SUMMARY
The mission of logistics management is to plan and co-ordinate all
those activities necessary to achieve
desired levels of delivered service and quality at lowest possible
cost. Logistics management, from this total systems viewpoint, is the
means whereby the needs of customers are satisfied through the
co-ordination of the materials
and information flows that extend from the marketplace, through
the firm and its operations and beyond that to suppliers. To achieve this
company-wide integration clearly requires a quite different orientation
than that typically encountered in the conventional organisation. The
last few decades have seen the introduction of flexible
manufacturing systems (FMS), of new approaches to inventory based
on materials requirements planning (MRP) and just-in-time (JIT) methods
and, perhaps most important of all, a sustained emphasis on total quality
management (TQM). Equally there has been a growing recognition of the
critical role that procurement
plays in creating and sustaining competitive advantage as part of
an integrated logistics process. Leading-edge organisations now routinely
include supply-side issues in the development of their strategic plans.
not only is the
cost of purchased materials and supplies a significant part of
total costs in most organisations, but there is a major opportunity for
leveraging the capabilities and competencies of suppliers through closer
integration of the buyers’ and suppliers’ logistics processes.
The supply chain and competitive performance
The supply chain is the network of organisations that are
involved, through upstream and downstream linkages, in the different
processes and activities that produce value in the form of products and
services in the hands of the ultimate consumer. Thus, for example, a shirt
manufacturer is a part of a supply chain that extends upstream through the
weavers of fabrics to the manufacturers of fibres, and downstream through
distributors and retailers to the final consumer. Supply chain management
is not the same as ‘vertical integration’. Vertical integration normally
implies ownership of upstream suppliers and downstream
customers. Everything else is ‘outsourced’ – in other
words it is procured outside the firm. So, for example, companies that
perhaps once made their own components now only assemble the finished
product, e.g. automobile manufacturers. Other companies may also subcontract the
manufacturing as well, e.g. nike in footwear and sportswear. These companies
have sometimes been termed ‘virtual’ or ‘network’ organisations.It must be
recognised that the concept of supply chain management, whilst relatively new,
is in fact no more than an extension of the logic of logistics. Logistics management
is primarily concerned with optimising flows within the organisation, whilst
supply chain management recognises that internal integration by itself is
not sufficient.
The changing competitive environment
As the competitive context of business continues to change,
bringing with it new complexities and concerns for management generally, it
also has to be recognised that the impact on logistics and supply chain
management of these changes can be considerable. Much of this book will be
devoted to addressing these challenges in detail but it is useful at this
stage to highlight what are perhaps the most pressing currently.These are:
a. The new rules of competition
The fundamental difference from the previous model of
competition is that an organisation can no longer act as an isolated and
independent entity in competition with other similarly ‘stand-alone’
organisations. Instead, the need to create value delivery systems that are
more responsive to fast-changing markets and are much more consistent
and reliable in the delivery of that value requires that the supply chain
as a whole be focused on the achievement of these goals.
b. Globalisation of industry
A further strategic issue that provides a challenge for logistics
management is the continued trend towards globalisation. A global company is
more than a multinational company. In the global business materials and
components are sourced worldwide and products may be manufactured offshore and
sold in many different countries, perhaps with local customisation. Such is the
trend towards globalisation that it is probably safe to forecast that before
long most markets will be dominated by global companies. The only role left for
national companies will be to cater for specific and unique local demands, for
example in the food industry.
c. Downward pressure on price
Whilst the trend might not be universal there can be no doubting
that most markets are more price competitive today than they were a decade ago.
Prices in the high streets and the shopping malls continue to fall in many
countries. Whilst some of this price deflation can be explained as the result
of normal cost reduction through learning and experience effects, the rapid
fall in the price of many consumer goods has other causes. The need to take a
supply chain view of cost is further underscored by the major trend that
is observable across industries worldwide towards outsourcing. For many
companies today, most of their costs lie outside their legal
boundaries;activities that used to be performed in-house are now outsourced to
specialist service providers. The amazing growth of contract manufacturing
in electronics bears witness to this trend. If the majority of an
organisation’s costs lie outside the business then it follows that the
biggest opportunities for improvement in their cost position will also be
found in that wider supply chain.
Nama : Vinny Alifah
Kelas : S1 MLM C
NIM : 224412149
