Abstract
This Study evaluates the impact of implementation of Leagile supply chain model so as to improve efficiency and effectiveness of the supply chain in SMEs catering firms. The industry is a competitive sector where the competition edges on supply chain through cost, quality, lead time, and service level provision. However, the industry succumbs to crisis during the peak season due to the increase in the number of customers. The problems of cost, lead time quality and service level lead to deterioration of service quality provision as SMEs strain to satisfy the customers’ preferences. The research study will use Hajj, in Saudi Arabia, as case study for implementation of Leagile model. Therefore, implementation of Leagile model may help in solving the prevailing problems in the industry. The data for the research will be collected from SMEs catering firms around Hajj in Saudi Arabia. Qualitative data analysis methods will be used in analysing the data collected from respondents.
Key Words:
Leagile, Mass Food Customization, Decoupling point, Customer Order Decupling point, Order process Promise, Make to Order, SMEs
Introduction
The SMEs catering industry is one of the delicate industries in the business sector. The industry is characterized by stiff competition which focuses on provision of cost, quality, short lead time and service level to the customers (Kotzab, et al. 2009; Vorstet, et al. 2001; Cavusoglu, et al. 2007). Many catering businesses struggle trying to supply customers with different types of food ordered. Hence, there is a need to develop an appropriate strategy that will help in effective and efficient management of the industry in all seasons. Customer service is what determines the performance of a business (Lo& Power, 2010; Nizam & Rahman, 2012; Fayezi, O’Loughlin & Zutshi, 2012; Salvador, Rungtusanatham & Forza, 2004). This contributes to the competitive edge in any business especially the service industries such as SMEs catering businesses (Boland, 2006).
Leagile supply chain is a method developed with an aim of improving the efficiency and effectiveness of supply chains in the business sector (Mason-Jones, Naylor & Towill, 2000; Krishnamurthy & Yauch, 2007). The model is useful to businesses that have stiff competition especially in the supply chain. Leagile supply chain is a combination of two methods, which include lean manufacturing techniques and agile techniques (Kumar& Tiwari, 2009; Joakim & Martin, 2005; Bask, et al. 2011). Since each of the two methods focuses on a particular segment of the supply chain, they complement each other thereby producing an effective and efficient supply chain distribution. Lean manufacturing techniques helps in reducing losses resulting from time and resources waste, in the supply chain.
In turn, this enhances the development of mass production within the organization and reduction in the production costs (Gosling & Naim, 2009; Agarwal, Shankar & Tiwari, 2006; Duray, 2002). On the other hand, agile technique helps the supply chain to respond to volatile market demands. In turn, this causes the development of a competitive edge in the market. The two models require the use of the minimum lead time in the service provision. Lead time is the time taken to provide a customer with the goods he ordered (Selldin & Olhager, 2007; Currie & Shalaby, 2012). The time should be reduced to the minimum possible time frame. The amount of time saved from such activity is used in serving other customers, and it also saves losses occurring as a result of time wastage. This commonly occurs with the help of lean manufacturing techniques.
Additionally, mass customization has been used in attaining a cost efficient customization in many businesses (McIntoshet, et al. 2010; Bask, et al. 2011; Giesberts & Tang, 1992; Reiner & Trcka, 2004; Duray, et al. 2000). There is reduction in production costs when there is mass customization (Svensson & Barfod, 2002). This involves production of food products in large quantities and still meets the customer’s specific requirements. Mass customization will enhance agility, flexibility and effectiveness in the supply chain (Svensson & Barfod, 2002). The intersection between lean and agile paradigms develops a decoupling point. These provide the buffering point between the two paradigms and thus preventing a crisis occurring when the two methods interact (Svensson & Barfod, 2002; Rudberg & Wikner, 2004). Decoupling point holds the buffer stock from either side of the paradigm waiting to move to the next phase in the supply chain (Rudberg & Wikner, 2004; Hart, 1995; Zipkin, 2001; Silveira, Borenstein & Fogliatto, 2001). Decoupling point also helps to monitor the performance of the two paradigms in the supply chain (Mason-Jones &Denis, 1999; Donk, 2001; Fogliatto, et al. 2012; Rudberg & Wikner, 2004; McIntosh, et al. 2008).
Recently, there has been increased acceptance of Customer order decoupling point (CODP) in the value adding activities. This is common in production and logistics businesses. CODP is a point that separates the decisions made under certainty from decisions made under uncertainty (Rudberg & Wikner, 2004). Many customers want products that can satisfy their needs and are not costly in relation to other products prevailing in the market. Thus, due to the competing needs of customers where they want low prices and specific products, firms struggle to satisfy the diverse needs of their customers (Rudberg & Wikner, 2004). However, in certain cases, customers have to choose between price and fulfilment of their needs when it is not possible to obtain specific products at low prices. In order for a company to achieve these diverse needs of consumers they can implement CODP in their supply chain. This involves the implementation of CODP upstream and downstream (Rudberg & Wikner, 2004).
In the upstream, there is attainment of flexibility and in the downstream there is reduction in marginal productivity. When the upstream and downstream meets, this leads to formation of an equilibrium point that helps in fulfilling the customers’ needs (Rudberg & Wikner, 2004). CODP is commonly used in engineer-to-order (ETO), assemble-to-order (ATO), make-to-order (MTO) and make-to-stock (MTS). Moreover, mass customization also occurs through other methods. These include Available-to-promise (ATP) and capable-to-promise (CTP). ATP aims at delivering promises to consumers CPT is an extension of ATP and a company can define time limit when they will deliver the product (Rudberg & Wikner, 2004).
The CTP coincides with CODP. In production dimension (PD), ATPPD moves upstream in CODPPD and in the MTOPD, CTPPD moved downstream. This occurs through make-to-stock, assemble-to-order and make-to-order. In the engineering dimension (ED), when a company makes a product before a customer makes an order, the company can use ATPED to seek customer acceptance or rejection. This occurs depending of the specifications of the customer (Rudberg & Wikner, 2004). Conversely, when a consumer makes an order, the company can use CTPED to confirm the specification details of the customer order. CTPED also includes the definition of lead-time for the production of the product ordered (Rudberg & Wikner, 2004).
General model of the order-promise process for mass customization environment
Hajj, in Saudi Arabia, receives quite a large number of guests especially when Islamic believers visit Mecca. The number of guests visiting the area continues to increase every year. Islamist visit Mecca every year for a period of one week. This is according to the teachings of the Koran. The estimated number of visitors to Mecca is approximately 4.2 million annually, and it is expected that the number will double by the year 2030 (Naim & Gosling, 2011; Faisal, Banwet & Shankar, 2006). During the one week visit to Mecca, SMEs catering businesses receive many customers, which sometimes result into a crisis.
Leagile supply chain management is one method that may help in solving the problem of varied demands and expectation from customers during the peak season. Leagile method proved effective in many organizations that have complex supply chains (Cox, Chicksand & Yang, 2007; Cox, 2008; Fogliatto, Silveira & Borenstein, 2012). In this research study, Leagile supply chain will aid in improving the supply chain in the SMEs catering industry by reducing lead time, Cost deterioration due to increased demand and enhancing mass customization of the supply chain (Liu, Shah& Schroeder, 2010; Hill & Scudder, 2002). Supply chains are very sensitive to product market and thus, it is highly affected by variations in demand of products (Stevenson & Spring, 2007; Rahimnia, Moghadasian & Castka, 2009). According to Svensson and Barfod (2002), Leagile supply chain paradigm helps the organization to respond to short demands, feasible deadlines and varied demands by customers among others.
Problem Statement
When the peak season arrives in Mecca, it results in chaos as SMEs catering business try to respond to the persistent increase of customers. It seems like its unforeseen increase in the number of customers within the industry. This results to mass production of food products in order to satisfy the customers. It becomes impossible for customization of food products. Some SMEs are facing problems with mass customization since they do it using traditional methods. However, industrialization of the information processing will improve the performance of SMEs in mass customization of products (Svensson & Barfod, 2002).
The SMEs are also facing challenges with competition between them. This is because of technological development in the world. For example, Asian SMEs firms produce many customized products at low costs as compared to European firms. Mass customization brings an alternative for price competition between SMEs businesses (Svensson & Barfod, 2002). This is businesses compete on satisfying customers specific needs instead of price.
There are three types of customization of products. The first type is point of sale standardization. In this case, the consumer has an influence in the delivery of the product. The other customization is customized standardization. In this case, the consumer influence is in the design process of a product. The last type is tailored customization, which involves consumers influence in the production process of a certain product (Svensson & Barfod, 2002). In the case of SMEs catering firms, built to order is the appropriate method of satisfying customer’s needs. Therefore, the business can use customized standardization or tailored customization. This will enhance competition between mass production and mass customization firms.
During the month of Thul-Hijjah, the last month in Islamic calendar, Islamic believers visit Mecca for prayers as commanded in the Koran (Naim & Gosling, 2011; Faisal, Banwet & Shankar, 2006). This leads to an increase in the number of guests visiting the area for a period of one week. The SMEs catering businesses in surrounding environment strain to serve guests from different parts of the world (Stadtler, 2005). Food processing firms also strain in meeting the varied demands from different customers. There is deterioration of some of the services and products provided by the catering firms as a result of the strain (Faisal, Banwet & Shankar, 2006). Therefore, there is a need for the development of an appropriate strategy that will help in solving this problem.
This research will investigate the impact of the Leagile supply chain on SMEs’ in mass food customization for a short period with high demand as in the case of Hajj in Saudi Arabia. Quality, cost, service levels, and lead time, are some of the important factors that are very pertinent to supply chains (Boland, 2006; Svensson & Barfod, 2002). This paper seeks to address how to satisfy all the customers who attend Hajj, with all their different tastes, preferences and expectation with a sustainable time frame in term of mass food customization (Boland, 2006). In addition to what is the best way of applying and locating a decoupling point and the reduced cost incurred by the firms, it will also reflect into lower costs on the side of the customers. This is because Small and Medium Enterprises (SMEs) play a critical role in the development of a country.
Aim and Objectives
This study aims to develop, examine and validate a model of Leagile supply chain on SMEs’ performance to achieve customer s’ satisfaction in mass food customization.
1- To investigate a literature review to find out how SMEs uses the application of Leagile SC in mass food customization.
2- To investigate and evaluate SMEs’ capability and reliability of Designing, producing and distributing mass food customization during short time period.
3- To determine best strategy and process those SMEs can accelerate and operate in a mass food customization to satisfy customers’ preferences, considering SC determinants (cost, quality, service level, lead time).
Conceptual Framework
A conceptual framework will help in providing a pictorial view of the implementation of Leagile supply chain paradigm, and its operations in the SMEs catering industry in mass food customization. Conceptual framework gives a step by step direction of the way events are going to unfold so as to achieve the anticipated goals (Chan & Kumar, 2009). The following is the diagram for the conceptual framework.
The lean processes works from one side and agile processes works from the other side of the supply chain (Aitken, Childerhouse & Towill, 2003). In this case, lean works from the processing side where raw food is transformed into a ready meal. In the food preparation sector, lean strategy will help in reducing waste from raw materials and time during the preparation of food (Krishnamurthy & Yauch, 2007; Vorst, et al. 2008). It will also help in elimination of duplicate duties and unnecessary operations in the supply chain. It will also enhance multitasking where an employee performs more than one activity (Kohl & Depner, 2010; Spring & Dalrymple, 2000; Yao & Liu, 2009).
On the other hand, agile paradigm will help in improving service delivery of the timed orders. Agile paradigm improving the quality service delivered and ensuring the orders requested are prepared within the minimum period of time (Childerhouse & Towill, 2000; Valeria, Alberto & Thanos, 2009). Agile paradigm works on the orders delivery side where the staffs interact with the client.
Methodology
The Study will involve an inductive process, and qualitative data analysis methods will be used in analysing the data collected from the respondents for this research study. In order to achieve this, an objective method will be used. This will help in obtaining the required information for making appropriate conclusions and recommendations of Leagile supply chain model in mass food customization. A table will be made that will help in analysing the data collected from the respondents. It will also help in making appropriate conclusions regarding the objectives of the study.
Sampling
Sampling frame
The data for this research study will be obtained from SMEs catering firms located around Mecca in Saudi Arabia. The respondents will comprise of business managers and catering firms located in the area. The other respondents are customers of the catering businesses in located in the area.
Sampling procedure
Simple random sampling and stratified random sampling will be used selecting individual respondents for the research study (Treiman, 2009). Simple random sampling method will be used in selecting the individual SMEs from the sampling frame. This will require the use simple random table so as to ensure all the potential respondents are represented in the sampling procedure. The catering managers from selected firms will respond to the questionnaires. Stratified random will be used in selecting respondents from the customers of the catering businesses. Stratified random sampling allows selecting a definite kth number of respondents after locating selecting the sampling frame (Bryman & Bell, 2007).
Data Collection
Data will be collected using open-ended questionnaires presented to the selected individual respondents. There will two questionnaires which include a questionnaire for catering firms’ managers and customer’s questionnaire. The questionnaire will comprise of two sections; the first section will collect demographic information and second section will collect information related to the research study.
Conclusion
The research proposal evaluates on the impacts of the implementation of Leagile in the supply chain in the SMEs catering industry. It will involve carrying out a case study of Hajj, in Saudi Arabia. The catering industry is competitive and the businesses compete on the basis of service level, cost and lead time. This creates a stiff competitive edge which sometimes affects the service provision by the firms. This research proposal will evaluate on the implementation of Leagile model and how it will help in reducing lead time, cost and improving quality and service level.
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