Role of logistics in enhancing competitive advantage

Abstract

PurposeThe purpose of this paper is to describe the issues, tradeoffs, and models relating to two important sets of problems that arise in supply chain management – complexities in extended supply chains and network coordination in globally dispersed supply chains. This paper highlights the role of logistics in enhancing the competitiveness of firms that operate a global supply chain.Design/methodology/approachThe methodology used in this paper encompasses conceptual research and detailed literature review of key issues.FindingsThis review indicates that the key challenges faced by supply chain managers due to extended supply chains are non‐stationary demand, variability propagation, and inventory imbalances. For network coordination managers must determine the role of facilities in a global network, identify the optimal location and capacity of facilities as well as role of consolidation hubs. For the above challenges, the tradeoffs in terms of four key drivers of supply chain performance – transportation, inventory, information, and facilities and relate these to key measures of supply chain performance are described. Important directions for future research are also identified.Research limitations/implicationsTest cases are needed to validate and refine the framework presented. Developing case studies that gather appropriate data to test out the models described would be important.Practical implicationsCompanies with a global supply chain as well as third party logistics companies will find the framework presented in this paper very useful.Originality/valueA new integrated framework that incorporates key decision issues like complexities of extended supply chains and network coordination into the firm's decision making has been presented. This has not been reported in previous research.