Logistics was an unheard of topic in large firms until the recent past, although in today’s competitive market, global logistics and supply chain management are getting increasingly popular in boardrooms. The primary concept of logistics is to eliminate losses, and now the shift has surged to enhancing overall competitiveness. Global logistics and SCM focus on a miscellany of topics including lean supply chain, transportation management, warehousing, strategic sourcing, and performance based logistics, management of constraints, demand management and supply chain network design. The key aspects of supply chain management incorporate:
- Strategic management
- Logistics techniques and operations
- Modeling and support of supply chain decision
- Professional methods of research and development
- Freight transport management
- Retail logistics
Elements of Supply Chain Logistics
A typical supply chain is created of several elements which are associated through the movement of products. The SCM begins and ends with the customer. Here are the key elements of the supply chain:
Customer
The customer is the beginning of the chain even when they want to purchase a product which the company offers. With the customer’s instructions, the sales department enters an order.
Planning
The sales order of the customer triggers the requirement which makes the planning department create a production plan for producing products to fulfill the customer’s order. Then the raw materials are purchased.
Purchasing
The purchasing department receives the list of services and raw materials for completing the orders of the customer.
Inventory
The suppliers provide the raw materials which are checked for quality before moving into the warehouse.
Production
On the basis of a production plan, the raw materials are moved from the inventory and moved into the production area. The customer orders the finished products which are made with the raw materials that are purchased from the suppliers.
Transportation
Once the finished product is delivered at the warehouse, the shipping department determines the most efficient process of shipping the product to maintain the delivery date.
Rethinking Operations
The purpose of global logistics and supply chain management is to render a competitive edge to your business through core competencies. The present day business climate has changed rapidly, becoming increasingly competitive with each passing day. To survive the competition, businesses not only need to focus on operating at lower costs, but also develop their core competencies to distinguish them from the competitors so that they can stand out in the market. While the competitive edge is being created, companies should divert their resources to focus on their key areas, outsourcing the process and tasks which are not crucial to the overall objectives of the company.
With SCM, these processes can be reevaluated so as to restructure them to focus on their core strengths and outsource the procedures that do not fall within the ambit of the regular competence level of the organization. Given the dynamics of the present day competition, this is the only method of survival for the companies. The strategies influence the market positioning of a company as well as helps the firm choose partners wisely. It can even create specific niches and specialize in core areas. The secret is to focus on the overall picture to divulge the process through which elimination, creation and development are fostered.
