Logistics & Supply Chain Management | Discussion

1. Nowadays it is hard to imagine business without appropriately built supply chains and logistics structures. In short supply chain includes all the operations and asserts, which are needed in order to move the product or service to the customer. This is a huge mistake to think that it is enough just to organize the delivery of the end product of the customer. In reality there are a lot of operations included into the supply chain, which should be well coordinated in order to make the final products reach their customers. All products have their supply chains, but they are different due to their complexity degree. Supply chain has a great meaning for the successful implementation of the final goals of the company.

Usually there are three important things included into a supply chain structure: materials, information and money (cash). Only under the condition that all these three aspects move smoothly and in the correct direction, a company is able to organize correct functioning of its supply chain. The importance of the supply chain for business could be compared to the importance of nutrition for humans. Being more specific, it is important to mention that management of the supply chain is meaningful for reduction of the supply chain costs. Depending upon the amount of attention, paid to building the supply chain, the costs could be high or low. Effective management of supply chain would make them reduced and efficient. Those reduced supply chain costs could be perfectly used for other resources of the company. Operations management could be improved with the help of building stable supply chains, which would later have positive impact upon overall business functions. In many cases successful relations with customers are also dependant upon the supply chains. In such fields as sociology, economics, management and accounting there are a lot of theories of SCM. One of them is transaction cost economics. This theory is mostly focused upon consideration of the reasons of existence of the firms. In relation to SCM this theory aims at reduction of costs. “There are three attributes which influence a firm’s decision to make or buy: frequency of transaction, asset specificity and degree of uncertainty associated with a transaction.” (Pala 2013). The second theory is network perspective. This theory states that firms are dependant not only upon direct relations with their partners, but also upon the extended network of relationships with supply chain firms. According to this theory competitive advantage could be achieved only under the condition of effective and efficient organization of the network of supply chains. According to the social network theory it is important to consider social and behavioral aspects of various relationship types, for example individual-firm, individual-individual, firm –firm relations. Resource based view is the theory, which considered the firm’s resources and capabilities to be the most important assets. This theory is one of the most widely spread supply chain theories in theoretical literature. Principle agent theory is related to the governance and control mechanism structure of the company and its ability to mitigate the risks of conflicts of interests and information asymmetry. Game theory is rather a strategic approach, “which looks at the conflicting and cooperative behaviors of two intelligent and rational decision makers (supply chain firms in our case) for different scenarios (i.e.: win-win, win-lose, lose-win and lose-lose) to help with the strategic decision making.” (Pala 2013). Systems theory is a combination of the different components of complex supply chain, including capital, information, materials, human and financial resources, with the aim to create a subsystem, becoming later an integral part of a bigger system of supply chains. These are certainly only some examples of the supply chain theories and in fact there are much more theories, which are currently applied to SCM context in theoretical literature.

Strategy wheel is an important tool, which contributes into development of strategies of the companies. It is based upon the problem of determining the boundaries of the company and helps to involve all types of boundaries, which are needed, at a time. “Use of the strategy wheel should be preceded by a preparatory phase, in which relevant information about company’s products is gathered. Information about current developments concerning the supply, manufacturing and distribution is also gathered.” (Chicksand et. al., 2012). In order to formulate the corresponding strategy a number of activities should be performed. Usually they include creating of the list of offered products, identification of market requirements and needs of the customers, estimation of the satisfaction degree, definition of competences and knowledge, the limits of the supply chains flows, determining of the ability for the concrete company to perform certain tasks upon delivery of the raw materials or finished products, selection of the best range of products, provided by the enterprise, and establishment of goals for development of the needed infrastructure and skills.

2. Along with rapid development of global economy in the 21st century, the role of logistics is reconsidered, making logistics management critical for the companies. Logistics used to be a meaningful part of supply chain. “Logistics is defined as: “the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.” (Chicksand et. al., 2012). It is necessary to underline here that logistics strategy is not simply organization of moves of the products of services, rather this is a balancing act, which should be based upon thorough consideration of a number of variables. Thus in order to improve logistics for an organization is it advisable to consider the following factors: inventory management, purchasing practices, risk management and supply.

Information technology has penetrated into all life spheres, including business and organizations management. Generally information technology could be defined as the study, creation, design, utilization and management of computer-based systems, software applications and computer hardware.  Informational technology plays a meaningful role for the supply chain management, “in helping to restructure the entire distribution set up to achieve higher service levels and lower inventory and lower supply chain costs.” (Chicksand et. al., 2012). The current changes in the modern world economy are related to transformation of the relationship between companies and their customers, suppliers and business partners. Most of the companies are forced to apply IT developments in order to gain competitive advantage. Appropriate IT investments make the companies more efficient and sustainable. It could be applied in supply chain in a number of ways. First of all electronic commerce is developed nowadays as a range of tools for conducting business outside paper environment. It includes paperless data interchange, fund transfers, electronic publishing, images, shared databases and magnetic data capture. Electronic data exchange made the processing of all the needed data much quicker and easier for all companies, leading them towards cost efficiency and competitive advantage. Bar coding and scanners are used for check out counter, data warehouse is a consolidated data based, which is kept separately from the production’s system database. In addition there is a variety of enterprise resource planning tools. Along with great new opportunities, offered by IT technologies for supply chains, there are also some issues, related to them. Taking into consideration the complexity of data, uncertainty risk in supply chains becomes more evident. It could lead to increased vulnerability towards electronic risks. (Varma, Khan, 2015). 

Information technology has become an integral part of inter-organizational business exchange and thus has impact upon relations between organizations and suppliers. The role of IT is related to “the structural, action, and management layers of a relationship and shows how IT can be a strong element around which relationship management activities are implemented to improve the consistency and performance of the relationship.” (Makkonen, Mervi, 2014).

Overall, supply chain management plays vitally important role for organization’s functioning, introduction of innovative approaches, cost reduction and increase of efficiency along with the level of competitive advantage.

References:

Chicksand, D., Watson, G., Walker, H., Radnor, Z., and Johnston, R. (2012). Theoretical perspectives in purchasing and supply chain management: an analysis of the literature. Supply Chain Management: An International Journa, 17 (4), 454–472.

Craig, Thomas. (2017). Supply Chain Management. Six Issues That Impact Its Effectiveness. A Publication of Round Table Group

Makkonen, Hannu, Mervi, Vuori. ( 2014). The role of information technology in strategic buyer–supplier relationships. Industrial Marketing Management, Volume 43, Issue 6

Naslund, D. and Williamson, S. (2010). What is Management in Supply Chain Management? – A Critical Review of Definitions, Frameworks and Terminology. Journal of Management Policy and Practice, 11 (4), 11–28.

Pala. Mesut. (2013). Theories in supply chain management literature.

Varma, T.N., Khan, D.A. (2015). Information technology and e-risk of supply chain management. National Institute of Technology.

The terms offer and acceptance. (2016, May 17). Retrieved from

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"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: November 26, 2021]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: November 26, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 26, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 26, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 26, 2021]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: November 26, 2021]
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