Logistics and Supply Chain Management

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Executive Summary

In today’s rapidly changing business environment, ever-greater demands are being placed on business on every industry, such as to provide products and services quicker, with greater added value, to the correct location, with no relevant inventory position, etc. However, customers are more sophisticated by wanting more quality, design, innovation, choice, convenience and service, and they want to spend less money, effort, time and risk. Hence, every business has to deal with highly competitive situation in order to survive; Supply Chain Management (SCM) becoming the main topic for improving efficiency and satisfy customer’s need.

The supply chain of a company consists of different departments, ranging from procurement of materials to customer service. Supply chain management means transforming a company’s “supply chain” into an optimally efficient, customer-satisfying process, where the effectively of the whole supply chain is more important than the effectiveness of each individual department. Cost involved in the Supply Chain operation and process can be significant influencing the satisfaction of customers and the whole chain efficiency. The following assignment I will be focus on the total cost concept in operating supply chains of my selected firm. Introduction

Every business organization needs to delivers products to its customers. Traditionally we would have described these products as either goods or services. Then manufacturers like Sony makes electronic products or Toyota makes cars these kinds of tangible goods, while the Vodafone makes mobile or Internet service provide the intangible services. In reality, this view is rather uncertainly, some products are really a complex package that contains both goods and services. The organization that I have chosen is one of the largest computer manufacture and IT consulting company that contains both goods and services. The IBM Company.

IBM is one of the world large computers and IT service provider company, it provide the computer system and almost all industry information technology service and IT related solutions for its customers. Behind their integrated management of the company, its supply chain management have involve much effort on improvement in order to be successful, the management processes start from Procurement, product lifecycle management, supply chain enterprise application, operation, planning, strategy, visibility, complex supply chain optimization, logistics business transformation to IBM asset management solutions.

Logistics and Supply Chain Management

Total Cost Concept

Total Supply Chain Management Cost is considered to be one of the most difficult measurable costs in business management, which is defined as the fixed and operational costs associated with the source, plan, strategy and delivery within the supply chain processes. It is a cost takes into account of procurement, order management, inventory carrying, planning or finance and information technology costs.

From the Supply Chain Council’s Operations Reference by Scott Stevens stated, “It is estimated that reducing the cost of your supply chain by 1 percent can be the equivalent of increasing revenues from 4 to 12 percent.” It tells the cost reduce from supply chain can make a significant large profit of company.

Supply chain operations provide organizations with the ability to recognize operational improvements across many areas of their value chain. IBM comprehensive supply chain management address every phase of the supply chain, from design to source to plan to build to distribute. It has one of the broadest portfolios of alliances with leading and emerging supply chain vendors, such as SAP, Dassault Systems and i2 Technologies. As a single source for supply chain management, IBM Supply Chain Management Services can help you address the full supply chain spectrum and help move companies from a lagging to a leading position in their industry...
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