Logistics Supply Chain Management (Scm):

Logistics

Supply Chain Management (SCM):

Supply Chain Management -- SCM enables businesses to have an enhanced understanding of the activities that offer component level materials for their end product. Through proper focus on SCM, companies can immensely enhance operational efficiency. SCM seeks to help businesses to curb costs by revealing the problems in their important relationships with the internal suppliers and external vendors. Thus the basic concern is the urgency to realize customer demand and align with the supply side of the business. In achieving this, organizations are able to cut costs or also to eliminate costly overruns and ensure proper management of the inventory of the products so that there is no shortage of products or excess of it either. To help accomplish this, SCM software helps in several ways through different implementations.

Fundamentally, SCM connects suppliers to databases which are able to display forecasts, shipping, current inventory or logistics timeframes inside the customer organization. Through allowing the suppliers such access, they are able to meet the demands of the customers in a better manner. To take an example, the supplier will be able to make amendments to his shipping schedules to make sure that their customers possess the inventory needed to meet the requirement of the customers. Suppliers will be able to download forecasts into their own production systems to automate their internal processes also. In case of a normal retail/supplier relationship, the retailer has traditionally been responsible for inventory management inclusive of monitoring customer demand, inventory, and placing orders to the suppliers. Allowing the suppliers access to the retailer's inventory and sales activities helps the supplier to efficiently manage its product manufacturing and monitor its supply chain in a better manner. (Enterprise Applications: A conceptual Look at ERP, CRM and SCM)

Warehousing and modern SCM:

In the past, warehouses catered primarily as storage facilities. Raw materials arrived or finished products departed from warehouses, and companies made improvements in the event only when problems happened or the space became restricted. Presently the role of warehouses transcend beyond just storing materials, merchandise or finished goods; they have come to be an important piece of supply chain that is inclusive of such value-added services like packaging, kitting or light assembly. Warehouses are also crucial in terms of customer service and satisfaction. An effective warehouse continually gives the right product to the right place on time that can offer a competitive edge. Adept operations are also able to minimize operating costs and offer improvement to profits. The ideal strategy for improvement the warehouse environment begins with undertaking a holistic viewpoint. (Taking a Lean Approach to Warehousing)

The present era calls for following the lean approach initiated by the legendry Henry Ford and further refined by the Toyota Production System the characteristic of which is the persistent elimination of waste and a culture devoted to constant improvement. It has been acknowledged that lean is a culture and not just a particular process or plan wherein a culture of continuous progress has to be the objective. In order to change over to lean, warehousing needs crucial change in the warehousing operations along with a commitment at every level of the organization to look for means to perform all activities in an improved, faster, with less of errors and with less waste. Executing a lean approach at the warehouse level often needs gathering data, analyzing it and making crucial changes- at least in the early stages. The present warehouse operations are so entwined that it is almost impossible to change one process without impacting the others. Due to this the Supply Chain managers are taking a holistic view appreciating that all the pieces should fit together without any problems. Nevertheless, these experts also realize that they should improve upon the individual processes with a view to integrating them into the redesigned system in order to make the warehouse more lean and effective-oriented. (Taking a Lean Approach to Warehousing)

Modifications in the supply chain, expectations of the customer, and marketing conditions are putting considerable pressure on warehousing. In the modern era, warehousing needs are presently assessed on a total supply chain basis. The conventional roles of warehousing that include transportation management; inventory management, storage, and customization imply that warehousing have a significant place within the supply chain. There are at least four promising responsibilities for the warehouses in the supply chain. The first of these roles is that warehouses function as flexibility provider. Both the users as also suppliers of warehousing agree that warehousing constitute a basic source of supply chain flexibility. Flexibility normally needs space and labor, as also information. The warehouse is sometimes a low-cost base of all of these resources. Besides, the warehouse can function as an important source of knowledge for the supply chain. Information on customization, inventory, receiving, and accurate delivery stipulations is important for seamless operation of the supply chain, and the warehouse personnel's knowledge of customers, carriers, and geography are capable of affecting product and marketing strategy as the warehouses are the final stop in front of the customer. (News: The Evolution of Warehousing)

This means that maximum knowledge is present which normally nobody has. The warehouse might also serve as the supply chain coordinator. The warehouse organization is uniquely built-in to a broad supply chain role due to its position inside the supply chain. This is due to the fact that a warehouse generally involves more than one or two members of the supply chain consisting of inbound as well as outbound carriers, the owner of the goods, the owner's customer, and the information providers. It might also possess several contacts with the partner of the supply chain. This apart, the warehouse is progressing in the sphere of marketing also. Warehouse is being positioned to play three crucial support roles as regards logistics, capabilities, and credibility. Marketing depends in the warehouses to supply customer and market feedback and also utilizes it as proof of company capability and reputability in the view of third-party logistics firms. (News: The Evolution of Warehousing)

Use of latest technology in Supply Chain for Warehouse management:

Radio Frequency Identification -- RFID is fast gaining an important footing in certain areas of the supply chain like that of warehouse management and inventory control. Several technologists and business leaders across supply chain enterprises acknowledge that RFID is the next breakthrough technology in the Supply Chain space. However, some skeptics argue that their short-term return on investment -- ROI is unable to justify the start-up costs of adoption, process re-engineering, re-tooling and integration of RFID. Regardless, of these concerns, analysts have prophesized that major growth in RFID is in store for RFID supply chain management during the forthcoming years. For instance, Venture Development Corporation anticipates the global delivery of RFID systems in areas of manufacturing, logistics, and retail markets to attain $4 billion during the year 2007, a rise from $1.25 billion in the year 2004. (Emerging Trends in RFID: Business Process Innovations)

Role and trends of Packaging in SCM (Case Study of Nestle)

Nestle is wholeheartedly dedicated to continue progress in pursuit of packaging solutions that will contribute to a better environment. Package is definitely essential from the point-of-view of both Nestle and that of the consumer as well. It guarantees the safety and quality of products right from the stage of manufacture to that of storage, distribution and also it pertains to consumption. Apart from that packaging contributes to improving the product appeal, offers convenience, communicates information relating to nutrition and providing of instructions, and might also include characteristics relating to tamper-evidence. Packaging can also assist in preventing or reduction of product waste. Nestle uses a large variety of packaging materials to ensure that their products would be able to reach their consumers in the same manner they left the factory. The various materials used for packaging are cartons, paper sacks, corrugated fiberboard boxes, rigid plastic packaging, metal cans, plastic laminates, and glass packaging. Nestle sources its materials for packaging from a wide variety of packaging suppliers both at the local level as also from other countries of the world. (Nestle Australia Ltd.: National Packaging Covenant)

Overall, over more than 200 companies are being involved in the Nestle packaging supply chain, with major suppliers inclusive of signatories to the Covenant like Visy, Amcor and Carter Holt Harvey. Nestle communicated to their packaging suppliers during the year 2002 and also in the year 2003 sharing with them the environmental commitments in relation to Nestle, and the Advanced Manufacturing Centre's "Purchasing Guidelines for the Environment" as being developed by the Food Industry Waste Minimization Program of which Nestle was a participant as well as that of the NPC Action Plan. Nestle asked its suppliers to join them in supporting the Covenant and the requirement of Nestle that it wants the suppliers to be signatories to the National Packaging Covenant. In keeping with the Nestle Policy on the Environment, the company supports an integrated approach in relation to packaging waste minimization which supports the level of reduction of source, recycling, reuse and energy recovery in order to minimize the influence of packaging which might be focused on the environment.

From the year 1991, environmental considerations have come to be an important standard with regard to Nestle's renovation and innovation of packages and that of the packaging materials. Reduction with regard to the amount of packages and packaging materials which are required for a product and at the same time making conditions for protecting safety and quality is an ongoing important primary objective and priority. Nestle's 'No Waste at Work' program helps the 'shop floor' staff at their offices, warehouses and factory sites with the knowledge, skills and tools to develop and carry out waste minimization plans to ensure reduction of not just solid waste, but also energy and water usage. The program continued to be implemented and utilized by sites across the area during the period from 2003-2004 with huge success in not just reducing the amount of waste but in developing an empowered amount of shop-floor culture. (Nestle Australia Ltd.: National Packaging Covenant)

Role and trends of warehousing in SCM (Case Study of Volkswagen):

Based in Wolfsburg, Germany, Volkswagen -- VW is Europe's largest auto manufacturer with global revenues touching $110 billion and having manufacturing facilities in every continent of the world. The company is best regarded for its VW and Audi brands; Volkswagen is also the parent company behind such renowned and prestigious brands of cars like Bentley, Bugatti and Lamborghini. In the midst of ever-increasing competition in the global auto industry, VW has long distinguished itself through the design and engineering of its cars yielding the twin blend of speed and simplicity that epitomizes the 'Euro' styling. The various on demand business benefits of VW are (i) anticipated payback within one year (ii) 20% rise in productivity for VW's procurement staff (iii) shorter order-to-delivery cycles by means of more effective processes. (iv) Enhanced capability for VW's procurement employees to concentrate on high value activities. (v) More quick responses to imminent shortages and surpluses, thus reducing bottlenecks and inventory costs. (vi) Better ability to leverage purchasing economies by means of a greater unified notion of VW's supply chain. (Volkswagen's world class procurement strategy produces breakthrough productivity gains)

Speed and simplicity have also risen in significance for the company's core business processes. Propelled by continuous industry competition, the necessity for maximum employee productivity, shorter cycles and lower cycles had never been higher. Concurrently, attaining these efficiency levels had come to be of a greater challenge. A greater factor has been a change in the buying practices of consumers, with increasing number of buyers tailoring their car at the dealership point's right from the upholstery and color to engines. Due to change in fashion in the buying habits, the business processes of the car manufacturers which is already complex have been even more so. When an order is placed at a dealer, it travels through many systems to the production ordering system, to the production assembly system and lastly to the logistics system that completes the cycle when it gives delivery of the car to the customer. (Volkswagen's world class procurement strategy produces breakthrough productivity gains)

Whereas greater options implies more choices for VW's customers, it also implies an exponential rise in the differences of components traveling through the assembly processes, each of which is required to be ordered, delivered and tracked. In a number of ways, this order-to-delivery cycle forms the forefront of the competitive battle being undertaken in the auto industry. As a part of this battle, VW and its competitors are required to maximize the efficiency levels of each stage of this cycle so as to lower their costs and to fasten the delivery of new vehicles to customers. Nevertheless, with VW's processes over the years turning to be more and more complex, maximizing efficiency has in its turn become a greater challenge. The industry's continuous pressure to have control over costs forced the company to encounter this challenge. To embark on an enhanced level of efficiency going forward, the company required to basically alter its central processes.

Within VW, the efficiency of processes is outlined by the manner how good these processes function under normal predictable conditions and maybe which is more crucial, their capability to dynamically adapt to crucial changes in its environment and continue to deliver the best possible results. VW partnered with IBM and started installing a new system designed for simplification and process automation by which employees and suppliers capture, access, analyze and utilize information. The new system aimed at reversing the present application pattern, under which the responsibility of seeking information lies completely on the end users. The vision of the company was to leverage technology to make a sense and respond capability which would support more efficient decision-making. This implies the right intelligence and workflow automatically goes to the right user in response to an outside event, which is the very definition of an end-to-end adaptive process. (Volkswagen's world class procurement strategy produces breakthrough productivity gains)

SCM needs specialist skills and is all regarding efficiently assembling all the links and stages involved in building a high quality supply chain. VW's part of the supply chain is managed by Exel who long with providing the systems and solutions also handles freight by provision of airfreight and sea-freight supported by an extensive transportation network where the movement of the goods can be tracked by means of an extensive Internet-based transportation network. Apart from that Exel manages the warehousing and distribution of goods along with that of the supply chain. With substantial experience in this field it is in a position to design large-scale distribution outlets which are sometimes shared among different customers who gain advantages from economies of scale in relation to storage and distribution. Among the best instances of modern supply chain management lies in motor vehicle manufacturing. (Exel: Managing the supply chain for globally integrated products)

Modern cars are an instance of global products containing research and design characteristics that include the joint effort of several people across a lot of countries. The components that are included in the final assembly might possibly be produced in a lot of different avenues and include several assembly and sub-assembly activities. Exel has worked with car manufacturers in order to develop upon a parking system of managing end operations of the supply chain for that of the motor vehicle assembly. A lot of important end component suppliers are being located near to the final assembly point. Exel has created and handles the Just-in-Time -- JIT system that makes way for an efficient running supply chain of components to the new Beetle final assembly plant that avoids wastes from the processes. (Exel: Managing the supply chain for globally integrated products)

Role and trends of warehousing in SCM (Case Study of Volvo Construction Equipment):

Volvo Construction Equipment or Volvo CE constitutes one of the world's largest producers of heavy and compact construction equipment with the company selling its products in over 100 nations maintaining production facilities in the 4 continents. It manufactures over 130 various models of articulated haulers, wheel loaders, motor graders, excavators. Besides, the company also offers a broad range of compact equipment. In the year 1998 following the acquisition of the construction equipment business of Samsung Heavy Industries, Volvo CE Korea was formed. This takes over assisted Volvo CE to form a manufacturing presence and enhance its distribution facilities in S. Korea. Even though the Samsung acquisition improved Volvo's CE market status, the company understood that in order to make profitable growth in Korea and to maintain the profitability of the newly formed company, it would encounter a lot of challenges. (my SAP Automotive at Volvo CE)

Taking the marketing forces into account, Volvo, Korea determined that it must better its supply chain planning and execution potential, in case it wished to attain sustained levels of profitable growth. The company improved customer-facing business processes, inclusive of available-to-promise -- ATP capabilities, and concentrated on the efficiency levels of its internal operations by means of reengineering initiatives in order to eliminate unwanted complexity as well as costs. Volvo also realized that its legacy with regard to stand-alone applications would not be able to support it needs in future. Following a careful analysis of alternatives, Volvo selected mySAP Automotive SAP Business Information Warehouse and SAP Internet Transaction Server to assist in the reengineering its planning and execution processes. The SAP solutions have helped Volvo to reinvent itself in order to transform and reorient itself in order to become a process-oriented organization. (my SAP Automotive at Volvo CE)

Given the process innovation efforts, employees of Volvo are at present using an integrated system which supports its daily customer-oriented business processes. A short time after the acquisition of Samsung in 1988, Volvo started a detailed assessment of its operations in order to find out how best to satisfy the needs of the customer requirements and enable the newly formed company to take part effectively in Volvo CE's global manufacturing and distribution network. Volvo chose mySAP Automotive to provide the novel, integrated application foundation. Thereafter, the company undertook a two-phase integrated application foundation. In the first phase involved system replacement wherein Volvo phased out existing systems and implemented mySAP automotive to deal with order fulfillment, manufacturing, financial, and other applications areas in a massive implementation.

Apart from that it also implemented SAP Business Information Warehouse to assess relevant transaction data, the actual financial results against the plans and important Performance Indicators. Under the second phase that entailed business process redesign occurred. At this time Volvo went in for redesign of all business processes to provide a platform for future innovation and to guarantee consistency with the best-in-class business processes which are to be facilitated by the SAP application foundation. Volvo also established an S&OP process in order to more efficiently strike a balance between the demand and that of the supply. It also made procedures to implement a two-level master scheduling process. (my SAP Automotive at Volvo CE)

Role and trends of Packaging in SCM (Case Study of Alcan)

Alkan is a global and market driven company and an international leader with regard to aluminum and packaging. It has a world-class operation in terms of primary aluminum, fabricated aluminum and also with regard to flexible and specialty packaging. Alcan Packaging among that of Alcan's business groups manufactures packaging materials for cosmetics, food, specialty packaging, pharmaceuticals, tobacco applications and personal care products. The group supplies to an international base of customers through that of 72 manufacturing plants. Alcan Packaging's pharmaceutical and cosmetics implements mySAP Supply Chain Management in order to manage this supply chain in a more efficient manner. The full suite of the solution pertains to SAP Advanced Planning & Optimization -- SAP APO that is being integrated with that of SAP Business Information Warehouse -- SAP BW and SAP R/3. (Alkan Packaging implements mySAP SCM to increase shareholder value)

According to the Vice President of SCM, it presently gets into a queue system and mySAP facilitates the company in order to anticipate the necessities and rapidly slot firm orders into that of the production schedule. Alkan Packaging intends to offer the delivery dates in real time in case of every order from that of the distributors and customers who intend to purchase stock product, as also in matters pertaining to special orders. The company will bring its suppliers into the mySAP SCM in order ensemble to promote compliance with that of the promised delivery date. A schedule of tight integration will be the most important base or criterion. Alkan Packaging selected SAP APO which is an important capability of mySAP SCM for its close integration with SAP R/3. Whenever Alcan develops a plan, it analyses the quality of that plan. The supply chain performance management potential in the case of mySAP, SCM offers them with an instrument which enables to supply them with a tool that provides it easy to look at supply chain metrics in a suitable manner that the company desires.