Supply chain management involves the organization of the flow of goods (Jacoby, 2009). There are various practices within the supply chain management. These practices include: storage and movement of raw materials; finished goods; work in process; interconnected networks; and channels involved in the provision of goods to customers (Blanchard, 2010). The objectives of supply chain management include: the creation of net value; leverage of logistics; measurement of performance; matching supply with demand; and setting up competitive infrastructures. Supply chain management also involves activities which include: designing; planning; executing; controlling; and monitoring (Jacoby, 2009). Supply chain management relies a lot on several areas of expertise such as logistics, information technology, operations management and procurement.
Logistics involves the management of the flow of goods from the producer to the consumer (Alessandra, 2012). The objective of logistics is to meet the needs of either the company or the customers. The products managed by logistics are either physical or abstract. Physical items include animals, materials, food and equipment. Abstract items include particles, information, energy and time. The logistics involved in physical items include: handling of materials; flow of information; inventory; packaging; production, warehousing; transportation; and security.
Companies are coming up with new ways of doing things because they are faced with a lot of competition. Each company wants to improve its competitive advantages and, therefore, plans on how to improve the various functions within its structure. Logistics and Supply Chain Management provide various practices which are aimed at improving the competitive advantages of businesses. Examples of these practices include: strategic supplier partnerships; continuous improvement; information sharing; customer relationships; lean thinking; information quality; and agile supply chain (Blanchard, 2010). Some of these practices are discussed below.
Continuous improvement is one of the ways that is used to enable businesses to gain competitive advantages over their competitors. In the past, companies focused on cutting down the costs involved in logistics and supply chain management (Myerson, 2012). These companies succeeded, but they left a lot to be desired in terms of quality and productivity. Most companies have adopted the lean principles of manufacturing and thereby succeeded in reducing costs. Lean activity is an example of continuous improvement that identifies and gets rid of waste. Waste includes activities that do not add any value to the customers. Some of the activities that do not add value to the customer include storage, inspection and delays (Christopher, 2010). The cycle time that starts from the time the good enters the supply chain to the time the good reaches the customer is considered a waste. The shorter the cycle time, the leaner the manufacturing process and vice versa.
In terms of lean, logistics and supply chain are seen as boxes or lines on a value stream map (Myerson, 2012). The value stream mapping is used to separate activities which are value added and those that are not value added. This process starts from the customer and ends up at the supplier. The value stream mapping is unique to lean processes. There are many lean tools and concepts that can be applied to logistics and supply chain functions. The simple ones include: Layout; Visual Workplace; and 5S Workplace Organization. The complex ones include: Total Productive Maintenance; Quick Changeover; and Batch Size Reduction (Myerson, 2012). A lot of support, training and commitment are required from the management and employees so as to understand these tools and concepts.
It is very important to understand the non value added activities. These non value added activities are referred to as waste and they should be viewed from the eyes of the customers. Other parties to the goods should also be considered while labeling the activities as waste. A good example of a company that has clearly defined its wastes is Toyota. The company gave seven definitions of waste through Taiichi Ohno who is considered as the father of the Toyota Production System. The seven wastes include: transportation; inventory; motion; waiting; over-production; over-processing; and defects (Ohno, 2012). Other lean experts add an extra waste to make eight: behavioral waste or underutilized employees.
Customer relationship is very important in logistics and supply chain management. This is because the company gets to know the needs of the customers, their tastes and preferences. A good customer relationship helps in gaining their trust and loyalty. The process of communicating to customers involves many methods and many people (Murray, 2014). The main department that is able to handle customers regularly is the sales department. They report to the company the needs of the customers and also communicate to the customers the standards of the company. The customers prefer a supply chain that is faster and does not have any delays. They also want a company that can answer their queries whenever there is need. For a company to gain a competitive advantage, it is important to provide the customers with the best service experiences possible. This calls for the use of customer relationship management software (CRM). A CRM enables the company to track and organize the contacts of current and potential customers (Murray, 2014). Storage of customer information in this software enables other employees from various departments to have knowledge of the customer and, therefore, relate well with them.
Siebel Systems was created by Thomas Siebel and developed many CRM packages. The company was later on bought by Oracle (Murray, 2014). Another example of a popular CRM package is Infor CRM Epiphany. Other examples of CRM packages include Salesforce.com and SAP. All these packages are meant to create customer relationships with the intention of satisfying their needs in an effective and efficient manner. This enables the company to gain a competitive advantage over its competitors in the logistics and supply chain management. It also enables the company to gain loyalty from its customers.
References
David Jacoby, 2009. Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance. New York: Bloomberg Press.
David Blanchard, 2010. Supply Chain Management Best Practices, 2nd Edition. New York: John Wiley and Sons.
Cozzolino Alessandra, 2012. Humanitarian Logistics and Supply Chain Management. Berlin: Springer Berlin Heidelberg.
M. Christopher, 2010. Logistics and Supply Chain Management: Creating value-adding networks. New Jersey: Prentice Hall.
Paul A. Myerson, 2012. The Journey to Continuous Supply Chain Improvement. Retrieved from: http://www.inboundlogistics.com/cms/article/the-journey-to-continuous-supply-chain-improvement/
Paul A. Myerson, 2012. Lean Supply Chain and Logistics Management. New York: McGraw Hill.
Taiichi Ohno, 2012. Workplace Management. New York: McGraw Hill
Martin Murray, 2014. Customer Relationship Management. Retrieved from: http://logistics.about.com/od/forsmallbusinesses/a/CRM.htm
