Introduction
Supply chain management refers to control that is accorded to raw materials and finished products. Proper management of these chains will enhance not only the loyalty that customers offer but also the satisfaction they receive1. Logistics management envisages an interrelationship of various activities that will collect indicators that are used to properly measure performance.
Selection of performance metrics is well done when allowed to not only compliment but also support each other. This will also enhance the decision making processes having obtained a clear picture.
For an effective supply chain to be operated, planning, organizing or resources and implementation of polices is invaluable. Currently, technological advancements have made the process of logistics management even better. 2
Enterprise Resource Planning for example helps firms to manage resources at all stages in the supply chain. Logistics management would therefore incorporate short term incisive analyses, performance evaluation; transportation of products and the distribution of resources.
Demand forecasting is unarguably pivotal in logistics management since before any production activities can take place, the market requirements would have to be first estimated. Technologies have been creatively incorporated by firms like Dell. Demand forecasting information systems have helped firms to produce optimally.
In supply chain management, it is important to recognize that the supply chain is one whole and is best considered that way. Therefore managing the flow of products and information from the suppliers’ suppliers through to the customers’ customers has to be looked at globally.
Success of the chain will usually be based upon tangible outcomes like growth in revenues, use of assets and reduction in costs. Proper coordination of activities across the supply chain is of invaluable benefits. Value shall be created for customers while profitability to every link of the chain.
Principles of Supply chain Management
For effective logistics management to be run, several principles need to be put in practice. Among them includes segmentation of customers by basing them on their distinct needs. Upon segmentation, the supply chain can then be adopted to serve the individual segments profitably. Customization of the logistics chain or network follows the first principle.
Customization is best carried out when the requirements of service are considered as well as the profit. A third principle will ask for exquisite market study.
This relates to the firm listening to market signals and adjusting the demand planning relative to the information that is gathered. The supply chain can then be structured accordingly. In this principle, consistency of the forecasts is emphasized just as much as resource allocation is.
A fourth principle involves the differentiation of the product so that it is as very well made accessible to the customer and his/her specific requirements thereof. Speed will also be enhanced. Equally managing sources of supply into the long term will lower the cost of owning materials and services.
This is an important principle. A second last principle will involve development of a broad based supply chain that will enhance decision making at all levels of management. Lastly collective success can be gauged by adoption of channel spanning performance measures.
Application of Logistics Management at Lean Construction in Brazil
A first case study will look at how logistics management is applied in Lean construction in Brazil. Application of logistics management in this industry aims to achieve not only customer satisfaction and cost reduction but also increase in profitability while retaining competitiveness. Several metrics are used by this company and evaluation of the same carried out. The emphasis is laid upon reducing the waiting time, limiting the storage costs and reducing the inspection costs.
The components of logistics management under focus in the construction industry in Brazil include: manpower supply, management of data relating to all the physical and services flow, scheduling control, assured material supply, storage processing and handling. Management of infrastructure on site and equipment monitoring is also very vital.
In this industry the functions of logistics are divided into supply logistics and site logistics. The former relates to cyclic activities like supply planning and organizing of transport while the latter relates to management handling, definition of activity sequence among other activities carried out on site.
Quality Movement is a company that is ISO certified and is outsourced by most construction firms in Brazil. They carry out the following in logistics management: specifying purchase orders, selecting suppliers, carrying out quality assurance on materials, inspection of materials delivered and any divergences from standards with corrective measures planned.
The companies do not employ Just in time techniques. Site logistics management for these companies involves lay out planning of the site, managing the handling systems, production design and check listing the conditions on site for control. This industry in Brazil also utilizes management of logistics information flow. This information flow is mainly for the system support.
Logistic waste Management at TLS Fremont
TLS Fremont is a firm that is in charge of Toyota’s waste management services. This firm uses Stop waste services to control the production of waste materials and therefore minimizing the pollution caused to the environment. The Japanese concept of Kaizen is applied.
The management process is so interactive. They bring together employees who brainstorm to bring up ideas that may be applied to improve efficiency. Planning of selected projects takes place, monitoring of the same and carrying out any corrective measures necessary.
Supply chain management involves request processing of the required truck running boards. Authorization of this will lead to send out of orders to purchase. Teams that are in charge of shipment of the truck running boards get into play and relevant times when the materials are required.
Previously, the running boards were stacked separately in cardboard boxes and in Styrofoam. At present, recycling is done for the cornstarch and compostable packaging. This has led to immense cost minimization. Costs have been cut up to $ 15000 per annum because of this program.
In their logistics management program, having their supplies at the right place has been a vital attribute to the success of their plans.
Logistics indicators
The performance indicator ordinarily refers to the characteristic that is to be specifically determined in the process of measuring the performance3. Logistics management, just like any other management, will involve setting of standards. These standards will be benchmarked against the actual results to see whether efficiency was noted or not.
To measure the level of objective achievement, indicators/metrics will be used. These include determining the length of time for transaction processing, the cost thereof and any documents processed.
The lower the cost and the shorter the time, the more efficient the processes will be deemed to be. Dell Company Ltd which deals in computer sales has only three stages in the supply chain. This includes the suppliers, the manufacturers who are Dell and then the end users. They avoid the middlemen in their transactions.
The customers can order computers by phone or online and this reduces the length of time of processing the transactions since they are digitized. The costs are also minimized this way.
Other key metrics include the number of documents that are incorporated per sales transaction got into. Even though more documents may reduce loopholes for fraud, cost effects come with it and so the trade off has to be evaluated for a specific industry.
This goes hand in hand with the number of signatures that are incorporated in a document per transaction. The time taken to resolve an appeal by a customer is a very important metric that has to be considered in logistics management.
Before a metric can be selected in a firm, there needs to be a proper criterion to be followed before selecting a metric. There are numerous requirements for a metric to be so effective. The main ones include a clear definition so that it can be well understood by all persons involved in the logistics management process.
Documentation and communication of the metric is a second important requirement. This then should be agreed upon so that a concerted effort shall have the goodwill of each and every member involved. Benchmark able yet reportable metrics are desirable. They also need to be time bound, actionable, specific, consistent, and realistically kept current.
Information systems have come in very handy in the logistics and supply chain management area. Material handling robots, transaction processing systems, decision support systems and expert systems are just but a few that come in very relevantly.
One such system is the Material Requirements that enables Dell to know when and how much to order for. Production processes are controlled by these systems for efficiency just as transport is improved by these systems.
Importance of performance measurement
Performance measurement is a vital component of logistics management. 4Performance measurement helps to hold together the various value adding components of the supply chain. Upon setting the standards, measurements will be carried tout to see ho well the targets were achieved and if not so, which corrective measures to be incorporated.
The reasons that this measurement t is done is to save on costs involved in some wasteful procedures. Only necessary procedures are to be incorporated. Dell has achieved this by cutting out middlemen who at times make the products to be unnecessarily expensive.
Performance measurement will equally assist the logistics department o reduce on the time spent on procedures. This will enhance efficiency as customers will be served best.
Dell has incorporated Information systems to reduce the time wasted in the transaction processing. Performance measurement will help firms to determine the areas of weakness in their management process with the intention of correcting. The construction industry in Brazil earlier discussed utilizes this. Some challenges were faced by these companies at both strategic level and structural level.
This included: decision of logistics goals and solving relationship politics involved with the suppliers. At the operational level, the distinction of the agents’ roles posed a challenge. Proper definition of vital materials to help in rationalization of the physical flow equally posed a challenge.
Performance measurement has the intention of also establishing new strategies that should be incorporated to improve the whole process of logistics management. Dell is effectively doing this since it constantly evaluates its performance and incorporates changes especially in the information systems thus improving logistical efficiency.
For a firm involved I production, losses are bound to soar if it is caught without stock. To minimize cases of stock out costs, firms need to do evaluation so as to determine optimal levels of stock. Apart from using information systems, Construction companies in Brazil determine stock levels best using this measurement.
Conclusion
In conclusion, success of the supply chain and logistic management is the function of how the whole procedure is approached globally. Focus should not be narrowed. Sustainable infrastructure is equally a vital aspect of this management. Any changes to be incorporated should be properly coordinated and communicated. Localization of changes with communication may disrupt the supply chain.
Technologies like Radio Frequency Identification could take Supply chain to higher heights if incorporated.5The biggest challenge that is facing supply chain managers is how to develop and carry out a plan to transform the supply chain so that it can move various complicated, intertwining entities. The firm should be very well aware of its targets so that the process of supply chain and logistics management can be customized.
Bibliography
Jespersen, B. & Skjott-Larsen, T. Supply chain management: in theory and practice. Holbaek, Copen-Hagen, 2005.
Hugos, M. Essentials of supply chain management. John Wiley &Sons Inc. New Jersey, 2006.
Coyle, J., Langley, J. & et. al. Supply chain management: a logistics perspective. Cengage Learning Institute, New York, 2009.
Schönsleben, P. Integral logistics management: planning & control of comprehensive supply chains. CRC Press LLC, New York, 2004.
Handfield, R. & Nichols, E. Supply chain redesign: transforming supply chains into integrated value systems. Pearson Education Ltd, New Jersey, 2002.
Footnotes
1 John Coyle, John Langley & et. al. Supply chain management: a logistics perspective. Cengage Learning Institute, New York, 2009, p. 141.
2 Birgit Dam Jespersen & Tage Skjott-Larsen. Supply chain management: in theory and practice. Holbaek, Copen-Hagen, 2005.
3 Paul Schönsleben. Integral logistics management: planning & control of comprehensive supply chains. CRC Press LLC, New York, 2004.
4Robert Handfield & Ernest Nichols. Supply chain redesign: transforming supply chains into integrated value systems. Pearson Education Ltd, New Jersey, 2002, p. 68.
5 Michael Hugos. Essentials of supply chain management. John Wiley &Sons Inc. New Jersey, 2006, p. ix.