SUMMARY SUPPLY CHAIN MANAGEMENT LOGISTIC

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