Supply chain management (SCM) is the management of the flow of goods. It includes the movement and storage of, work-in-process inventory, and finished goods from point of origin to point of consumption. Interconnected or interlinked networks, channels and node businesses are involved in the provision of products and services required by end customers in a supply chain. Supply chain management has been defined as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." SCM draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach.
Barriers to Entry
Certain segments, such as warehousing, require expensive physical assets, but it's possible to launch companies in transportation management and software development with minimal capital. Scaling up, however, can be a difficult feat for small players in the industry, says Evan Armstrong, the president of Armstrong & Associates. Transportation management companies, for instance, will have a tough time negotiating prices with trucking companies if they don't bring in significant business. Growth Potential
Over the next five years, the global supply chain management industry is expected to grow more than 9% annually, according to ARC Advisory Group, a technology research and advisory firm. Watch for growth especially in freight transportation arrangement. Sales in that sector have risen an average of 20.5% over the past two years, according to Sageworks. If you have products or services that help firms lower their environmental impact, as well as costs, you'll see even more growth opportunities over the next five years, says IBISWorld analyst Lauren Setar. Where the Action Is
As manufacturing companies increase production and freight volume they're going to need to fine-tune efficiency. So, the industry is especially ripe for new technologies and software that make supply chain management easier and more accurate, says Jack Plunkett, the CEO of Plunkett Research. For instance, Amazon recently acquired, for $775 million, past Inc. 500 honoree Kiva Systems, which makes robots for order fulfillment. "Advanced software, machinery, third-party logistics services, all those types of things help American manufacturing companies," Plunkett says. "I see them growing along with the industry."
4.1 High cost of logistics.
Logistic cost is 13% of India’s GDP in comparison to
11% in Europe and 9% in the U.S. of the total logistic
cost, transportation represents 39%, while
warehousing, packing and inventory accounts 24%
of the total costs(365businessdays.com). Higher
logistic costs are mainly due to poor infrastructure
facilities in the country.
4.2 Physical infrastructure –a bottleneck
Insufficient distribution channels and infrastructure
bottlenecks restrict the scope to reach consumer of
products nationwide. Though the country has
developed the largest road networks in the world, yet
the regional concentration of manufacturing in Indian
but geographically diversified distribution activities
as well as infrastructure bottlenecks, e –
infrastructural facility is not comparable to developed
countries. Less than half of the roads were paved in
India and less than 2000Km were express highways
in 2007, which was significantly lower than china’s
30,000Km (365businessdays.com). The scarcity of
tracking technologies like global positioning systems
(GPS),(www.scmr.com) the inability of ports to
handle goods quickly, and the lack of modern
technology in warehouse. Though there are
considerable investment underway to address these
issue, such as projects take large amount of time in
India by comparison, emerging economic...
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