Literature review on drivers of supply chain management
In this section, previous studies related to key drivers of supply chain management are presented. These findings provide a better understanding on the main drivers such as facilities, inventory, transportation, information, sourcing and pricing. The planning, coordination and management of these drivers are important to achieve the ultimate responsiveness and efficiency of supply chain performance. This is because the activities in each driver are related and have significant impact on each other.
Facilities
According to Chopra and Meindl (2013), facilities refer to actual physical location in the supply chain network where it involves the storage, assembly or fabrication of the products or inventories. Supply chain facility location problems are considered as one of the most critical and challenging issues in operating an efficient supply chain. Decisions made on the location, capacity and flexibility of facilities can significantly affect supply chain performance (Chopra & Meindl, 2013; Lambert & Cooper, 2009; Melo, Nickel & Saldanha-da-Gama, 2009; Shahzadi, Amin & Chaudhary, 2013).
Kirkham, Richbell and Watts (1998) address that plant size, site constraints, labour productivity, distance from headquarter, age of plant, remoteness and future expansion must be carefully considered in locating a facility. Meng, Huang and Cheu (2009) add on inefficient locations for production will lead to excessive cost being incurred throughout the lifetime of facilities regardless of how the production plants, transportation options, inventory management and information sharing decisions are augmented in response to changing conditions.
Inventory
Inventory consists of all raw materials, work in progress and end products in a supply chain. They can be classified under cycle inventory, safety inventory and seasonal inventory. Inventory exists in all supply chains because of a mismatch between...