Every business, from high-street electronics shops to large multinational companies is burdened by having to maintain an efficient and cost-effective logistics supply.
Supply Chain Management and Outsourcing
Supply Chain Management is the process of supervising and executing the movement of materials from supplier to manufacturer, wholesaler, retailer, and finally to the consumer. Logistics supply has an important place in today’s business – ensuring that goods are delivered on time and efficiently within the supply chain, with a view to reduce the inventory.
Nowadays possessing raw materials is far less attractive from the perspective of businesses, which would rather focus on their core operations. This is due to the increasing complexity of the distribution process (e.g. inventory, transportation, and warehousing). Hence, outsourcing the logistical supply over raw materials has become far more appealing.
The benefits of outsourcing in the supply chain management model are clear-cut: the business can leave its overall logistics supply operations in the hands of its supply chain director, who oversees the effectiveness of reducing investment in vehicles, manpower and warehousing.
The disadvantage of the supply chain management model is that businesses are now required to work in partnerships with other businesses to bring the end product to the consumer.
How to keep an efficient logistics supply running?
There are many theories on ensuring an efficient logistics supply. It is not always the case that a supply chain management model is best served by fast and a fully stocked logistics supply. Tax planning in relation to investment strategies and competition analysis may also be key features that make up an efficient logistics supply model.
However, other important factors need to be taken into account; for instance, resourceful management by the supply chain director of the inventory to control stock levels, or by maintaining cost-effective buying practices to keep expenditure proportionate to sales figures.
It is apparent from these factors that the supply chain director plays a significant role in the overall logistics supply process. With a continuous growth in a business’s operations, the complexity and intricacy of logistics supply becomes more and more difficult to control. Hence, a refined supply chain management model demands an organised and strategic supply chain director. In particular, the overseeing of risk management becomes very important the greater the business becomes (e.g. changes in exchange rates or supply distributions can severely hamper its operations). Hence, a supply chain director should ensure that he is well-placed and informed of the overall logistics supply process to anticipate such variables.
The use of computers has vastly helped to improve logistics supply. Computer programs can now model and test changes in distribution methods and costs faster and cheaper. Simulations can be designed to assist the supply chain director in deciding on the various parameters in the logistics supply chain.
Conclusion
Nevertheless, as competition increases worldwide, businesses are left to ensure that their prices meet consumer demands. Companies can no longer ignore the importance of efficient logistics supply management in reaching that goal.