Global Competitiveness: Role of Supply chain Management
Business today is in a global environment. This environment forces companies, regardless of location or primary market base, to consider the rest of the world in their competitive strategy analysis. Firms cannot isolate themselves from or ignore external factors such as economic trends, competitive situations or technology innovation in other countries, if some of their competitors are competing or are located in those countries. Companies are going truly global with Supply-chain Management (SCM). A company can develop a product in the United States, manufacture in India and sell in Europe. Companies have changed the ways in which they manage their operations and logistics activities. Changes in trade, the spread and modernization of transport infrastructures and the intensification of competition have elevated the importance off low management to new levels.
SCM & OUTSOURCING
Liberalization, Privatization and Globalization (LPG) of the economies and companies has fuelled the competitiveness among corporate. A number of factors have lead to the increasing globalization of the world economy and as a result the competitive environment faced by the corporate has changed dramatically since the last decade. The drivers of globalization include: decreasing tariffs, improved transportation, communications and information technology, global manufacturing of products and availability of services across markets. These changes have enabled the global competitors to make the products and services available to customers worldwide, and the results have been a proliferation of choices for consumers and a need for the companies to offer greater products and service quality at lower costs in order to remain competitive. These pressures have led to an increased emphasis on reengineering internal business processes and working more collaboratively with the customers and suppliers to better integrate planning and operations throughout the supply chain as a means to reduce costs and improve services. Changes in technology and globalization of products and services have also resulted in increasingly dynamic markets and greater uncertainty in customer demand. Consumers have greater access to more goods and services, and the introduction of new products is occurring at a faster pace. Thus a company’s competitive position depends upon its ability to understand changes in customer demands and respond appropriately with goods and services that will meet those demands. SCM tools and techniques are mechanisms that can allow the companies to respond to these environmental changes. Hence the reason as to why supply chain management has become popular during the past decade is the phenomenon of globalization. Increased competition has made business look for core competencies for enhanced performance. If a particular organization in some country has the core competence for a certain product/component/service, it will get the business for that product/service. This is called global outsourcing
Supply Chain Dynamics
A supply chain is defined as a set of three or more companies directly linked by one or more of the upstream and downstream flows of the products, services, finances and information from a source to a customer. It consists of all the stages involved, directly or indirectly, in fulfilling a customer’s demand. It not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers and customers themselves. Within an organization, the supply chain includes all the functions involved in fulfilling a customer demand. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance and customer service.
Competitiveness and Supply-chain Strategies
A company’s competitive strategy defines the set of customer demands that it seeks to satisfy through its products and services. A supply-chain strategy...
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