Logistics supply chain management is one of the most contemporary and challenging concept in today’s business world. Due to increasing global demand of business; transportation, procurement, manufacturing, distribution activities increased tremendously. Now a day, major companies are focusing on SCM to reduce cost and constantly trying to develop new innovative strategy to meet consumer demand to achieve competitive advantage.
2 Definition of Supply Chain Management:
In short, supply chain management means, right product at the right place at the right time at the right measure and at the right quantity. For example, in a supermarket, if the consumer found in a product shelves, there is tag for the product but no product in shelves; what you think? Yes, that is because of poor management of SCM. More precisely, SCM is the management of inbound and outbound logistics process to integrate from procurement, suppliers, manufacturers, warehouse, distributors, transportation, and store in order to meet consumer demands.
3 Why Supply Chain Management is Important?
As global competitions are increasing customer have different choices & needs to satisfy demands. For example, if there are demand for umbrella in rainy season and if you asked supplier to deliver 20,000 umbrellas in summer and expected to receive at the beginning of rainy season; what do think would probably happened?
According to this scenario, say for example, supplier response lately after two weeks, slowly starting procurement and then starting production and supply the goods at the end of rainy season. As a result, in this case the buyer will face tremendous losses.
Let’s just think how can, we change our scenario with an effective strategy: consider the order of umbrella was given at the end of spring to deliver at the end of summer. Supplier response precisely, starting from procurement to distribution utmost efficiently and transported through freight within one week before ending summer. The delivery was on time and arrive within 30th days in summer. The buyer is happy to receive items on time and that allows the buyer to distribute products through distribution channel and, with the right forecasted of demand, buyer captures the market at the right time and making money.
In past manufacturers were known as the drivers of the supply chain as they were scrambling to meet customer demands at rapid pace but now customer is called the driving shots in a long term competitive advantage. To meet the customer demand accordingly, companies are shifting to customer oriented strategy (a bright example would be ‘Dell computer’). Hence, to achieve competitive advantage in the market, it’s necessary to deliver the product at the peak time.
4 Key Drivers of Logistics Supply Chain Management:
From the analysis different journal article, textbook, web research we found the key drivers are differ in according to different perspective, such as Globalisation, Sustainability, School IT Supplier Cost-awareness, Customers, Suppliers, Technology and Transportation.
The external forces (i.e. political, economical, socio-cultural, technological, legal and environmental), local competition, continuous policy and regulations changes, pressure from international brands and all affects to meet the consumer demand in market. Thus, companies are facing huge challenges to meet the requirements globally. Through the product barriers are eliminated, no products are now considering domestic products but due to globalization forces companies tend to change policy and strategy regularly. Besides, with the benefits from globalization now, foreign investor are encouraged to invest in several countries which forces local companies to improve quality of existing products which create huge challenges in procurement, manufacturing, transportation and distribution activities for the companies.