Use of Low Cost Labor Continues Damaging the Twenty-First Century Supply Chain

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Situational Analysis

The management of the Supply Chain Management (SCM) is emerging as the combination of technology and best business practices worldwide. Companies have improved their internal operations are now working to achieve greater savings and benefits by improving processes and information exchanges that occur between business partners. A successful supply chain management implies timely delivery to the final customers, the right product at the right place at the right time, the required price and the lowest possible cost. Best SCM programs share common features, first of all, have an obsessive fixation on customer demand. Instead of forcing the products to be sold in the market quickly, may or may not meet the demands of customers or be complete financial failure. This type of initiative is plotted development objectives and producing products that are demanded by customers minimizing the flow of raw materials, finished products, packaging materials, money and information at each point of the product cycle (Willcocks, 2002).

These objectives have been sought by industrial companies for several decades and have experienced by the management. The companies have also successfully implemented modern techniques such as Just in Time (JIT), Quick Response (QR), Efficient Customer Response (ECR)-Managed Inventory Provider (VMI) and many more. These are the tools that help build a structure of robust supply chain. From the cost point of view, is where the company performs the best benefits, a recent study showed that the total costs of the supply chain become 75% of operating budget expenditures. MIT recently did a study which showed that companies that have successfully implemented these programs achieve benefits such as we can tell inventory reductions of up to 50%, 40% increase in on-time delivery, 27% reduction in cycle product accumulated, doubling inventory turns, reduced 9 times the missing, and 17% increase in sales (Rudd, 2007).

Another study by a consulting firm found that these companies typically achieve excellent results in reducing operating costs, improve asset productivity and be more efficient in responding to changing market demands. In the last decade, companies have implemented a range of programs designed to reduce the cost of operating, doing business concepts such as downsizing, reengineering, outsourcing, etc. It helped the company to restore the competitiveness of entire industry.

During this period, the focus was to increase profitability and cost-cutting rather than increasing sales. This cannot be brought up to certain limits in today's businesses as operations are looking thinner and healthier to grow, and are repositioning the concept of supply chain as a lever for growth. The question then arises of why not or how. Smart managers recognize two important things. First, think about the supply chain as a whole, all the links involved in managing the flow of goods, services, information and funds from the vendor of the client to client. Second, continually seek tangible results, with a focus on sales growth, asset utilization and cost reduction. This chapter includes all situation analysis that has been researched regarding the topic ...