THE STUDY OF GLOBAL SUPPLY CHAIN MANAGEMENT: THE CASE STUDY OF PTV A JAPANESE MANUFACTURING FIRM IN MALAYSIA

1.1

Background of the Study

Japanese firms have went through a hard years after the collapsed of Bubble Economy in 1989 till recently. This was known as Japans Lost Decade (Callen and Ostry 2003; Westney 2006). The competition became stiffer for Japanese firms especially with the emergence of new technology that dominated by American firms, especially in new industries such as Internet, biotechnology, and software. While in specific industry such as electric and electronic (E&E), they start facing aggressive competition from South Korean, Taiwanese, and Chinese makers that catching up with technologies, and operating in lower cost position. Among other problems that also facing by most of Japanese firms after the outburst of property bubble were prolong economic recession and continuous downturn in consumer spending. Besides, the unstable market situation due to the intense competition in new product development and diversifying consumers value also has became the main problems to them. The main task for Japanese firms here is how could they, efficiently response to the current market situations? In responding to it, many Japanese firms have started shifting their strategy from the perspective of individual firm efficiency to perspective of total supply chain. They have started focus on implementing Supply Chain Management (SCM) to smoothen their total cash flow movement through the utilization of information technology (IT) which promotes higher degree of information sharing, and have aggressively pursuing business process reformation activities to facilitate total supply chain optimization (Yamashita et. al. 2003). They started restructuring their business organizations, strategies, and also their established business system such as lifetime employment and Keiretsu. Many of Japanese MNCs have started to adopt western style of strategies that utilize the advancement of information technology to further increase operational efficiency in their current business process. Among the strategies that being focused and adopted by Japanese MNCs is, as mentioned in the above statement, the Supply Chain Management Strategy (SCM). This shift has lead to the changes in the nature of competition itself, current style of inter firm competition has been changed to the inter supply chain networks competition, individual businesses no longer compete as solely autonomous entities, but rather as supply chains (Lambert et. al. 1998). For Japanese MNCs, its widely use product divisional structure of organization and internalized market hierarchy, that has became the backbone of their competitive

advantage during 1980s, again might provide another incentive to the firms through its own internal global supply chain. 1.2 Statement of Research Problem

The implementation of SCM among Japanese firms is still in the early stage of between three to five years (Yamashita et. al. 2003). Therefore it will be necessary to conduct investigations on the practices of SCM among the Japanese firms to further understand how they implementing it. Tough they are numbers of case study has been developed base on the practices by firms like Hewlett-Packard, Whirlpool, Wal-Mart, West Co., Becton Dickson, Baxter, and Georgia-Pacific Corp (Lummus and Vokurka 1999), however Japanese firms especially the MNCs, has been considered as unique and different from it western counterpart through the application of Japanese style management and organizational futures. This also has giving a rise to a different model of MNC that differed significantly from of other countries (Itagaki 2002). Hence it has significant reason to conduct a study on SCM practices and implementation in a Japanese firm. From the perspective of strategic management, Cheng and Grimm (2006) has pointed out that despite the increase in application of relevant strategy theories to SCM, a large body of strategy research that has empirical findings and research methods relevant to SCM subjects still remain largely unexplored by SCM researchers. While in the other hand of global strategic perspective, Nix (2001) has also pointed out that research specific to global supply chain management is still lacking. Therefore it is significant to include the above mentioned perspective into the study of SCM. This study will utilize Porters (1985) value chain framework and Bartlett and Goshal (1998) global strategic structure together with its extension to SCM by Nix (2001) to examine the SCM practices and model employed by the Japanese firm. 1.3 Research Objectives

At the end of this research, the overall result are hoped to assist scholars and organizations in identifying the practice of SCM among Japanese firms. Specifically the elements of management, network structure, and business processes that been employed to enable the adoption and ensuring successful implementation of SCM. In summary, this study intends to answer the following general and specific objectives 1.3.1 The General Objective of this Research is:

To identify the successful practice of SCM base on the three variables which are the global supply chain management components, supply chain business process, and the network structure of supply chain. 1.3.2 The Specific Objectives of this Research are as follows:

1. 2. 3.

To investigate the strategy that being employed by the firm in managing its global supply chain. To investigate the business process reformation conducted by the firm as a subsidiary factory in achieving firms total supply chain goals. To investigate to supply chain network structure that being utilized by the firm in implementing its SCM strategy. Significance of the Study

1.4

It is believed that the information regarding the implementation of SCM that gathered through this study would be very useful to the scholars that interested in the areas of SCM, students, SCM practitioners, and manufacturing firms. The significances of this study are as follows: a) To provide the scholars, students, and SCM practitioners with the successful example SCM practice. b) To provide the scholars and students with the framework of global SCM. c) To assist the SCM practitioners and manufacturing firms to make an effective and efficient framework of decision making in the implementation of SCM in their operations. d) To enable SCM practitioners and manufacturing firms especially multinational firms understand the strategic framework of global supply chain which could be utilized to assist them in pursuing their competitiveness. e) To enable SCM practitioners and manufacturing firms especially multinational firms to gain better understanding in the configuration aspect of supply chain networks. 1.5 Scope of the Study

This research focuses on the implementation of SCM base on the three variables which are the global supply chain management components, supply chain business process, and the network structure of supply chain. The scope of this study is base on a manufacturing firm, a subsidiary of Japanese multinational firm that operates in Shah Alam, Malaysia. The selection of the firm is due to its significant contribution towards a successful implementation of SCM, while it also has reported that the firm is conducting set of value creation activities at its facilities here. Therefore it is conducive for researcher to conduct a study at the site.