The supply chain concept incorporates numerous participants ranging from customers to the suppliers. Each participant has a significant role to play within the supply chain system. In essence, the capacity to streamline the efficiency of all participants has extensive ramifications on the entire supply chain. In addition to the customers and suppliers, the supply chain concept integrates another dimension of the customers’ customers and the suppliers’ suppliers. These dimensions must be structured to augment the efficiency of the entire supply chain system. The link between the participants of a supply chain network should cater for adequate sharing of costs and risks. This analysis narrows down on the supply chain network for Aero Marine Logistics. In line with the analysis, the various linkages between the participants will be put into perspective. Additionally, the different risks and costs of the business venture in the AML case will be assessed.
Every supply chain brings together numerous participants ranging from customers to the suppliers. In the case study for Aero Marine Logistics, numerous participants are evident. The first participant is the Aero Marine Logistics firm. This company specializes in the provision of business logistics services for local and international enterprises. Within the supply chain system, Aero Marine Logistics can be categorized as a supplier. This is because of its role in shipping mushrooms from Amsterdam to Mumbai. The second participant in the supply chain is Freshfoods (Murphy & W0od, 175). This is a company that approaches AML for a potential business partnership in the shipment of mushrooms cargo from Europe to India. In line with this framework, this company serves as a customer to AML.
The third dimension as pertains to the participants of the supply chain is the customers for Freshfoods. The nature of imports for mushrooms from Europe depends on demand from the targeted consumers. In the absence of high demand, the levels of imports for mushrooms will be affected negatively. In contrast, high demand will facilitate for more imports of mushrooms from Europe. This underlines the role of consumers as the customer’s customer within the supply chain (Myerson, 82).
The fourth category of participants in the case encompasses the company that supplies containers to Aero Marine Logistics. The price at which this company supplies containers to Aero Marine Logistics has inherent implications on the entire supply chain. For instance, if the company sells containers at low prices, Aero Marine Logistics will have to increase the importation charges for the mushrooms. Similarly, lower costs of acquiring containers will help in minimizing the costs of importation. (Butcher, 119) These attributes highlight the linkages between the customers, suppliers, customer’s customers, and the supplier’s supplier.
Numerous costs and risks are involved in any kind of logistics partnership. Such costs and risks must be considered while selecting potential partners and participants of the supply chain. While some costs and risks are avoidable, others are more are less inevitable. In the case study pitting Aero Marine Logistics, different risks and costs are evident. One of the most notable risks is the fluctuation in the demand for mushrooms. The consumer market for mushrooms India is still at its tender stages. In line with this aspect, it is considerably complex to predict the response of the consumer market to the mushrooms when they are imported from Europe.
Another notable risk in the venture pertains to the vulnerability of the refrigerated containers. These containers are highly susceptible to defects and breakages. Such eventualities can cause losses to the logistics company and also the customer. In terms of costs, a lot of money is required in order to purchase the refrigerated containers. Presently, Aero Marine Logistics does not have such containers. Consequently, extensive investment is required in order to provide logistics services to Freshfoods. In view of these costs and risks, it is pertinent to assess the most effective ways n which these risks and costs might be shared (Gibson, 36).
The best approach would be to ensure that the supplier and the customer meet the costs and risks in a distributive way. This entails the establishment of a framework that assesses the potential costs and benefits for all participants. Based on this approach, the costs would not be skewed towards either the supplier or customer. The distributive framework should also apply to the risks. For instance, Freshfoods should meet some of the costs of refrigerated containers. Additionally, Aero Marine Logistics must participate in the enhancement of demand for mushrooms within the Indian market. Consequently, the distributive mechanism will help in the mitigation of risks and costs for both participants.
The proposed deal involving Aero Marine Logistics and Freshfoods cannot be actualized without establishing a framework for sharing risks, potential profits, and costs. The most effective agreement should have an inherent capacity to favor all the parties involved. Firstly, Freshfoods must assist Aero Marine Logistics in the purchase of the relevant equipment for the transportation of mushrooms. This is because of the high expenses involved in the purchase of such equipment. However, Aero Marine Logistics must meet a larger percentage of such expenses because it will own the containers after purchase. In line with such dynamics, Aero Marine Logistics should pay 70% of the costs of acquisitions and Freshfoods would cater for the rest.
An effective framework must also be established in order to share risks (Li, 161). Consequently, Aero Marine Logistics must help the customer in popularizing mushrooms across India. A rigorous promotional framework would be instrumental towards enhancing the demand for mushrooms. An effective agreement for the deal must also encompass an elaborate plan for sharing the profits. As an essential partner in the entire venture, Aero Marine Logistics should be entitled to at least 15% of the profits generated from the import and sale of mushrooms=. Such a plan is essential in terms of enhancing overall efficiency for the entire supply chain.
The link between the participants of a supply chain network should cater for adequate sharing of costs and risks. These aspects form the basis of analysis. Within the supply chain system, Aero Marine Logistics can be categorized as a supplier. This is because of its role in shipping mushrooms from Amsterdam to Mumbai. The second participant in the supply chain is Freshfoods. While some costs and risks are avoidable, others are more are less inevitable. In the case study pitting Aero Marine Logistics, different risks and costs are evident. One of the most notable risks is the fluctuation in the demand for mushrooms. In view of these costs and risks, it is pertinent to assess the most effective ways n which these risks and costs might be shared.
Myerson, P. (2012). Lean supply chain and logistics management, New York, NY: McGraw-Hill Professionals
Butcher, T. (2008). Global logistics and supply chain management, Hoboken, NJ: John Wiley & Sons
Murphy, P. R. & Wood, D. P. (2010). Contemporary logistics, 10th Edition. Prentice Hall
Li, L. (2007). Supply chain management: Concepts techniques and practices, Singapore: World Scientific Publishing
Gibson, B. J. (2008). Supply chain management: A logistics perspective, Mason, OH: Cengage Learning