Supply Chain Organizations and Functions
Supply chains are specific networks, including employees, organizations, resources, production, and carriage, designed to manufacture and market a product. Therefore, supply chains are closely linked to the primary goals and activities of any corporation and require careful consideration. It may be necessary to constantly develop and optimize supply chains in order to reduce costs and improve product quality. As supply chains involve a wide variety of entities and influence all stages of production, they have a large number of functions. First, supply chains provide necessary resources, which are required during the production process. Second, these chains are designed to provide top-notch services to the clients and expand the market share. Third, supply chains play a critical role in following the production schedule and providing the needed inputs in time. Logistics and information workflow are also an inseparable part of managing supply chains.
As already mentioned, supply chains involve a wide variety of entities and organizations, each of which has a specific objective within the production cycle. Suppliers represent the first link in a chain as they provide raw materials for future products. In some cases, there is a chain of suppliers as raw materials require preliminary treatment. The second element includes the manufacturers, which process the provided materials to produce a final product. Distributors receive the final product and deliver it to wholesalers. In the last stage, the product is delivered to retailers, which directly sell it to the customers and provide complementary services. A logistic company may be a significant part of such a supply chain as it links these organizations by delivering materials and products. Various functions are implemented during each step. Moving raw materials is the primary function of the chain. Production and delivery are conducted by manufacturers and distributors. Marketing and selling the product are delegated to wholesalers, and services are implemented by retailers. Different states have diverse problems and require distinct approaches to their solvation. Moreover, various aspects represent a competitive advantage for each organization in the supply chain. It may be necessary to provide an individual management approach during every stage.
Third-Party Logistics in Supply Chains
Using third-party logistics may be highly beneficial for any organization with a relatively long supply chain. It may be especially relevant for transnational organizations, which require transporting goods on significant distances. Third-party logistics providers may offer several advantages as they have sufficient knowledge and experience in the area. Outsourcing logistics to such organizations may lead to cost reduction. Third-party logistics organizations may be cost-efficient as they provide their services to multiple companies and have considerable economies of scale. Furthermore, they may allow adjusting supply chains according to demand without significant economic losses. Simultaneously maintaining logistics and production may lead to downtime. Using third-party logistic companies also allows mitigating risks as risk management is partially outsourced. Such cooperation may also provide flexibility to test new markets with lesser investments. Moreover, using third-party organizations in logistics gives access to valuable knowledge in the field. Even though cooperating with third-party logistics may lead to lesser control over the process, the benefits overweight the shortcomings, and it should be considered by most modern organizations.
Nike’s approach to supply chains and logistics is unique. In some cases, Nike is even considered to be one of the pioneers in implementing modern outsourcing strategies. Even though Nike does not use third-party logistics providers, it achieves a similar goal through other methods. Nike may appear to be a “third-party logistics company” for its own product. Instead of outsourcing logistics, Nike outsources product manufacturing. Nike’s manufacturing network includes approximately seven hundred factories, yet Nike owns none of them (Jiang, 2019). Such an approach allows Nike to focus on product development, marketing, services, and logistics. In addition, it significantly reduces the costs as raw materials are produced in the manufacturing host countries, and the supply chains are shortened. It also provides access to low-cost labor without significant losses of quality.
Nike’s outsourcing techniques allow for improving the supply chain as if it utilized third-party logistics services. The approach is particularly beneficial in terms of the last stages of the supply chain. Nike is able to focus on marketing strategies and provides sufficient financial investments into its brand. Moreover, Nike utilizes such a strategy for decades and accumulated valuable knowledge and experience in logistics. Nike also offers top-notch services to their clients as they view it as the main priority. Considering the unique methodology used by Nike, it may not be rational to implement third-party logistics services as the company already improved the supply chain by other methods. However, it may be possible to utilize their knowledge and experience in the field to expand the company. First, Nike may start providing third-party logistics services to other organizations to reduce downtime. Second, it may be beneficial to expand franchising and allow manufacturers to sell certain products using Nike-owned trademarks. Overall, Nike’s supply chain management is unique and requires a special approach to its improvement.
Jiang, W. (2019). Sustainable Development of Supply Chain in Footwear Industry – Take Nike as the Case. Asian Business Research, 4(3), 86. Web.