material assortment, and
promotion are all key flagship initiatives in terms of a sustainable and environmental friendly
supply chain [CITATION UKE18 \l 1033 ].

Sustainability and Competitive Advantage

Increasing consumer awareness of social and environmental issues has given businesses the
advantage of acting more responsibly and gaining greater recognition among their competitors.
Moving to Green supply Chain has increased their market value and the brand name.
Companies use these techniques and innovations to create a unique selling point and charge
premium price for that. The strategies not only help customers in their satisfaction of needs but
also they help the company to gain competitive advantage in the market [CITATION UKE18 \l
1033 ].

Implementation and the Challenges of GSC

Making a sustainable business operating within a supply chain becomes easier rather than more
difficult. They have adopted few practices, but a lack of information has led to certain
challenges [CITATION UKE18 \l 1033 ]. In 2009, just 10% of companies actively represented
their carbon footprint in the supply chain. A 2009 survey of 250 global supply chain managers
found that 37 per cent of them did not know how much carbon emissions were in their supply
chain. However, 86% of managers reported that they had adopted some form of environmental
practices in their supply chain, such as recycling, the use of natural light, energy efficient light
bulbs, etc[CITATION Bla09 \l 1033 ]. Larger industries have the issue of identifying the long and
complex chain. There are suppliers and sub-suppliers that aren’t accountable directly to the
company but they have to face repercussions [CITATION UKE18 \l 1033 ]. For example, big
names like Nike and Adidas have been comforted for using suppliers that dump toxic waste in
china[CITATION Vil20 \l 1033 ]. GSC is increasingly becoming a part of business requirements as
consumers become more aware of the need to change their basic tactics and strategies
[CITATION Gre15 \l 1033 ].

SCM & PAK – CHINA Economic Corridor

Pakistan and China had an agreement on May 2013 that they are going to build One Belt One
Road project more commonly known as China-Pakistan Economic Corridor (CPEC)[CITATION
Ikr19 \l 1033 ]. This motorway is going to be of an immense importance as it will allow smooth
trade routes with a cutback in their transportation cost. The corridor consists of three routes in
all: Central Eastern & Western routes [CITATION All18 \l 1033 ].
Figure 4: One Belt One Route Initiative Adapted from GIS report (2017) Source: https://ukdiss.com/examples/china-pakistan-
economic-corridor-smart-motorway.php

Economic Belt
China holds the world’s second biggest economy, it has also become the core of a global supply
chain network with import and export of enormous products. It stands on 120 out of the 200
world countries of the largest trading partners. CPEC is another way to stimulate their
dominance of supply around the world. This will provide china with the shortest path to the
Middle East, Africa and Europe, resulting in low transfer cost, loading charges and delivering a
safe alternative route in case of any disturbance which won’t result in any losses. China will
invest billions of dollars on the Belt and Road Initiative (BRI), to achieve the strategic
importance. Moreover, China’s ambitious plan to re-create a better and bigger Silk Road is not
only because of the Pakistan’s strategic location and its relationship with China but also China
being an immediate neighbor, Pakistan is also central to OBOR. This project also includes the
development of the port of Gwadar, which will provide China with the smallest and alternate
route from the Arabian Sea rather than the current long route [CITATION Chi18 \l 1033 ]
Figure 5: CPEC Railway Connectivity Adapted from Tribune (2015) Source: https://ukdiss.com/examples/china-pakistan
economic-corridor-smart-motorway.php

Advantages to Pakistan
The economic belt is not only colossally important and strategic for China, but Pakistan will also
gain benefits directly and indirectly. One of the major impact CPEC will have on is Pakistan’s
infrastructure. With China’s highly innovated and new technology and machines they can built
the roads and areas around the location which will result in exploration of Baluchistan and also
improve the time that it takes to deliver goods within Pakistan only. For example, it is estimated
that travelling time was cut from 26 to 12 hours from Karachi to Lahore due to the modern
railway network Main Line -1 (ML-I) [CITATION Chi19 \l 1033 ]. Such infrastructure projects will
make the movement of goods and services quicker, easier and more secure. In fact, as a result
of CPEC, it was figured that logistics industry will increase by US$30.77 Billion in Pakistan by the
end of 2020 [ CITATION Ikr19 \l 1033 ].
Moreover, Supply Chain Management practices are also going to be influenced by the
introduction of CPEC. Pakistan would be assisted by the Chinese people who are dominant in
the world due to their practices. There is going to be the transfer of knowledge and capital both
which will make more employment opportunities for the young adults of Pakistan.
Additionally, the trade activates just won’t be carried out by China, but it will mark an
important site in the international market for Pakistan. This is particularly true for the port of
Gwadar that will provide easy access to South China, Central Asia, Afghanistan and even
southeastern Iran. Pakistan will become increasingly efficient through effective tools and
policies and a comprehensive system as we expand our horizons and potential.

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