r. Material management. Physical. distribution. Logistics supply. chain. 11 The global costs of inventory collection and maintenance, next to the. Request PDF on ResearchGate | On Oct 1, , John Mangan and others published Global Logistics and Supply Chain Management. The development of international trade is driven by international logistics and management and the provision of the global supply chain. The ultimate objective .
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Global Logistics and Supply. Chain Management. Second Edition. John Mangan, . Chandra Lalwani, Tim Butcher and Roya Javadpour. John Wiley & Sons, Ltd. Global Logistics and Supply Chain Management, now in its third edition, provides essential reading for anybody studying SCM and logistics. Encompassing both. To help you learn psychology on your own, Psychology: A Self-Teaching Guide Following each section there are one or se.
Island automation: installing separate IT systems in separate business units. ERP caters for the complete administrative process in all departments in one IT system. PLM: product lifecycle management: everything related to product details SCM: supply chain management: everything to do with controlling the physical flow of goods, downloading, manufacturing and distribution CRM: customer relationship management Together PLM, SCM, and CRM form the holy trinity embracing all business software applications.
Integral systems make data exchange much easier. This model is used for setting up, controlling, and improving logistics and supply chain processes. This model allows you to compare the logistics performance of various companies benchmarking. The model is very robust, it can be applied to all sorts of companies ranging widely in size.
The SCOR model is continually in development. The model has a modular structure for process analysis comprising of three levels: 1. Process 2. Process category 3. Process element Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live. Plan 2. Source 3. Make 4. Deliver It also states the performance indicators considered important at management level: 1. Plan : planning and control in the supply chain 2. Source: downloading of raw materials and resources 3.
Make: production 4. Deliver: distribution 5. Recycling recently added In the process category the various categories are divided into: - Planning P - Execution and enabling E Chapter 3 Market and e-commerce Marketing: concerns the regulation of goods flows of finished products using a range of marketing instruments. The common ground with logistics is mainly found in the area of distribution logistics. The value-added chain Companies think and act based on their value added, which in turn is based on the idea of the value chain.
Porter introduced the value added chain. A company is profitable if the value it creates exceeds the costs of performing the value activities. But product differentiation and market segmentation can also provide value for customers. Porter distinguishes 9 categories of value activities. The links necessitate coordination. The value system includes value chain of: - Suppliers - The company - Distributor - Customers Links in the value chain provide relationships, but also dependencies.
To greater extent, the field of operation of the logistics specialist is driven from marketing and sales. Marketing Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live.
These activities are aimed at fulfilling the wishes of the consumer and the wishes of the supplier. Product and production-oriented thinking has made way for market-oriented thinking. Within the marketing concept we can distinguish three sub-objectives: 1. Mass-individualization: supply of a product or service is made especially for a customer custom- made at the cost of a standard product off-the-shelf.
Customers appreciate those products that meet their requirements, wishes and specifications customizing , but would rather not pay any more that for the standard product commodity If a company is able of realizing custom-made products at low cost, this could lead to higher profitability. Increased interest in mass-individualization can be explained from two trends: 1. Consumers are becoming more individualistic, demand is becoming more heterogeneous and unpredictable.
Individuals want to distinguish themselves from others because of the need for self-improvement and recognition. Customers are less loyal to specific products, services and stores. Consumers belong to an even increasing number of networks that are becoming smaller and changing faster than ever. This makes customers unpredictable the capricious customer , this makes forecasting groups and planning from the top unworkable.
Hierarchy of objectives Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live. Within each function we can then distinguish a number of instruments or activities. Choice of a distribution channel The word distribution has to meanings, a marketing and a logistics meaning. Within marketing we will limit ourselves to the marketing-mix instrument, the marketing side of distribution.
The manufacturer who is outlining his distribution policy should ask himself through what distribution channels he can sell his products. Distribution channel: the road a product covers from manufacturer to consumer. A distribution channel consists of a number of loosely connected business economies, that push a product along from manufacturer to consumer.
Retailer: company that concentrates on the sale of products to household consumers. Wholesaler: specialized in trade with business economies, often these are retailers or other wholesalers. Importers: considered to be part of the wholesale sector. Forward integration: wholesaler takes on the task of a retailer within the same distribution channel Backward integration: wholesaler takes over the task of the manufacturer.
The opposite of integration is called differentiation. In integration the market and price differences between two links in distribution channel are eliminated, but this does not mean that certain functions are eliminated. The opposite of this is specialization. Distribution spread should be weighted multiplied by Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live. PAGE 99 calculations!!
Customer service Customer service concerns all factors that influence the process in which the product is made available to and suitable for the customer. The service level: a benchmark for meeting customer orders according to the delivery terms that are generally accepted in the market. During the past few decades, the concept of customer service has gone through a considerable development. Three stages can be distinguished La Londe : 1.
Customer service as an activity: more considered as a separately activity than an integral part of the total corporate objective. Customer service as a performance measure 3. Customer service as a management philosophy: customer service concept must penetrate into the entire organization Customer service is a customer-oriented company philosophy that integrates and manages all elements of the business that interface with customers, within a predetermined optimum of costs and services.
Quality, availability and price play a key role in determining customer service. Elements of customer service One of the most difficult tasks is making customer service operational. Customer service includes activities prior to the transaction pre-transaction , at the moment of the transaction itself the sales contract or transaction , and after the actual transfer of the goods post-transaction.
Pre-transaction elements: customer service is related to the effort with which the customer can conclude an order or make the download. Electronic data interchange EDI has enabled orders, transport documents etc. Internet is accessible to everyone and flexible to function inside the organization intranet as well as between companies extranet. E-business: the application of new technology to connect the value chains between businesses and consumers B2C and between business and business B2B and make them transparent, so that service can be Improved, cost can be reduced, and new market channels can be opened, making competitive positions undergo a transformation.
Cost-cutting seems to be the main reason for e-business. Four trends that are currently dominant in the market under influence of e-business: 1.
Individual customers come first: good respond to individual customer requirements 2. Increasing number of network organizations are outsourced more often: simplification of communication and automation of data exchange make it easier for companies to cooperate. Speed and transparency are becoming more important: delivery should be quick and processes should be streamlined and information must be available. Services are becoming more expensive: internet offers companies the opportunity to expand their services E-commerce E-commerce is the application of e-business to marketing and sales.
Sometimes is the download of products and services also included, but a better term for the downloading side is e-procurement. E-commerce concerns downloading and selling through the internet.
E-business is a wider concept and includes integrating information and communication technology in all aspects of the organization, and e-commerce is a part of this. E-commerce is: performing all actions in pre-sales, sales, and after- sales electronically. The e-commerce process includes: Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live. Thet are interpreted differently and some extra factors are added.
Place: The place factor has to do with the location where the offer is made. Because of wireless marketing, it is easy to offer products to more people. Product: with e-business the customer can make its own contribution to the development to the final product.
Price: customer is able to make more price comparisons. The costs can be reduced because of the cost savings resulted from e-business. Promotion: communication is faster and cheaper through internet. It is also possible to build a closer relationship with the customer. With e-business the traditional marketing instruments do not lose their value. Customer relationship management CRM Marketing and logistics meet each other in information technology and mainly in the appearance of CRM.
CRM is continuously and systematically entering into, developing and maintaining relationships with individual customers with the aim of achieving mutual benefits. Three elements are essential: - Know your customer: distinguish customers and understand the basis of the relationship. Identify the needs of the customer Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live. Continually adapt your service to the customer.
Make custom-made solutions. Managing CRM as a process enables a company to: - Respond to the individual needs of customers - Place responsibility for the development of the relationship - Optimize the process quality and minimize the pain for the customer - Concentrate on those customers that are relevant to the company - Measure how successful it is in creating mutual benefit What is needed for CRM: 1. Remembering : know the customer, use databases prevent islands 2.
Analyzing: transform into actions 3. Supporting: streamlined process to serve customers as effectively and efficiently as possible 4. Communicating: uniform communications with customers Where to begin with CRM: The most important thing in CRM is to concentrate on those matters that have the most effect on your objectives.
Where is the profit? The next step is to create an ideal image of the future. Three types of CRM: 1. Operational CRM: 3 segments of sales, marketing and call center automation. Analytical CRM: making automated and real-time connections between customers and product. Chapter 4 Product and Process Once a company has gained sufficient knowledge and information about the market, it can start the product design procedure and start setting up the production process.
Product terminology A well-chosen ERP system can provide benefits for a business. The form and structure of the production process can mean that many ERP systems are not workable in these circumstances. The question then, do we need to change the product or the ERP system? Product: objects or services, that can be manufactured within the company or acquired from third parties, and that are intended to be resold with an added value.
In some companies, a product is referred as a stock keeping unit SKU. Products are often identified with a unique product number, Verspreiden niet toegestaan Gedownload door: Angela de Groep E-mail adres: angela live. If the FFF of a product is changed, the product number needs to be changed as well.
The number of product numbers that are used internally, is one of the benchmarks for the degree of complexity of the ERP control process. download items: are acquired from suppliers and are sometimes supplied according to a customer specification. The delivery takes place after an order has been placed with a supplier by the downloading department.
Manufactured items: produced entirely or partially within the own company. When a part of the production takes place externally this is called outsourced work specialization. The individual steps in the manufacturing process are usually managed with the operations sheet. This lists all the processes in chronological order, as well as the materials to be used and the time required for production.
Products can be subdivided into different types of products based in their status in the production process: 1. Raw materials 2. Parts 3. Compound items 4. Finished products Raw materials: crude materials that are acquired from outside the company and are traded exclusively by weight, volume, surface or length. Inventory records can be held per product number.
Most companies set up their own number system. Part: Single products, this item is not assembled from other items, and is often made out of one piece. Standard parts are download items that have been manufactured according to a standard. Compound items: permanently assembled or permanently packaged products, constructed from a number of existing products that have been manufactured or downloadd independently from each others.
The less product numbers is a company the simpler the internal production process. Finished products: included in the commercial package of products intended for sale to customers. Companies have often a core activity in which it specializes.
Finished products can be made in different varieties. The choice of a product number system can depend on the way in which the finished product is constructed.
By adding specific product information as separate details in a data field in the information system, you can prevent complications and mistakes. In IT terms this is called the entity of the product number. Opportunities may exist or evolve that could give a business a competitive advantage and reduce the impact on the supply chain of crossing international borders. For example, electronic commerce is becoming more widespread globally with traders reporting to customs electronically see page Usually as a prerequisite, some form of paper trail is required.
Electronic reporting and electronic declarations can simplify complying with customs. Electronic reporting is usually subject to customs authorisation. Another example is customs warehousing see page 87 , which in principle allows the storage of goods free of duty and import VAT. Management of the Inventory in the Supply Chain Analysis Including Vendor Management The management of the inventory in the supply chain is a critical area in the cycle time analysis.
This embraces from the time when inventory is needed until it is received, sold and sales payment is received, and is particularly important to company success and longevity. The longer the cycle time the larger the amount of inventory that will be carried to balance against uncertainty. A contract manufacturer turns inventory 3. Development of a strategic focus on inventory is best expressed in companies operating a payment cycle every 90 days resulting in four payments per year.
Hence a lot of capital is tied up, which earns nothing while goods remain unsold. Inventory has a limited shelf life. There is a window of opportunity to sell the product.
The inventory works against having a good warehouse layout to reduce order picking. It adds to labour cost. Too much inventory results in having a distribution centre larger than really necessary to store the extra items.
Hence cost and impact are very large. Overall, it restricts agility to respond quickly to changing conditions. Other aspects include insurance cover, risk of obsolescence and discount pricing to dispose of fast-moving goods FMG such as the computer, perishable products, etc.
Much depends on the product and level of competition. A key factor is the degree to which the logistic supply chain network has been developed. We will now focus on some of the reasons for excess inventories to be followed by a strategic development: Hence, a hedge factor arises to carry more items and more inventories than is necessary. A further factor is an overoptimistic sales forecast with inadequate market research and intelligence.
Price strategy: Prima facie economical downloads may actually be uneconomical. Obsolescence is a great risk in overstocking. Basically, it is more of an initiative activity with long lead times for items, especially those imported; this compounds the problem.
Supplier performance and analysis is a key area. Suppliers are not managed even when suppliers fail to ship or deliver more than 25 per cent of the procurement on time. Ideally, a zero tolerance or near zero tolerance should be sought, as practised by the Japanese. Firms build in extra time to receive their orders. They carry extra inventory to compensate for the supplier delivery issues.
Poor supplier performance generates increased inventories because of its unreliability and extended time to deliver. Absence of any process embracing downloading and ordering transactions: This embraces companies with no strategic processes for customers, sourcing, or tactical processes for sales and operations planning. Procedures that lack processes, whether for inventory or other purposes, may be used instead. Expediting is another sign of no process. Inventory is used to compensate for the lack of process or for lack of execution.
Consequently, companies end up carrying too much inventory, especially for slower turning items. Developing a strategic approach is essential with focus on processes at all levels of management throughout the company. A company commitment is required throughout the business, which we will now examine. This will identify daily measurement of movement throughout the inventory, especially in terms of velocity, ageing and turns.
Developing a lean inventory see page 27 throughout the business. Excess inventory and additional management time represent waste and add no value to the product.
Lean is very similar to supply chain management see page 24 with its emphasis on pull see page 27 for product movement.
Lean is a key tool to identifying and reducing unnecessary inventory. Companies that have supply chain management as part of the core competency and strategic focus perform better in controlling inventory across the supply chain. Endeavour to reduce the time from the need for inventory until it is sold. This is very important with lead times for critical items especially perishable, fashionable and fast-moving consumer goods FMCG , and for imports that have long transit times.
Compression should occur both internally and externally to the company. Vagaries in the supply chain compound uncertainty and increase inventory. The location of the warehouses may have been established years ago under economic conditions that have changed.
Their design, layout, often favours a labour-intensive operation and out-of-date transport resource. Many warehouses can increase the total inventory carried because of the extra safety stock. Too few can mean longer transport distances and can have more inventories in transit than on the shelves.
It also applies in India see page and Sri Lanka see page Manage download orders at all stages of the procurement process, including the supply chain transparency. There is much more to consider than low prices in rent or selection. Analyse the impact Factors and Challenges Driving Logistics and Supply Chain Management u v 21 of such sourcing and determine how to address the inventory and degree of competitiveness, especially in the area of pricing. Study the Dyson case study see page relative to the relocation of the production plant of domestic appliances such as washing machines, vacuum cleaners, etc.
Outside assistance embracing two options. Secondly, there is the ongoing approach that can be provided by a 4PL or 3PL to manage the inbound or outbound supply chain. Third-party logistics and 4PLs that can see the supply chain, not just freight or pallets, can be valuable partners.
It ensures the development of a computer-literate management system and focus. This facilitates planning and especially the interface with the supply chain management. It requires commitment and vision.
Moreover, it involves all levels of management and constant brainstorming to improve performance. The most salient are detailed below. RFID has enabled a transformation to take place in communication and data transmission, opening up markets and refocusing strategies in distribution and manufacturing outsourcing and assembly.
It has no culture or language barriers, no time zones and is available continuously, bringing together the low- and high-labour cost nations and their skills for the exchange of goods and services. A major contributor is the WTO see page It has placed a fresh focus on global distribution with an emphasis on added value in the distribution chain.
This has opened up new markets in both the manufacturing and service industries. The decline of the freight forwarder has emerged as the mega container carriers develop in-house global logistic operations. This has encouraged the trade to entrust the entire distribution arrangement to the shipowner, thereby bypassing the freight forwarder. The development of the free port, free trade zones and distriparks see page 79 in the port environs has opened up new opportunities of trade distribution for the international entrepreneur.
Such designated areas are immune from customs examination and revenue collection until they enter the domestic market in question. They enable the global trader to outsource the product and focus on such areas as the component assembly point, the packaging and distribution point, and the mixing and blending unit for powdered cargoes such as spices.
Value is added to the product through the global logistic network. Companies, particularly multinationals, are being driven by their logistics departments.
Moreover, the multinationals now focus on a simultaneous global product launch across all markets to ensure an early cash return on capital expenditure rather than concentrating on a regional launch over a period of time, for example, phase one Europe, phase two North America and phase three the Far East.
This favours the logistic operation. Following on from point 10 is the intense competition emerging in the global product market. Hence, to remain competitive the trader must adopt a global logistic strategy. Satellite production demands a logistic network. It is computer-driven. Hence, both the importer and exporter develop empathy with the global logistics operator on a tailor-made basis, taking full advantage of their professionalism and experience coupled with a competitively priced operation.
Traders can therefore concentrate on their core business of marketing, product development, investment and production.
The global logistics operation encourages the rationalisation of distribution networks. This will accelerate as the hub and spoke system develops through the megacarrier operations. Continuing improvements in the global infrastructure, for example port modernisa- Factors and Challenges Driving Logistics and Supply Chain Management 18 19 20 21 22 23 24 23 tion, the development of inland clearance depots and free trade zones, the provision of new and enlarged airports, the development of road and rail networks, serving the ports and airports, all favour the global logistics operation.
The development of multi-modalism involving a stronger interface and integration between transport modes and the emergence of dedicated services also favours global logistics. Undoubtedly, the rapid expansion of IT has been a major driving factor as the global logistic operation is computer-driven.
Companies today demand responsiveness from the global operator. When a trader downloads a service, the trader expects the consignment to be delivered or to be informed of delays or challenges encountered. The global operator will be able to help the trader in planning such market expansion and provide data on the culture, the market environment, import restrictions, customs regulations and the best-practice global logistics operation feasible.
Today, traders are logistically literate and demand accreditation to product quality control — which includes distribution through global logistics.
Moreover, traders demand a quick response to changing and volatile order levels with cycles of peaks and troughs. Again, the mega-logistic carrier can best respond to such a challenge.
Most changes occur due to a poor service quality or inadequate attention to the individual customer. This also favours the mega-logistics global operator. The continuous improvement in supply chain software. The most important concept underlying management of supply is that of integration. This embraces manufacturing resource planning, inventory management and supply chain design.
It is essential all parties involved in the supply chain have an agreed set of priorities. Figure 2. Software advances have been accelerated through the rapid globalisation of manufacture and distribution. The development of time-sharing with the logistics contractor. Reproduced by courtesy of Synquest.
To achieve improvements in the management of a supply chain, keeping track of goods at all times is the key.
This can be achieved through manual methods or sophisticated electronic data interchange EDI tools see page Asset Management in the Supply Chain Asset management is a key area in the global supply chain and warehouse management. The asset management problem — it emerges with many industries conducting and keeping up with existing inventory — has historically been a challenging, resourceintensive process. Many current methods for performing an inventory count or for tracking asset movement do not provide real-time asset visibility.
Hence, decisions are based on outdated, inaccurate information. One must acknowledge that in the most advanced supply chain management, warehouse management systems, enterprise resource planning and related software solutions, the accuracy and value of the data from these packages is only as good as the information source input.
Equally challenging is the equipment and asset monitoring to prevent theft or misplacement.
Hence the results that the asset is no longer available and the company will incur additional cost to replace it. Endless situations arise of asset loss, such as the hotel that lost hundreds of television sets from their own shipping docks, the manufacturer that was to have much of its electronic equipment stolen via employee exits or shipping docks, or the laboratory unable to locate a piece of test equipment, but later found it locked away in a forgotten storage room.
Being able to detect a potential theft before it happens, or locating critical equipment when needed, requires real-time visibility and information relating to the location and status of the item.
Additionally, that information must be integrated into the existing host systems so that decisions and actions can be taken in real time. Security is another area on which to focus attention. It is used in conjunction with data capture hardware such as RFID — active or passive , bar code or global positioning system GPS ; it provides real-time visibility to assets at the site or enterprise level. The system operates on the basis of the foundation for a data capture ecosystem.
It allows users to integrate a variety of data collection mechanisms, embracing the best technology for a given class of assets while maintaining a single, comprehensive data collection exchange and reporting structure.
The managing mobile resource solution is capable of providing a complete solution for the improved management of mobile resources and assets inherent in the supply chain such as pallets, containers, totes, equipment and vehicles.
Running as a thin client application most of software resides on network as opposed to PC, that is, webdeployed applications , the solution has the ability to provide the following: The mechanism procedure of RFID embraces tags placed on assets to be monitored. Depending on the asset type and application requirements, the tags may be active or passive RFID. Active tags have a battery, beacon, on a periodic basis, and can be read from distances of several hundred feet depending on the antenna type and surrounding 26 Factors and Challenges Driving Logistics and Supply Chain Management environment.
While they are considerably less expensive than active RFID tags, they have considerably less read range capability, with most having maximum read ranges of 10 feet or less.
Resolution for the zones can vary based on the asset being tagged, antenna type and composition of the surrounding environment. Additionally, bar-code readers could be used to capture asset information and provide this to the system via the MRM software.
This assumes that a bar code is placed on each asset and the operation or process provides means for manual scanning of the bar code. An example of asset management arises in the manufacturing sector in North America, embracing seven locations. The manufacturing process is highly automated and high-tech.
Hitherto, it was reliant on manual bar-code scans or manual entries into logs. This information is subsequently shared with other systems in the operation and made available and transmittable via web browser, report or alert. Subsequently, the RFID was used to track totes used to transport parts and tools, and monitor and locate vehicles moving within the facility.
A further example arises with reusable container tracking.
A leading manufacturer of residential glass uses metal racks to transport sheets of glass within the facility and for shipping to window manufacturers. The glass manufacturer has a problem maintaining visibility to the racks inasmuch as they can only account for a percentage of the racks and do not know how many reside at their manufacturing or customer locations.
This generates a problem, as individual sites may not have enough racks on hand to support customer orders, impacting the sales cycle and ultimately revenue. Moreover, it contributes to excess inventory as more are downloadd to meet demand because of misplaced racks. To resolve the problem, RFID tags are placed on each rack and readers placed at each dock door. To conclude, active RFID see page is not a panacea for all asset types or applications.
The ideal asset management system must make use of multiple technologies, choosing the best data capture solution for each type of asset. It involves the ability to identify waste in the supply chain. Overall it focuses on three key areas. Basically, it extends beyond the supply chain and manufacturing programme, but includes a change throughout the organisation to be logistically focused and literate.
Secondly, it embraces the suppliers and customers. Thirdly, the lean principles that must be the basis of the lean supply chain: Lean supply chain management is a challenge that must be acknowledged.
This is in addition to the usual company issues, such as lack of implementation know-how, resistance to change, lack of a crisis to create urgency, gaining resources and commitment and backsliding. Areas that need to be addressed include the following: The order to delivery time is long. It is compounded when experiencing port delays and shortage of specialised containers. Accounting — does not recognise waste as lean does.
Inventory represents capital tied up. Accounting systems do not recognise time, particularly in the balance sheet. Rework is not treated the same by accounting. Organisation — supply chain management and lean are processes that cross organisation boundaries. There are many suppliers and many logistic service providers in a supply chain.
Some are visible and some are less visible. Many suppliers or logistics services do not practice a lean strategy. This involves evaluating all the ingredients of the supply chain and measuring each element against a benchmark.
A key to the plan is the starting point. This features the infrastructure to support it, training, culture, quality methods, accounting systems and investment policies. It embraces six stages. This is a visual way to organise waste removal with extra time for travel or employees.
Rapid set-up — or changeover — has application in the warehouse to adjust layout for seasonal products, new products and changes in which products are fast-moving and often picked, and the complementary items that go with these fast-overs. Reducing the time can involve housekeeping and maintenance including 5 Ss , setting up smaller areas for stock-keeping units SKUs , technology such as warehouse management systems and RFID see page It can be the basis for employee training.
A way to coordinate multi-step processes for multiple products. With Kanban, small stocks of inventory are placed in dedicated locations for supply chain control.
This approach runs counter to the traditional way of large distribution centres delivering truckloads of products to stores or customers. Point of sale and other technologies can be the withdrawal signal to trigger both drawing from and replenishing Kanbans. This reduces time and inventory with small batch sizes for select items.
All inventories are not treated the same way from suppliers nor with regard to warehousing. It is self-contained as to equipment and resources.
The potential application, combining multi-operations into a central area, exist where warehouses carry out additional activities such as kitting or assembly. Sigma — an advanced tool that ties to quality. The focus is variation and controlling and preventing errors.
Statistical measurement is fundamental. It is used throughout the supply chain, not just in select activities or locations. Sigma takes lean supply chain management to its ultimate level. Usually, there are complementary or supporting processes with lean supply chain management. Essentially, the operation must remain seamless throughout. A strategic focus is required. Getting started with lean and sustaining it with continuous improvement is not easy.
Lean takes time and years to accomplish. Often the waste has become incorporated into the daily operation company-wide and is accepted as part of doing business. In some situations there may be too much instability in a supply chain to become lean. Planning is an essential ingredient. Lean Supply Workforce We have examined lean supply chain management see page 27 and will examine the demand-driven workforce see page , embracing the demand-driven supply network, incorporating the pull model as distinct from the push model.
We will now examine the concept of lean supply workforce. These are all interrelated. Today it has become translated into the logistic framework and is found in the global supply chain. The next stage is to set goals, standards and adaptable precision. A useful technique is engineered labour standards developed using time studies, an established database of granular movements called master standards data, or a combination of both. The third element is planning, scheduling and simulation.
This embraces the 30 d e f g Factors and Challenges Driving Logistics and Supply Chain Management prerequisite to have in place the best practice and creation of accurate standards, which facilitate how long a given job should take or the required number of workforce to undertake a particular job. Technology is available to translate order demand data, seasonal trends, special promotions, and other demand signals into workforce plans that indicate how many people, with what skills, are required to complete the prescribed work within a given time frame such as a shift, day, week or longer period.
Quality and safety are key factors to establish best practices. This is realised through employed best-practice methodologies, training workers and supervisors how to properly use the best practices, and by removing barriers to productivity. Workers will try to cut corners to improve their productivity performance, but the cost of mistakes and accidents that ensue, including damaged inventory and equipment, injuries, penalties, returns and other customer service issues, can far outweigh the savings from productivity gains.
Educating the workforce in the logistic skills to develop best practice is a key area. This includes not only the initial course programme, but also refresher courses. Continuous training must be given by supervisors to ensure the goals are realised.
Overall, the training must be professional and pragmatic and with a view to performance monitoring and coaching. The management must have regular meaningful data to measure the workforce productivity and reliability. This involves a range of analytical tools that will identify problem areas and groups that are high or low performers. For example, it may identify areas of investment, training and changes in the workforce. Companies focusing on the lean supply workforce strategy frequently devise incentive schemes.
This requires accurate performance data. Finally, in our lean supply workforce analysis, companies frequently experience a reluctance to change, but in most situations the option does not exist if the company and its products are to remain competitive. The driving force is often technology. This improves productivity and morale, since all workers are evaluated fairly and equitably.
This reduces training cost, improves quality, and enhances customer service. This improves customer satisfaction and loyalty. This helps management to better understand the cost to serve each customer by product or service provided.
This data can be very helpful in bidding and price negotiations, as well as in determining true margin contributions by product, customer service, location or business unit. It generates a situation where workers are self-motivated and self-accountable, supervisors become coaches, and the management has a more productive workforce with higher esteem and retention qualities.
Full cognisance must be taken of logistics and the supply chain. Market Environment Today, conducting business overseas is logistically driven.
The following points are relevant: Market stability and its infrastructure. Product availability and its stage of development. It is also added value in terms of its development. Countries like India see page 33 , Pakistan, China and Sri Lanka see page are moving from a low-tech to a high-tech environment in many industrial and sociably developed regions with a logistics focus and continuous investment in the logistic infrastructure.
Membership of economic or trading bloc. Excellent example found in EU — 27 Member States — good infrastructure — single market permitting distribution of goods without border controls embracing customs duty and above all, high-tech and logistically focused see page North America is likewise logistically focused see page Whether market is fully developed, underdeveloped, or developing.
Fully developed Export Sales Contract i j 33 are high-tech, capital-intensive with fully trained workforce. Conversely the less developed countries LDCs are agriculturally driven and often a commodityfocused economy with low labour costs and low levels of technology.
Moreover, they rely on non-convertible currencies. Opportunity for inwards investment embracing joint venture, licensing, franchise, mergers and acquisition or industrial transplant. Market Entry Strategy Companies must have a logistic strategic focus in their decision-making process of selecting and entering a market, a series of markets, or cluster markets.
The following logistic strategic considerations are relevant: To increase production thereby lowering unit cost and permitting more competitive pricing. To increase market share and dominance. To increase general competitiveness of the company.
To ensure the long-term future of the company. To develop a proactive, rather than a reactive, company, which is globally logistically focused and market research-driven, with a continuous focus on client base and marketplace environment. To develop an international brand image. It also favours a volume market with the opportunity for more productivity and logistic development. Planning is an essential factor with well-thought-out and designed logistic systems. Overall, it embraces three basic areas.
Reliability, cost of service, value added, and performance are key areas. Cluster customer markets of similar service preferences are ideal. It is a market-driven logistics strategy. This embraces a zero failure rate. It is a challenging 34 Export Sales Contract operation that the global logistics entrepreneur must overcome.
Software is a key factor in the design of the global logistic system and enables, through e-commerce, continuous communication such as RFID see page The second aspect is to continuously examine ways of reducing cost in the supply chain compatible with providing an acceptable service to the client.
This is an important area in global logistics as international transport operators are continuously remodelling their services to become more competitive in transit time. Constituents of the Export Sales Contract The formulation and execution of the export sales contract involves four elements — insurance of the goods, payment of the goods, the contract of carriage and the export sales contract.
All are interrelated and are primarily based on the global logistic operation and the related documentation. There are numerous variations to the foregoing arrangements see page 79 , which provide the logistics operator the ability to reduce cost, improve productivity and above all improve service and competiveness to the customer.
Details of an export contract are given below: Short title of each party quoted in a and b. Number and quantity of goods, precisely and fully described.
The price. The currency selected must be stable and convertible see page It is important that the correct Incoterm see page 50 is used and the supply chain management keeps it under continuous review.
Again, salient factor in the design of the supply chain. This is a critical area with item j and has a strong interface with international transport operation see page The period of their validity must be reconciled with the terms of payment and delivery date or shipment date or period. This includes marking of cargo. A complex area that the logistic operator must be familiar with.
This includes pre-shipment documentation see page This embraces local conditions that will vary with overseas destinations, especially customs clearance see page Both parties must ensure that a responsible person at director or managerial level signs the contract and the data should be recorded. Obviously the terms of the export sales contract will vary by circumstance and must be driven by logistics strategy. It may feature agency involvement, after-sales activities such as the availability and supply of spares, product servicing, training, advertising and promotion cost, and so on.
It may embrace outsourcing of components and thirdcountry assembly, embracing inbound and outbound movement. Each party of the contract must retain a copy. A sound logistic management strategy is required and full use must be made of computerisation. The tactics adopted include the strategy required for continuous review in the light of changing marketing conditions. Five areas need special attention: The foregoing embraces: Business-to-Business B2B and Business-to-Consumer B2C The process of conducting business globally is electronically driven and there is no doubt it is a main driver in the globalisation of logistics.
Digital trading extends to the digital trade transport network embracing the logistics chain. It enables both the MNIs and the small and medium enterprises SMEs to operate in the same environment with similar market penetration strategies crossing international barriers and developing the B2B or B2C contact.
Hence, the exporter with a logistic focus in developing market entry strategies must have a high-tech computer resource and software to develop a viable overseas market. A market research strategy must be adopted. During the past decade and much facilitated by e-commerce internationally, we have seen an enormous increase in the B2B and B2C sectors. Moreover, it develops empathy between the two parties and favours strongly a logistic and computer-focused approach.
The B2B e-commerce market is well established and favoured strongly by personnel designing the logistic supply chain as it eliminates the intermediary and encourages transparency. The B2C is distinguished from the B2B by the nature of the customer and how the customer uses the product.
In business marketing international customers are organisations such as businesses, government bodies and institutions such as hospitals. It is very popular in the EU market. It should be manned 24 hours per day to handle global enquiries in various time windows. The website must be targeted to focus on individual logistic markets and ideally in the language of the downloader.
This was driven very much by containerisation, which has changed considerably during this year period. The biggest changes in the logistics industry have occurred in the last 10 years. Figure 3.
Integration between departments increased steadily in the following years, until in the s the two distinct functions of materials management and physical distribution became prominent.
These gradually merged into a more integrated logistics function by the early to mids. In the early s logistics costs accounted for 15 per cent of gross domestic product GDP in the US, 14 per cent in Australia and 25 per cent in Japan. Alfred J. This arose also because more regulated delivery, more rapid response of the system, and total stock, in the pipeline capital assets in transit see page 18 , is reduced by a quicker transit time. Today, several of the top 10 3PLs are Swiss companies founded in the nineteenth century.
Air freight was a fast-growing industry in the s. Emery was a leading player, but today focuses attention onto other transport modes. In the container business various subsidiaries and acquisitions over the years were consolidated at Maersk Logistics and APL Logistics in and , respectively. Today, Maersk Line is a leading player in global logistics.
Moreover, globalisation and the use of Internet technology paved the way for global sourcing, which triggered global supply chain management solutions. From a systems perspective, a complex network structure can be decomposed into individual component firms. Therefore, the choice of an internal management control structure is known to impact local firm performance.
First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier " just-in-time ", lean manufacturing , and agile manufacturing practices. Firms with geographically more extensive supply chains connecting diverse trading cliques tend to become more innovative and productive.
Supply-Chain Management draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach. Historical developments[ edit ] Six major movements can be observed in the evolution of supply-chain management studies: creation, integration, and globalization,  specialization phases one and two, and SCM 2. Creation era[ edit ] The term "supply chain management" was first coined by Keith Oliver in However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line.
The characteristics of this era of supply-chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to Japanese management practices. However, the term became widely adopted after the publication of the seminal book Introduction to Supply Chain Management in by Robert B. Handfield and Ernest L.
Nichols, Jr. This era has continued to develop into the 21st century with the expansion of Internet-based collaborative systems. This era of supply-chain evolution is characterized by both increasing value added and reducing costs through integration. A supply chain can be classified as a stage 1, 2 or 3 network.
In a stage 1—type supply chain, systems such as production, storage, distribution, and material control are not linked and are independent of each other. In a stage 2 supply chain, these are integrated under one plan and enterprise resource planning ERP is enabled.
A stage 3 supply chain is one that achieves vertical integration with upstream suppliers and downstream customers.
An example of this kind of supply chain is Tesco. Globalization era[ edit ] It is the third movement of supply-chain-management development, the globalization era, can be characterized by the attention given to global systems of supplier relationships and the expansion of supply chains beyond national boundaries and into other continents.
Although the use of global sources in organisations' supply chains can be traced back several decades e.