Supply Chain Management: Principles, Logistics, Location Models and Factors

SUPPLY CHAIN MANAGEMENT
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
QUESTIONS...................................................................................................................................3
1. Summary of key ideas.............................................................................................................3
2. Supply chain management principles and its role in supporting competitiveness..................4
3. The role and contribution of logistics in the achievement of supply chain goals and
objectives.....................................................................................................................................6
4. Location models and factors affecting location selection........................................................7
5. Contemporary issues related to international logistics and transport......................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Supply chain management (SCM) is defined as the process of managing and organising all
resources, people and activities for ensuring the continuous flow of goods or services to
customers (Langley and et.al., 2020). It regulates various stages involved from acquisition of raw
materials to final delivery of products so that cost, time and resource wastage can be controlled.
Nestle is world’s largest beverage and food service providers which operates all over the world.
Organisation’s SCM has made it possible for it to render more than 2000 brands in almost every
country of the world. This report will discuss the case study of Nestle to understand the
principles of supply chain and contribution of logistics in it. It will also discuss various logistic
related issues and locations models so that uninterrupted supply chain can be ensured.
QUESTIONS
1. Summary of key ideas
The case study of Nestle has highlighted the following key concepts which plays
significant role in the success of organisation by providing competitive advantages.
Supply chain: It is the defined as the set of various activities involved in supplying product or
services from raw material to finished form to end user or customers. Supply chain may vary
from country to country depending upon multiple factors such as availability of raw material,
technology, external environment as well as processing method or relation between different
supplying phases.
Logistics: Another concept discussed in case study is logistic which involves process to manage
resource acquisition, storage as well as final delivery of products by using transportation
network. Like Nestle has different types of suppliers which ensure that its coffee products are
smoothly delivered to different parts of world (Lambert, 2017). Organisation uses good
packaging, pest control as well as good transport services to assure safe logistics.
Supply- demand: The prices of product is affected by various factors however organisations
such as Nestle are always willing to pay even higher prices for meeting the quality standards for
their products. In addition to this the gap between supply and demand has great impact on
deciding price so organisations always develop strategy to ensure adequate supply so that they
can get fair prices.
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Trading methods: For ensuring the continuous supply all over the world Nestle also employ
variety of supply methods such as direct trading or export (Jia, Gong and Brown, 2019). The
method chosen depends upon different factors such as cost, supplier or raw material availability
as well as pricing.
2. Supply chain management principles and its role in supporting competitiveness
SCM establish coordination between technology, resources, people as well as customers so
that organisations can render high value to customers. The management of logistics as well as
price adjustment and supplier relationship greatly affect the success and profitability of the firms.
Some of the key principles of SCM are as follows:
Collaboration: Nestle supply chain ensure that it has good communication and collaboration
with its customers and other stakeholders. Coffee beans are agricultural products and are green
beans which need great processing and actions before final product. Thus Nestle ensure at every
stage that it has direct relation with farmers as well as processors so that good quality products
can be prepared (Kozma, Varga and Hegedüs, 2019). It not only makes brand faithful and
competitive but also makes business cost effective.
Flexibility: It is one of the key principle of supply chain. Unavoidable circumstances can
anytime affect the availability of raw material. Coffee being the agricultural product greatly
depends upon climate conditions. In most of the parts of world Nestle has chosen to follow only
direct buying from the farmers so that it can give fair prices to them and they are encouraged to
regularly supply coffee. However, in regions where direct buying is not possible organisation has
chosen other flexible means such as export or warehouses to facilitate the smooth supply. The
flexibility in supply chain help Nestle to have smooth network.
Specific customer needs: For greater advantage organisation must respond to unique needs of its
customers. The same customization is provided by Nestle to its worldwide and diverse customers
so that they can enjoy and easily access the global needs. For this purpose, organisation always
innovate creativity in network. For instance, use of technology in distribution and storage has
made services highly effective in terms of cost.
Forecast and prediction: For continuous supply organisation must have accurate resource
allocation and consistent forecasting in its demand and supply so that it can plan and act
accordingly. For instance, key resource for Nestle are coffee beans and thus climate changes or
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