Page 19 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes A strong and supportive value chain works like the traditional Japanese system, where members
of the chain look at the benefits that accrue to the entire value chain. Such cooperation is possible
and often seen in such value chains, e.g. increasing productivity, reducing stocks at different
levels, or process improvements etc., are undertaken by members of the value chain and the
advantages that accrue benefit all members of the value chain.

Self Assessment

Fill in the blanks:

7. The …………………… flow in a supply chain is concerned with the procurement, movement
and storage of materials and finished products.
8. Within the whole ……………………, there is only a certain value of profit margin available.
9. A …………………… is one of the most common sources of increasing the technological
competence of organisations.

1.4 Supply Chain Effectiveness

The effectiveness and value of the supply chain is determined by its ability to align with its
partners, whether they are service providers, employees, suppliers or distributors. The processes
and systems have to be set to common business goals. It includes the business activity analyses
that allow you to optimize processes, both strategic and operational. Supply chain effectiveness
is determined by some identified management traits that set them apart from others. These
traits include the following:

1.4.1 Strategy

It starts with strategy. Firms with best supply chains have a corporate strategy that drives
planning, tactical design, milestones and other steps in strategy development and
implementation. The supply chain organization builds on and around this. The supply chain
management strategy should enable firms to plan tactical operations and to prioritize suppliers,
customers and products.
Strategy sets the platform for supply chain execution if the supply chain members understand
the process crosses their company and extends beyond the company. The strategy has to be
about the flow of products and information, which stretches from suppliers through to store
shelves or to customer warehouses. If the company’s strategy means a significant shift in markets,
products or customers, then the supply chain must change.

Notes There is no such thing as “one” supply chain management approach and one-size
supply chain does not fit all.

The strategy is long-term and has a growth focus. The strategy must be dynamic, and must take
into account the resistance to change that can happen within companies. That means the supply
chain strategy must be a facilitator of change, be agile and able to recognize, incorporate and
adapt to drive toward the changes required.

1.4.2 Metrics

Results matter, but the right measures matter more. Performance management often gets lost in
the maze of supply chain initiatives. There are many new initiatives firms are taking in SCM:

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