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The production and logistics functions of an international firm have a number of important strategic objectives. A primary objective is to lower costs. Dispersing production activities to various locations around the globe where each activity can be performed most efficiently can lower costs. Costs can also be lowered by managing the global supply chain to better match supply and demand. A second strategic objective is to increase product quality by eliminating defective products by both the supply chain and the manufacturing process. A third objective involves meeting demands for local responsiveness. Finally, production and logistics must be able to respond to shifts in customer demand.
The term supply chain management implies a well-organized and managed procurement function. However, procurement is often a collection of disparate suppliers selected almost randomly based on a perceived ability to deliver products at a price that appears correct (Sánchez-Flores, Cruz-Sotelo, Ojeda-Benitez & Ramírez-Barreto, 2020). Though this may be an exaggeration, many companies do not attempt to coordinate their vendors or execute cohesive supply chain strategies.
The term supply chain management (SCM) refers to all the activities involved in managing an organization’s procurement to reduce costs, increase efficiency, and meet demand. Because these objectives come at a cost, businesses must develop and implement supply chain plans or strategies that determine service levels and long- and short-term procurement objectives (Sánchez-Flores, Cruz-Sotelo, Ojeda-Benitez & Ramírez-Barreto, 2020). These objectives should be linked to and consistent with a company’s strategic approach.
The term supply chain management (SCM) refers to all the activities involved in managing an organization’s procurement to reduce costs, increase efficiency, and meet demand. Because these objectives come at a price, businesses must develop and implement supply chain plans or strategies that determine service levels and long- and short-term procurement objectives. These objectives should be linked to and consistent with a company’s strategic approach.
The success of SCM has a substantial impact on the overall success of the company. Companies with extended global supply chains are projected to have between 80 percent and 90 percent of their costs wrapped up in their supply chains from a cost-containment standpoint (Kumar & Ganesh, 2013). SCM is also essential due to the increased difficulty of current supply chains created by global sourcing, omnichannel delivery, and a diverse range of markets.
Customers have become more competitive, want stores to have what they want in stock, or leave, resulting in a missed sale. They demand timely, on-time delivery and simple return procedures if they make transactions they don’t like. Many manufacturers rely on just-in-time (JIT) production techniques, which require products to be delivered on time but not ahead of schedule and in the exact quantity expected (Mikkola & Skjøtt-Larsen, 2006).
Omnichannel retailers must work out how to balance the often opposing demands of brick-and-mortar and online retailing. Businesses need supply chains that are agile and adaptable and the ability to react quickly to opportunities presented by rapidly evolving customer habits.
Kumar, C. & Ganesh; N. (2013). Supply Chain Management Components, Supply Chain Performance and Organizational Performance: A Critical Review and Development of Conceptual Model. Retrieved from https://0624jdcvm-mp02-y-https-www-proquest-com.pr…
Mikkola, J. & Skjøtt-Larsen, T. (2006). Platform management: Implication for new product development and supply chain management. Retrieved from https://0634jdd97-mp02-y-https-www-proquest-com.pr…
Sánchez-Flores, R., Cruz-Sotelo, S., Ojeda-Benitez, S. & Ramírez-Barreto, M. (2020). Sustainable Supply Chain Management—A Literature Review on Emerging Economies. Retrieved from https://0624jdcvm-mp02-y-https-www-proquest-com.pr…
The supply chain is a network formed by various businesses that produce, handle, and distribute a particular commodity. It is a system of organizations, individuals, events, details, and services that are involved in getting a product or service from the producer to the consumer. The purpose of operations management is to turn resources and labor into products and services as effectively as possible to increase an organization’s benefit. The primary goal of supply chain and operations management is to increase the company’s benefit through efficient resource use.
The philosophy of eliminating duplication and non-value adding practices to design a well-established supply chain. Companies must examine any step in their supply chain and adopt waste-reduction steps to build an efficient lean supply chain. A well-designed lean supply chain can help improve efficiency and profitability. Lean is also a term for quality enhancement aimed at eliminating waste in a process and is also referred to as Muda. If an organization’s supply plan prioritizes stability over stock reductions and purchasing price reductions, its economic and financial efficiency improves. González-Benito, J. (2010).
Supply chain strategy enables businesses to effectively adapt to rapidly evolving demand. Agility, reliability, and pace are important features of this supply chain. Its key emphasis is on customer loyalty by successful supply chain execution. Price-sensitive supply chains are capable of reading and reacting to real-time market demand. End consumers become more informed about the commodity because of this form of supply chain. While there is no agreement in the literature about how to quantify supply chain integration, it is thought to be a significant factor in enhancing efficiency. Forslund, & Jonsson (2009).
Forslund, H., & Jonsson, P. (2009). Obstacles to supply chain integration of the performance management process in buyer-supplier dyads: The buyers’ perspective. International Journal of Operations & Production Management, 29(1), 77-95. doi:http://dx.doi.org/10.1108/01443570910925370
González-Benito, J. (2010). Supply strategy and business performance: An analysis based on the relative importance assigned to generic competitive objectives. International Journal of Operations & Production Management, 30(8), 774-797. doi:http://dx.doi.org/10.1108/01443571011068162