Aramex: Aligning Supply Chain With Business Strategy

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Table of Contents

Introduction
Aramex business and strategic goals
Organisation of supply chain at Aramex
Alignment of supply chain with the strategic goals of the company
Future challenges or risks in supply chain design and operation
Recommendation and conclusion
Reference List

Introduction

Aramex Delivery Unlimited pioneered in1982 and it mainly focused on offering express services. Currently, Aramex offers transportation coupled with logistical services.

Headquartered, in Jordan at Amman, the organisation also provides services such as domestic distributions, express services, forwarding, and freight services among others (Aramex Delivery Unlimited 2014).

Aramex is now a global brand recognised by customers through the provision of customised supply chain services. This paper discusses Aramex Company by strategically mapping its supply chain with a view of pinpointing areas of risk within the supply channels.

It also proposes how to manage the identified risks. Finally, the paper offers recommendation on the risk areas in the supply chain management approaches for Aramex.

Aramex business and strategic goals

The success of Aramex in its global business depends on the development of effective supply chain management, which is consistent with its strategic goals.

Supply chain management refers to overseeing the movement of goods and services, finances, and information from the point of production to wholesalers and then to the end users, viz. consumers. Ketchen and Hult (2006, p. 573) note that it also encompasses ‘coordinating and integrating these flows both within and among companies’.

Supply chain management is an important function in an organisation. According to Ketchen and Hult (2006, p. 574), ‘organisations increasingly find that they must rely on effective supply chains or networks to compete in the global market and networked economy’.

The main goal for Aramex entails facilitating the achievement of these functions of effective supply chain management on behalf of its clients who are mainly organisations seeking to transport and distribute their products and services across the globe.

Aramex believes that supply chain management occupies its epicentre for operational efficiency. This value helps in the development of an important goal of the company, which entails ensuring smooth and efficient movement of goods coupled with services from manufacturers to retailers and then to the end users.

Aramex Delivery Unlimited (2014, par. 4) states that customised solutions ‘have helped clients in reducing inventory costs, increase transaction speed, and improve sales by implementing customer requirements more efficiently’.

This assertion implies that Aramex’s main strategic goal ensures that its supply chain management system, which is utilised by the company’s clients, reduces the cost associated with supplies.

This goal measures up to the concerns of effective supply chains, which focus on availing products and services whenever they are required and in a manner that ensures the increasing numbers of products that need to be availed in the market are sustainable (Ritchie & Brindley 2007).

Aramex explores sustainability in chain supply management as a business strategy. The company engages in corporate social responsibility (CSR) to drive its sustainability business strategy.

Integrating CSR in supply chain management implies that an organisation behaves in a socially responsible manner while establishing distribution networks for products coupled with proper treatment of wastes arising from its operations.

Indeed, Aramex not only engages in community work coupled with environmental stewardship, but it also involved in the development of mechanisms of reducing carbon footprints.

Organisation of supply chain at Aramex

Aramex organises its supply chains according to various facets that comprise the tasks of effective supply-chain management arm of an organisation.

This arm includes transportation of products from the manufacturing locations to warehouses, tracking of the products in warehouses, and their subsequent distribution until they reach the consumer.

In a bid to ensure that clients possess direct control and ability to track their products, Aramex deploys innovative technological interventions in its supply chain management.

Aramex stores clients’ products in its different warehouses located across the globe. According to Aramex Delivery Unlimited (2014, par. 8), this aspect involves ‘offering bonded or duty-paid options to cater for the different needs of customers in all industry segments’.

While clients’ products are in these stores, incorporation of technology in supply chain management at Aramex ensures that clients have real-time visibility of stocks. It also provides them with the capacity to control the levels of stocks directly in an effort to streamline order cycles coupled with purchases.

In case clients have their own stores, Aramex supply chain services are also important. The company’s dedicated experts offer services such as warehouses facility management to such clients.

Aramex Delivery Unlimited (2014, par. 8) notes that the main goal here entails ‘minimising wastes, creating better space utilisation, selecting right equipments, and streamlining running expenses’ at the clients’ owned warehouses.

Aramex offers value added services, freight forwarding, customs clearance, distributing, consulting services, IT services, and professional engineering design among others. In distribution, client visibility is provided through GPRS devices installed in the company’s trucks.

Consulting services offered at Aramex, as part of organisational supply chain, include facility evaluations and analysis of supply chain strategies deployed by organisations.

This undertaking aims at making a recommendation on how organisations can improve their supply chains and logistical abilities to minimise costs associated with these tasks.

Through professional engineering design, Aramex provides clients with complete warehouse design plans to facilitate ease of material handling coupled with provision of adequate operational areas.

Alignment of supply chain with the strategic goals of the company

Alignment of the Aramex’s supply chain management with strategic goals of the company compels it to embrace the perspectives of sustainable supply chains. For instance, the company engages in activities such as planting tree in various arid and semi arid areas coupled with making use of trucks in enhancing its logistics, which are greener in terms of carbon dioxide gas emission.

This aspect helps in the reduction of excessive costs on the environment that would have been incurred if individual organisations transported their products from point of production and across the distribution channels until they reach the consumers using their less green trucks.

The application of the concepts of green supply chains aligns well with the strategic goal for enhancing sustainability in supply chains. Sustainable supply chains ensure that the environment does not suffer from any harm due to organisational operations.

This assertion suggests that sustainable supply chain entities at Aramex should encourage the implementation of various eco-friendly technologies.

One of such strategies entails phasing out paper documentations. Leclerc (2012, p. 68) support this strategy and further notes that while ‘there are advantages to paper, the sheer amount used coupled with innovative technology has made it apparent that it is time for a new direction’.

Arguably, the most preferred direction is the one that will ensure that supply chains approaches become cost-effective and give an organisation the benefits of competitive advantage.

In a bid to shift to more eco-friendly supply chains, Aramex deploys paperless technological interventions to facilitate its supply chain management and logistics. It also uses recycled papers as part of the company’s green strategic goals.

In aligning the strategic goals of Aramex with supply chain, the company incorporates perspectives of social corporate responsibility. Maloni and Brown (2006, p.43) argue that some ‘regulatory directives oblige companies to consider the environmental impacts of their products and operations’.

While deriving strategies deemed as necessary for ensuring sustainable supplies, it is important to evaluate the relationship between the strategies and such directives in a bid to determine whether they are in conflict. All this elements entail attempts of ensuring that an organisation is socially responsible.

In its supply chain strategic goals, Aramex identifies people as one of the major issue of concern in its supply chain design operations.

In the company, the term ‘people’ refers to clients, employees, consumers, which the company facilities their distribution, and those affected by consumption of products through effects such as environmental landfills.

The company addresses the concern of these people in its supply chain management approaches through the adoption of supply chain strategies that enhance wastes reduction, reduction of costs of handling inventories, and ensuring environmental friendly manner of products’ distribution.

The perception of value of an organisation to society is perhaps one of the important factors that enhance its acceptance as a responsible company by communities within which a firm bases its operations. Aramex considers prefers the adoption of strategies that ensure the supply of products in a green way.

This element is crucial in ensuring that goods are produced and distributed without attracting high social costs to consumers and other stakeholders. Such costs include reduction of the extents of global warming by reducing the emission of green house gases.

Christopher (2005, p.78) emphasises that an organisation, which seeks to succeed in the efforts to achieve sustainable chain supplies, should ‘focus on one or more attributes that customers perceive as important, which usually leads to low cost levels’.

In the contemporary globalisation era, impacts of global warming entail one of the issues that are considered incredible by customers. Aramex responds to this concern by ensuring that its operations produce minimal negative impacts on all stakeholders that are concerned with how the company operates.

In the effort to align its supply chain with its strategic goals, Aramex supports communities. Aramex Delivery Unlimited (2014, par. 10) states that the company ‘is keen on continuously practicing its citizenship by being an active partner in development and serving its communities and the environment’.

It achieves this goal through supporting entrepreneurial initiatives in societies where it bases its operation across the globe. Aramex also engages in youth empowerment programs coupled with sponsoring various sports. All these activities help in developing the perception of organisational value to communities across the world.

Future challenges or risks in supply chain design and operation

Supply chains practices at Aramex ensure the reduction of inventory levels. Tracking supplies using paper files is an immense hindrance to the creation of sustainable supply chains. According to Leclerc (2012, p.68), ‘it is much more difficult to keep track when it comes to inventory and similar data files’.

Although one of the green approaches to the creation of sustainable chain supply driven by perspectives of green supply chains is through recycling of paper, a more effective way is the creation and embracement of technological ways of maintaining supplies data through mechanisms such as holding data in soft form.

Aramex strategically focuses on programs for the creation of sustainable supply chains. This initiative covers transformative processes meant to outline various comprehensive roadmaps for detailing various approaches that are implementable to ensure that business partners remain committed towards the achievement of green technology in supply chains.

Aramex deploys technology to provide real-time tracking visibility for customer products. However, it still uses paper-based labelling techniques. For, instance, Aramex Delivery Unlimited (2014, par. 9) notes that ‘Aramex value-added services range from labelling, kitting, to light manufacturing and software installation’.

Although labelling may involve the utilisation of recycled paper, it still presents a major risk in the company’s strategic goals as tracking technology continues to improve. Arguably, through such labelling, customers lack the ability to track every product.

Many organisations are resorting to mass customisation of the production process. For instance, a customer based in Georgia, USA, can order for a pair of shoe in a Chinese-based manufacturing company through modern mass customisation production techniques.

The company manufactures the product (pair of shoes) to customer specification and delivers it in the shortest time possible. Through such emerging production approaches, Aramex will face challenges in providing real-time visibility to individual mass-customised customer products as they move from point of manufacturing to point of consumption.

This assertion implies that the focus of Aramex on establishing its own warehouses may soon become an obsolete consideration in supply chain management.

Arguably, mass-customised products are made for specific customers. Consequently, large volume storage in warehouses is unnecessary. Labelling of such products may also be unnecessary. Therefore, Aramex should prepare to face the challenge and take the risk of investing in advanced and emerging technologies, such as the use of microchips, for tracking individual entities.

Manufacturing outsourcing is also becoming a major strategy deployed by organisations to reduce the production costs by relocating manufacturing operation to nations having low costs of labour and other inputs (Ritchie & Brindley 2007). The relocations are not permanent.

An organisation shifts its production facilities from a nation to another as cost of production changes. In the era of manufacturing outsourcing, establishing and locating warehouses strategically to target certain manufacturers constitutes a major challenge that faces Aramex.

Recommendation and conclusion

The changing technology and manufacturing approaches such as outsourcing and mass customisation of manufacturing introduces new challenges to the Aramex’s supply chain model. For instance, Aramex has well-established warehouses and other investments in logistical facilities in China.

These heavy investments were fuelled by preferences of China as a major location for manufacturing due to low labour costs. However, China has experienced sporadic wage increases due to labour disputes coupled with incidences of workers committing suicide due to inability to sustain their livelihood in the Chinese cities.

Similar incidences have also taken place in Vietnam and Bangladesh, which are two other important manufacturing outsourcing nations preferred by companies established in the western nations where labour costs are prohibitive.

Therefore, there is a possibility for a shift from outsourcing manufacturing from these nations. Hence, Aramex will run into losses due to such a shift.

In a bid to mitigate the risks associated with shifts of location for manufacturing outsourcing, it is recommendable for Aramex to stop focusing on installation of its own warehouses. Rather, it should focus on utilising and enhancing supply and logistical services to manufacturing organisation only within clients’ owned warehouses.

Alternatively, it can concentrate on developing flexible warehouses building technology to foster ease of relocation. In addressing the challenges of the need to provide real-time visibility to individual mass-customised products, Aramex should provide solutions such as deployment of low cost memory chips as an alternative to labelling products.

Reference List

Aramex Delivery Unlimited: Aramex Supply Chain Management 2014. Web.

Christopher, M 2005, Logistics and supply chain management: Creating value-adding networks, FT Press, New York.

Ketchen, G & Hult, T 2006, ‘Bridging organisation theory and supply chain management: The case of best value supply chains’, Journal of Operations Management, vol.25 no.2, pp. 573-580.

Leclerc, Y 2012, ‘sustainability and the supply chain: how to reduce cost and save the environment’, Manufacturing business technology, vol.2.no.1, pp. 67-71.

Maloni, M & Brown, E 2006, ‘corporate social responsibility in the supply chain: an application in the food industry’, Journal of Business Ethics, vol. 68 no. 1, pp. 35-52.

Ritchie, B & Brindley, C 2007, ‘Supply chain risk management and performance: A guiding framework for future development’, International Journal of Operations and Production Management, vol. 27 no.3, pp.303–322.

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