The Importance Of Supply Chain Operations

As the name suggests, supply chain refers to the network or system of people, organizations, various activities, processes, resources, information and activities. All of these factors are involved in supplying the product or a service to the customer from the supplier’s end. Supply chain activities have three different aspects with an ultimate goal of forming a final product. They may include transforming natural resources, or conversion of raw material and/or components into finished product.

The performance of the supply chain process depends on a number of factors associated with the process. These factors act as determinants and involve the decisions that are taken with respect to inventory, transportation, facilities, pricing, sourcing

inventory, transportation and facilities. The inventory consists of the raw materials that the firm procures for the processes and production of products. It is also about the work in progress and the stock of finished goods in the supply chain (Handfield and Nichols, 1999). The transportation part comprises of the means of moving the inventory and the facilitation of the movement of the same from one point to another. The facilities include the part and place involved in accurate storage of inventory, manufacturing process and assembly. Thus the facilities are divided into production facilities and storage facilities.

To maintain the supply chain process the focus is on the logistics. It is the logistics part that if improved can be the primary source of firms that can be used to make profits and maintain a competitive edge in the market (Christopher, 1998). There have been several innovations in the logistics department and all of them have been in favor of advancements. The innovations have been focused on improving the individual processes as well as the logistics system totally. At times, incompetent logistics system can prove to be a bottleneck in the company’s process and it is important to tackle them

This is done in order to meet the requirements of the customers. The logistics department is so important that a firm that has detailed information and has done an in-depth analysis of the requirements can provide a logistics coordinator in itself (Thomas and Griffin, 1996). This type of a logistics coordinator is also known as Third Party Logistics or 3PL and has been gaining attention lately. Herein any organization can outsource their logistics activities.

3PL exactly stands for outsourcing logistics activities inclusive of transportation as well as storage. There can be multiple activities being outsourced at the same time by a production house. A 3PL provider can comprise of the different features that include integrated logistics service provider, contract-based service provider as well as consultation based services (Hertz and Alfredsson, 2003). A 3PL provider can be identified as an asset-based or non-asset based i.e. transportation vehicles can be grouped under assets whereas information system management companies or the brokers are placed under