Supply Chain Management - Strategy, Planning, and Operations - Essay Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Title : Logistic Management Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2010 Logistics is the management which harmonizes providing activities such as procurement, production, sales, and distribution with demands. It aims at promoting corporate competitiveness and enhances corporate value by achieving customer satisfaction, cutback of unprofitable inventory and minimization of its transfer and minimization of supply costs. To realize the mentioned objectives, collaboration of firms involved is necessary and development of logistics using supply chains is required. Humanitarian relief is a major operation after a disaster for individuals who are isolated in areas affected by disasters and can not get basic supplies. Since the demand can be very large, effective humanitarian relief logistics are very significant. The role of logistics in humanitarian relief sector will be discussed in the two main areas: transportation management and procurement (Donald et al, 2005). Logistical activities play a significant role in transportation management and procurement in the human relief sector. The two activities enhance the utility of the services provided by the humanitarian relief agencies. The impact of logistics in the activities can best be described through the concept of economic utility. Economic utility is the value or usefulness of a commodity in satisfying customer needs and requirements. The four types of utilities that aid in the satisfaction of customer needs include possession, form, time, and place. Logistics directly contributes to time and place utilities (Chopra & Meindl, 2001). Possession utility describes the value or usefulness that results from an end user being able to have the possession of a product. Procurement directly affects possession since it is through procurement that possession is realized. Transportation is also involved in enhancing possession utility since most of the products must be transported from the producer to the final user in order to guarantee possession. Possession utility can be affected by the payment terms associate with a commodity. Credit and debit cards for instance facilitate possession utility by allowing customers to buy commodities without necessarily having to produce liquid cash or its equivalent. Similarly, automotive leases enable customers to take possession of a more attractive model than would be possible with traditional automotive loans (Chopra & Meindl, 2001). Form utility describes the appearance of a commodity in a form that can be used by the end user and is value to the end user. Although form utility has normally been associated with production and manufacturing, logistics can also play a role in form utility. Procurement enhances form utility through the purchase of a product in the required form. Transport management is also significant in enhancing form utility. A humanitarian relief agency must ensure that products are transported in such a way that the form is not changed (Chopra & Meindl, 2001). Place utility refers to having commodities available at the point where they are required by the end users. Transportation and procurement are directly involved in increasing form utility. Products are normally transported from places where they are considered to be of low value to places where they have a high value. In regard to the diet cola mentioned above, place utility is increased by transporting the soda from a point of lesser value for instance in the warehouse to a point of high value such as a supermarket (Chopra & Meindl, 2001). This is closely related with lace utility and it refers to having commodities available to the end users when they are required. Having the goods available when they are required involves appropriate procurement and transportation procedures. It is significant to recognize that various products have diverse sensitivities to time. For instance a five day delay in the delivery of perishable goods will possibly have more serious consequences compared to the same delay in delivery of non-perishable goods (Chopra & Meindl, 2001). The diagram below illustrates the role of logistics in the movement of a product from the manufacturer to the end-user. Humanitarian relief operations in a natural disaster start with a disaster warning or the actual occurrence of the disaster where no warning has been given. The response to a disaster is the execution of a plan development in the course of the disaster preparedness assessment. In many instances however, the disaster is not predicted forcing the response planning to take place after the event. The first response to a disaster is the life saving phase. This phase involves search and rescue operations, medical aid, and food, water and shelter provisions. The second phase is usually the stabilizing phase or the life conserving phase which involves continued supplies of basic necessities. The last phase is the universal recovery phase which involves rehabilitation and reconstruction. These phases normally overlap and no specific time is stipulated for individual steps. Transportation management and procurement are very important in the execution of each phase in the relief operation. Procurement ensures that the required items are acquired while transportation ensures that the supplies are taken to where they are required (Donald et al, 2005). The 2010 Haiti earthquake was a disastrous magnitude 7.0M earthquake that was reported about 25 km west of Haiti’s capital, Port-au-Prince. It occurred in January 12 2010. About 3 million individuals were affected by the earthquake. The relief operations began on January 12 with the International Committee of the Red Cross which had been in operation in Haiti since 1994 focusing on efforts to providing emergency assistance to the people affected by the disaster. The International Committee of the Red Cross worked in collaboration with International Federation of Red Cross and Red Crescent Societies to provide emergency services to the people affected. Most of the activities involved the transportation of injured victims to hospitals where they could get medication since most of the hospitals were already overcrowded. The response procedure followed the three phase process described above (Frontline Club, 2010). Several countries responded to the International Committee of the Red Cross call for aid and the required assistance was offered. Funds, rescue teams, transport facilities and support personnel were provided by various countries to enhance the rescue process. The first phase of the rescue process constituted life saving in which victims were rescued from destroyed buildings. The rescued victims were treated and basic necessities were provided. The second phase of the process involved the provision of basic necessities to victims of the disaster. The last phase of the process is the general recovery phase. This phase which entails reconstruction and rehabilitation is still in progress in Haiti. Transport management and procurement were very important in the whole rescue process (Frontline Club, 2010). The main concepts in logistics management can best be analyzed by comparing the relationship between logistics and the various issues surrounding an organization. The various issues that are taken into account in this case greatly affect the humanitarian relief sector in meeting its objectives appropriately (Donald et al, 2005). Logistics is a subset of supply chain management. While supply chain management is the process in which organizations cooperate to leverage strategic positioning and to enhance operating efficiency, logistics is a process that enhances value by timing and positioning goods. A supply chain comprises of all activities in fulfilling customer demands and needs. These activities are related with the flow and transformation of goods from the raw materials stage through to the final user as well as the related information and funds flow (Chopra & Meindl, 2001). There are four stages in a supply chain Supply network, internal supply chain which involves manufacturing plants, distribution systems and end users. Moving across the four stages are the four flows: Material flow, Service flow, Information flow and Funds flow. E-procurement connects the supply network and the production plant while e-distribution connects the production plant and the distribution network while e-commerce connects the distribution network and the final or end users (Chopra & Meindl, 2001). These are logistics concerned with movement of goods from the supplier to the firm. The application of logistics in regard to procurement is known as procurement logistics. It includes all activities that provider a producer with raw materials, tools and operational supplies together with purchase and substituting parts. In the past, the appropriate materials were basically obtained from local resources. Through procurement logistics a firm can obtain raw materials courtesy of global networks and the Internet (Chopra & Meindl, 2001). Procurement is a logistics associated with market operations. It acts as the link between the suppliers’ distribution operations and a firm’s production logistics. Procurement logistics commodities and goods that should be supplied to the firm as required like raw, auxiliary and operating resources (Jarrus & Martha, 1998). Supply chain management is a set of harmonized decisions and operations utilized to efficiently integrate suppliers, manufacturers, warehouses, transporters, retailers and customers in order to produce and distribute goods and services at the appropriate quantities, to the appropriate locations and at the appropriate time in order to reduce system-wide expenses while fulfilling customer service level needs. The objective of Supply Chain management (SCM) is to realize sustainable competitive advantage. A firm’s supply chain in an e-Biz condition can be very complicated. Logistics function enhances the physical flow of commodities from the raw material producer to the producer, to the distributor and ultimately to the end user (Jarrus & Martha, 1998). The internal supply chain of a central manufacturing firm is involved in sourcing, production and distribution of goods and services. Sourcing or purchasing of the firm is responsible for choosing suppliers, negotiating contracts, formulating purchasing process and processing orders. Production is responsible for converting raw materials, parts or constituents of a product to product. Distribution is concerned with managing the flow of material and completed products inventory form the producer to the customer. Enterprise Resource Planning systems (ERP) is concerned with integration of the entire firm’s information system, process and store data of all the functional areas, business units and production lines to help the managers make viable decisions concerning the firm (Hau, 2004). The supplier network encompasses of all the organizations that offer materials or services either in a direct or an indirect way. For instance a computer manufacturer’s supplier network includes all organizations that provide all the necessary material required to make the computer. The distribution network is concerned with actual movement of materials from one location to another. A major portion of distribution management is transportation management which encompasses the selection and management of external as well as private transport arrangement (Hau, 2004). The supply chain described above can be summarized by diagram shown below which describes the various supply chain configurations: Logistics play a significant role in the supply chain management. The supply chain which is necessary in the satisfaction of customers in the humanitarian relief sector cannot be complete without the application of logistics. Logistics and supply chain management integrate in the accomplishment of the following roles (Handfield & J. Ernest, 2002). Just like a retail store, the success of a specific logistic system relies on the location of a suitable warehousing and manufacturing facilities. Facility location decisions are increasingly significant as the configuration of logistics system is changed due to the effects of multinational trade treaties (Ptak, 2000). Packaging can assume both a marketing and logistical dimension. Industrial packaging refers to packaging that prepares a commodity for storage and transportation and industrial packaging has significant interfaces with the resource handling and warehousing operations (Ptak, 2000). Transportation management and procurement are very important in the operations of the humanitarian relief sector. This is largely because the two enhance the utilities of the various commodities utilized by the agencies in the field. The two also facilitate the supply chain management. Supply chain management is the process in which organizations cooperate to leverage strategic positioning and to enhance operating efficiency. For every organization involved, the supply chain relationship shows a strategic choice. A supply chain strategy is a channel organization based on recognized dependency and collaboration. Supply chain activities require managerial procedures that span functional areas within specific organizations and connect trading partners and clients across organizational boundaries. Logistics in contrast is the work necessary to ensure the movement of goods throughout a supply chain. Logistics is thus contained in the wider framework of supply chain management. Logistics as described above is the process that enhances value by timing and positioning goods. It is thus an important constituent of supply chain management (Steermann, 2003). Bibliography Chopra, S. & Meindl, P., 2001. Supply Chain Management: Strategy, Planning, and Operations. Upper Saddle River, NJ: Prentice Hall. Donald J. Bowersox, R. J. C., & Alexander M. R., “Estimation of Global Logistics Expenditures Using Neural Networks,” Journal of Business Logistics 26, no. 2 (2005), pp. 1–16. Handfield, R. B. & J. Ernest L. N. 2002. Supply Chain Redesign. Upper Saddle River NJ: Prentice Hall. Hau L. L., 2004, “The Triple A Supply Chain,” Harvard Business Review (October 2004), pp. 102–12. Frontline Club, 2010, Aid-workers, academics and journalists discuss the social context of the earthquake, and the international response London, 3 February 2010. Jarrus D. P. & Martha C. C., “Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy,” Journal of Business Logistics 19, no. 2 (1998), pp. 13–28. Ptak, C. A. 2000. ERP: Tools, Techniques, and Application for Integrating Supply Chain. New York: The St. Lucie Press. Rosalyn W., 16th Annual “State of Logistics Report,” Council of Supply Chain Management Professionals, Oak Brook, IL, June 2005. Steermann, H.2003. “A practical look at CPFR: the Sears – Michelin experience.” Supply Chain Management Review, July/August 2003, pp. 46-53. Read More