Essential of Supply Chain Management

Essentials of Supply Chain
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Essentials of Supply Chain
Globalization, technological change, and cutthroat market competition have influenced the approach to supply chain operations. Nowadays, companies cooperate to contribute mutual benefits, focusing on particular activities and trying to perform it at their best. The companies successfully use the outsourcing service of logistics companies. Instead of dissipating energy, companies can bring to perfection a core competency and stay competitive in a rapidly changing environment (Chopra &Meindle, 2016, p. 11).
The new business approach implies virtual integration instead of vertical integration: a company takes its position in a supply chain and collaborates with other companies that complete an entire integrated net. From a financial perspective, this new approach contributes to generation of costs and benefits that intertwine in an efficiently functioning steady system. A company identifies specific benefits and makes estimates of their dollar value (Hugos, 2018, p.21).
The new system provides four types of benefits. Direct benefits — the increasing capacity leads to an increase in productivity and cost savings. Also, the new system brings labor saving and growth of productivity (Hugos, 2018, p.285). Incremental benefits imply monetary benefits provided by the capability of the new system.

It refers to the growing ability to attract and retain new customers. In addition, due to the new system, a company generates additional revenue for outsourcing services (Hugos,2018, p.285). Cost-avoidance benefits mean savings due to reducing the amount of staff. Intangible benefits are not measured in monetary amount as they include improving competitiveness through an intelligent and flexible approach to operations, providing a superb level of service and enhancing the reliability of the company in the eye of the customers. In addition, intangible benefits refer to leverage the employees’ talents by careful allocation of duties (Hugos,2018, p.285).
Conclusion
The new model of supply chain suggests virtual integration instead of the previous vertical one. It means that companies develop a limited number of competencies, focusing on one-two core ones. As a result, there is formed an efficiently integrated fast-moving supply chain, which has four benefits. Direct benefits mean the savings of cost and revenue due to the improvement of productivity. Incremental benefits refer to making better decisions and attracting new customers. Cost avoidance benefits make due to the reduction in the number of employees and the expenses connected with hiring working personnel. Intangible benefits are difficult to calculate, as they imply releasing the staff from tiresome and routine work, making them focus on more interesting and valuable tasks.

References
Hugos, M. (2018). Essentials of Supply Chain Management. Canada: Wiley.
Chopra, S., &Meindle, P.(2016). Supply Chain Management. Strategy, Planning, and
Participation. The USA: Pearson.