PRINCIPLES OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Table of Contents

Introduction. 3

Supply Chain Management Strategies, Policies, and Practices. 3

Effectiveness of Various Supply Chain Strategies in Maintaining Supplier Relationships. 4

Mechanisms of maintaining Business and Supplier Relationships. 5

Role of Information Technology in Integrated Supply Chain Management and Logistics. 6

Application of E-commerce in Supply Chain Management 7

The Concept of Multi-Channel Supply Chain. 8

Conclusion. 8

References. 10

Introduction

Many companies globally have managed to become market leaders in their industries because of the effective supply chain management strategies they adopted (Nguyen 2017). Such companies include Walmart and Toyota. Even though they come from different industries, retailing and manufacturing, respectively, these two firms’ performance signifies that the optimization of supply chain and manufacturing procedures can benefit an organization.

Supply Chain Management Strategies, Policies, and Practices

A supply chain management strategy refers to a formal written plan detailing the actions a company will be taking over a given period in its supply chain to meet its organizational goals and objectives (Nguyen 2017). Walmart and Toyota have implemented various supply chain management strategies that have helped them remain market leaders for many years.

Fig. 1: Walmart Supply Chain Flow Chart

Walmart operates a supply chain strategy that entails sourcing products directly from manufacturers or producers before taking them to the organization’s storage facility for dispatch to various retail outlets (Nguyen 2017). The company has since eliminated intermediaries who may adversely affect lead times. Since its inception, the business has adopted an agile supply chain management strategy, which has seen to it that the retail giant’s customers get the required products on time. Consequently, the organization’s customers are sure of getting high-quality goods as and when they require them (Nguyen 2017).

On the other hand, Toyota’s sustainable growth is significantly based on the organization’s ability to design, improve, and control its production processes (Iyer 2019). The company’s operations strategy primarily focuses on the optimization of its manufacturing procedures. It continuously works to enhance the design, quality, control, planning, as well as utilization of resources (Iyer 2019). Toyota emphasizes the significance of just-in-time production. In essence, the corporation minimizes costs and improves its vehicles’ quality through timely identification of defects, optimal utilization of spare parts, enhancing the employees’ ability to improve design flows, efficient management of time, and effective utilization of technology (Iyer 2019).

Effectiveness of Various Supply Chain Strategies in Maintaining Supplier Relationships

Being a retailer, Walmart has to develop good relationships with its suppliers and producers. The company’s relationships ensure effective information sharing to promote warehousing and logistics activities to ensure an efficient supply chain system (Nguyen 2017). The use of information technology systems heavily characterizes the company’s supply chain strategy. Its adoption of distribution centers has significantly ensured the steady and consistent flow of products in its retail stores. It manages these centers through the use of sophisticated technology and computer systems. At the headquarters, Walmart uses a private satellite network to monitor sales and stock levels in various stores in different locations across the globe (Nguyen 2017).

Over the years, Walmart has maintained strategic relationships with suppliers to ensure they meet demand (Nguyen 2017). It has developed strategic partnerships with most of its vendors, offering them long-term and bulk volume purchases in exchange for the least possible prices. The company has streamlined its supply chain management by developing supplier communication and relationship networks to ensure low inventories and smoothen the flow of materials (Nguyen 2017). Through the Retail Link platform, suppliers can monitor the sale of their items every day for timely replenishment. Products are delivered to the company’s distribution centers through cross-docking, which has significantly eliminated inefficiencies, reduced transportation time, and minimized transportation and inventory costs (Kim and Choi 2015).  Walmart’s strategic relationship with its suppliers has greatly reduced costs, enabling it to pass the cost savings to consumers through highly competitive pricing (Nguyen 2017).

Mechanisms of maintaining Business and Supplier Relationships

Excellent business and supplier relationships ensure the streamlining and improvement of processes between the suppliers and the business. A supplier relationship entails the development of a mutually beneficial relationship to ensure innovation, efficiency, and quality. It can as well be used to minimize prices paid and costs to the company. One of the mechanisms used by companies for better supplier relationship management involves the use of technology to create, process, and track purchase orders with the vendors. For instance, Walmart uses the RFID technology in which when commodities run low, alerts are sent from the company’s retail stores to the nearest distribution center and the respective supplier (Nguyen 2017). The supplier then ships the product directly to the appropriate distribution center, from which the product is then delivered to the retail store. This use of technology within the company’s supply chain has resulted in improved efficiency, which has seen the company become one of the leading retail chains in the market.

Another mechanism used by businesses to maintain an effective relationship with suppliers is through timely payments. Effective supplier relationship management requires fulfillment of payments on time. Apart from establishing their credibility and reliability as a client to the vendors, timely payments help businesses not to lose their valuable suppliers. Some other companies also make well-documented supplier relationship agreements to reduce the chances of disputes and ensure better relationships. The agreement signed details the expectations of both parties from the partnership regarding such issues as communications, terms of payment, delivery, price, and service or item description. Walmart carefully manages its suppliers’ performance on a daily basis based on the standards stipulated in the Walmart rule book for suppliers.

Role of Information Technology in Integrated Supply Chain Management and Logistics

Supply chain management and logistics integration refer to the process of developing cohesion and enhancing connectivity across the entire value chain, from procurement to the planning of production to logistics (Han, Wang, and Naim, 2017). Instead of allowing each function to operate on its own, supply chain management integration ensures the working together of these distinct functions to minimize disconnect and encourage collaboration. The goal of supply chain management and logistics integration is to reduce costs and waste and improve production and response time (Han, Wang, and Naim, 2017). This can be achieved through the use of information technology solutions that assist in centralizing cross-operational data to ensure an increase in cross-operational visibility.

Vanpoucke, Vereecke, and Muylle (2017) point out that by making it possible to share large amounts of data along the entire supply chain, including strategic planning, logistical, and operational data, information technology promotes real-time integration of all the partners in the supply chain and improves production planning. It also offers companies with forward visibility in addition to enhancing the management of inventory. Apart from Walmart and Toyota, Dell Computers is another company that managed to successfully integrate its supply chain. Such integration significantly helped the company benefit from low excess inventory and just-in-time delivery to its customers worldwide, thus enabling it to become a leader in its industry for many years.

Application of E-commerce in Supply Chain Management

E-commerce refers to the acquisition and sale of products and services over the internet. Payments for such transactions are also made using the internet (Kayikci 2019). Despite being popularly known for the sale of physical products online, e-commerce also describes any type of commercial transaction carried through the internet. While e-commerce specifically concerns the transaction of goods and services, e-business covers all aspects of running an online business. The various models of e-commerce include business to business (B2B), business to consumer (B2C), consumer to consumer (C2C), and consumer to business (C2B) (Yu, Wang, Zhong, and Huang 2017).

Businesses across the globe are turning to the internet to buy and sell their items. Companies like Zara are heavily investing in eCommerce operations because of the associated benefits (Yu, Wang, Zhong, and Huang 2017). E-commerce and supply chain management to help such organizations become market leaders. In the fulfillment process, e-commerce allows businesses to exchange documents electronically and streamline their document handling without any significant time and money investments (Yu, Wang, Zhong, and Huang 2017). E-commerce ensures improved data accuracy, minimizes overall costs, accelerates business cycles, streamlines supply chain services, and improves customer service (Yu, Wang, Zhong, and Huang 2017).

The Concept of Multi-Channel Supply Chain

Multi-channel supply chains offer consumers many buying options. Multi-channel supply chain solutions emerged as a result of increased internet use (Yan et al., 2019). People wanted options on how they can acquire their desired goods and services. In multi-channel supply chains, buyers may acquire a product online, over the phone, or by going into the physical brick-and-mortar store (Yan et al., 2019). However, each of these channels operates on its own. Each has its transportation and warehouse solutions, and department v. Such kind of disconnect may result in increased costs and reduced visibility across the supply chain. Businesses operating multi-channel supply chains may prove problematic to the customers (Yan et al., 2019). For instance, items acquired in the store may feature different prices from the online sales, and the products a consumer requires may not be available in his or her preferred channel. Unlike multi-channel supply chains, omnichannel supply chains offer higher brand consistency, increased customer loyalty, and enhanced customer satisfaction (Yan et al., 2019).

Conclusion

In summary, it is in order to say that effective supply chain management is essential for the long-term sustainability of an organization, as been proven by Walmart and Toyota over the decades. Various firms have to improve the way in which they handle their supply chain management operations. Managers should constantly be on the lookout for how best they can enhance their supply chain efficiency to ensure increased performance and profitability, and dominance in their industries. Maximum utilization of information technology is key to ensuring successful supply chain integration. Walmart’s strategies can significantly help other companies become industry leaders as long as they are emulated appropriately.

References

Han, J.H., Wang, Y. and Naim, M., 2017. Reconceptualization of information technology flexibility for supply chain management: An empirical study. International Journal of Production Economics187, pp.196-215.

Iyer, A.V., 2019. Toyota: Supply Chain Management. MGH.

Kayikci, Y., 2019. E-Commerce in logistics and supply chain management. In Advanced Methodologies and Technologies in Business Operations and Management (pp. 1015-1026). Igi Global.

Kim, Y. and Choi, T.Y., 2015. Deep, sticky, transient, and gracious: An expanded buyer-supplier relationship typology. Journal of Supply Chain Management51(3), pp.61-86.

Nguyen, T.T.H., 2017. Wal-Mart’s successfully integrated supply chain and the necessity of establishing the Triple-A supply chain in the 21st century. Journal of Economics & Management29, pp.102-117.

Song, G., Song, S. and Sun, L., 2019. Supply chain integration in omnichannel retailing: a logistics perspective. The International Journal of Logistics Management.

Vanpoucke, E., Vereecke, A. and Muylle, S., 2017. Leveraging the impact of supply chain integration through information technology. International Journal of Operations & Production Management.

Yan, B., Chen, Y.R., Zhou, X.T. and Fang, J., 2019. Consumer behavior in the omnichannel supply chain under social networking services. Industrial Management & Data Systems.

Yu, Y., Wang, X., Zhong, R.Y. and Huang, G.Q., 2017. E-commerce logistics in supply chain management. Industrial Management & Data Systems.

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