Global Logistics: New Directions in Supply Chain Management - Essay Example

GLOBAL LOGISTICS: NEW DIRECTIONS IN SUPPLY CHAIN MANAGEMENT TABLE OF CONTENTS GLOBAL LOGISTICS: NEW DIRECTIONS IN SUPPLY CHAIN MANAGEMENT 3 Introduction 3 Globalization and its implications on businesses 3 Supply chain management 4 Global logistics 5 Conclusion 7 REFERENCES: 8 GLOBAL LOGISTICS: NEW DIRECTIONS IN SUPPLY CHAIN MANAGEMENT Introduction The value chain of a business had several implications on its overall success (Lummus & Vokurka, 1999). In this age of volatility and uncertainty, businesses are affected by factors like price volatility, economic crises, inflationary pressures etc. thus they look to their supply side for supporting cost savings in order to survive. Making the best and optimum use of available resources helps businesses survive market uncertainty and stay on the top of their game. The phenomenon of globalization has affected businesses positively as well as negatively. Going beyond national borders and establishing a global supply chain makes the businesses processes efficient as well as complex. The aim of this paper is to study global logistics and how it can benefit an organization in today’s businesses environment. Challenges that occur as a result of this function and effective ways to tackle them can enable businesses to make the best use of this opportunity. Globalization and its implications on businesses Globalization refers to the phenomenon of dissolved boundaries and integration of functions worldwide. This integration takes place in every aspect i.e. economics, trade, communication etc. The advent of technology has enables business to perform their functions more efficiently, quickly and at a feasible cost (Bartelson, 2000). Automation of processes, ability to transcend national borders and faster communication systems has made it an opportunity for businesses to avail. Businesses have more markets to cater to and the ability to have a global network of operations in place. In the economic volatility of today, businesses look beyond borders to outsource their functions as a part of cost cutting strategies (Quinn & Strategy, 2013). Outsourcing functions could involve many reasons two of the top ones being low cost and better expertise. The interdependency of operational functions implies that organization needs to elevate the importance of supply chain management and ensure that each chain member is in sync with the organizational objectives and values. This has also elevated the function of procurement management which is associated with making the right purchase decision globally. The growing importance of supply chain management has made it an entire field of extensive study (Melo, Nickel & Saldanha-da-Gama, 2009). The next section will explore the concept, related functions and the newest trends that help make its one the key organizational strengths. Supply chain management Supply chain management refers to the flow of goods from the point of procurement to the point of consumption (Mentzer et al., 2001). It includes the procurement to raw material, processing at reduction facility and related functions like storage and warehousing, the transportation and logistics associated with sending the goods out to their point of consumption or end consumers. The supply chain activities are conducted in order to reap value for the business, stakeholders and consumers, matching the demand with supply, participating in competitive market spaces and leveraging global logistics to enhance international performance of the firm. Related areas of supply chain include Logistics, procurement, operations and IT. An integrated approach to match the capabilities with objectives for each of the supply chain function enables organizations to build a strong fit in their value chain that ultimately leads to their competitive advantage. Global logistics Logistics refers to transfer and movement of goods. With the growing popularity and success of international supply chain components for strategic business progress, global logistics plays an essential role in determining the extent of advantage that the organization can derive from conducting global logistics. With businesses depending on various countries for their raw material, labor, product integration etc., it becomes imperative that they take into account the unique regulation that accompanies ever distinctive country. Global transportation regulations explicitly restrict and allow the transport of certain goods and materials (Verhoef, Van Den Bergh & Button, 1997). The amount of tariffs to be levied on the goods to be transported, custom processes and other formalities constitute just one major portion of international logistics. The uncertainty associated with the shipment of goods over a long distance and chances of accidents and mishaps that could destroy, damage and delay the shipment has several implications for the risk management procedures for businesses that can protect it from suffering from undue losses as a result. Complications in terms of order fulfillment, insurance, delays make the logistics function integral to the efficiency of the whole business. If a component of the end product is delayed, it will have a chain reaction on other processes and ultimately effect the time of product’s availability on the store shelves. It can be expected that a percentage of the demand is already been catered to by the competing brands, driving out the businesses’ share of profits. A logistics manager is thus, expected to keep himself abreast with the changing times and various challenged that can hamper the efficiency of the process. The logistics challenges are represented by the five Vs namely, value, velocity, variability, visibility and vulnerability. These represent the factors that can affect the quality of procurement function by differing on the basis of quality, delayed transportation, order variability and exposure to the risk elements like accidents. In a global setup the five Vs are accompanied by additional challenges owing to the dynamism of the process. The economic policies of the countries, fluctuating prices of fuel, level of security in terms of risk coverage and exposure cushioning, the capacity of the supplier to fulfill order sand transport them on timely basis and the latest phenomenon of conducting safe transportation practices also known as the green movement. In order for the global logistics to bear the desired result, organizations need to focus upon maintaining logistics partners that are reliable and meet the organizational needs. An understanding of the implications of their mishaps on the organizational performance gives these logistics members the drive to excel at their jobs so that they can retain the organization as a client. Effective ways to manage global logistics are discussed below: 1- Use of technology: making use of available technology to enhance the logistics functions and automate it by elevating the efficiency and speed of communication, processes and transportation. By implementing customized logistics systems. Organizations can also track any discrepancies in orders, flaws in the process flow, expected delays, probability of risks etc. this can help organizations make use of technology to do away with the challenges of delays and order discrepancies. 2- Risk management: as mentioned earlier, operating in a global setup involves the transportation of goods over long distances which can meet with mishaps and accidents causing transportation delays and loss of goods. This can have a massive impact on the time the end product is offered to the end consumers and can drive out a significant share of the company’s profits. By having a systematic risk management procedure in place that identifies risks, evaluates their probability, prioritizes them on the basis of their impact and occurrence and having a contingency plan to counter possible risk and minimizing the losses to be borne by the business. 3- Maintaining effective logistics member relationships: by maintaining sustainable relationships with the members of the supply chains, businesses can drive out the risk if non-availability of raw material on a timely basis, non-compliance with order specifications, difference in quality levels, transportation delays etc. Conclusion Global logistics as a part of supply chain management has several implications on the success of the businesses. By leveraging on key offerings of global partners and pairing them with swift, efficient and safe logistics, businesses are in a better position to gain advantage form global business frameworks. Identifying risks and logistics protocols can ensure that the transportation of goods is timely and safe. REFERENCES: Bartelson, J. (2000). Three concepts of globalization. International Sociology, 15(2), 180—196 Lummus, R., & Vokurka, R. (1999). Defining supply chain management: a historical perspective and practical guidelines. Industrial Management \& Data Systems, 99(1), 11--17. Melo, M., Nickel, S., & Saldanha-da-Gama, F. (2009). Facility location and supply chain management--A review. European Journal Of Operational Research, 196(2), 401--412. Mentzer, J., DeWitt, W., Keebler, J., Min, S., Nix, N., Smith, C., & Zacharia, Z. (2001). Defining supply chain management. Journal Of Business Logistics, 22(2), 1--25. Quinn, J., & Strategy, E. (2013). Strategic outsourcing: leveraging knowledge capabilities. Image. Verhoef, E., Van Den Bergh, J., & Button, K. (1997). Transport, spatial economy, and the global environment. Environment And Planning A, 29(7), 1195--1213. Read More