The statement elaborates the extent to which the benefits of logistics management (LM) and supply chain management (SCM) turn out to be threats to the organisation. One reason for such scenario underlying LM is the wide promotional strategies that CEOs opt without contemplating upon the long term effects of managing SCM even in times of crisis…
Examples like Wal-Mart and Benetton are in front of us where logistics transformed the form of core competence which is strategically positioned for bringing market success for the organisation (Drew & Smith 1995). This on one hand gives competitive advantage to one organisation, on the other hand it is achieved at the cost of exploiting the other. Such exploitation in market terms can be labeled as 'weapon' that once used against the competitor provides benefit at the cost of bringing loss to the competitor. This can be illustrated by the fact that an organisation can increase or decrease the goods supply to the market or can purchase the services of major supply chain companies irrespective of the fact he uses them or not, but to choke other companies particularly competitors from getting supply chain services for their goods supply.
Unless the competitor is efficient enough to detect what is going on behind the curtain, he is unable to rectify the cold war being played against him by his rivals. However, Drew & Smith (1995, pp. 24-33) points out that excessive exploitation can produce dangerous results if the organisation adopts a rigid behavior. Similarly this 'explosive weapon' can result in fatal blind spots if used in single direction without considering other factors. For instance, supply chain integration once stop at the factory door may annoy large organisations to exploit more but since logistic firms are aimed to improve their performances, such exploitation will probably not work.
Traditional supply chain deliver limited value to companies for which there is a political competition going on among competitors. In contemporary fast paced supply chains, managers or CEOs lack an insight into the ripple effects of their decision (Boyson et al 2004, p. 99). Logistical challenges are confronted by the firms who not only assume a static environment but look at each problem individually. For instance, a company when switches from long-term contracts to short-term buys it suffers temporarily for the decision will influence the logistic options available to the organisation including short-term variability, price of the product and supplies.
With the lengthening of supply chains, logistics executives are increasingly taking onus on their shoulders for anticipating and eliminating a greater number of risks. Though contemporary stakes are high that what they were five years ago resulting in an average profitability loss of 107% (Logistics 2009). But at the same time CEOs are struggling to prioritise the overwhelming number of risks that indirectly leads to unfocused plans and poorly coordinated responses (ibid). Competing with others become critical for the logistic firms when there is a concern to reduce costs while continuing to guarantee the quality of products. This requires ensuring an efficient execution of outsourced activities in a complex trading and production scenario which is a difficult phenomenon in a competitive environment. In this context it is indispensable to identify, evaluate and extenuate potential disruptions in SCM in a systemic manner so as to control or minimise the risk of product recalls (Gomer 2009).
The internal analysis of risk in ...
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8 Pages(2000 words)Essay
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