Application of soft systems thinking in analyzing the intense international competition threat of closure

1.0                Question 1

1.1                 Introduction

In this question, the CTOC in Busan is being threatened with closure by intense international competition. I have been appointed as the chief executive (CEO). CTOC is invited to join an IUG network. The soft systems thinking is applied to analyze the CTOC problem as per the ‘Competitiveness of container terminal operating companies (CTOC) in South Korea and the industry-university-government (IUG) network’ by Yoon J, Lee HY & Dinwoodie J (2015). The usefulness of soft systems modeling is evaluated in assisting CTOC to gain competitive advantage in the international market.

1.2                 Application of soft systems thinking in analyzing the intense international competition threat of closure

Soft systems thinking is applied when an organization wants to solve a problem that is complex and in utilizing the views and perceptions of the people. In this case when the CTOC is facing intense competition, the perceptions of the staff, managers, suppliers and even industry partners can underlie its success. CTOC are increasingly facing competition due to large volumes of trade and container traffic growth. Trends of container consolidation have proliferated terminal operators business relationships forming critical basis for maritime container transportation decision making. The relationships have seen container terminal operating companies (CTOCs) increasing competition in international transport and logistics services provision. IUGs are encouraged by government to generate agglomerative effects. The competitiveness of a CTOC is affected by traditional factors; location, costs, service and facilities. Additionally softer factors such as customers, government policies, reputation, networks and human resource affect CTCOs competitiveness. The soft systems thinking can be applied in the case of a CTOC facing intense competition to avert its closure. The soft systems model helps organizations solve problems that are complex to be solved using traditional methods. It uses system thinking in a research action, learning and reflection in order to understand people’s perception in a situation they are in. In a CTOC, facing closure due to intense competition is a messy problem. The concept utilizes the perception of all the managers, employees and even suppliers in a CTOC to provide different views and find ways to get a competitive edge. Figure 1: TOC typology (Yoon, et al., 2015) The soft systems help understand the typologies in a TOC. As a CEO, I will thus be able to tell the competitors and the capabilities they have over my CTOC. The factors of security, efficiency of individual terminals and port information systems enables to provide the CTOC internal capabilities and areas of improvement. Additionally as the CTOC executive leader, definition of strategies is key, determining the factors that affect our customers and also enhance the collaboration with the industry partnerships. All the people in the CTOC will be able to give their views on improving the customer relationship so that the CTOC loyalty increases. In the management, the strategy formulation will seek to improve the image of the CTOC. This will lead to brand equity increasing thus enhancing our competitiveness. In order to do so, the capacity of the management will be empowered, technology improved, raise the customer-management-staff trust and stability and endeavor to raise quality through human resource development. Improving these factors will enhance the perceptions and views, thus more input from our human resource and customers leading to profitability increase. The CTOC also needs to deepen interactions with I-U-G networks. This will form a solid base for innovations development as well as learning from the pears. It will increase market confidence for the CTOC leading to increased competitiveness. The network will enable creation of alliances that lead to sharing the benefits in the industry such as customer referrals. CTOC will be able to gain from cutting edge research, real time creativity as well as government support within the network.

1.3                 Evaluate the usefulness of soft systems modeling in the creation of competitive edge for the CTOC

The soft systems thinking focuses on the core of the CTOC without disrupting the business. This methodology seeks to solve complex problem using research, learning and understanding the prevailing perceptions of the people around to the problem. It is a direct fix to a complex problem that cannot be modeled using the traditional tools. The soft systems thinking puts effort to understand a problem through minds of different people who are involved in the issue. This can enable a complex problem to be narrowed down to something that can be modeled mathematically. It is able to deal with human complexity and put a problem into practical solutions. The soft systems modeling is able to understand the organization, its context and the culture. With this it becomes easy to foster a relationship with people and put them in a good line to get the solutions. It is able to line up the organization stakeholders and their perceptions to the complex issue. In this case CTOC is able to know its internal and external stakeholders, the environment it operates i, problem definition, views from different people and develop conceptual model that will help it gain competitive advantage over other CTOCs.

2.0                Question 2

2.1                 Introduction

This section seeks to evaluate how supply chain managers can improve the performance of the chain supply management. Supply chain management is a broad concept focusing on the effect of combining different companies which carry out production of goods and services from suppliers, wholesalers, retailers to the final customers who consume the final goods. In other aspect, supply chain management may involve how the waste products are disposed or recycled. This kind of an approach assumes that all the companies in the logistic pipeline are all involved in the production of goods and services which are mainly for consumption by the final customers (Helms, 2016). They will be seeking to meet the needs of the customers by producing the right products and use the right methods of production. This kind of a process requires innovativeness and effectiveness of the management so as to enhance a seamless process of production and supply. Supply chain management should seek to ensure that product reaches the customers at the right time, at an affordable price and within the favorable location (Gunasekaran, 2004).

2.2                 Technology

Increased competition, complexity, and increased scope of business environments have  broadened the business scope and improvement of technology in the usage of personal computers so as to achieve the optimization of the supply chain. Improvement of information exchange via emails and internet has caused a paradigm shift in the way companies in supply chain management relate. Dissemination of information is executed within the shortest time possible. For the supply chain managers to be in a position of gaining a competitive edge and to enhance the supply chain performance, they need to incorporate technology in their processes and have simple communication structure (Walton, 2005).

2.3                 Integration of different function units

Companies which have put the supply chain management as a core practice in the business have reported less cost and reduced turnaround time. For instance, Wal-mart Store International has reported the most reduced turnaround time in its operations from a month to a day to hours. Out of stock occurrences have been significantly reduced, accompanied by an increase in inventory stocks (Sheoran, 2004). The most important facet of the supply chain management is to look at facilities and production processes as a network of activities rather that a single separate unit in management of the supply chain (Young-Joon Seo, 2014). People who are involved in procurement and those who change the form of raw materials to finished products and then distribute these goods to the customers should be integrated to function as a common unit rather than working as separate units. Integration is a fundamental principle to be applied by managers so as to achieve the optimal supply chain management. However, integrating these units should not overshadow the core link of the chains within an organization which is the most important thing in achieving supply chain goals. Almost every company has a supply chain but less than often, not all companies manage these supply chains to achieve these strategic advantage edges (Tan, 2005).

2.4                 Differentiation of supply chain and other corporate strategies

Supply chain strategies should be differentiated from the corporate strategies. Whether the business exhibit superior customer services, great products innovations and a leader in cost reduction measures, supply chain should be shaped in such a way that it is able to deliver these key strategies (Glatzel, 2014). Leaders from across all departments should be brought together to work on a supply chain that will ensure timely delivery of all the departments deliverables. Marketing department needs to outline the most valued services to customers offered by the organization. They should be able to communicate and tell how the customers need in different segments should be met and how to ensure that the competitive edge is gained in the market front line. Such kind of information sharing will ensure the supply chain and the product development departments have designed innovative products based on the need of the customers (William, 2005).

2.5                 Conclusion and Further Research Recommendations

Researches on the supply chain management cannot be totally exhausted because businesses are faced with new supply chain challenges every day as new market dynamics evolve. Change in technology and the need to increase the integration of supply chain units embedded to achieve an optimal supply chain management need to be researched on. This will help in creating more modernized ways to manage a given supply chain. There is still some more room on the technology to be researched on and how use of technology can be applied smoothly in the supply chain management. Customers experience with companies supply chain need to be researched on and more applicable recommendation be structured out. A company supply chain should be able to stand out more than those of the competitors but how should this be achieved? This is one area of research I should commission for further researches (McCormack, 2004).

3.0                Question 3

3.1                 Introduction

Sustainability is concept that seeks to ensure that business is able to meet the present needs without depleting resources for its future needs. Sustainability does not only seek to increase the turnover of the business but also take into account the environment and the people around the community from which they are operating. The triple bottom line concept (people, profit, and planet) have been used widely by many ports in achieving their sustainability goals such as Southampton port. Southampton port is one busiest and the largest port in UK. It has been facing different issues of sustainability but with their current master plan they have been able to address these challenges (Associated British Ports, 2010 ). Despite the adoption of the sustainability measures the increased need for more resources has increased depletion of these resources. This has pollution of the environment through land degradation, increased oil spills and release of fossil fuel gases. Continuous exploitation of assets for the purpose of expansion especially at the south coast of United Kingdom has posed a great sustainability challenge.

3.2                 Sustainability Concept

The American progress in 2013 reported an impact caused by oil spillage along the gulf of Mexico led to a great economic impact of about $8.6 billion loss and over 22,000 people lost their job. Sustainability is costly but it needs to be well intergraded in the strategic plan of the every port. Southampton has embarked on project which enhances the usage of renewable energies instead of fossil fuels. Sustainability measures do not only appear in the master plan of port but they have as well strived to implement them to the sustainability objectives.  The diagram below illustrates the triple bottom line concept which has been widely adopted by different port in sustainability approach. The three factor intersect at a central point and this is the point where sustainability is achieved (KUZNETSOV, 2014). Figure 1: The Triple Bottom Line Sustainability Concept

3.3                 Environment Sustainability

Environment management system at the port is very elaborative since their operations affect the environment daily. Their sustainable policy cut across different aspects of quality of the air, noise and ecosystem conservation. Their expansion plan to have an additional facility for container storage means more land and more resources. The construction of modern berth to cater for the increased number of cars in the port business is another milestone project that Southampton port is undertaking. Their environment management system is therefore focused on ensuring that despite this expansion they can still enhance the sustainability and protection of the environment. The management framework (2) below shows how environment stewardship is owned and spearheaded by the top  level of management and support staffs. Appraisal based on the risks is well developed to facilitate cargoes handling at the port. This is done to ensure that resources are assigned to the right activities which prevent any damage to the environment (Associated British Ports, 2010). Figure 2: Environmental Management Framework Southampton port does not only confine itself on the conservation of the environment but also on the way they carry out their development projects. They monitor resources consumption. Some of the resources monitored include water and electricity usage and the carbon level within the port and areas surrounding its operation. This kind of monitoring effectively guides the Southampton port in managing for its resources and adoption of measures to increase on the environment sustainability. The port has as well worked with the waste management team to reduce on the impacts which might be caused by the mismanagement of waste products from the jurisdiction of their operation (ABP, 2016). The table below shows some of the environments that need to be addressed when the Southampton port is carrying out its infrastructures expansion project. Figure 3: Environmental issues identified as likely to require consideration at detailed design stage for each infrastructure project

3.4                 Socio-Economical Sustainability

Sustainability also includes the aspect of the social economic development. Southampton has immensely contributed to the UK economic growth. A report published by Oxford Economics journey outlined that, the port has employed over 132,000 employees and its annual profit amounting to 7.6 billion pound meant 3 billion pounds in tax revenues (Associated British Ports, 2010 ). The port recognizes that it does not operate in vacuum and therefore get involved in the communities around. This port is not only restricted to the generation of income and providing employment but is as well involved in promoting the welfare of the communities around through corporate social responsibility. Southampton port has continued to create more employment opportunities for UK citizens. Increased operations in deep sea port businesses to the international level have opened up more markets. (Associated British Ports, 2010 ). Safety for its employees has been improved by using improved safety systems and measures. Sustainability of the business should not be seen as factor of profit only but as a whole concept of profit (economic), people (social) and planet (environment). The diagram below shows some of the components of port sustainability. Figure 4: Components of port sustainability

3.5                 Green bulls eye template

Green bull eyes template is used to help businesses in maintaining their focus to the goals and objectives. It assumes that, all factors held constant the business will achieve all the set goals. This assumption has been criticized because it not possible to hold economic factors such as inflation and tax constant. Policies on strategic plans keep on changing. Businesses need to incorporate such factors when planning since they may affect the smooth operation of business. The main challenge that is facing the Southampton port today is meeting the 2030 master plan that was designed in 2009.  They are faced with silt deposit challenges especially at the south east part of the port. This has adversely affected the business operations and hence the green bull eye concept may not be useful in such a situation. Nevertheless, when the green blue eyes concept is used in addressing the sustainability of the business, it adds more value. It seeks to ensure that businesses adopt a green approach on their operations. This may be taken mean use of renewable energy. Southampton port has invested heavily in the adoption of green energy by construction of a 2300Kwh wind turbines to generate renewable energy for its operation. They have also invested heavily on the usage of LED technologies within all its operations. Green bull eye concept is about aiming at the target. It is about doing things right so as to achieve the both social, economical and environment sustainability goals of the business (Associated British Ports, 2010 ).

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