Supply chain management. According to Wilton (2005, p.22 ), the term logistics has originated around 1930’s from the French word “logistique”, which is taken from the word “loger” meaning dividing troops. Nowadays, the term logistics is used in different spheres, bearing different meanings.
The Council of Supply Chain Management Professionals (CSCMP) define logistics as “the plans, implements and controls that effectively and efficiently forward and reverse the flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements”(CSCMP – online, 2010).
Alternative definition of logistics is provided by Webster’s dictionary as “the procurement, maintenance, distribution, and replacement of personnel and material”(Webster’s Dictionary – online, 2010)
Mentzer et al. define supply chain as a “set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer” (2001, p.4)
The quality within supply chain management is defined by the author of present essay as the measure of supply chain in terms of reducing costs of supply chain and increasing its efficiency.
Houlinah (1998, p.14) lists the following differences between supply chain management and traditional manufacturing materials control. Firstly, supply chain is seen as a single process. Second, supply chain requires strategic approach and decisions making. Third, supply chain requires a different approach to inventory. And, fourth supply chain requires integration rather than interfacing for system approach.
The objective of managing supply-chain, according to Stevens (1989, p.5), is to synchronise the requirements of the customer with the flow of materials from suppliers with the aim of effecting the balance to achieve high customer service, low inventory management and low unit cost.
Companies in any supply chain, according to Hugos (2006, p.5), must take decisions individually and collectively regarding their actions in five areas: production, inventory, location, transportation and information.
Importance of logistics and quality within supply-chain for business
The importance of logistics and quality within supply-chain for a business has increased significantly during the past two decades due to the forces of globalisation. Because nowadays customers can be based on the other part of the world, but nevertheless, they still expect to receive the product during the few days. And if a company cannot satisfy this expectation, it can find its customer segments limited only to the local market losing a large number of potential customers, and potential profit.
Mentzer et.al (2007, pp.3-4) describe three factors contributing to the prominent role of supply chain management in today’s global marketplace. First, corporations have adopted a tendency of turning to global resources for their suppliers. Second, nowadays time and quality is the basis for competition among competitors and distribution channels. Third, there is a marketplace uncertainty caused by the global orientation and rapidly changing technology and economic conditions.
Christopher (2005, p.12) argues that logistics management has a potential to help organization to achieve cost advantage and value advantage over its competitors. Cost advantage can be gained through reducing the expenses associated with the various elements of supply chain, and value advantage is gained though improving the process itself.
The creation of a unique supply chain configuration is proposed by Cohen & Roussel (2005, p.10), which should include five following critical configuration components: operations strategy, outsourcing strategy, channel strategy, customer service strategy, and asset network.
- Cohen, S, Roussel, J, 2005, “Strategic Supply Chain Management: the Five Disciplines for Top Performance”, The Mc-Graw Hill Companies
- Council of Supply Chain Management Professionals (CSCMP), 2005 Retrieved: April 29th 2005 from http://www.cscmp.org/Downloads/Resources/glossary03.pdf
- Christopher, M, 2005, “Logistics and Supply Chain Management: Creating Value-Adding Networks” 3rd edition, Prentice Hall
- Extended Definition: Logistics, 2010, Webster’s Online Dictionary, Retrieved July 9, 2010. Available at: http://www.websters-online-dictionary.org/definitions/logistics?cx=partner-pub-0939450753529744%3Av0qd01-tdlq&cof=FORID%3A9&ie=UTF-8&q=logistics&sa=Search#906
- Houlinah, JB, 1988, “International Supply Chains: A New Approach”, Management Decision, vol.26, no.3
- Hugos, MH, 2006, “Essentials of Supply Chain Management”, John Wiley & Sons
- Mentzer, JT, DeWitt, W, Keebler, JS, Ming, S, Nix, NW, Smith CD & Zacharia, ZG, 2001, “Defining Supply Chain Management”, Journal of Business Logistics, vol.22, no.2
- Mentzer, JT, DeWitt, W, Keebler, JS, Ming, S, Nix, NW, Smith CD & Zacharia, ZG, 2007, “What Is Supply Chain Management”, Sage Publications
- Stevens, GC, 1989, “Integrating the Supply Chains”, International Journal of Physical Distribution and Materials Management, vol.8, no.8
- Wilton, D. 2005, ‘Origin of the Word Logistics’ Retrieved: 8 July, 2010 from http://logistics.about.com/od/logisticsdefined/a/origin.htm