When was the last time that you made a purchase at McDonald’s? You may have not put much thought as to where all of the ingredients came from that produced your sandwich. Depending on the restaurant’s location, McDonald’s sources its ingredients from both local and global suppliers. The challenge is to ensure that all restaurants in theMcDonald’s network have enough ingredients to meet customer demand. This is the challenge for Logistics & Supply Chain Management. Here is a list of relavent topics that Logistics / Supply Chain Management operations encompass.
1.1 History of Logistics & Supply Chain Management:
Logistics has always been a critical part as one of the 4 P’s in Marketing: Product, Place, Price and Promotion. The“Place” component ensures the product is at the right place, at the right time, in the right quantity and the right quality. Read about how the logistics discipline started and where it is headed.
A History of Logistics / Supply Chain Management
Logistics has always been a critical part as one of the 4 P’s in Marketing: Product, Place, Price and Promotion. The “Place” component ensures the product isat the right place, at the right time, in the right quantity and the right quality. Read about how the logistics discipline started and where it is headed.
Logistics received recognition in military operations during World War II. It gained its momentum as it contributed to the effective distribution of machinery and supplies to troops. A service delivery failure here may mean anincrease in unnecessary fatalities. Peter Drucker (a business guru in the 1960’s) identified logistics as a growing concern within business. This generated more prominence towards the practice of logistics.
As the economies in North America evolved in the 1970’s and 1980’s, transportation deregulation changed the competitive landscape of business. Carriers were free to chargetheir customers (Shippers) a competitive rate for their shipments. Warehousing companies that typically acted as surplus inventory storage locations, married up with transportation companies to offer customers full-service solution capabilities. This formed the beginning of the 3rd party logistics business and paved the way for outsourcing logistical activities.
With the advent ofglobalization, firms began to seek ways of cutting their production costs. Thus, multi-national corporations re-located their factors of production to low-wage countries to gain a competitive advantage. Increasingly, more and more countries are joining the World Trade Organization (WTO) and opening their country to foreign capital investment (most recently in China). Retail giants like Wal*Martexploit these new efficiencies and increase their imports from new emerging economies to reduce product prices in their stores. Thus, the new challenge is how to manage the product and information flows around the world. The increased pressure on managing these operations further underscored the importance of logistics as an area for optimization.
Another contributor that ledto an increased presence for logistics was the explosion in information technology and use of computers throughout the 1980’s and onwards. The cost of computing has decreased year after year since then and computing power rose exponentially. The use of the Internet and increased bandwidth capacity further enhanced and enabled quick connectivity and collaborative relationships that reducedinventories and created a Just-In-Time operating opportunity for organizations. These efficiencies reduced errors, increased fill-rates and cut overall operating costs for organizations.
Supply Chain Management
As the above factors fuelled efficiencies, logistics gained more prominence in organizations. A natural extension was to link the logistical operations from each firm to the entire supply...