Logistics: Economics and Supply Chain

Topics: Economics, Logistics, Supply chain management Pages: 5 (1268 words) Published: September 26, 2011
Transportation: Critical Link In The Supply Chain

Study Questions
1. What are the major forces or external factors that have impacted our economy during the latter part of the 20th centuries? How have each of these factors influenced companies as well as their respective supply chains? Which of these factors do you feel is the most important for a computer company? Why?

In the 21st century, transportation systems will face significant challenges and problems because of global environment and the changing economic base in the United States. With combination of economic, technological, sociocultural, political, and biological factors. Many organizations developed demand-driven supply chains which could rapidly respond to change. Businesses and other organizations are striving to be more efficient (reducing their cost of doing business) and more effective (improving customer service) to survive in the new environment. The external forces driving the change include globalization, technology, supply chain integration and consolidation, consumer empowerment, and government regulation and policy Globalization: global recession of 2009 -2011 and loss of manufacturing and service jobs. Also lower prices, wider availability of goods, and new employment opportunities. Globalization increases the importance of transportation because of the longer shipping distances and transit times, as well as increasing risk. Technology: Enhance the efficiency and effectiveness of an organization’s operations. Also be viewed as an external driver of change in most organizations since the rapid development of technology (hardware and software) and its application by individuals forces companies to change and adapt. Consolidation and Integration: Large retailers, wholesalers, and other members of channels of distribution have sufficient economic power and leverage to influence business practices among suppliers and their customers. Transportation companies have had to respond to their requests for scheduled deliveries, special packaging and advanced shipment notices. Enlightened Consumer: Education: Who is empowered by education, income and especially by information from the internet and other media. Their Consumers are demanding competitive prices, high quality, flexibility of operations and service, and responsiveness to their special needs. Government policy and regulation: Deregulation of interstate transportation services, communication companies, and financial institutions which occurred created a more competitive environment.

Consolidation and integration would be the most important for a computer company. They can properly identify market segments, analyze the requirements and profitablility of each segment, and develop more accurate demand forecasts. There supply and demand because its customers order computer configurations over the phone or online (Internet). These computer configurations are built up from components that are available. Their strategy is to provide customised, low cost, and quality computers that are delivered on time. They successfully implement this strategy through its efficient manufacturing operations, better supply chain management and direct sales model. They take orders directly from its customers; either on phone or online. Thus, reduces the cost of intermediaries that would otherwise add up to the total cost of PC for the customer. They also save time on processing orders that other companies normally incur in their sales and distribution system. Moreover, by directly dealing with the customer they get a clearer indication of market trends. This helps to plan for future besides better managing its supply chain.

Another advantage would be directly dealing with the customer is that it is able to get the customer’s requirements regarding software to be loaded. They load the ordered software in its plant itself before dispatching it. By eliminating the need of a PC...
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