The Supply Chain Revolution - The Supply Chain Revolution...

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The Supply Chain Revolution logistics is a subset of and occurs within the broader framework of a supply chain. logistics is the work required to move and geographically position inventory. Logistics is the process that creates value by timing and positioning inventory. Logistics is the combination of a firm’s order management, inventory, transportation, warehousing, materials handling, and packaging as integrated throughout a facility network Integrated logistics serves to link and synchronize the overall supply chain as a continuous process and is essential for effective supply chain connectivity. Why Integration Creates Value To explain the basic benefits and challenges of integrated management, it is useful to point out that customers have at least three perspectives of value. The traditional perspective of value is economic value. Economic value builds on economy of scale in operations as the source of efficiency. Economy of scale seeks to fully utilize fixed assets to achieve the lowest, total landed cost. The focus of economic value is efficiency of product/service creation. Economic value is all about doing things as well as possible. The customer take-away of economic value is high quality at a low price. market value . Market value is about presenting an attractive assortment of products at the right time and place to realize effectiveness. Market value focuses on achieving economy of scope in product/service presentation. The creation of multimerchant shopping malls, large-scale mass-merchandising retail stores, and multivendor Internet fulfillment operations are all initiatives to achieve market value. The customer’s take-away in terms of market value is convenient product/service assortmentand choice. a third perspective of value, referred to as relevancy. Relevancy involves customization of value-adding services, over and above product and
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This note was uploaded on 03/23/2012 for the course ECONOMICS eco 403 taught by Professor Talatafza during the Spring '10 term at Aachen University of Applied Sciences.

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The Supply Chain Revolution - The Supply Chain Revolution...

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