Publisher's Synopsis
A couple of decades ago, few companies focused on supply-chain management and logistics. Because of globalization, distribution enjoyed much of the focus. Various techniques and methods were developed to control costs and to improve sales. These past 20 years have seen growing understanding and focus on supply chain management. Today, Supply Chain Management and logistics are considered mainstream in strategic planning and decision-making. Supply-chain and logistics management is leveraged to attain competitive advantage. Traditionally, the aim was to reduce costs by achieving economies of scale. However, today the focus on value creation and its delivery are in focus. Another significant change is of managing relationships with all partners of complex network chains. We may be right in saying globalization has fueled intense market competition, which has further made the markets volatile, uncertain and dynamic. These dynamic and uncertain markets demand companies to cope-up turbulent markets. Hence, companies acquire flexibility and responsive supply chains.
As the actual costs of satisfying the customer are usually considerable, it is difficult to calculate these costs. Some costs are tangible and others intangible. As the costs vary company to company, sector to sector, industry to industry and region-to-region, the total costs of Managing logistical operations is 10% of total gross domestic product (GDP) of United States of America (State of Logistics).
The aim and objective of a supply chain is quite simple: to match supply and demand. However, given the uncertainties it is a difficult task to achieve. Uncertainties and vast marketplace today makes it strenuous to conduct the business on forecasts. The product lifecycles are getting shorter, huge demands with variety and competitive pressures demand companies to be innovative and be able to respond to changing demands of the market in a faster way.
To achieve this, companies have to be agile (adjusting to market quickly) in their processes and organizational structure. There is another technique developed by Toyota in Japan famously know as Lean Technique where companies try to have just-in-time deliveries. The aim of lean management is to eliminate waste and reduce inventories.
‘Time is money' is a cliché well versed over the world but it does hold true in business, even more for logistics management. There is a direct proportionality between the length of supply chain, inventory and cost. Companies having longer lead times are less responsive and have potential risk of losing sales.
Supply chains traditionally were a group of disconnected departments, processes, activities and elements. Internal elements off of a supply chain followed a philosophy to optimize departmental efficiencies. This created gaps and differences between functions on the entities of supply chain. A smaller end-to-end supply chain is competitively easier to manage and is responsive.
Information plays a vital role in making a supply chain responsive. Sharing information helps integrating supply-chains; it improves coordination and collaboration. We discuss in this book how supply chains have transformed into demand chains or supply networks. Companies guard core activities and outsource the rest. Thus, to manage this complex network, information flows are necessary. Information technology helps connecting and linking activities, processes and entities in a supply chain. Making use of technology processes are simplified reducing lead-times considerably. Information Technology helps installing information systems, which can not only improve information sharing in quick time but also analyze the data. Information systems can help in making rational decisions based on marketplace information. This further enables companies to respond to customer demands and market fluctuations in a timely manner.
Supply chains are no longer a group of independently working entities; current supply chains are integrated set of processes and activities, which function in a synchronized manner. Companies source worldwide, they have the facilities like manufacturing, distribution offshore this makes it difficult manage the entire supply network. Although, globalization offers larger market space, it comes with a few challenges. Markets across the world vary and companies have to categorize and design products as per regional requirements and demands in each place. This requires excessive coordination and collaboration to manage logistical and supply chain activities.
To be successful in current turbulent markets, companies need to transform their organizational structure, strategic, managerial and operational level planning. Many leading companies have radically redesigned processes to achieve significant results. Shortening of product lifecycles, has made time to market a very critical factor. Just in time and flexible manufacturing enables companies to produce as per fluctuating market demands, but companies have to develop systems, which can respond to market situations.
The biggest change in recent years is that companies no longer compete as independent entities, instead the competition is on the basis of supply chains. Companies merge, acquire and takeovers have changed market conditions. A growing demand for better customer service and quality the market has changed from a supplier's market to a buyer's market. Most of the markets have become commodity markets, where the availability of products at lower costs with better service and quality is the expectation. Companies failing to provide any of the order winners will potentially lose the customers to the competitors. Availability of substitute products and brands increases consumers bargaining power compared to the suppliers, manufacturers.
In order to understand logistics and supply chain management in a context of current market conditions and current trends a solid foundation of logistics and supply chain management is essential. This book is an attempt to highlight the changes in comparison with traditional methods. We have listed and explained basic concepts in logistics and supply chain management. It can be used as a guide to understand the role and importance of logistics and supply chain management in an organization. We have paid special attention of the context included in the book. This book focuses on the basics of logistical and supply chain concepts, recent advancements and new philosophies used. The book's language has been kept simple to make sure understanding of concepts is easy.
The chapters of this book are arranged in a manner, starting from basics of supply chain management and logistics. Initial chapters focus on supply chain management nd logistics management understanding and a comparison between old ways of looking at SCM and logistics and recent changes brought in outlook. As we move ahead with chapters we have tried to detail almost all-important aspects and elements playing role in supply chain management, their contribution and impacts on logistics and SCM.
