With intensifying globalization and escalating business competition, there has been a lot of research undertaken to comprehend the concept of supply chain management in the purview of the challenges of new business dynamics. Supply chain management and it’s every facet, right from product design, resource procurement, product distribution management, all have evolved as key differentiating determinants of competitive advantages.
The role of logistics in supply chain management
Conventionally, supply chain was mistakenly understood as a synonym of logistics management and the key function of supply chain was logistics with the intention to assimilate customers with the suppliers and producers. The process initiated from the “point of origin” and concluded at the “point of consumption”. However, supply chain is a vast concept that along with supply of product and services also includes the movement of information in both forward and backward directions.
Contemporary management experts view logistics as an integral part of supply chain management. This involves planning, execution, and control of efficient and effectual two- way movement and storage of goods and relevant information with the intention of customer satisfaction.
Distribution management in supply chain management
Available literature reveals supply chain management through catchphrases like:
- cohesive purchasing strategy,
- integrated logistics,
- supplier coordination,
- partner relationship management,
- strategic alliances,
- harmonization of the supply chain to cater to the rostrums of the newly evolved philosophy (Tan, 2000).
Distribution management and supply chain management are used as synonyms to address supply issues of an organization, right from procurement of resources to supply of finished goods to point of sale. However, there is absence of well-defined explanation of supply chain management in the available reservoir of knowledge (Ganeshan and Harrison, 2002).
Dimensions of distribution management
Hall and Hesse (2012) perceived the concept of distribution management from four major dimensions: geographical; physical; transactional and distributional. The geographical flow of products means the transfer of goods from the place of origin to the destination. However, ironically, with globalization and intensified competition acted as catalysts for more separation in concurrence with the escalation in trade flows between specific trade partners. The physical dimension relates to the characteristics related to how products are shipped safely and conveniently as per the protocols. Transactional dimension pertains to the negotiations between the parties of interest in the supply chain as it involves monetary deals between the consignor and the consignee especially amongst the newly evolved third party logistics. Last, the distributional aspect aims at developing an organized and well-structured sequential network involving various modes and terminals of goods transfer. It is aimed at cost optimization and improvising efficiency either in-house or through experts.
Distribution management as a social system
There is unanimous consent on the criticality of distribution channels in the physical transfer of goods as the channel is the showground where marketing and logistics functions amalgamate to deliver results to the customers. Hence, the decision-makers must righteously comprehend the strategies pertaining to the distribution channels and develop an in-depth understanding of the complete and general characteristics of total distribution channels. It becomes essential as distribution channels are nothing but a social system consisting of inter-reliant businesses that carry out specifically assigned activities. They collectively complete the supply chain function of the company as a whole, i.e., from the procurement of raw material to ensure the product reaches the destination on time (Wilkinson, 1996).
It is this interdependency of the organizations that require businesses need to develop mutual strategies keeping in mind the common business objectives of all the channel partners. This acts as a catalyst for cooperation and coordination amongst partnering businesses and smooth alignment of transfer and logistics activities of the comprehensive distribution function.
Consumer centrism in supply chain management
The biggest challenge of the present-day market structure is to satisfy the constantly changing customers’ demands with innovative products that are superior in quality and lower in price. This has compelled businesses to explore the potential of distribution management as a strategic tool for revenue appreciation. Supply chain management is being acknowledged as an integral strategy for competitive success domestically and internationally.
Consumer satisfaction through adaptable manufacturing
Gunasekaran, Lai, and Cheng (2008) have emphasized on the need of the companies to be flexible enough to accommodate changing customer demands through adaptable manufacturing and agile distribution management. Adaptable manufacturing refers to a system of operations that possess the exceptional capability of modifying as per the changing requirements of the catering markets. It must be competent enough to switch smoothly between product models or product lines, preferably instantaneous response to the innovative and ever-changing customer demands (Gunasekaran, Lai and Cheng, 2008).
However, it becomes a tough task for the companies to meet the challenges of dwindling product life cycles, an abundance of variants in each product category (mass customization), and the rising ambiguity pertaining to both the demand and supply aspect of the product. Handling such a high degree of uncertainty is one of the crucial determinants of supply chain design. Companies selected from the three generic possibilities for it: holding safety inventory, holding safety capacity, or lowering variability through the employment of improved information (Poiger, 2010).
Complexity in decision making related to supply chains
Supply chain management decisions are an outcome of a lot of mixed influences from theories like:
- systems theory,
- transaction cost economics,
- game theory,
- inter-organizational relationships and,
- industrial network theories.
Moreover independent supply chain functions like logistics management, distribution, inventory management, etc. add to the complexity. Therefore, managing supply chains is a highly demanding and exigent job. It involves more of relationship management rather than effectual management of transportation of goods. It consists of interrelationships between vendors and other participating partners. Businesses that are able to manage this complexity of inter-relationships and multiple vendors can attain a business advantage.
- Ganeshan, R. and Harrison, T., 2002. An Introduction to Supply Chain Management, Department of Management Science and Information Systems, Penn State University
- Gunasekaran, A., Lai, K. and Cheng, T., 2008. Responsive Supply Chain: A Competitive strategy in a Networked Economy, Omega The International Journal of Management Science, 36, Pp. 549-564
- Hall, P. and Hesse, M., 2012. Cities, Regions and Flow, London: Routledge
- Poiger, M., 2010. Improving Performance of Supply Chain Processes by Reducing Variability, Dissertation, Vienna University of Economics and Business: Department of Information Systems and Operations.
- Tan, K., 2000.A Framework of Supply Chain Management Literature, European Journal of Purchasing and Supply Management,7, Pp.39-48
- Wilkinson, I., 1996. Distribution Channel Management: Power Considerations, International Journal of Physical Distribution and Logistics Management, 26 (5), Pp.31-41