Question

Text book: Supply Chain Management: A Logistics Perspective 10th Edition

Question: Throughout our discussions of supply chains, it is repeatedly stressed that supply chains must be both efficient and effective. Compare and contrast these two by giving definitions, then explaining each interms of supply chain management.

Answer 1

The efficient supply chain refers to the supply chain that utilizes the resources in the best ways to achieve its objective and delivers productivity, whereas effective supply chain refers to the meeting the expectations of the different stakeholders including the customers. Here, the efficiency in the supply chain is internal in nature, but the effectiveness in supply chain is external in nature. There is a possibility that a supply chain can be efficient in managing the internal standards and resource utilization, but may not be effective as customer service may not be satisfactory and interest of different stakeholders may be overlooked.
In this regard, there is a greater emphasis in supply chain management to be not only efficient, but also to be effective. An efficient and effective supply chain not only utilize the resources and maintain the highest standards, but also brings customer satisfaction, follow the compliance of the regulatory bodies and create value for the whole supply chain. The element of efficiency and effectiveness make supply chain to be flexible, adaptive and ready to take up new challenges according to the changing environment.