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Logistics and supply chain management: all about relationships The battle of market is no longer a contest between rival companies; it is a contest between competing supply chain. The struggle to find the balance between effective cost control and efficient customer service drives improvement across the entire supply chain. The challenge facing organizations today as they struggle to grow in this competitive environment is the number of relationships that must be developed and level of co-operation that must be achieved between suppliers and customers to win the contest.

In this chapter ,we will explore the component part of supply chain and the relationship among and between them,we will also look at the individual processes that logistics is concerned with-as discreet processes and as inter-related parts of larges systems.

One’s perspective of supply chain depends on one’s position within the chain. The producer or manufacturer of the goods is usually located in the middle of the chain. Traditionally it was the manufacturer who “owned” the chain, leading change initiatives both upstream to raw material suppliers, and downstream through distribution channels to retailers and end users. Today, with the increasingly strong leadership role played by the mega retailers (yes, Wal-mart is a prime example), manufacturers are taking the secondary role to retailers in supply chain leadership issues. If producers wish to get their goods onto retail shelves, they must either create their own retail opportunities (OLD navy, Gap, Roots) or they must reconcile themselves to being at the mercy of the retailer.

Regardless of the position and leadership role of the participant, players in supply chain recognize that success is fuelled by cross-organizational integration of key business processes across the entire network. Valuable resources are wasted when elements of the supply chain duplicate effort and when they are not properly streamlined, aligned and managed.

Historically, the focus was on internal improvements within a functional silo of the organization – within warehousing, manufacturing or purchasing . In the 1980’s ,when manufacturers began to address cost reductions, the 30%,-60% of cost attributed to purchased goods was the first expense targeted for reduction. While achieving cost reduction in purchasing remains a strong focus, today improvement initiatives focus on redesigning, re-engineering or transforming the whole network of the supply chain.

External supply chain
The external supply chain spans the network of companies and facilities outside the ownership boundaries of a particular company. The term “Boundary-spanning” refers to the relationship between external members of the supply chain. How these companies work together, how they integrate key business processes and align their business systems to work collaboratively is indicative of the strength of the relationships.

Upstream
Suppliers from the production organization include:
* Raw material suppliers (cotton growers ,iron ore or coal mines, oil companies) * Manufacturing suppliers (textile manufacturers, steel companies, plastic fabricators) * Secondary manufacturing suppliers (zipper and button manufactories ,parts and sub-assembly manufacturers , assembly companies) * Inbound logistics suppliers (transportation companies ,freight forwarders and customs brokers, all of the services companies moving the goods along the loops and over the links of the chain) * Non-production suppliers (machinery, consumables ,supplies);and * Staging or distribution centers (today often owned by the supplier rather than the production company locations where inbound materials are held pending production)

Downstream
Suppliers from the production organization include:
* Finished goods warehouses or distribution cents(DCs) (warehouses which store inventories for extended periods; distribution centers which store and pass through...
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