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P A N A S O N I C
I – Introduction
This is essay will be submitted for the purpose of analyzing the organization I will be focusing to, its current order processing, how they process the inventory control, and the use of ICT technologies in logistical operations.
Since the founding of our company in 1918, Panasonic have been providing better living to its customers, always making "people" central to their activities, and thus focusing on "people's lives." Going forward, based on innovative electronics technology, they provide a wide variety of products, systems, and services, ranging from consumer electronics products to industrial devices, building products and housing. The company is working hard to cater a new value for better living, and help realize "A Better Life, A Better World" for each individual. (Panasonic, 2014)
II – Order Processing
As technology is finding its way to into many business systems engineering efforts, Linkage of Order processing directly from the buyer to the factory and back to the buyer through computers is another breakthrough in technology nowadays.
As one of the biggest electronics company, Panasonic have managed to establish its linkage to all its concerned parties via EDI (Electronic Device Information). Using one of the most popular systems (SAP), the company can easily get the orders from its customer around the world and send to the factory as well.
Order Processing procedure (Practiced Globally):
- End Customer (after setting an agreement for the price quotation) to place order to Panasonic Overseas Sales office, who will evaluate the quantity that the customer is requesting based on the forecast they have initially given. Delivery request must be at least 90days before the requested delivery date, or else, it’s considered short lead-time order. Once everything is confirmed, EC will transmit the Purchase Order to Panasonic Singapore via EDI/SAP, followed by an email about the list of PO’s being transmitted.
- PIDS (Panasonic Singapore) will then check all the Customer PO’s received and counter- check all the information’s needed (Quantity, MOS, Delivery date, Consignee, Destination and Final Buyer). After all information are confirmed, PIDS will check with Panasonic Refrigeration & Devices Singapore if there’s available stock, release the PO to the factory then double check everything and forward the details to the Production Planning Department. This department will then do the proper material planning, production scheduling and then confirm the order reply with the delivery date via system (SAP).
- OSC would then be able to see the Order reply and share the information to the costumer if the schedule is acceptable to them or not.
- After the End customer’s confirmation (if it’s within the 90days lead-time), OSC will confirm to both PIDS and PRDS so they can advise the delivery schedule and confirm via EDI.
*** PRDS will then proceed to produce the cargoes based on the planned schedule depending on the product. They would normally commit 1 week so they could produce and replenish the buffer stocks.
*** In case of urgent shipments and stock out, factory will proceed to do the hand-to-mouth-production where all the F/G are right away be packed and proceed for collection by the In-house forwarder.
*** They would propose to customer if it’s possible to do partial shipment and when is the best ETD/ETA.
III - The use of ICT in Panasonic Logistics operation
Based on the above data linkage, Information Technology have been widely used in Panasonic. Investing in this kind of system cost them a huge amount but it did help them simplify the job and efficient result which has been a big help to the company’s value added service to its customers.
Even in the US and other 1st world countries, Panasonic is implementing the use of RFID in monitoring its Rail, Port & Airport activities. (Panasonic, 2014)
SAP, EDI & those high-end monitoring solution clearly enhances the productivity of cargo handling everywhere. The company invested to this high-cost technology but, without an aggressive inspection program and monitoring to support it higher costs and much bigger issues may be arise down the road.
Benefits of EDI/SAP to Panasonic:
- Automated systems reduce labor and admin costs.
- Sharing info leads to more timely deliveries and falling inventory levels at the store.
- Cross docking reduces inventory levels at DC
- Customer need scare more fully addressed.
- Rapid replenishment can reduce stock-outs, and this means that customers seeking a particular product or brand will not leave empty-handed.
A small amount of time spent by a skilled EDI consultant can save hours of time for your busy staff. It also ensures achievement of your process automation key goal: better key customer service.
- Only large organizations can afford EDI/SAP. Not all companies/vendors are using EDI.
Since EDI requires standardized, participating companies must agree on the format of a standard, and it is not easy for them to do since many of them have different standards. If the interested company can’t afford to invest in the software, the chance for an additional customer might be lost.
- Higher Unemployment % – with EDI, everything can be done in fast-track.
- A small amount of time spent by a skilled EDI consultant can save hours of time for your busy staff. Thus, the company might choose to invest in an expensive investment than lose a bigger value in the long run if the user made some mistakes in the Order processing data entry up to the invoices being transmitted to the customer.
- High maintenance for IT – for every company that is using this software, there’s also a need to maintain a group of people who knows the software thoroughly and be able to trouble-shoot when errors are encountered.
1st, I would recommend and would help if the company would be very flexible to cater/accept smaller companies who couldn’t afford this software.
They would also need to educate their employees about the software which will enable them to trouble-shoot with less help from the IT people. With this, the company can save by reducing the IT consultants.
IV – Inventory Control
Every company/factory are in dire need of managing and controlling their inventory in order for them to maintain an even flow of production, at the same time avoiding excessive investment in inventories. Efficient inventory control cuts out losses and wastes of materials.
Panasonic is currently using a Cycle Stock Method,
Order-Cycle System. In this system, every 30, 60 or 90 days you go through your inventory and check product levels. You order more of products that you suspect will sell out before the following scheduled inventory checkup.
- 30 days inventory is dangerous. You could run into overstock problems or shortages.
- A lot of monitoring works for each cycle.
- The cycle is risky and it could make a company lost its profit. Thus, a lot of monitoring in its inventories needs to be done properly. Hiring a staff that is totally new would put the company into risk,
V - Conclusion
In Order processing, It is vital to clearly communicate with the customer. Getting the right information and providing the correct feedback to them about their order are to be given a high importance. Tell the customer if there is a delay in the fulfillment of the order. Being upfront and honest with the customer when there is a problem is much better than ignoring it. Also, inform the customer when the order ships. Tell her the carrier, the tracking number and the expected delivery date. Ask for feedback from the customer after he receives the order. Have a customer service. Every company must establish this elegance in handling customers especially their orders. High-end technology is an enormous help to the company, but still, customer service is a profession that everyone needs to master for an Efficient Customer reply (ECR)
As for the Inventory control, it is known that the aim of an effective inventory replenishment system is to maintain a suitable balance between the cost of holding stock and the particular service requirement for customers. Low stock is a dis-advantage as it can’t help to customer’s need to be immediately fulfilled, which may lead to the loss of both existing and future business.
High stock levels also have major disadvantage because capital is tied up that might be better invested in elsewhere. There’s also a risk for Product deterioration, products may become obsolete, or outdated. The expense pf providing additional storage space is also a dis-advantage, thus we must need to have a balanced inventory. (Alan Rushton, 2006)
Another factor which Inventory must be managed correctly is in manufacturing firms. Manufacture process requires relatively long process cycle-time. Procurement of materials has long lead time. Demand for finished products is some time seasonal and prone to fluctuations. Material costs are affected by fluctuations in demand and subsequently by fluctuations in manufacturing. These conditions are managed by maintaining reserve stock or safety stock through managing the inventory.
VI - Recommendation
Due to the fluctuating market and high competition nowadays, I would recommend to use Kanban Pull System in order to manage their Inventory.
Pull System is establishing an appropriate inventory level with a focus on replenishment lead time to satisfy the actual customer consumption. A Pull Company builds only what is consumed and when it is consumed. The inventory level is only what is required for the customer demand, so the risk of inventory obsolescence or expiration is minimized. The need for a production schedule is removed as production only builds what is consumed in the sequence it is consumed. The mechanism used to inform production to fill an inventory position is called a Kanban Replenishment. Kanban is Japanese for “signal”.
An additional benefit of a Pull System is that the rush to “push” orders through a system is removed, so work flows on actual demand “pulls” and quality improves naturally due to a smooth manufacturing process. Consider all of the valuable machine time, materials, manpower and effort required to build to a Push System when a Pull System redirects these resources to build only what is required and when it is needed. The company saves money in areas unrealized before, such as improved quality, fewer rejects, better customer service, less planning, and lower management overhead. By being Lean, the focus of profit per piece-produced is replaced with the actual net profit of the entire company’s through-put. (Incorporated, 2007)
Alan Rushton, P. C. (2006). Basic Inventory Planning & Management. In P. C. Alan Rushton, Logistics & Distribution Management (pp. 197-207). Great Britain: Kogan Page Limited.
Incorporated, W. S. (2007). Google. Retrieved from Lean-manufacturing-inventory: http://www.lean-manufacturing-inventory.com/pushvspull.aspx
Panasonic. (2014, Oct 10). Retrieved from www.panasonic.com.
Panasonic. (2014, Oct 17). Retrieved from Panasonic USA: http://www.panasonic.com/business-solutions/supply-chain-logistics-technology-solutions-port-rail.asp