The success of any business process is strongly dependent of the effectiveness of supply chain systems. The logistics employed in the entire business process have inherent implications on the productivity of the company. In international supply chain systems, the logistics mechanisms are highly complicated. This is occasioned by different barriers such as trade tariffs, international treaties, sanctions against some economies, and transport costs among others. In view of such barriers, business organizations must employ effective strategies from the perspective of logistics. Adequate logistics planning facilitates in the mitigation of irrelevant expenses in international supply chain systems. This paper revolves around the Tempo Limited case study. As the company’s owner, Fatih Terim faces the challenge of determining the best alternative for shipping lumber from North Korea. The total costs for shipping the cargo via the Syrian and Romania channels will be examined.
Question 1: Costs of the Romanian and Syrian Options
As Fatih Terim seeks to ship lumber from North Korea to Turkey, he is faced with four alternatives. However, only two of the four alternatives are viable from the economic and legal perspectives. In line with such dynamics, it is essential to examine the costs associated with each alternative. This will form an excellent basis for decision making. In the Romanian option, Tempo will have to ship the cargo from North Korea to Romania because both countries enjoy excellent bilateral ties. Upon arrival in Romania, the cargo will be transported into Turkey via road. For this option, the company will incur $42,000 to transport the cargo from Wonsan to Constanta (Murphy & Wood, 110). Transporting the cargo from Romania into Turkey would cost $15,000. The handling fees apply to both options, and it translates to $6250. The other cost in the Romanian option is the falsification of documents, and it would cost $10,211. By summing all costs, the Romanian option would cost the company a total of $74,361.
The second option for Tempo Limited encompasses the shipment of lumber from Wonsan to Latakia in Syria. The cargo is then shipped into Turkey via the Suez Canal. The first cost for this option is the $33,000 which would be incurred while transporting the lumber from North Korea to Syria. From Syria to Turkey, the company would incur $12,000. Additional charges would be incurred due to the $3,100 charged for shipping the lumber via the Suez Canal. The other charges for the Syrian option include the $6250 handling fees and $50,000 in bribes. Consequently, the Syrian option adds up to $104,350. Based on these figures, it is evident that the Syrian option is expensive by $29,989.
In view of such disparities, the Romanian option is the best alternative for Tempo Limited. There are various reasons why Terim should recommend the Romanian option. Firstly, this alternative is cheaper by $29,989 compared to the Syrian option. In any supply chain framework, cost alleviation should always be prioritized (Myerson, 87). The second aspect pertains to the bribery involved in the Syrian option. Such a malpractice is highly risky because of the possibility of fines. While planning the logistics framework for supply chain systems, it is crucial to avert corporate malpractices especially at border points. By opting for the Romanian option, the company will minimize costs and also avert the potential risk of corporate malpractice (Branch, 29). Consequently, Tempo Limited should use the Romanian option in transporting the lumber from North Korea to Turkey.
Question 2: Bribery in Supply Chain Systems
It is essential to underscore that bribes should not be included in any way. While numerous companies include bribes in their supply chain systems, it is a strategy that is tantamount to corporate malpractice. There are various attributes which help in exemplifying the necessity to exclude bribery from supply chains. Firstly, bribes can significantly undermine the reputation of an organization. Information about involvement in bribery can spread in the public domain at phenomenal rates. This forms the basis of degrading the public image of the organization. Bribery can also lead to hefty fines from law enforcement agencies. Such fines undermine the company’s capacity to make profits.
Additionally, the fines might cause bankruptcy or liquidation of assets within an organization. When companies use bribes, it serves different purposes (Butcher, 119). Some corporate entities use the bribes to gain competiveness. Additionally, some companies use the bribes in order to facilitate for favorable treatment from business partners or law enforcement authorities. From another perspective, bribes may be used by a company to convince potential clients. Such elements highlight the unethical business practices which are characterized by use of bribes within the supply chain system. In the event of Tempo Limited, the falsification of documents in Romania is an action that encompasses unethical business practice. However, an assessment of the benefits and shortcomings of the action show that it is the only option suited for the company/’s supply chain systems.
Question 3: Moral Values in Developing Countries
The implementation of moral values in business practice within the developing world lags behind the west. The supply chain systems and other aspects of business are tainted by incidences of corruption in most developing nations. In the 21st Century, ethical and moral values are integral aspects of business. This also applies to the supply chain systems and logistics planning mechanisms. It is thus essential to assess some of the best ways of integrating moral values into the developing countries.
Firstly, law enforcement agencies should lead by example (David, 107). In essence, this implies that senior people in positions of authority should be at the forefront of promoting morals. The second aspect concerns the policy framework for business practice. Stringent policies with stern fines should be established in order to curb unethical practices in business. This must be supported extensively by an elaborate framework for implementation. Some developing countries have exemplary ethics policies for business but do not have effective implementation mechanisms (Branch, 61). These challenges can be addressed by allocating adequate resources towards the implementation of ethics policies. Business entities should also maintain international standards for corporate social responsibility.
Adequate logistics planning facilitates in the mitigation of irrelevant expenses in international supply chain systems. Through such mechanisms, Tempo Limited can easily solve the different logistical and supply chain challenges. There are various reasons why Terim should recommend the Romanian option. Firstly, this alternative is cheaper by $29,989 compared to the Syrian option. In any supply chain framework, cost alleviation should always be prioritized. The second aspect pertains to the bribery involved in the Syrian option. Such a malpractice is highly risky because of the possibility of fines.
Branch, A. E. (2008). Global supply chain management and international logistics, New York, NY: Routledge
Butcher, T. (2008). Global logistics and supply chain management, Hoboken, NJ: John Wiley & Sons
David, P. A. & Stewart, R. D. (2010). International logistics: Management of international trade, Mason, OH: Cengage Learning
Murphy, P. R. & Wood, D. P. (2010). Contemporary logistics, 10th Edition. Prentice Hall
Myerson, P. (2012). Lean supply chain and logistics management, New York, NY: McGraw-Hill Professionals