Supply Chain Mangt. Essay Example

SUPPLY CHAIN MANAGEMENT 6

Supply Chain Management

Supply Chain Management

To gain a competitive edge over the competitors, companies today are striving to meet the needs and expectations of the customers (Esper, Fugate and Davis-Sramek, 2007). Success in doing this is founded upon developing business processes and activities that can strategize, manufacture and deliver the creative, innovative, low-cost as well as quality products and services. Most often than not, managers may realize that their companies lack the essential and relevant skills and resources needed to ensure effective delivery of quality products and services to the customers (Fawcett, Ellram and Ogden, 2007). This has led them to look outside their companies to see how the skills, expertise and resources of both the suppliers and the customers can assist in creating value for their product. In addition, these companies are seeking assistance from other companies that have the ability to supply the relevant specialist services and products. For this reason, supply chain management is very essential to organisations. This paper will discuss the proposition of the statement: “In recent years, some of the terms used to refer to business logistics have included (but are not limited to) the following … logistics management (and) supply chain management. Although the aforementioned terms are similar, they aren’t the same. In addition, the essay will detail out the reason why logistics and supply chain management are fundamental to an organisation.

Supply chain management and logistics do not have the same meaning (Larson and Halldorsson, 2004). Logistic management entails logistics in the private sector, the public and non-profit sector. Logistic is the management of business, military, event and service. Logistic management can be defined as the art and science of practical activities, management and engineering that is associated with the requirements, design, supply and maintenance of resources for the purpose of supporting objectives and plans of operations (Fawcett, Ellram and Ogden, 2007). On the other hand, supply chain management is a recent business concept that can be defined as the process of networking and integration of organisations that are involved in bringing a commodity or service to the customers (Mentzer, Stank and Esper, 2008). The concept of supply chain management involves the life cycle activities and processes that guarantees customers receive products and services at a value they demand. From the definitions, we can establish that logistic management is a small section of the supply chain management that involves the management of goods and services in an effective way (Larson and Halldorsson, 2004). Supply chain management is an extensive concept that deals with the integration, from the suppliers to the consumer.

Business nowadays barely goes in alone. Most of their operations are founded upon combined logistics and supply chains. Logistics and supply chain management are very important strategic tools that can be used to ensure achievement within an organization. Therefore, logistics management and supply chains can be a very significant strategic tool for manufacturing organizations. Christopher argues that supply chain management creates a competitive advantage to a manufacturing organization hence completely differentiating itself from its competitors with regard to the perspectives of its customers. Therefore, it gives manufacturing organizations a particular emphasis on low cost operations which brings about high profit levels (Christopher, 2011). For example, Toyota Motor Corporation created a vivid differentiation over its competitors via inventive lean manufacturing. In addition, logistics and supply chain management can be used as a strategic tool by manufacturing organizations because it gives an added advantage to both the resources and skills of the organizations hence delivering exceptional services to their end consumers. Additionally, logistics adds value to the overall performance of the economy particularly to organizations through aspects such as economic utility (Larson, Poist and Halldorsson, 2004). Therefore, service organizations can use this as a strategy to increase their value through satisfaction as well as usefulness of their services to their customers.

Service organizations can increase their value by using the following economic utilities: form, time, place and possession utilities. Service and manufacturing organizations can utilize form utility to add value to their commodities via a manufacturing operation (Willersdorf, 2007). These organizations can also utilize place utility since it increases their value by ensuring that their commodities are effectively delivered to their target destinations. Thus, logistics plays a key role in service positioning where they are required by consumers. Also, service organizations can utilize time utility as a strategy. This is because, time utility increases the value of the organization by ensuring that their services have been delivered to the appropriate location where they are needed (Willersdorf, 2007). Therefore, these organizations derive the value from their ability to depend on the services in order to continue with relevant operations, for instance, ensuring that various parts are accessible when the equipment is planned for maintenance. Also, service organizations can utilize possession utility as a strategy since they can increase their value by marketing activities which are connected with the promotion of their services. This entices the consumers to take possession of the services they need (Mentzer, Stank and Esper, 2008).

Service organizations can also use competitive, spatial as well as product relationships of logistics in order to ensure success in the organizations (Coyle et al., 2008). Competitive relationships involves order cycles, inventory and transportation effect. Therefore, service organizations can utilize these considerations to enhance their services by keenly observing the elapsed time between when a customer places an order until it is received. Therefore, these organizations can critically measure their logistics performance against their competitor’s. In addition, these organizations can use this strategy by increasing their inventory costs. This can enable the organization reduce the cost of lost sales (Coyle et al., 2008). Also, by considering the transportation effect, service organizations can trade off raised costs of transportation with decreased cost of lost sales.

On the other hand, spatial relationships is a very important aspect of logistics and supply chain management since it relates the location of a points within a logistics system with the various demand and supply points. Service organizations can therefore utilize this as a strategy since it is very significant to transportation costs (Coyle et al. 2008). This is because the transportation cost is directly connected with distance. Service organizations can thus use this to improve and enhance their operations in order to maintain higher profitability and increased customer satisfaction. Profitability is considered a key factor in any organisation. Implementation of effective logistic and supply chain management increase company’s profitability and add to the shareholder value. The cost reduction ability coupled with customer satisfaction is key determinant of company profitability. One way a company can reduce cost is by outsourcing logistic activities (Green, Whitten and Inman, 2008)). This enables an organisation distribute its services in a competitive manner by eliminating unnecessary costs that may add up if it undertakes the distribution activities itself.

In conclusion, companies cannot just operate alone. They need to link with other companies in order to offer value to the customers.in addition, in order to boost their competitive advantage; companies seek assistance from other companies in order to supply quality products and services. This can be done through logistics and supply chain management. Logistic management and supply chain management are considered different terms with different meanings. Logistic is considered a subsection of supply chain management and involves the management of business, service, event as well as military logistics (Coyle et al. 2008). Both terms may have a strategic importance in the manufacturing and service sector. For instance, logistics and supply chain management have the ability to add value to organisations through economic utility. Also, they both give an added advantage to both the resources and expertise of an organisation and boost competitive advantage of an organisation.

References

Christopher, M 2011, Logistics & Supply Chain Management, 4th edition, Prentice Hall, Edinburgh Gate, Harlow UK

Coyle, JJ, Langley, CJ (Jnr), Gibson, BJ, Novack, RA, Bardi, EJ 2008, Supply Chain Management: a logistics perspective, 8th edition, South Western CENGAGE Learning, Mason, OH, USA.

Esper, TL, Fugate, BS & Davis-Sramek, B 2007, ‘Logistics learning capability: sustaining the competitive advantage gained through logistics leverage’, Journal of Business Logistics, Vol. 28, No. 2, pp. 57-81.

Fawcett, SE, Ellram, LM, Ogden, JA 2007, Supply Chain Management: From Vision to Implementation, Pearson Education, Upper Saddle River, NJ, USA, Chapter 1

Green Jr., K.W., Whitten, D. & Inman, R.A 2008, ‘The impact of logistics performance on organizational performance in a supply chain context’, Supply Chain Management: An International Journal, Vol.13, No.4, pp.317-327.

Larson, P & Halldorsson, A 2004, ‘Logistics vs. supply chain management: an international survey’, International Journal of Logistics: Research & Applications, Vol. 7, No.1, pp.17-31.

Mentzer, J., Stank, T., & Esper, T., 2008, ‘Supply chain management and its relationship to logistics, marketing, production and operations management’, Journal of Business Logistics, 2008, Vol. 29 Issue 1, pp. 31-46.

Willersdorf, RG 2007, ‘Adding value through logistics management’, Logistics Information Management, Vol.3, Issue 4, pp. 6-8.