Evolution Of A Supply Chain Cases And Best Practices Pdf

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Globalization has become an undeniable part of commerce over the last few decades, as large companies have grown first to source labor and parts from developing regions, and then to start selling in those same areas as they grew in wealth and buying power.

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The evolution and future of logistics and supply chain management. This article will be divided into three sections: past, present, and future. The past section will trace major events that created business logistics as it is practiced today.

In particular, do the events portend the future of business logistics and supply chain management? The present section will attempt to summarize the state of business logistics. How business logistics relates to supply chain management will be addressed. The future section will make some predictions as to the issues that need to be addressed and the events that will likely take place in the near term.

It has been my good fortune to experience the inception and growth of business logistics, and now supply chain management, as an area of academic study, research, and business practice. As a logistician, I will trace the evolution of thought in the field and make some predictions as to where the field may be headed. Much of what I have to say is based on my understanding of the events of the past as they occurred in the United States and what these events mean for the future.

There is no documented historical record withstanding scientific scrutiny that can be used to validate what occurred and why. Conclusions in this article come from my impression of the events surrounding business logistics, their basis, and their meaning from the vantage point of one who has lived through the formation and growth of business logistics and who has been deeply involved in logistics education, research, and practice for more than 40 years.

This article will be divided into three sections: past , present , and future. Before the s, logistics was thought of in military terms. It had to do with procurement, maintenance, and transportation of military facilities, materiel, and personnel.

Although a few authors before this time began talking about trading one cost for another, such as transportation costs with inventory costs, and discussed the benefits to the firm of getting the right goods to the right place at the right time, the organization within the typical firm around the activities currently associated with logistics was fragmented.

Figure 1 shows how a firm might have organized key activities at that time in terms of the responsibilities and objectives for marketing, finance, and production. The reasons for this fragmentation were said to be:. Later, it was learned that there are benefits to eliminating the fragmentation such that 1 it encourages important tradeoffs to occur that can lower total costs, 2 it focuses on an important, defined area by top management, and 3 it sets the structure within which control can take place.

Educational courses and programs at the time were not focused on logistics or distribution. They were mainly related to individual activities such as transportation and purchasing. Hence, there was not much of an opportunity for managers to learn about the broader concepts of logistics. Physical distribution begins to emerge as an area of study and practice, which is the coordination of more than one activity associated with physically supplying product to the marketplace.

LaLonde and Dawson LaLonde and Dawson, trace the early history and note that Arch Shaw in began to see the two sides of marketing, where one deals with demand creation promotion and the other with physical supply, and Fred Clark in identified the nature of physical distribution and pointed out how it was different from the demand-creating nature of marketing.

Marketing as a discipline was creating interest at this time and scholars did include distribution as a primary activity in the marketing mix, however, distribution seemed to be defined more in terms of transaction channel activities than physical distribution ones. Paul Converse Converse, , a noted marketing professor, said in that businesses had been paying a great deal more attention to buying and selling than to physical distribution.

In retrospect, research that would play a pivotal role in laying the foundations for physical distribution was a study by Lewis et al. Lewis et al. This study for the airline industry asked how it might better compete in hauling freight when its costs were significantly higher than other forms of transportation. The study pointed out that it is necessary to view shipping from a total cost perspective and not from just a transportation cost one. This was an expression of the total cost concept that was to underpin much of writing and teaching to follow in the s.

The first college course Michigan State University and textbook Smykay et al. Within the context of the total cost approach, activities such as transportation, inventory control, warehousing, and facility location were discussed. In , the scope of physical distribution was expanded Heskett et al. Using the descriptive name of business logistics was not only an attempt to distinguish the name from military logistics but to focus on logistics activities that took place within the business firm.

Purchasing was not generally considered nor was production. On the other hand, there was a similar movement by those interested in the purchasing activity. Whereas purchasing was initially considered a buying activity, there were efforts to expand the scope to include many of the activities familiar to physical distribution but associated with the inbound side of the firm.

This expanded scope was embodied in such names as procurement and materials management. The study and practice of physical distribution and logistics emerged in the s and s. Logistics costs were high. On a national level, it was estimated that logistics cost in the U. Similarly, physical distribution costs of other nations were found to be high as well. For example, in the United Kingdom, they were 16 percent of sales Murphy, , in Japan they were On an individual firm level, they could be as high as 32 percent of sales LaLonde and Zinszer, The recognition of these high costs led one writer to declare physical distribution as one of "the most sadly neglected, most promising areas of American business" Drucker, With marketing and production being relatively mature areas of analysis, physical distribution and logistics were the next obvious areas for managerial attention.

Physical distribution with its outbound orientation was first to emerge, since it represents about two thirds of logistics costs and it was considered a component of the marketing mix product, place or physical distribution, promotion, and price of essential elements. Business logistics, with its broader scope that includes inbound movement, was soon to follow. It is useful to look at what was envisioned by early proponents of the areas to see the fit with current views and to give some idea of future directions.

When comparing the early vision of physical distribution and logistics with the current one for supply chain management, there is little difference.

For example, the definition in offered by Smykay et al. Smykay et al. Although physical distribution is usually associated with outbound product movements from a firm, this definition indicates a broader concept that includes both inbound and outbound movements. Heskett et al. Figure 2 shows the multiple echelons of a supply channel for flour, and Heskett et al. These concepts are similar to what is currently described as supply chain management and, at that time, physical distribution and logistics were somewhat synonymous terms.

Although these early definitions suggest a broad scope for physical distribution and logistics, the focus was on coordinating among the activities within the function, with little emphasis on coordinating among the other functions within the firm or among external channel members. This limited application of a much broader scope probably had to do with technological limitations of information systems at the time and the difficultly of managing across areas of responsibility.

Most notably missing from early definitions was a direct reference to purchasing and production. Although they may have been implied, they were rarely treated in logistics education or practice.

As previously indicated, marketing considered physical distribution to be a part of the marketing mix, however, the greatest interest seemed to be in transactional channels while physical distribution was given short shrift. On the other hand, production claimed logistics activities as part of the product function. According to Timms and Pohlen Timms and Pohlen, :. Time and place utilities are usually referred to as physical distribution or logistics activities.

In these early years, not only did scholars and practitioners struggle with a definition for the field, they could not agree on a title. Some of the familiar ones were:. There are several lessons to be learned from the past. First, physical distribution and logistics were envisioned to have broad responsibilities for managing activities associated with product flow from the points of raw material acquisition to the end consumer.

Although the scope of the field was extensive, actual management practice was generally limited to coordination of activities within the logistics function or among those activities associated with product flow. Boundary-spanning management was embraced but little practiced. Second, the total cost concept served as the basis for managing certain activities collectively. Activities such as transportation and inventory control were collectively managed because they were in cost conflict.

All those activities associated with product flow and displaying this cost tradeoff characteristic were considered a part of the new field of physical distribution or logistics. Third, physical distribution and logistics were embraced by both marketing and production areas, but they gave little attention to issues of product flow.

As a result, physical distribution and logistics began to develop as an independent function within business. This action was spurred by the recognition that logistics costs were high and that there was an unrealized opportunity to reduce them.

Fourth, among the areas of purchasing, production, and physical distribution, there was little coordination, even though they had a direct effect on product flow management.

This coordination was to become a major theme in later years. This name is taking the logistics area by storm since so many in various business fields seem to embrace it and see activities of their areas imbedded in it. The origin of the name seems a mystery and exactly what supply chain management is, compared with physical distribution and logistics, is being debated. Some are saying that it is a fulfillment of the activity integration promise implied in early definitions while others think it is a new and bold concept.

Those believing that supply chain management is evolutionary construct a diagram of the type shown in Figure 3. The claim is that supply chain management is not new and they recognize that the logistics pioneers had many of the ideas promoted by current supply chain enthusiasts. For example, note what Heskett et al. Specifically, note that they refer to the entire supply channel and suggest that coordination is needed throughout the channel.

These are ideas that form the basis for supply chain management as practiced today. Given 40 years of background with a broad concept for logistics, what exactly is supply chain management to its proponents? There has been an attempt to distinguish logistics from supply chain management, declaring logistics to be a subset of supply chain management.

Recently, the Council of Supply Chain Management Professionals CSCMP , which is the premier organization of supply chain practitioners, researchers, and academics, has defined supply chain management as:. Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities.

Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. Logistics Management is that part of SCM that plans, implements, and controls the efficient forward and reverse flow and storage of goods, services, and related information between the point of origin and point of consumption in order to meet customer requirements.

In these two definitions, first note that procurement i. Second, emphasis is placed on coordination, collaboration and relationship building among channel members that are missing from logistics management. Put another way, supply chain management can be viewed as having three dimensions. These are activity and process administration, interfunctional coordination, and interorganizational coordination.

Activity and process administration is much of what logistics has been doing.

E‐volution of a supply chain: cases and best practices

Schedule a Pick Up — Ext. Over the last plus years of the history of supply chain management has evolved from an initial focus on improving relatively simple, but very labor-intensive processes to the present day engineering and managing of extraordinarily complex global networks. We will take you through the last 60 plus years below and end the post with an amazing infographic. Both industrial engineering and operations research have their roots in logistics. Fredrick Taylor, who wrote The Principles of Scientific Management in and is considered the father of industrial engineering, focused his early research on how to improve manual loading processes.

Specific examples, case studies and best practices are provided to illustrate the evolution of SCM and support the development and.

The Triple-A Supply Chain

Supply chain management SCM is an integrating philosophy to manage the total flow of materials, information and finance from supplier to ultimate customer. The goal of SCM is to meet the needs of the final consumer by supplying the right product at the right place, time and price. Companies use SCM as a way to meet the competitive challenges of today's business environment.

The evolution and future of logistics and supply chain management. This article will be divided into three sections: past, present, and future.

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Supply Chain 4.0 – the next-generation digital supply chain
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