Introduction

Liberalization, Privatization and Globalization (LPG) of the economies and companies has fuelled the competitiveness among corporates. A number of factors have lead to the increasing globalization of the world economy and as a result the competitive environment faced by the corporates has changed dramatically since the last decade. The drivers of globalization include: decreasing tariffs, improved transportation, communications and information technology, global manufacturing of products and availability of services across markets.
These changes have enabled the global competitors to make the products and services available to customers worldwide, and the results have been a proliferation of choices for consumers and a need for the companies to offer greater products and service quality at lower costs in order to remain competitive. These pressures have led to an increased emphasis on reengineering internal business processes and working more collaboratively with the customers and suppliers to better integrate planning and operations throughout the supply chain as a means to reduce costs and improve services.
Changes in technology and globalization of products and services have also resulted in increasingly dynamic markets and greater uncertainty in customer demand. Consumers have greater access to more goods and services, and the introduction of new products is occurring at a faster pace. Thus a company’s competitive position depends upon its ability to understand changes in customer demands and respond appropriately with goods and services that will meet those demands. SCM tools and techniques are mechanisms that can allow the companies to respond to these environmental changes.

Supply Chain Dynamics 

A supply chain is defined as a set of three or more companies directly linked by one or more of the upstream and downstream flows of the products, services, finances and information from a source to a customer. It consists of all the stages involved, directly or indirectly, in fulfilling a customer’s demand. It not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers and customers themselves. Within an organization, the supply chain includes all the functions involved in fulfilling a customer demand. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance and customer service.

The objective of the supply chain is to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s demand. It is strongly correlated with the supply-chain profitability, the difference between the revenue generated from the customer and the overall costs across the supply chain.

Competitiveness and Supply-chain Strategies

A company’s competitive strategy defines the set of customer demands that it seeks to satisfy through its products and services. A supply-chain strategy determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service and distribution of the product to the customer, along with any follow-up service.
The ultimate objective of SCM is to achieve a ‘strategic fit’ between the company’s competitive strategy and supply-chain strategy. This strategic fit can be achieved by:

• Understanding the customer demand. This helps the company to define costs and service requirements.

• Understanding the supply chain. It helps the company to design and manage its supply chain in accordance with the customer’s demand.

• Achieving strategic fit. If any mismatch exists between what the supply chain is capable of doing with respect to customer demands, the company can either alter the structure of the supply-chain design or alter its strategies.

Optimizing the Supply-chain Performance

There needs to be a trade-off between the supply-chain responsiveness and supply-chain efficiency. The supply-chain responsiveness includes a supply-chain’s ability to do the following:

• Respond to a wide range of quantities demanded by customers
• Meet short lead times
• Handle a variety of products
• Meet very high service levels

The more of these abilities the supply chain has, the more responsive it is. The supply-chain efficiency is the cost of making and delivering a product to the customer. Increases in costs lower the efficiency. For every strategic choice to increase responsiveness, there are additional costs that further lower the efficiency. For optimizing the supply-chain performance, the company needs to achieve a balance between the responsiveness and efficiency, in line with the company’s competitive strategy. The main drivers of the supply-chain performance include:

1. Inventory: This includes all raw materials, work in process and finished goods within a supply chain. Changing the inventory policy can dramatically alter the supply chain’s efficiency and responsiveness.

2. Transportation: This entails moving the inventory from point to point in a supply chain. It can take the form of many combinations of modes and routes, each with its own performance characteristics. Transportation choices have a large impact on the responsiveness and efficiency of the supply-chain performance.

3. Facilities: These are the places in the supply-chain network where the inventory is stored, assembled or fabricated. The two major types of facilities are the production and storage sites. Whatever the function of a facility, decisions regarding the location, capacity and flexibility of facilities have a significant impact on the supply-chain performance.

4. Information: This consists of data and analysis regarding inventory, transportation, facilities and customers throughout the supply chain. Information is potentially the biggest driver of performance in a supply chain as it directly affects each of the other drivers of the supply-chain performance. Information presents management with an opportunity to make supply chains more responsive and efficient.

Conclusions

With the globalization of the world economy, the diversity and environmental factors that influence a company’s global strategies and approach, supply-chain drivers influencing the companies to become increasingly global, it can be concluded:

• Different approaches to globalization require different degrees of supply-chain integration, as well as different supply-chain strategies and structures.

• Whatever approaches to globalization and global supply-chain management are adopted, companies face the challenges of understanding and managing the greater complexity and risks inherent in the global environment.

• Global supply-chain processes need to provide operating flexibility to the company to respond to changes in the macroeconomic environment or government policies that adversely affect the supply-chain performance.

• Design and management of supply-chain activities must consider the influence of differences in culture, industry structure, legal requirements and infrastructure in different countries on customers, suppliers, competitors and supply-