CHAPTER 1 SUPPLY CHAIN MANAGEMENT: AN OVERVIEW
The major objectives of this chapter are:
Understand the major external change drivers in the global economy and explain their impacts on global supply chains. Understand the development of supply chain management in leading organizations and its contribution to financial viability. Appreciate the significance and role of supply chain management among private, public and nonprofit organizations. Understand the contributions of a supply chain approach to organizational efficiency and effectiveness for competing successfully in the global marketplace. Explain the benefits that can be achieved from implementing supply chain best practices. Understand the major challenges and issues facing organizations currently and in the future.
The last decade of the twentieth century was a period of rapid change for organizations, especially businesses. That rate of change has not slowed down and is actually increasing in the twenty-first century. The forces of change require organizations to be much more nimble and responsive; that is, organizations need to be able to transform themselves to survive in the intensely competitive global environment.
Use the Case study as a means to discuss the changed environment in a more concrete manner.
Discuss the current retail environment and use the examples of K-Mart and Walmart, and the ability of Walmart to dominate the retail landscape in part due to their highly developed logistics capability. An online literature search should find several current articles that you can use to provide more information.
What Forces Are Driving the Rate of Change?
The rate of change has accelerated, both in U.S. domestic business and globally. A key to understanding how to respond to this change is to gain a perspective on the forces of change. Globalization: Many believe that globalization has replaced the “cold war” of the post-World War II era as the driving force for world economics. Beginning in the 1970s, U.S. firms began procuring more globally. Firms started asking: Where in the world should they source?
Where in the world should they manufacture
Where in the world should they market their products?
From where in the world should they warehouse and distribute? What global transportation strategies should they utilize?
Some important issues or challenges for supply chains of the global economy are: (1) more volatility of supply and demand, (2) shorter product life cycles, and (3) the blurring of traditional organizational boundaries. All three deserve some discussion. Supply and demand have become more volatile for a number of reasons. Acts of terrorism, for example, can have serious implications for the flow of commerce. Companies have put in place security measures to protect their global supply chains. Visit the webpages for the Department of Homeland security and Transportation Security Administration to see how their activities can impact the Supply Chain Natural catastrophes such as hurricanes, floods, earthquakes, etc., have become more problematic because of the scope and extent of global trade; therefore, they pose a significant potential problem. Longer-run issues of supply and demand also arise with the global competition of sources of supply and markets. The global supply chains of the best companies must be adaptive and resilient to meet the challenges of the global marketplace. Shorter product life cycles are a manifestation of the ability of products and services to be duplicated quickly. Technology companies are particularly vulnerable to the threat of their new products being reengineered, with life cycles as short as 18 months. To maintain their profitability, companies may have to outsource some parts of their operation to another domestic or global company that can provide what they need more efficiently and hopefully maintain the same quality....
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