CIT WORLD 8 TEMPLATE - The Chartered Institute of Logistics and ...

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CILTWorld issue 9
LOGISTICS
Logistics process for supply chain
management – some reality
A SUPPLY CHAIN is not a series of links forged
together for a common purpose. That is a nice
image. However it minimises the reality of the
chain and how each link in that chain must design
its own logistics process to function within the
chain. As a result, there are supply chains within
each supply chain. With supply chains, the
emphasis is on logistics because that is the vital
driver of the supply chain.
The success of the chain depends on many things.
How well and how clearly the key player in the
chain, the large retailer/mass merchandiser or
whoever, has defined what he is doing and why
he is doing it that way. For suppliers located within
the chain, this is important. There is no one
standard universal chain. What you are dealing
with are multiple, different supply chains and
logistics processes and supply chains for each
customer. That means developing agile, tailored
logistics solutions to meet the requirements of
each customer.
Each chain is really a series of buyers and sellers of
products and services. That means that each link
participant has his own objectives, and sometimes
conflicting objectives, which can work against
supply chain effectiveness.
Companies buy and sell and participate in the
supply chain for their own reasons. This is an
important and sometimes overlooked
fundamental of developing a working logistics
process, both for the entire chain and for each link
in the chain. It is also the driver behind the need
for collaboration between and among various
buyers and sellers.
A relay race
Think of the supply chain as a relay race with good
speed by each runner and a great handoff and
exchange of the baton between runners.
The diversity of participants in the chain can create
a complex and long process. The supply chain
design and plan must be clearly communicated.
All parties must understand how and, especially,
why the chain is supposed to function. This
becomes more important as the complexity and
length of the chain grows. Suppliers to suppliers
to suppliers need to understand the ‘what and
why’ so they can design their own production and
logistics process and cycle time.
Suppliers located in other countries need to
understand the supply chain given the time and
distance they are from the final supply chain
“The supply chain should be
designed from the end user
back through the various
product and service providers,
and the purpose should be
transparent.”
destination. Factor in uncertainty – a primary
reason for inventory and something that increases
as the supply chain complexity and distances
increase – and the need for proper supply chain
strategic design and tactical implementation is
compounded.
Expediting and other crises are symptoms of
supply chain problems. There is more involved
than a ‘weakest link’. Excessive and consistent
occurrences are signs of poor supply chain design
and execution. And no software can make up for
supply chain design and execution flaws or
shortcomings. Software is a means to an end, a
tool. It is not an end in and of itself to supply chain
success.
Cleary defined and delegated
The supply chain should be designed from the end
user back through the various product and service
providers. The purpose should be transparent.
Each party’s role in the movement of product and
information should be clearly defined and
delegated. Communication should be open and
flow both ways. The potential for exceptions
should be recognised and be built into
contingencies for the plan.
But note – they are exceptions. When exceptions
occur too often, there is no process. There are just
multiple entities each doing what they think they
should do. The result is that the very purpose of
supply chain management, to drive out
inefficiencies, is lost. Instead the ‘process’ has
reconfirmed and created its own inefficiencies.
The process should be designed from both the
strategic and tactical views. The strategic should
set out the grand plan and purpose and to define
the players and their roles and responsibilities.
Then the tactical, operational design must address
the details to make the process function
effectively.
No matter where you are positioned in the supply
chain and no matter how well the supply chain is
designed and operated, here are points you
should address in your company’s logistics
process.
• Recognise that supply chain management has
different meanings in different industries. The
importance of transportation cost or inventory
or information technology can impact the
design and operation of the logistics process.
Understand customer requirements
• Understand what each of your customers
wants and why. Each customer may have his
own requirements. Know them. Ask questions.
Communicate internally and work together.
Get forecasts for each customer, that match the