Supply Chain Management And Business Logistics Management Essay

2241 words (9 pages) Essay

1st Jan 1970 Management Reference this

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Introduction

Supply chain management is defined as ” an integrated philosophy to manage the total flow of the distribution channel from the supplier to the ultimate user” (fllram, lisa m and martla, 1990). Logistics is an important component of supply chain. “Logistics is a French word which mean the art of transport, quartering of troops and supply”. Its basic characterstics are reliability, cost, speed and performance. Logistics deals with the planning and management of material flows and information within the organization. Its mission is to get the right material to the right place at the right time.

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Business logistics is a coordination of projected requirement, procurement, physical movement and storage of components, parts, raw materials and semi finished goods to achieve the optimum demand service level at minimal cost. It includes both inbound and outbound movement in a larger concept then distribution management which doesnot includes activities such as forecasting. Logistics is the important function in business today no marketing, manufacturing or project can be succeed without the logistics support. “The globalization and the free trading has raised the competition now it’s the requirement that customer get the right material at the right time at the right place in the right condition at the lower cost”.(www.projectmonnitor.com)

Theoretical concept

Performance measures and metrics are essential for effective managing logistics part curly in a competitive environment. “Three purposes of metrics can be identified as (Melnyk et al., 2004): control, communication and

Improvement”. “According to Melnyk et al. (2004) literature has until now mainly focused on the use of metrics, but less on generating metrics and putting them into execution. They mention several reasons for an increased interest in performance measurement: (1) ever changing and ever increasing demands of customers, (2) the moving focus from internal operations to a chain of collaborating companies (3)decreasing product life cycles, (4) increased amount of data (not necessarily data quality) and (5) growing number of options a company can choose from. Logistics service providers offer services in a wide variety of areas” (Sink et al. 1996)

“The increasing focus on core competencies opened up many business opportunities for Logistics Service Providers (LSPs)” “(Christopher, 1998). LSPs, often also referred to as Third Party Logistics Service Providers (3PLs), carry out the logistic activities for one or more companies within the supply chain; functioning as an intermediary” “(Lai et al., 2004). The functions of 3PLs or LSPs can be divided in: warehousing, transportation, customer service, and inventory and logistics management” “(Sink et al.,

1996). Planning and control is crucial for the operations

of an LSP: both for the day-to-day operations as well as the more long-term strategic objectives. A good insight in performance information and therewith steering mechanisms for planning is important. Historically, companies concentrated on financial

indicators. Nowadays it is widely recognized that non-financial and even non-numerical indicators can give valuable information as well” “(Brewer et al, 2000, Ittner et al., 2003). Such indicators though are more difficult to measure and compare. cost efficiency

may be one of the important measures for an LSP, still this might not be what the shippers and consignees desire . they would instead prefer high quality and low price (Lai et al., 2004).”

Literature review

After a brief literature review we come to the conclusion that there are many logistics matrices which are used in logistics. Some of the main indicators are 1.timeliness 2.inventory turnover 3.transportation 4.logistics cost 5. customer satisfaction.

Performance indicators can serve many purposes. “management literature suggests a wide variety of uses for performance indicators by organizations. Among the most common uses are:

• Support strategic and other long-term planning efforts

• Improve program effectiveness

• Identify performance problems and needed corrections

• Provide data for in-depth program evaluations

• Communicate with public and enhance accountability

• Help make operational and resource allocation requests

• Formulate and justify budget requests

• Motivate personnel to make program improvements”

Performance management is considered as a process for constituting common

understanding about what is desired to be achieved and how it can be achieved. Measuring, analysis and enhancement of logistics performances are the basis of continual improvement of quality of logistics services. “There are four key areas for measuring performances in logistics and they are the following:

measuring the level of customer satisfaction, measuring the level of satisfaction of all factors and other interested subjects, measuring characteristics of logistics services and measuring performances of logistics processes. The literature has examined a variety of measures to measure general or specific performance of logistics service providers regarding transport activities (Van Donselaar et al. 1998)” “timeliness and accuracy” “(Bromley, 2001; Johnson, 2001)”, “delivery performance (Stewart, 1995)” “personnel scheduling and safety measures (Crum and Morrow, 2002; Mejza et al., 2003)”. “Mentzer and Konrad (1991) define performance measures in five sub-areas of logistics”: “transportation, warehousing, inventory control, order processing and logistics administration. Logistics service providers can also be distinguished based on characteristics of customer relationships(Knemeyer et al., 2003)” “customer satisfaction and loyalty (Stank et al., 2003)”. “Findings of Lai et al. (2004) suggest that perceptions of shippers and consignees differ.”

Performance measurement is very important inorder to stay on the right track. Performance measurement tells you that in which field you are going right and in which one you have to emphasize more. While doing the performance measurement we do analysis of all the departments. For example cost benefit analysis is used to set the standards for the physical distribution. Warehouse management measurement areas are labour, cost, time utilization and administrarion. Inventory control performance measures are those of puechasing overall inventory management it covers forecasting accuracy, inventory carrying cost, timeliness, availability and quality of order fulfillment. These are organized under the factor of labour cost, equipment and time. Order processesing includes order entry, order editing, scheduling, shipping and the billing.

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So inorder to measure the performance of logistics many companies use different techniques and measures. Such as the modular database. “A modular database is an assential measurement tool for a sophisticated logistics organization. It is a computer database system which allows information to be assessed in a format that is useful to the logistics managers. Activity based costing and management is a tool of producing relevant information for performance measurement. This system is designed to measure the operational performance of the distribution logistics which also provides information for strategic decision making. One important measurement tool is balance scorecard. With the help of balance score card the managers can locate the problem at all the stages. Its benefit is this that if every one in the organization know about their weakness they can focus more on that specific field and management can also motivate on them. Same like that logistics score card provide an insight towards the performance level and cost effectivness of a logistics network and integrating system successfully(www.projectmonnitor.com)”

Casestudy

“J Sainsbury plc is a leading food retailer in the United Kingdom with interests in financial services. It consists of Sainsbury’s supermarkets, Sainsbury’s Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsbury’s Online and Sainsbury’s Bank. Founded in 1869, Sainsbury now have over 148,000 people in the United Kingdom. With more than 488 stores serving 16 million customers a week, is one of the most famous

brands in the country(http://www.sainsburys.co.uk)”. Besides shops, Sainsbury’s has a large number offices in the United Kingdom for the management of its business, logistics and goods supply chain. Sainsbury is proud to provide excellent service and quality shopping experience with products at reasonable prices. So inorder to give customer the right thing at the right place at the right time at the right cost Sainsbury use different methods and techniques based on the logistics indicators and matrices. For example Sainsbury has its own transport cost and performance controllers with special softwares for fleet management in order to optimize the delivery operation. This spcial soft ware is integrated with with isotrak telematics to capture real time data such as vehicle locator and driver technography outputs this soft ware chooses the best routes and do the best scheduling for the Sainsbury.

“Sainsbury’s Logistics Division enhanced their visual communications infrastructure by implementing the Virtual Presence IP collaboration solution, they improved colleagues’ quality of life and reduced the length of meetings to enable faster decision-making.. In 2007, Sainsbury’s Logistics made the decision to migrate its video communications

facilities to Internet Protocol. Since the migration to Virtual Presence video conferencing on IP, Sainsbury’s Logistics has seen a dramatic difference. The call quality is no longer restricted by ISDN bandwidth. Video conferencing has become an on-demand service that could be used any time for multipoint and point-to-point meetings with continuous presence and 24 hour customer support(http://www.sainsburys.co.uk)”

Conclusion

In the above text we discuss that what are the logistics matrics and how these matrices are used to enhance the performance of the organization. Regarding these performance indicators we also do some literature review. We also discuss the tools of performance measurement. We also put some light on the importance of performance management. After all we relate this whole process with a practical case study of Sainsbury. After all we come to the conclusion that by recognizing the performance matrices an organization can enhance its performance and achieve good customer satisfaction and market place.

Refrence

“Lai, K.H., Ngai, E.W.T., Cheng, T.C.E. (2004), An empirical study of supply chain performance in transport logistics, International Journal of Production Economics 87: 321-33”

“Sink, H. L., Langley Jr., C. J., & Gibson, B. J.(1996). Buyer observations of the US third-party logistics market. International Journal of Physical Distribution & Logistics Management, 26(3): 38-46”

“Christopher, M (1998) Logistics and Supply Chain Management: strategies for reducing cost and improving service 2nd Edition. Financial Times / Prentice-Hall, London”

“Brewer, P. C. & Speh, T. W. (2000). Using the balanced scorecard to measure supply chain performance. Journal of Business Logistics 21(1):75-93”

“Lai, K.H., Ngai, E.W.T., Cheng, T.C.E. (2004), An empirical study of supply chain performance in transport logistics, International Journal of Production Economics 87: 321-331”

“Lai, K.H., Ngai, E.W.T., Cheng, T.C.E. (2004), An empirical study of supply chain performance in transport logistics, International Journal of Production Economics 87: 321-331”

“http://www.southernfulfillment.com/articles/fulfillment-services_12/grow-your-small-business-with-a-fulfillment-service_47.htm”

“Fllram, lisa m and martla c.cooper, supply chain management,partnership, international journal of logistics management vol 1, no.2 (1990) pp 1-10)”

“www.projectmonnitor.com)”

“Sink, H. L., Langley Jr., C. J., Gibson, B. J (1996), “Buyer observations of the US third-party logistics market”, International Journal of Physical Distribution Logistics Management, Vol.26, No.3, pp. 38-46″

“Bromley, P. (2001), “A Measure of Logistics Success”, Logistics Quarterly, Vol. 7, No. 3″

“Stewart, E. (1995), “Supply chain performance benchmarking study reveals keys to supply chain excellence”, Logistics Information Management, Vol.8, No.2, pp. 38-44.”

“Crum, M. R., Morrow, P. (2002), “The influence of carrier scheduling practices on truck driver fatigue”, Transportation Journal, Vol.42, pp. 20-41″.

http://www.sainsburys.co.uk/sol/index.jsp

Introduction

Supply chain management is defined as ” an integrated philosophy to manage the total flow of the distribution channel from the supplier to the ultimate user” (fllram, lisa m and martla, 1990). Logistics is an important component of supply chain. “Logistics is a French word which mean the art of transport, quartering of troops and supply”. Its basic characterstics are reliability, cost, speed and performance. Logistics deals with the planning and management of material flows and information within the organization. Its mission is to get the right material to the right place at the right time.

Business logistics is a coordination of projected requirement, procurement, physical movement and storage of components, parts, raw materials and semi finished goods to achieve the optimum demand service level at minimal cost. It includes both inbound and outbound movement in a larger concept then distribution management which doesnot includes activities such as forecasting. Logistics is the important function in business today no marketing, manufacturing or project can be succeed without the logistics support. “The globalization and the free trading has raised the competition now it’s the requirement that customer get the right material at the right time at the right place in the right condition at the lower cost”.(www.projectmonnitor.com)

Theoretical concept

Performance measures and metrics are essential for effective managing logistics part curly in a competitive environment. “Three purposes of metrics can be identified as (Melnyk et al., 2004): control, communication and

Improvement”. “According to Melnyk et al. (2004) literature has until now mainly focused on the use of metrics, but less on generating metrics and putting them into execution. They mention several reasons for an increased interest in performance measurement: (1) ever changing and ever increasing demands of customers, (2) the moving focus from internal operations to a chain of collaborating companies (3)decreasing product life cycles, (4) increased amount of data (not necessarily data quality) and (5) growing number of options a company can choose from. Logistics service providers offer services in a wide variety of areas” (Sink et al. 1996)

“The increasing focus on core competencies opened up many business opportunities for Logistics Service Providers (LSPs)” “(Christopher, 1998). LSPs, often also referred to as Third Party Logistics Service Providers (3PLs), carry out the logistic activities for one or more companies within the supply chain; functioning as an intermediary” “(Lai et al., 2004). The functions of 3PLs or LSPs can be divided in: warehousing, transportation, customer service, and inventory and logistics management” “(Sink et al.,

1996). Planning and control is crucial for the operations

of an LSP: both for the day-to-day operations as well as the more long-term strategic objectives. A good insight in performance information and therewith steering mechanisms for planning is important. Historically, companies concentrated on financial

indicators. Nowadays it is widely recognized that non-financial and even non-numerical indicators can give valuable information as well” “(Brewer et al, 2000, Ittner et al., 2003). Such indicators though are more difficult to measure and compare. cost efficiency

may be one of the important measures for an LSP, still this might not be what the shippers and consignees desire . they would instead prefer high quality and low price (Lai et al., 2004).”

Literature review

After a brief literature review we come to the conclusion that there are many logistics matrices which are used in logistics. Some of the main indicators are 1.timeliness 2.inventory turnover 3.transportation 4.logistics cost 5. customer satisfaction.

Performance indicators can serve many purposes. “management literature suggests a wide variety of uses for performance indicators by organizations. Among the most common uses are:

• Support strategic and other long-term planning efforts

• Improve program effectiveness

• Identify performance problems and needed corrections

• Provide data for in-depth program evaluations

• Communicate with public and enhance accountability

• Help make operational and resource allocation requests

• Formulate and justify budget requests

• Motivate personnel to make program improvements”

Performance management is considered as a process for constituting common

understanding about what is desired to be achieved and how it can be achieved. Measuring, analysis and enhancement of logistics performances are the basis of continual improvement of quality of logistics services. “There are four key areas for measuring performances in logistics and they are the following:

measuring the level of customer satisfaction, measuring the level of satisfaction of all factors and other interested subjects, measuring characteristics of logistics services and measuring performances of logistics processes. The literature has examined a variety of measures to measure general or specific performance of logistics service providers regarding transport activities (Van Donselaar et al. 1998)” “timeliness and accuracy” “(Bromley, 2001; Johnson, 2001)”, “delivery performance (Stewart, 1995)” “personnel scheduling and safety measures (Crum and Morrow, 2002; Mejza et al., 2003)”. “Mentzer and Konrad (1991) define performance measures in five sub-areas of logistics”: “transportation, warehousing, inventory control, order processing and logistics administration. Logistics service providers can also be distinguished based on characteristics of customer relationships(Knemeyer et al., 2003)” “customer satisfaction and loyalty (Stank et al., 2003)”. “Findings of Lai et al. (2004) suggest that perceptions of shippers and consignees differ.”

Performance measurement is very important inorder to stay on the right track. Performance measurement tells you that in which field you are going right and in which one you have to emphasize more. While doing the performance measurement we do analysis of all the departments. For example cost benefit analysis is used to set the standards for the physical distribution. Warehouse management measurement areas are labour, cost, time utilization and administrarion. Inventory control performance measures are those of puechasing overall inventory management it covers forecasting accuracy, inventory carrying cost, timeliness, availability and quality of order fulfillment. These are organized under the factor of labour cost, equipment and time. Order processesing includes order entry, order editing, scheduling, shipping and the billing.

So inorder to measure the performance of logistics many companies use different techniques and measures. Such as the modular database. “A modular database is an assential measurement tool for a sophisticated logistics organization. It is a computer database system which allows information to be assessed in a format that is useful to the logistics managers. Activity based costing and management is a tool of producing relevant information for performance measurement. This system is designed to measure the operational performance of the distribution logistics which also provides information for strategic decision making. One important measurement tool is balance scorecard. With the help of balance score card the managers can locate the problem at all the stages. Its benefit is this that if every one in the organization know about their weakness they can focus more on that specific field and management can also motivate on them. Same like that logistics score card provide an insight towards the performance level and cost effectivness of a logistics network and integrating system successfully(www.projectmonnitor.com)”

Casestudy

“J Sainsbury plc is a leading food retailer in the United Kingdom with interests in financial services. It consists of Sainsbury’s supermarkets, Sainsbury’s Local, Bells Stores, Jacksons Stores and JB Beaumont, Sainsbury’s Online and Sainsbury’s Bank. Founded in 1869, Sainsbury now have over 148,000 people in the United Kingdom. With more than 488 stores serving 16 million customers a week, is one of the most famous

brands in the country(http://www.sainsburys.co.uk)”. Besides shops, Sainsbury’s has a large number offices in the United Kingdom for the management of its business, logistics and goods supply chain. Sainsbury is proud to provide excellent service and quality shopping experience with products at reasonable prices. So inorder to give customer the right thing at the right place at the right time at the right cost Sainsbury use different methods and techniques based on the logistics indicators and matrices. For example Sainsbury has its own transport cost and performance controllers with special softwares for fleet management in order to optimize the delivery operation. This spcial soft ware is integrated with with isotrak telematics to capture real time data such as vehicle locator and driver technography outputs this soft ware chooses the best routes and do the best scheduling for the Sainsbury.

“Sainsbury’s Logistics Division enhanced their visual communications infrastructure by implementing the Virtual Presence IP collaboration solution, they improved colleagues’ quality of life and reduced the length of meetings to enable faster decision-making.. In 2007, Sainsbury’s Logistics made the decision to migrate its video communications

facilities to Internet Protocol. Since the migration to Virtual Presence video conferencing on IP, Sainsbury’s Logistics has seen a dramatic difference. The call quality is no longer restricted by ISDN bandwidth. Video conferencing has become an on-demand service that could be used any time for multipoint and point-to-point meetings with continuous presence and 24 hour customer support(http://www.sainsburys.co.uk)”

Conclusion

In the above text we discuss that what are the logistics matrics and how these matrices are used to enhance the performance of the organization. Regarding these performance indicators we also do some literature review. We also discuss the tools of performance measurement. We also put some light on the importance of performance management. After all we relate this whole process with a practical case study of Sainsbury. After all we come to the conclusion that by recognizing the performance matrices an organization can enhance its performance and achieve good customer satisfaction and market place.

Refrence

“Lai, K.H., Ngai, E.W.T., Cheng, T.C.E. (2004), An empirical study of supply chain performance in transport logistics, International Journal of Production Economics 87: 321-33”

“Sink, H. L., Langley Jr., C. J., & Gibson, B. J.(1996). Buyer observations of the US third-party logistics market. International Journal of Physical Distribution & Logistics Management, 26(3): 38-46”

“Christopher, M (1998) Logistics and Supply Chain Management: strategies for reducing cost and improving service 2nd Edition. Financial Times / Prentice-Hall, London”

“Brewer, P. C. & Speh, T. W. (2000). Using the balanced scorecard to measure supply chain performance. Journal of Business Logistics 21(1):75-93”

“Lai, K.H., Ngai, E.W.T., Cheng, T.C.E. (2004), An empirical study of supply chain performance in transport logistics, International Journal of Production Economics 87: 321-331”

“Lai, K.H., Ngai, E.W.T., Cheng, T.C.E. (2004), An empirical study of supply chain performance in transport logistics, International Journal of Production Economics 87: 321-331”

“http://www.southernfulfillment.com/articles/fulfillment-services_12/grow-your-small-business-with-a-fulfillment-service_47.htm”

“Fllram, lisa m and martla c.cooper, supply chain management,partnership, international journal of logistics management vol 1, no.2 (1990) pp 1-10)”

“www.projectmonnitor.com)”

“Sink, H. L., Langley Jr., C. J., Gibson, B. J (1996), “Buyer observations of the US third-party logistics market”, International Journal of Physical Distribution Logistics Management, Vol.26, No.3, pp. 38-46″

“Bromley, P. (2001), “A Measure of Logistics Success”, Logistics Quarterly, Vol. 7, No. 3″

“Stewart, E. (1995), “Supply chain performance benchmarking study reveals keys to supply chain excellence”, Logistics Information Management, Vol.8, No.2, pp. 38-44.”

“Crum, M. R., Morrow, P. (2002), “The influence of carrier scheduling practices on truck driver fatigue”, Transportation Journal, Vol.42, pp. 20-41″.

http://www.sainsburys.co.uk/sol/index.jsp

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