What Is Supply Chain Management & Logistics?

Supply chain management is an effective and popular management philosophy aimed at improving the business process of a company. A supply chain is the network of businesses, people, resources, knowledge and technology involved in the production, transportation and sale of the product or good. Logistics is the management of the transportation of the resources used for the final product.

Function

The process of supply chain management begins with the supply of raw materials and includes any organizations involved and all value-adding activities until the product reaches the consumer.

Significance

Correct and effective logistics management can reduce costs of the supply chain and increase efficiency of the business process.

Benefits

Minimizing costs and increasing efficiency is accomplished through minimizing inventory and warehousing costs, working out bottlenecks with suppliers and strategically selecting distribution centers and transportation options.

Considerations

The managerial choices of a supply chain affect the public perception of an organization; businesses must align their values, ethical standards and objectives with every organization involved in the supply chain.

Warning

Even if an organization is ethical, responsible and never commits any violations, it can receive backlash from consumers if any partner in its supply chain is engaged in unfair business practices or misconduct.

References

• Global Logistics and Supply Chain Management; Tim Butcher, Chandra Lalwani, and John Mangan; 2008
• What is Logistics?