Key attributes of supply chain management and logistics impact

Supply Chain

There are several different attributes of supply chain management. Among them, some stand out as being more important than other. Key aspects of supply chain management include technology, communication/coordination, inventory control and bargaining power (EAUC, 2014).

Bargaining power is important because it dictates the terms and conditions of the supply chain. If the buyer has more bargaining than the seller, then the terms will reflect more on the needs of the buyer, and vice versa. Thus, a company has to take this into consideration with its supply chain -- if its suppliers need it more than it needs its suppliers, this will provide opportunity for the company to leverage that to the benefit of its supply chain.

Technology is becoming increasingly important in the supply chain. Companies are using technology to get better estimates on demand, to link their point-of-sale systems with their suppliers, and to track inventory as it moves through the supply chain. Technology also helps companies to introduce more competition into the supply chain, so there are many good uses for technology, and the best technology is becoming a source of competitive advantage for many companies via their supply chain. Communications, and coordination, are critical factors that are influenced by technology. Companies are starting to experience greater integration of their supply chains, so that customer needs are better understood, and the supplier can also communicate their situation. But it is particularly important for customers that they can order from their suppliers when needed, can estimate demand better, and that suppliers have the knowledge that they need to be more responsive to the needs of their customers (Subramani, 2004).

Lastly, inventory control is becoming an increasing trend in supply chain management. It costs money to hold inventory, and there is risk associated with unsold inventory, in that it might go unsold or have to be liquidated at a discount. Inventory management is tied into working capital management, so that lower inventory levels are associated with having working capital available for investment elsewhere, thereby offering companies an opportunity to increase their ROI. So supply chain systems are focusing these days on using data as a means of increasing the efficiency of the company's inventory management.

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Logistics are affected by the different key attributes of supply chain management, because logistics lie at the heart of the supply chain. Improve technology, for example, means that buyers will order more frequently, but smaller, and expect the same from deliveries. Furthermore, logistics systems are likely to incorporate technology -- the use of RFID systems for example allows goods to be tracked at all stages of logistics as part of total supply chain management.