Historically we have moved from physical distribution to logistics management to supply chain management. The major difference seems to be that supply chain management is the preferred name for the actualization of “integrated logistics”. With IT (Information Technology) acting as an enabler, it is now possible to have an integrated process view about the logistics & all the allied processes related to business. It is now possible to compress the lead-time by recognizing lead-time reduction as a strategic issue. Ideally, the supply chain should be a ‘seamless' chain. In traditional supply chain systems, suppliers and manufacturers operate rather independently. Suppliers have very little information on what manufacturers need until they receive orders from manufacturers. Similarly, manufacturers do not know what materials are available with supplier until they place an order and get a corresponding response. The status of information with manufacturers as to what in a stock with a multitude of distributors, dealers and retailers is hardly available and if available is seldom reliable. As a matter of fact many manufacturers consider obtaining this information as unwarranted because sale transactions is considered to be completed once stock reach these channels and as undesirable as it amount to interference with distribution channels. Many stockists also consider disclosure of this type of information of stocks as uncalled for as this is confidential.
[...] Supply Chain configuration calls for determining numbers and location of each of the participant. It calls for specifying the role of each of the participants. The answer of these question will take into account factors such as the volume of supplies, number of customers and their geographic locations, cost transportation, distribution costs and the level of customer satisfaction. Distribution Planning: The supplies can be carried through a wide variety of transportation choices. A faster transportation not only helps to achieve a higher level of customer satisfaction in making the supplies available on time but also helps to increase the sales by seizing business opportunities, when there is a sudden rise in demand. [...]
[...] Decision Integration: If the various participants of the supply chain system operate as one congruent whole, demands of integration call for a joint decision-making exercise. The participants are expected to meet at frequent intervals to take a joint decision on issues such as inventories, distribution, trade- offs to strike a balance between contradictions and even pricing policies. The entire supply chain system would be behaving as if it were one single company. This task is however, not easy to achieve as human element is involved and consensus decisions only signify the path of least resistance and minimum risk involvement. [...]
[...] The importance of logistics in our country can be gauged from the fact that logistics and supply chain management costs are in range of 10 to 15 percent of the GDP for a developed country. There is a difference in the result due to better customer service & parameters & better quality of life in the developed countries. This concept of integrated logistics consists of two interrelated efforts logistical operations & logistical co-ordination. The growth of integrated logistics has resulted from an acute need to improve faster movement of goods & storage efficiency. [...]
[...] Michael Porter's Value Chain: Porter's classic model of the value chain to understand the evolution of a finished product and its ultimate value in the supply chain. It allows a aerial view of the various costs incurred at every step of its movement towards the creation of the product or service offered. “Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its product. [...]
[...] The value chain model is a useful analysis tool for defining a firm's core competencies and the activities in which it can pursue a competitive advantage as follows: Cost advantage: by better understanding costs and squeezing them out of the value-adding activities. Differentiation: by focusing on those activities associated with core competencies and capabilities in order to perform them better than do competitors. Cost Advantage and the Value Chain A firm may create a cost advantage either by reducing the cost of individual value chain activities or by reconfiguring the value chain. [...]
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