Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such a way that current and future profitability are maximized through the cost-effective fulfilment of orders.
supply chain management
The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.
A network of connected and interdependent organisations mutually and co-operatively working together to control, manage and improve the flow of materials and information from suppliers to end users.
successful companies either have a cost advantage
or they have a value advantage, or a combination of the two. Cost advantage gives a lower cost profile and the value advantage gives the product or offering a differential ‘plus’ over competitive offerings.
the goal is to achieve competitive
advantage through both cost reduction and service enhancement.
The value chain
To gain competitive advantage over its rivals, a
firm must deliver value to its customers by performing these activities more efficiently than its competitors or by performing the activities in a unique way that creates greater differentiation.
look at each activity in their value chain and assess whether they have a real competitive advantage in the activity. If they do not, the argument goes, then perhaps they should consider outsourcing that activity to a partner who can provide that cost or value advantage.
The supply chain and competitive performance
organizations create superior value for customers
and consumers by managing their core processes better than
competitors manage theirs.
These core processes encompass such activities
as new product development, supplier development, order fulfilment and customer management. By performing these fundamental activities in a more cost-effective way than competitors, it is argued, organizations will gain the advantage in the marketplace.
consumers are less loyal to specific brands but instead will have a portfolio of brands within a category from which they make their choice.actual product availability becomes a
major determinant of demand.
In today’s marketplace the
order-winning criteria are more
likely to be service-based than
Competitive advantage = Product excellence × Process excellence Lead times are traditionally defined as the elapsed period from receipt of customer order to delivery.
The real lead time is the
time taken from the drawing board, through procurement, manufacture and assembly to the end market.
There are already situations arising where the life cycle is shorter than the strategic lead time. In other words the life of a product on the market is less than the time it takes to design, procure, manufacture and distribute that same product!
Globalization of industry
Globalization also tends to lengthen supply chains as companies increasingly move production offshore or source from more distant locations.
Downward pressure on price
there are new global competitors who have entered the marketplace supported by low-cost manufacturing bases. The dramatic rise of China as a major producer of quality consumer products is evidence of this.
the removal of barriers to trade and the deregulation of many markets has accelerated this trend, enabling new players to rapidly gain ground.
One result of this has been overcapacity in many industries. Overcapacity implies an excess of supply against demand and hence leads to further downward pressure on price.
A further cause of price deflation, it has been suggested, is the Internet, which makes price comparison so much easier
find a way to bring down costs to match the fall in price.,
products don’t have value until they are
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