1.1 Background of the study
With the increasing number of world class competitors domesticgally and abroad, organizations have to rapidly improve their internal processes to stay competitive. They have to become increasingly flexible and responsive to modify existing products, services, and processes or to develop new one to meet ever changing customer’s needs. In the 1990s, with the improvement of organizational capabilities, Managers realized that ability to meet customer needs. This led to the increased focus on the supply base and the responsibilities of purchasing.
Managers also realized that producing a quality product was not enough. Getting products and services to customers when, where, how, in the quantity required and in a cost effective manner constituted an entirely new type of challenge. (Monezka., Moberg, Stuart, 2002) (Balsmeier and Voisin; Monezka 2002).
More recently, the era of the “Logistics Renaissance” was also born, spawning a whole set of time reducing information technologies and logistics networks aimed at meeting these challenges.
As a result of these changes, organizations now find that they must be involved in the management of all upstream firms (suppliers) that provide direct and indirect inputs. They must also be concerned with the network of downstream firms responsible for delivery and aftermarket service of the product to the end customer. According to Bailey, and Bell (1994) (Bailey and Benishay, 1993) (Pattatucci and Hamer, 1995) (Pillard, 1990) Logistics involves the flow of materials from suppliers, through the organization and out to the customers of the organization. The activities include, coordination of receipts of orders from customers, developing a network of warehouses, picking carriers to get products to customers and setting up an invoicing system to receive payments. The smooth operations of these logistics flows are essential for the effective management of supply chain. These functions need to be managed in such a way that they maximize contributions to the management of the supply chain and that all non-value adding activities are eliminated. The supply chain encompasses all activities associated with the flow and transformation of goods from the raw materials stage, through to end users, as well as the associated information flows. Monezka Moberg, Stuart, 2002) (Balsmeier and Voisin; Monezka 2002). Materials and information flow both up and down the supply chain. The supply Supply chains are essentially a series of linked suppliers and customers, every customer is in turn a supplier to the nest downstream organization, until a finished product reaches the ultimate end user. Supply chain management has achieved a sustainable competitive advantage through a smooth production process of business.