Logistics and supply chain management(SCM)

Abstract:-

Logistics management is increasingly becoming a topic of interest among academicians and practitioners since it may lead to reduced operational costs, improved delivery performance, and increased customer satisfaction levels.

The global logistics industry is estimated to be worth USD 300 billion. Though most of the large service providers are headquartered in Europe, the biggest market is the US, which captures about one-third of the world market. The global logistics industry is characterized by high costs of operations, low margins, shortage of talent, infrastructural bottlenecks, demand from clients for investing in technology and providing one-stop solutions to all their needs, and consolidation through acquisitions, mergers, and alliances.

Though in India, the industry is still in its infancy, there is immense potential for growth. The Indian logistics industry is currently plagued with low demand, poor infrastructure, high costs, government regulations, etc. However, it is going to turn around on the back of robust GDP growth, globalization, FDI in logistics, and increasing government support.

This study highlights the current state of the industry, including the dynamics and opportunities for growth, globally, in general, and in India, in particular, based on findings from surveys of logistics service providers, and users, of India and other countries.

Introduction:-

Logistics and supply chain management (SCM) as an area of research has been getting increasing attention from academicians and practitioners over the last two decades since it may lead to reduced operational costs, improved delivery performance, and increased customer satisfaction levels, thereby making an organization more competitive in terms of cost, quality, delivery, and flexibility.

The importance of logistics and SCM is increasing also due to globalization as more and more multinational companies (MNC) are sourcing, manufacturing, and distributing on a global scale, making their supply chains very complex to manage.

However, outsourcing logistics activities to experienced logistics service providers (LSP), also known as third-party logistics (3PL) providers, may enable companies to get very efficient and customized logistical support while themselves focusing on the core organizational activities. Today, there are many large multi-national LSPs that offer complete supply chain solutions across many diverse countries in terms of their socio-economic and political environments.

Apart from core logistical activities such as transportation and warehousing. LSPs also offer value-added services such as customs clearance. freight forwarding. import/export management, inventory management. assembly installation packaging and labeling, distribution, after-sales support, reverse logistics, and so on. By outsourcing logistics, companies can leverage the expertise of LSPs while concentrating on their core competencies.

In literature, logistics and SCM are often used interchangeably, though there is a subtle difference between the two. While SCM is more strategic in nature, logistics is more operations-oriented.

The evolution of logistics and SCM in the 1990s can be traced back to “physical distribution management” in the 1970s when there was no coordination among the various functions of an organization, and each was committed to attain its own goal. This myopic approach then transformed into “integrated logistic management” in the 1980s that called for the integration of various functions to achieve a system-wide objective (Vats, 1999; Sutural, 1999). SCM further widens this scope by including the suppliers and customers into the organizational fold, and coordinating the flow of materials and information from the procurement of raw materials to the consumption of finished goods. The objectives of SCM are to eliminate redundancies, and reduce cycle time and inventory so as to provide better customer service at lower cost. The focus has shifted from the "share of the market" paradigm to the share of the customer” paradigm, wherein the goal is to create customer value" leading to increased corporate profitability, shareholder value, and sustained competitive advantage in the long run (Evans and Dansk, 1998). The successive stages of evolution of logistics and SCM.

Logistics and supply chain management(SCM)

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