Supply Chains and Logistics Essay

This essay examines the relationship between supply chain management and logistics, highlighting the challenges and trends that arise when operating globally. It analyzes the framework of supply chain management, explores the impact of globalization on the industry, and discusses the importance of understanding cultural differences in global supply chain operations.

SUPPLY CHAINS AND
LOGISTICS ESSAY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Supply chain is a system of people, organizations, information, activities and resources
involved in moving services or products from supplier to customers and logistics is simply
implementation and organization of complex operations or flow of things between origin point
and consumption point for meeting customers and corporation requirements. Both supply chain
and logistics have major impact if they want to operate globally. This essay will cover details
about Supply chain management and logistics and will explain all the challenges business
manager will face towards establishment of operations of supply chain and logistics in different
countries globally( Brandenburg & et.al., 2014 ). This essay will also show relationship between
supply chain and logistics, framework of supply chain management, different trends in supply
chain and logistics, problems which arises when operate globally, cultural effect on supply chain
will be explained in the essay.
MAIN BODY
Supply chain is a system of people, organizations, information, activities and resources
involved in moving services or products from supplier to customers. Supply chain management
is basically the management of flow of services, goods and all the process which includes raw
material transformation into final product. Supply chain management is a representation of
suppliers efforts for implementing and developing supply chain which are economical and
efficient as possible. Everything including product development to production of products to
information system required for directing these undertakings. So basically it can be said that
supply chain management is monitoring, controlling, planning, executing supply chain activities
with a simple objective of building a competitive infrastructure, creating net value,
synchronizing demand and supply and measure daily performance. It is heavily drawn from areas
like system engineering, industrial engineering, logistics, operations management, information
technology, procurement, marketing and fights for an integrated approach. Supply chain is an
organization network which is involved through downstream and upstream linking, in different
activities and processes for service and product production for the customers( Fredendall, & Hill,
2016 ).
Whereas Logistics is simply implementation and organization of complex operations or
flow of things between origin point and consumption point for meeting customers and
corporation requirements. Logistics resources can include materials, food, equipment etc. and
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also intangible items like information. Physical item logistics normally include integration of
material handling, information flow, packaging, information flow, transportation, inventory,
security and ware housing. Logistics mainly covers transportation, network design and inventory
management where transportation includes decision of mode of transportation like rout,
schedule,mode of transportation, shipment size and destination address where it has to be send,
inventory includes manner in which inventories are management and at last network design
includes location, facilities size, market demand and according to all these points path of product
to its destination is designed. It is simply a part of supply chain management that implements,
plans efficient and effective storage and flow of services, goods, products, information to
customers from supplier according to the need of customers. Both of these can be used for
business processes for customers through suppliers who provide services, products, information
and many more things that add value of stakeholders and customers.
Relationship between supply chain and logistics
Historically if relationship between supply chain management and logistics is seen then
supply chain management originally originated from development in logistics. Then it was
analysed that activities involved are analysed, encompassed and are interconnected in both
concepts( Grant, Wong & Trautrims,2017 ). One of the assumption about both are that SCM is
bidirectional flow of information, services, goods and products between companies involved in
the chain whereas logistics controls and implements efficient and effective storage and flow of
information, services, goods and products. According to this supply chain management consist of
more functions than logistics do. It is also said that these both have three types of relationship
first id direct relationship where suppliers and customers are directly connected to the
organization. Second is extended supply chain where suppliers supplies their product to another
supplier and they supply it to organizations and then that product is delivered to initial customer
who deliver it to final customer. Third relationship is ultimate supply chain where many other
third parties are involved like third party logistic supplier, financial providers, research firm who
research about the market and all these parties are directly connected to the organizations( Hazen
& et.al., 2014 ).
But there are also many contradictions and issues between both. Involvement of supply
chain management in defining its structure creates framework inside all the operation taken place
inside logistics. For example: If distant supplier are involved then it increases transportation cost
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and time( SCM affecting logistics). If transportation method which involves shorter time is used
then the organization may need to outsource distant suppliers without risking the inventory cost.
Despite of these relationships between SCM and logistics there are many differences
between them such as: Objective of both SCM and logistics is different like SCM focusses on
competitive advantage whereas logistics focuses on customer satisfaction. In Supply chain
management many organizations are involved while in logistics only one single organization is
involved. SCM is a broader concept which involves connection from ultimate supplier to
ultimate customer and new version of logistics whereas logistics is a fractional part of SCM and
an older version which only deals with goods management in a better way( Christopher,2016 ).
Framework of SCM
Framework of supply chain management focusses on inter-related nature of supply chain
management and need of several step process to successfully manage and design a supply chain.
Framework of SCM consist of three elements completely inter-related to each other: network
structure, business process and management components. Network structure of supply chain
identifies key members of supply chain and link them with each process. Business process of
supply chain focusses on the processes which should be linked with each of the supply chain
member and activities that produce a specific output for customers. Management components of
supply chain focusses on management and level of integration should be applied for each process
and manage and integrate all the business processes across the supply chain. All the three
elements are interconnected to each other and together make a framework of supply chain
management.
Today integration and interaction among companies, people and government has increased
worldwide which is known as Globalization. It is a multifaceted and complex phenomenon
which is a form of capital expansion by integration of national and local economies into
unregulated and global market economy. As nowadays transportation of products and
communication technology is growing due to which globalization is also growing. It also has its
effect on supply chain and logistics( Mangan, Lalwani & Lalwani,2016 ). Global supply chain
management can be defined as distribution of services and goods globally to maximise profit.
Global or international supply chain management focusses on organizations and companies
which are trans-national. For global or international supply chain to be successful it need to
comply with different international regulations set by non government organizations. All the non
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government and government organizations which creates and enforce laws and regulations plays
a main role in deciding which company should abide by.
Trend in Supply chain and logistics
There are many technologies factors which are trending nowadays which can affect the
development and shape of supply chain in the future but there are few main trending
technologies which are commonly used nowadays( Wang & et.al., 2016 ).
Digitalization of supply chain: Digitalization is a process which uses current technological
solution together with many other digital assets for designing logistics practices. Through this
process they can easily adjust themselves to the high competition and their business
environment. Digitalization also improves speed, time, reliability of operations for high revenue
and customer satisfaction level.
Artificial Intelligence: There are many applications available of AI which can be used in supply
chain especially on their warehouse management or on transportation like using navigation, self
driven cars etc.
Wearable devices: These are the devices which are worn by people. If these devices are
connected to cloud technology then employees can enter data or access data in real time. These
devices help companies to maintain there database and warehouse to maintain and control their
inventories.
Use of SaaS in the supply chain: Software as a service model is used in supply chain and
logistics management frequently nowadays as cloud computing in rising hand in hand. It is the
most secure and safe technology which provides pay per use facility which reduces high fixed
cost of systems upgrade, maintenance and all the infrastructure related cost.
As these technologies has improved supply chain management and logistics then there
are also some problems which has arisen due to globalization and has affected global logistics
like:
Changing customer needs: As the technology customers need and requirement has also
increased. They need complete transparency and all the stages should visible to them with good
quality( Hugos, 2018 ).
Security: It is the major concern nowadays especially in this industry as they are passed from one
service provider to another, kept in local warehouses and transported and delivered in the
globalization process distribution of services and goods to the customers is very crucial which
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increases the security threats. Due to globalization many companies are focusing on outsourcing
which has increased the risk as well as it has also impacted the supply chain.
Impact of globalization on Logistics and supply chain and current trending technologies
have an impact on supply chain and logistics and can be explained by different ways such as:
1. PESTLE Analysis
PESTLE consist of factors which has a positive as well as negative effect on an
organization. PESTLE analysis consist of political, economic, social, technological, legal and
environmental factors.
Political: political factors are one of the most important factor which impact an organization.
Political factors includes political stability, policies, foreign trade policy, labour law, tax policy,
environmental laws, trade restrictions etc. All these factors affect the way an organization does
business in that country like importance of mode of transport and political stability in a particular
country affects the business of the company. Safety regulations and laws also affects the
business.
Economic: Economic factors are also important to do business in an organization. Economic
factors includes economic growth, exchange rates, interest rates, inflation and disposable income
of the customers in that country. All these factors determine the aggregate investment and
demand of that sector in that country. There is also an important factor which determines the
business in a particular country is the unemployment rate in that country. All the macro
environmental factors deals with the management of demand in a particular country in the
current economic stage and micro environmental factors deals with how people spend their
income( Fernie & Sparks, 2014 ).
Social: Social factors affects an organization by attitude and shared belief of a particular
country's populations. These factors include population age, growth, carrier, health and many
more. Demographics and skills of population also affects the business, hierarchy, class and
power structure of society, leisure interest of people, education level of that country.
Technological: As it is already discussed above technological factors affect the way of doing
business and affects the company. In this industry there are many technological factors which
affects the company as transportation, digitalization, warehouses, rate of technological diffusion.
Mainly it affects the value chain structure of this industry, it also affects the product offering to
the customers.
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Legal: Legal factors also affects the company in any ways by following factors like equal
opportunities, health and safety, customers laws and rights, advertising standards, product safety
and product labelling. It states that companies need to know what is not legal and what is legal to
do business in that country. If an organization need to trade successfully then they need to abide
by all the rules, laws and regulation of a particular country.
Environmental: This factor has come into picture recently in last fifteen years. This factor has
become important due to increasing pollution, scarcity of raw materials, ethical and sustainability
issues in doing business and especially carbon footprints which is set by government of all
countries. These are the factors which marketers are facing very much( Rajeev & et.al., 2017 ).
2. Industry Globalization Drivers;
There are four sets of globalization drivers, which underlines conditions of each industry
and create potential for that particular industry. It includes four sets like Market drivers, cost
globalization drivers, competitive drivers and government drivers.
Market Drivers: One of the main aspect of globalization is to cover customers needs. As
nowadays similar product and service demand is increasing in different parts of the world, this
has increased the opportunities for companies through global marketing of products and services
which offers more or less standardizing offerings. Preferences, taste and needs of customers
greatly affects the product and are dependent on many factors like cultural variables, country
income and the degree at which local products are used or consumed. This applies to both
customers and industry services and products. Large customer base demands same level of
quality and service no matter where in the world they are. These factors affect the supply chain
and logistics as the preference, need of customers changes continuously.
Cost Globalization Drivers: Customers needs and opportunities for standardization affects the
economies of many organizations specially service industry like logistics and supply chain.
Economies of scope and scale, experience effects differences in cost of the product development,
sourcing in different parts of the world all these factors has a grater effect on global strategy.
Global economies have far reaching effect on global industries this has created barrier to entry
for new entrant especially for service industry organizations( Kozlenkova & et.al., 2015 ).
Competitive drivers: characteristics of an industry like import and export volume, extend to
which all the big industries has globalized their operations and many more characteristics has
affected the potential of an industry at global level including logistics and supply chain.
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Competitive diversity, high trade level, interdependence has also increased the potential of any
industry to enter globally. Change in industry and competition level has increased the
competitive advantage for large organization.
Government drivers: there are many government drivers like absence or presence of favourable
trade policies,laws and regulations, standards, competitors affects other elements of global
strategy and are important in global competitive environment in the industry. Each company
need to rely on the government policies and standards for the competition.
3.Strategic Outsourcing: Globalization in supply chain and logistics has pushed the companies
to consider outsourcing as an option. When an organization decides to outsource they become
completely dependent on the supplier for that particular process. Outsourcing in supply chain
management is an activity of an organization to outsource the entire supply chain management to
an external organization who specializes in that particular area. It helps to minimizing the overall
cost and focus on its core competencies, meed customers requirement with more efficiency and
gains a flexibility of operating and maintaining their supply chain. When an external
organization completely manages the supply chain of another organization it increases issues for
the main organization they might need to face. If integration of both the organization is taken
care of and that organization has prior experience in that particular area then the main
organization can gain strategic advantage of that outsourcing, also they can focus on other
business aspects, customer demands can be meet, can gain more flexibility. But this outsourcing
also has some disadvantages like integration difficulties, quality of the service, can increase the
anticipated cost( Gonzalez & Jabbour, 2017 ).
Cultural effect on supply chain
As globalization is increasing efficient and effective movement of goods has become
very much important. People must realize cultural differences to develop strong work
relationship. If cultural differences are not accepted then it can create misunderstanding, money
loss, contract loss etc. in logistics and supply chain people mostly face cultural issues because of
global environment. To handle these differences people must be open minded and react
accordingly. Language is not only the problem which a company faces if they are operating
globally but miscommunication and misunderstanding between global partners can also lead to
disruption in supply chain. Patience in operating globally is very important, team working also
helps to improve global operating decisions. Culture in different countries must be accepted by
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the organization if they are operating globally to manage their supply chain and logistics. These
factors also affects the transportation of products and marketing way in different countries as it
will affect the relationship between suppliers and importer included in the supply chain. So
knowledge and understanding of overseas culture is important if a company wants to operate
successfully globally( Ellram & Cooper, 2014 ).
CONCLUSION
From the above essay it has been summarized that globalization has both positive and negative
effect on supply chain and logistics. Then relationship between logistics and supply chain has
also been explained as logistics is a part of supply chain management. Framework of supply
chain has also been explained. Different trends in supply chain and logistics when operating
globally has also been explained and problems arises when operating globally are explained with
different analysis methods like PESTLE, globalization drivers and strategic outsourcing at last
cultural effect on supply chain management had also been explained in the essay explained
above.
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REFERENCES
Brandenburg & et.al., (2014). Quantitative models for sustainable supply chain management:
Developments & directions. European journal of operational research. 233(2). 299-312.
Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. CRC Press.
Grant, D. B., Wong, C. Y., & Trautrims, A. (2017). Sustainable logistics and supply chain
management: principles and practices for sustainable operations and management.
Kogan Page Publishers.
Hazen & et.al., (2014). Data quality for data science, predictive analytics, and big data in supply
chain management: An introduction to the problem and suggestions for research and
applications. International Journal of Production Economics. 154. 72-80.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain
management. John Wiley & Sons.
Wang & et.al., (2016). Big data analytics in logistics and supply chain management: Certain
investigations for research and applications. International Journal of Production
Economics. 176. 98-110.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Rajeev & et.al., (2017). Evolution of sustainability in supply chain management: A literature
review. Journal of Cleaner Production. 162. 299-314.
Kozlenkova & et.al., (2015). The role of marketing channels in supply chain
management. Journal of Retailing. 91(4). 586-609.
Gonzalez, E. D. S., & Jabbour, C. J. (2017). Advances in supply chain and logistics management
for a more sustainable society: An introduction. JOSCM: Journal of Operations and
Supply Chain Management. 10(1). 1.
Ellram, L. M., & Cooper, M. C. (2014). Supply chain management: It's all about the journey, not
the destination. Journal of Supply Chain Management. 50(1). 8-20.
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