Supply Chain Management & Logistics
Marketing and business is an art in itself. Therefore for a successful running business, coordination of a lot of sub departments, focus, goal orientation and planning is required. The ‘marketing mix’ also known as the 4 P’s (product, price, place, promotion) is the prominent broad categories of marketing decisions. Smooth organized functioning of these along with two more critical functions, ‘supply chain management’ (SCM) and ‘logistics’ will result in promising outcomes.
The Council of Supply Chain Management Professionals (CSCMP) has defined Logistics as “The process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.” and they have defined Supply chain management as “an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high performing business model.”. Both terms are often used interchangeably, but however do have differences between them.
What is Supply Chain Management?
Supply chain management is a multi functional approach towards marketing where managing movement of raw materials into the organization, managing selective internal processes of materials into finished products and the transfer of the finished product from the organization to the end customer is undertaken. When the organization strives to focus on core competencies, SCM helps distribute responsibilities by becoming more flexible and letting ownership of raw materials and distribution channels into other sources. In other words functions like purchase of raw materials, promotion and distribution among others is being outsourced more increasingly to other companies that have the ability to meet demands with more efficiency and cost effectively.
SCM has five primary components, namely:
▪Plan-to plan a strategy to supervise the supply chain functions, to maintain cost efficiency and delivery, high quality product and customer value
▪Source- choose the right supplier and manager who will monitor their products.
▪ Make-to manufacture and measure worker value and quality levels
▪Deliver- this component of SCM is often referred to as the logistics part of management.
▪Return-plan a proper network to receive excessive and defective products from the customers
What are Logistics?
Logistics is a process of detailed planning and organizing of a very complex business. It is nothing but the process of making a product reach from one station to another, in the boundaries of time constraints and cost, by utilizing the most effective and efficient mode, rate and services. The belief that the best logistic strategy is when a product reaches the customer from the supplier the fastest and has stock in all organizations is a myth. Thus a logistic strategy should be built in such a manner so as to balance many variables. Some of the points that need to be looked into before devising a logistics strategy are:
▪Inventory management- is the most important and is also a high maintenance asset. It is essentialto have knowledge of the best practices in inventory that will reduce inventory costs throughout the supply chain
▪Purchasing practices-productive and practical purchasing practices must be planned upon
In the process of outsourcing of Logistics and SCM operation, the management at risk will tend to become popular with several firms. The variables such as frequent fluctuating exchange rates, labour strikes in exchange causing disruptions in supply, and ultimately supplier bankruptcy, can cause chaos in the supply chain. Thus before devising a logistic for the company, there must be a strong ‘risk management strategy’ which must be formulated and implemented to reduce the risk of uncertainties.
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