10. Logistics: a challenge for today. Demand flow leadership
Today's customer demands quality products, quality service, and increasing value. Logistics is the management of inventory to achieve customer satisfaction. And logistics is a major frontier for both customer service enhancement and cost reduction.
The challenge confronting many companies is this: they desire to enhance customer satisfaction by improving logistics but lack the knowledgeable work-force necessary to make this happen.
In the early days of logistics, warehousing was offered as a supplemental service to transportation, and the facility was part of the clearance terminal. The word "terminal" implies that the warehouses were located in the center of the city, usually close to the railroad depot and the wholesale market district. Since the amount of land necessary for single-story warehouses was not available in the city, relocation to the outskirts of cities took place. Today, with the focus on increasing inventory turns while improving customer satisfaction, the trend toward the substitution of transportation for inventory is prevalent.
The challenge of enhancing customer satisfaction by improving logistics requires a fully integrated approach. All components of the logistics process must work as one. The only way to enhance customer satisfaction is to pursue the integration of logistics. The operational requirements having the greatest impact on integrated logistics' ability enhancing customer satisfaction are business requirements, customer requirements, and logistics requirements.
Your challenge is to address the business requirements, customer requirements, and logistics requirements in a way that maximizes customer satisfaction and value. To do this, you must move beyond the obsolete concept of supply chain management and instead embrace the integrated logistics philosophy of demand flow leadership.
There are only three problems with the concept of supply chain management.
The word "supply" is wrong because it indicates an obsolete "push" mentality. It should be replaced with the word “demand”, which indicates “pull” and encourages reduced inventories and costs and enhanced customer service
The word "chain" is wrong because it indicates individual, discrete links that are viewed as entities unto themselves. It should be replaced with the word "flow" to indicate continuous movement, as in a pipeline.
The word "management" is wrong because it implies a static environment of control and measurement. Instead, "leadership" is needed to harness the energy of change, to pursue continuous improvement, and to achieve peak-to-peak performance.
Demand flow leadership can be achieved only through a continuously improving, customer oriented approach of integrated logistics.
11. Supply chain management – an overview
Operating successfully today requires organizations to become much more involved with their suppliers and customers. As global markets expand and competition increases, making products and services that customer want means that business must pay closer attention to where materials come from, how their suppliers’ products and services are designed, produced and transported, how their own products and services are produced and distributed to customers, what their direct customers and the end-product consumers really want.
Nowadays firms are selling off many business units and otherwise paring down their organization to focus more on core capabilities, while trying to create alliances or strategic partnerships with suppliers, distributors and other customers. This approach to making and distributing products and services to customers is becoming the best way for companies to be successful and is central to the practice of supply chain management.
There are several reasons that require today’s firms to work together more effectively than ever before:
communication and information exchange through computer networks using enterprise resource panning
rapidly expanding competition in all industries and markets
global economic recession that made customers more cost-conscious while seeking higher quality and service; customers are demanding more socially responsible and environmentally-friendly activities from organizations.
Supply chains
Firms extracting raw materials
Raw materials suppliers (lumber companies, steel mills, food distributors)
Component manufacturers (make and sell intermediate components)
Final product manufacturers assemble finished products
Wholesalers and distributors
Retailers
End product consumers – buy products based on a combination of cost, quality availability, maintainability and reputation
Focal firm is the end product manufacturer. First-tier suppliers are direct suppliers and customers of the focal firm. The first-tier suppliers’ suppliers are the focal firm’s second tier suppliers and the first-tier customers’ customers are the focal firm’s second-tier customers.
Thus, the series of companies eventually making products and services available to consumers including all of the functions enabling the production, delivery and recycling of materials, components, end products and services is called a supply chain. Companies with multiple products are likely to have multiple supply chains. All products reach their customers via some type of supply chain. Some supply chains may involve foreign suppliers or markets. The only one true source of income for all supply chain organizations are the supply chain’s end customers. There is also a number of companies indirectly involved in the supply chain and they play a very important role. These are service providers, information system providers, public warehousing firms, freight forwarders, agents and consultants.
Supply chain management
There are plenty of definitions:
The Council of the SCM Prifessionals: The planning and managing of all activities involved in sourcing and procurement, conversion and all logistics management activities. Also includes coordination and collaboration with channel partners, which can be suppliers, intermediearies, third-party service providers and customers.
The Institute for SCM: The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of end customer.
The Singapore-based Logistics and SCM Society: The coordinated set of techniques to plan and execute all steps in the global network used to acquire raw materials from vendors, transform them into finished goods and deliver both goods and services to customers.
The main idea of SCM – coordinating or integrating a number of goods- and services-related activities among supply chain participants to improve operating efficiencies, quality and customer service among collaborative organizations. Thus for SCM to be successful firms involved in supply chain must work together by sharing the information.
In theory supply chain works as a cohesive, singularly competitive unit. But in practice independent firms in a supply chain are relatively free to enter and leave the supply chain’s relations if these relations are no longer beneficial. That makes supply chain more efficient than vertically integrated conglomerates because supply chains are much more dynamic and fluid and are able to adapt to changes. But from the other hand it may be hard to manage them.
There are also some conditions of a successful supply chain:
change in the corporate cultures of all participating firms – many traditional cultures with short-term, company focused performance may conflict with objectives of supply chain;
high levels of trust, cooperation, collaboration and honest, accurate communications
managers should have necessary expertise in critical supply chain functions and should understand how these functions affect the supply chain.
Boundaries of a supply chain are also dynamic. Many firms (Procter & Gamble, Apple, Toyota, Wal-Mart etc.) extend these boundaries to include their second-tier suppliers and customers.
Может быть, тоже нужно – Seven principles of a supply chain:
Segment customers based on service needs
Customize the SCM network
Listen to signals of market demand and plan accordingly
Differentiate products closer to customers
Strategically manage the sources of supply
Develop a supply chain-wide technology strategy
Adopt channel-spanning performance measures