Global Logistics And Supply Chain Management Essay

Question:

Discuss about the Global Logistics and Supply Chain Management.

Answer:

Introduction:

Global logistics refers to the process of transporting the products or goods from one point to the end user. Global logistics has been referred to as a management process which analyses the resources procured, stored & transported. In order to be effective, proper supply chain management (SCM) shall be practiced within the company (Bloomberg, LeMay & Hanna, 2002). With the implementation of global logistics will lead to reduction the cost thereby increasing the efficiency of the company at large. Global logistics analyses and implements the efficient flow of goods from one point to another i.e. point of origin to point of destination. Global logistics refers to as a fundamental process which deals with the relationship between supplier & buyer. For example, global logistics in an oil and natural gas industry refers to the process to store, manage transport petrochemicals. The process analyses the costs & benefits of various options such as pipelines, and create an optimum solution of the circumstances (Mangan, Lalwani & Butcher, 2008).

Supply Chain Management (SCM) & Logistics:

Supply Chain Management (SCM) refers to the process of planning, designing, controlling & implementing the various business processes in relation to manufacturing, procurement & sales and distribution so as to fulfill the business functions. The activities mentioned above are inter linked and co-ordinated with the supply chain experts to move the raw materials into finished goods and distributed to various locations across the globe (Shahin, 2010). Logistics is referred to as the backbone of supply chain. Logistics refers to the free flow of goods from suppliers to the ultimate consumers. This involves range of activities such as documentation of the data, free flow of information from one point to another. Logistics plays a vital role in the procurement of the goods & services from point of distribution to point of sale. The flow of goods or products is done by using range of transportation services such as road, rail, air, water to hold the inventory from being moving forward locations. This process involves various intermediaries such as agents, agencies, suppliers & customs department. Therefore, it can be said that Logistics is an integral part of supply chain management (SCM). Logistics and Supply chain management (SCM) go hand in hand (Lummus, et al 2001).

Origin of Logistics & Supply Chain Management (SCM)

The origin of logistics can be seen with regards to the military and defense organizations. It shall be kept in mind that, defense departments make use of the extensive planning which helps to gather men and move the goods from one base or location to another. The success of the defense organizations can be judged on the basis to gather information and use the data to support the units in a simultaneous manner. Similarly, the success of any organization depends upon the visibility and control over its logistics process which is termed to be a backbone for any enterprise (Tokar, 2010). In most the cases, supply chain management (SCM) and logistics are referred to as one. Though, both the aspects are interlinked but this does not mean that they share a similar meaning. The supply chain management (SCM) refers to a design which helps the organization to have a detailed plan & strategize the procurement strategy, develop a fair distribution system, well equipped network to transport the finished product. In case of production procurement, supply chain management (SCM) will be referred to a process of selecting the appropriate vendors, procurement strategy along with lead time to supply the goods on floor (Voudouris, 2008). Logistics in this case means to decide the mode of transportation, data & documentation, transit time & monitoring the flow of goods and services. In case of finished goods, supply chain management (SCM) means to define the network design along with other distribution channels. It deals with third party logistics, distribution network, establish distribution center and plan for further inventory.

Development of logistics as a business function

Logistics has been referred to as vital for every business. It has been rendered to as one of the important business function in any company. In case of big global corporates, shipping department has been referred to as the main focus in the success of the company. Logistics in the 21st Century touches each and every aspect of the company’s day to day operations. Logistics is essential aspect in the company’s competitive strategy & survival (Voudouris, 2008). Logistics has been referred to as the critical aspect evolved in the complex business environment. In today’s world, the term logistics is referred to as the process of effective & efficient flow of goods and services from one point to another. Supply chain is referred to as an important aspect covered under logistics which includes, shipping, receiving storage, transportation and managing the above mentioned areas.

Logistics is important to the company as a small business also needs to find a supplier to transport its goods from one point to another. Small business owners also conduct inventory & warehousing logistics functions (Drzymalski, 2012). Irrespective of the size of the business, logistics help the company to utilize its supply chain in the best possible manner. Logistics is the main function of the company & supply chain is referred to as a complex and fragile endeavor. Logistics management requires a professional approach i.e. to transport the goods from one point to another in the minimal possible time. Logistics & supply chain management (SCM) helps in making business an effortless job.

Global logistics in context of supply chain

Global logistics is that part of supply chain management (SCM) which deals with planning, implementing and controlling the effective as well as efficient forward & reverse flow of goods and services between points of origin till it reaches point of destination. Logistics therefore involves transportation, inventory, storage, materials, communication with the third party & information within and outside the company. With time, logistics has been referred to as a source of competitive advantage (Rushton, Croucher & Baker, 2010). Global logistics management helps the customer to attain competitive advantage & satisfaction amongst the customers with timely delivery of the product at the point of destination. Logistics management has evolved in the recent years within the competitive business environment. The modern era of logistics management takes into consideration the following sub – divisions i.e. transportation network, data & documentation, procurement of the materials, customer service, order management and fulfillment, warehousing techniques, inventory management and materials management.

Importance of both (logistics and SCM) in manufacturing and service context

Logistics in manufacturing context: Based upon various manufacturing insights report, there are two main aspects to be kept in mind by the manufacturers i.e. use of technology & operations. These two aspects will help the company to focus upon its efficiency in the long run. Therefore, in order to increase the efficiency the manufacturing company shall practice a fair logistics system to transport the inputs from one point to another (Rushton, Croucher & Baker, 2010).

Supply chain management (SCM) in manufacturing context: Supply chain management (SCM) has been referred to as a systematic approach which helps to manage the goods from producers (raw materials) to the ultimate customer. Supply chain management (SCM) affects the manufacturing companies in various ways i.e. how the companies interact with the suppliers or customers & cost and profits of the manufactured product. Effective SCM helps to ensure that the raw materials arrive at the destination in the stipulated time (Kathawala & Abdou, 2003). Whereas, on the other hand a poor SCM might lead to a halt in the manufacturing process. It shall be seen that, if the supply chain breaks in the middle i.e. before the arrival of the inputs the supplier would be required to arrange the inputs quickly resulting in high prices & low profitability. Lowering the distribution cost has been referred to as an important aspect of the supply chain management. With the help of cost effective supply chain, the manufacturers will be able to reduce the overhead costs & direct sales at the same time (Frazelle, 2002).


In today’s competitive business environment, manufacturers use various new technologies such as use of fuel efficient vehicles, navigation systems with the drivers, cost effective order processing machines so as to lower down the costs and boost the overall profitability of the company. Manufacturing managers tend to find a balance between owned distribution systems & contractor services. It shall be seen that, building in house distribution system is a costly affair when it comes to repair & service the vehicles. But, this provides the company full control over its supply chain. On the other hand, relying upon the contractors can be referred to as a reasonable process but high levels of risk are involved in the same. Modern manufacturers tend to squeeze every ounce of the production process in order to remain competitive in the global market place (Drzymalski, 2012). Various quality improvement techniques such as six sigma, supply chain dynamics, collaboration between suppliers & customers have been introduced to practice a smooth SCM. Just in time is another supply chain technique where in automatic processing is done between computers at the supplier’s and users end. This involves less payment processing time and new orders would be delivered in an efficient manner to the end user without any human interaction.

Logistics in service context: The service sector is not only the dominant sector which plays an important role in the GDP of any country but it plays a crucial role in foreign investment flows and large scale employment. Some of the activities covered under the service sector are hotel & hospitality industry, transport, storage, insurance, real estate & social and personal services (Coyle & Coyle, 2009). For example, in case of courier services logistics plays a crucial role in delivery of the courier to its point of destination within the stipulated time. Use of various means of transport such as road, rail, water, helps to attain remarkably in this sector.

Supply chain management (SCM) in service context: Building a strong foundation for supply chain in the service sector has been referred to as a crucial aspect. Supply Chain management (SCM) is applied in the service sector to provide customer satisfaction & success of the company in the long run. Supply chain management (SCM) is critical to business operations and success of the company as a whole. Supply chain management (SCM) touches various aspects such as growth in the multinational companies, expanding globally, fluctuations in the market & strategic partnerships. Supply chain management in the service sector is mainly concerned with planning and managing the activities from raw materials to finished products. It includes range of activities such as support functions to deliver the goods to the ultimate customer in the stipulated time frame. Supply chain management helps the service organizations to improve customer satisfaction & reduce the operational costs (Coyle & Coyle, 2009).

Conclusion

Hence, it can be concluded that Supply Chain Management (SCM) refers to the process of planning, designing, controlling & implementing the various business processes in relation to manufacturing, procurement & sales and distribution so as to fulfill the business functions. The activities mentioned above are inter linked and co-ordinated with the supply chain experts to move the raw materials into finished goods and distributed to various locations across the globe. Logistics is referred to as the backbone of supply chain (Bowersox Closs & Cooper, 2007). Logistics in the 21st Century touches each and every aspect of the company’s day to day operations. Logistics is essential aspect in the company’s competitive strategy & survival. Logistics has been referred to as the critical aspect evolved in the complex business environment. In today’s world, the term logistics is referred to as the process of effective & efficient flow of goods and services from one point to another.

References

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Coyle, J. and Coyle, J. (2009). Supply chain management. Mason, OH: South-Western Cengage Learning.

Drzymalski, J. (2012). Supply Chain Frameworks for the Service Industry: A Review of the Literature.European International Journal of Science and Technology, 1(3).

Frazelle, E. (2002). Supply chain strategy. New York: McGraw-Hill.

Kathawala, Y. and Abdou, K. (2003). Supply chain evaluation in the service industry: A framework development compared to manufacturing. Managerial Auditing Journal, 18(2), pp.140-149.

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Rhonda R. Lummus, Dennis W. Krumwiede, Robert J. Vokurka. (2001). The relationship of logistics to supply chain management: developing a common industry definition. Industrial Management & Data Systems, vol. 101(8), pp.426 - 432

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