CHAPTER IIILACK OF SUPPLY CHAIN COORDINATION AND THE BULLWHIP EFFECT Supply chain coordination all stages in the supply chain take actions together (usually results in greater total supply chain profits) SC coordination requires that each stage take into account the effects of its actions on the other stages Lack of coordination results when: Objectives of different stages conflict or Information moving between stages is distortedBullwhip Effect Fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers (shown in Figure) Distorts demand information within the supply chain, where different stages have very different estimates of what demand looks like Results in a loss of supply chain coordination Examples: Proctor &Gamble (Pampers); HP (printers); Barilla (pasta)

THE EFFECT OF LACK OF COORDINATION ON PERFORMANCE Manufacturing cost (increases) Inventory cost (increases) Replenishment lead time (increases) Transportation cost (increases) Labor cost for shipping and receiving (increases) Level of product availability (decreases) Relationships across the supply chain (worsens) Profitability (decreases)OBSTACLES TO COORDINATION IN A SUPPLY CHAIN Incentive Obstacles Information Processing Obstacles Operational Obstacles Pricing Obstacles Behavioral ObstaclesIncentive Obstacles When incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits misalignment of total supply chain objectives and individual objectives Local optimization within functions or stages of a supply chain Sales force incentivesInformation Processing Obstacles When demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain Forecasting based on orders, not customer demand Forecasting demand based on orders magnifies demand fluctuations moving up the supply chain from retailer to manufacturer Lack of information sharingOperational Obstacles Actions taken in the course of placing and filling orders that lead to an increase in variability Ordering in large lots (much larger than dictated by demand) Large replenishment lead times Rationing and shortage gaming (common in the computer industry because of periodic cycles of component shortages and surpluses)Pricing Obstacles When pricing policies for a product lead to an increase in variability of orders placed Lot-size based quantity decisions Price fluctuations (resulting in forward buying) Behavioral Obstacles Problems in learning, often related to communication in the supply chain and how the supply chain is structured Each stage of the supply chain views its actions locally and is unable to see the impact of its actions on other stages Different stages react to the current local situation rather than trying to identify the root causes Based on local analysis, different stages blame each other for the fluctuations, with successive stages becoming enemies rather than partners No stage learns from its actions over time because the most significant consequences of the actions of any one stage occur elsewhere, resulting in a vicious cycle of actions and blame Lack of trust results in opportunism, duplication of effort, and lack of information sharingMANAGERIAL LEVERS TO ACHIEVE COORDINATION Aligning Goals and Incentives Improving Information Accuracy Improving Operational Performance Designing Pricing Strategies to Stabilize Orders Building Strategic Partnerships and TrustAligning Goals and Incentives Align incentives so that each participant has an incentive to do the things that will maximize total supply chain profits Align incentives across functions Pricing for coordination Alter sales force incentives from sell-in (to the retailer) to sell-through (by the retailer)Improving Information Accuracy Sharing point of sale data Collaborative forecasting and planning Single stage control of replenishment Continuous replenishment programs (CRP) Vendor managed inventory (VMI)Improving Operational Performance Reducing replenishment lead time Reduces uncertainty in demand EDI is useful Reducing lot sizes Computer-assisted ordering, B2B exchanges Shipping in LTL sizes by combining shipments Technology and other methods to simplify receiving Changing customer ordering behavior Rationing based on past sales and sharing information to limit gaming Turn-and-earn Information sharingDesigning Pricing Strategies to Stabilize Orders Encouraging retailers to order in smaller lots and reduce forward buying Moving from lot size-based to volume-based quantity discounts (consider total purchases over a specified time period) Stabilizing pricing Eliminate promotions (everyday low pricing, EDLP) Limit quantity purchased during a promotion Tie promotion payments to sell-through rather than amount purchasedBuilding Strategic Partnerships and Trust in a Supply Chain Background Designing a Relationship with Cooperation and Trust Managing Supply Chain Relationships for Cooperation and Trust Trust-based relationship Dependability Leap of faith Cooperation and trust work because: Alignment of incentives and goals Actions to achieve coordination are easier to implement Supply chain productivity improves by reducing duplication or allocation of effort to appropriate stage Greater information sharing resultsThere are two views regarding how cooperation and trust can be built into any supply chain relationship:1. Deterrence based view In this view the parties involved use a variety of formal contracts to ensure cooperation.2. Process-based view With this view, trust and cooperation are built over time as a result of a series of interactions between the parties involved. A trust-based relationship between two stages of a supply chain includes dependability of the two stages, and the ability of each stage to make a leap of faith. Trust involves a belief that each stage is interested in the others welfare and will not take actions without considering their impact on the other stages. Building Strategic Partnerships and Trust within a Supply ChainCoordination and trust within the supply chain help improve performance for the following reasons:1. When stages trust each other, they are more likely to take the other partys objectives into consideration when making decisions.2. Action oriented managerial levers to achieve coordination become easier to implement. Sharing of information is natural between parties that trust each other. Management phase Interactions based on the ground rules occur and the relationships as well as the ground rules evolve.Designing a Relationship with Cooperation and Trust Key Steps in designing a relationship Step I Assessing the value of the relationship The first step in designing a supply chain relationship is to clearly identify the contribution of each party as well as the mutual benefit that the relationship provides. The next step is to identify the criteria used for evaluating the relationship as well as the contribution of each party. Equity defined as fair dealing measures the fairness of the division of the total profits among the parties involved. Thus, a supply chain relationship is likely to be sustainable only if it increases total profits and Design phase Ground rules are established and the relationship is initiated.here are two phases to any long-term supply chain relationship.Step II. Identifying operational roles and decision rights for each party When identifying operational roles and decision rights for different parties in a supply chain relationship, managers must consider the resulting interdependence between the parties. A source of conflict may arise if the tasks are divided in a way that make one party more dependent on the other. The allocation of tasks results in a sequential interdependence if the activities of one partner precede the other. In reciprocal interdependence, parties come together and exchange information and inputs in both directions. Step III. Creating Effective Contracts Managers can help promote trust by creating contracts that encourage negotiations as unplanned contingencies arise. Contracts are most effective for governance when complete information is available and all future contingencies can be accounted for. Over time, the informal understandings and commitments between the individuals tend to be formalized when new contracts are drawn up.Continuous Replenishment (CRP) and Vendor Managed Inventories (VMI) Bull whip effect can be dampened by 2 practices: 1. CRP (Continuous Replenishment Programs) 2. VMI (Vendor Managed Inventory) These two practices assign the responsibility of replenishment across the supply chain to a single entity. A single point of replenishment decisions ensures visibility and a common forecast that drives orders across the supply chain. 1. Continuous Replenishment Programs (CRP) wholesaler or manufacturer replenishes a retailer regularly based on POS data. CRP may be supplier, distributor or third party managed. Driven by Actual withdrawals of inventory from retailer warehouses rather than POS data at the retailer level. In CRP, the inventory at the retailer is owned by the Retailer 29. Vendor managed Inventory- VMI Mfr or supplier is responsible for all decisions regarding product inventories at the retailer. As a result, the control of the replenishment decision moves to the manufacturer instead of the retailer. In many instances of VMI, the inventory is owned by the supplier until it is sold by the retailer. Requires the Retailer to share demand information with the manufacturer to allow it to make inventory replenishment decisions. VMI can increase the profit for the entire SC, if both retailer and manufacturer margins are considered, while making inventory decisions. VMI also helps by conveying customer demand data to the manufacturer, which can then plan production accordingly. Helps improve manufacturer forecasts. For eg. K-Mart (with about 50 suppliers) has seen inventories drop by 30 to 40 percent after implementing VMICollaborative Planning, Forecasting,and Replenishment (CPFR) A business practice that combines the intelligence of multiple partners in the planning and fulfilment of consumer demand According to Voluntary Inter Industry & Commerce Standards Association VICS, Since 1998, over 300 companies have implemented the process Successful CPFR can only be built on a foundation in which the two parties synchronize their data and establish standards for exchanging information. Buyers and sellers in a supply chain may collaborate along any or all of the following four supply chain activities: 1. Strategy and Planning In a Joint Business plan, they identify significant events such as promotion, new product introduction, store opening/ Closing, Inventory plan that affect demand and supply. 2. Demand and supply Management- Collaborative Sales forecast is first done which projects the best estimate of customers demand at the point of sale and then converted to collaborative order plan that determines future orders and delivery requirements. 3. Execution After forecasts, converted to actual orders- then production, shipping, receiving, and stocking of products 4. Analysis - Identifying Exceptions and evaluating metrics that are used to assess performance. Common Scenarios Deployment ofCPFR1. Retail event Collaboration Promotions and other retail events have a significant impact on demand. In such a setting, collaboration between retailers and suppliers to plan, forecast and replenish promotions is very effective.2. DC Replenishment collaboration The two trading partners collaborate on forecasting DC withdrawals or anticipated demand from the DC to the manufacturer.3. Store Replenishment Collaboration Trading partners collaborate on store level point of sales forecasts.4. Collaborative assortment Planning Fashion apparel and other seasonal goods follow a seasonal pattern of demand. Thus collaborative planning in these categories has a horizon of a single season and is performed at seasonal intervals and forecasts rely more on industry trends, macroeconomic factors and customer tastes. Implementation of CPFR Johnson & Johnson and Super drug, a chain in UK implemented CPFR over the three month trial period and observed: Inventory level at its DCs dropped by13% Product availability increased by1.6% Sears implemented CPFR in 2003 and saw significant benefits : - Stock levels improved by 4.3% - DCs to store fill rate improved by10.7% - Overall Inventory levels fell by 25%. CHAPTER IVPerformance measures,The Framework for Performance measurement on Supply ChainSupply chain is an important element in logistics development for all industries. It can improve efficiency and effectiveness of not only product transfer, but also information sharing between the complex hierarchy of all the tiers. The performance measurement on supply chain is an appraisal on the performance including overall operation level, the node enterprises in the supply chain, the cooperation relationship between the node enterprises, etc. Hence it is essentially a business-process-based performance measurement framework. 1. Principles that should be followedWith the continuous development of theories for supply chain management and advancement of practice, a more effective Index system to be used for performance measurement should follow a few main principles as follows, It should focus on the key points and a thorough analysis on the key performance indices should be undertaken. Performance rating indices which reflect the real business process should be adopted. Performance rating indices should be able to reflect the operation status of the overall supply chain, instead of reflecting just the operation status of single node enterprises of supply chain. The rating methodology should be as far as possible combined with real-time analysis so as to be able to extend the scope of measurement to a level within which the real time operation information can be reflected. During performance measurement on supply chain, the rating indices which reflect the relationship between suppliersmanufacturers and the clients should be adopted, so as to be able to extend the scope of measurement to a level which involves the relative enterprises of the supply chain.2. Features of performance measurement indicesAccording to the aims and basic features of supply chain management system, performance measurement indices should be able to reflect the overall operation status of supply chain and the operation relationship between enterprises of adjacent nodes in a supply chain properly, instead of evaluating the operation of single provider without taking the organizational performance of supply chain into consideration. Take a raw material supplier with attractive price in the supply chain as example, the supplier would probably be evaluated as one which should be chosen if we take an isolated look. But if we evaluate it from a perspective of cross-functional level in a whole supply chain, more indices, such as matchability, flexibility etc. must be taken into account.3. Index System of Performance Measurement for supply chain

Metrics for order planningOrder lead-timeThe customer order pathEvaluation of supply linkMeasuring customer service and satisfactionSupply chain and logistics costMeasures and metrics at production levelMeasures for delivery performanceTotal distribution costFlexibilityCustomer query timePost transaction measures of customer serviceInformation processing costIndex System of Measurement perPerformance measurements and metrics in SCM1. Metrics for order planning1.1. The order entry method1.2. Order lead-time1.3. The customer order path2. Evaluation of supply link3. Measures and metrics at production level4. Evaluation of delivery link4.1. Measures for delivery performance4.2. Total distribution cost5. Measuring customer service and satisfaction5.1. Flexibility5.2. Customer query time5.3. Post transaction measures of customer service6. Supply chain and logistics cost6.1. Cost associated with assets and return on investment6.2. Information processing costDimensions of performance measures- The Council of Logistics Management defines Supply Chain Management as "the process of planning, implementing and controlling efficient and cost effective flow of materials, in-process inventory, finished goods and related information from point-of-order to point-of-consumption, for the purpose of conforming to customer requirements" The fundamental objective of a high performance of supply chain is to produce products to match customers' demand cycle, while producing the greatest value possible to the customers. The increasingly competitive environment calls for speedy, cost efficient, accurate and reliable supply chain. Supply Chain Management is no longer a matter of operational and functional areas of the firm. Today, it is a strategic issue demanding top-level management attention. The supply chain can have huge leverage on the creation of customer value. Supply chains will fight the new battle for market dominance; as such, measurements around the supply chain are critical. If we look at competition today, it is "supply chain versus supply chain" This brings out a situation that competitors might focus on developing superior supply chain performance. Accordingly, companies will have to find or develop metrics to measure performance of supply chain. A number of technologies and managerial attention have gone into improving supply chain performance.One benefit of a rigorous approach to supply chain benchmarking is that there are a number of critical measures of performance that need to be continuously monitored through 'Key Performance Indicators' (KPI). In this framework the three key outcomes of success are better, faster, cheaper. Since "what gets measured, gets managed" it is inevitable that once such measures are put in place, management attention will be directed to these key issues. Measurement is important, as it affects behavior that impacts supply chain performance. As such, measurement provides means by which a company can assess whether its supply chain has improved or degraded.Performance measurement in supply chain management A variety of measurement approaches have been developed, including the following important approaches, as reported in the AMR Research.The Balance Score CardIt recommends the use of Executive Information Systems (EIS) that track a number of balanced metrics that are closely aligned to strategic objectives. The approach would recommend that a small number of balance supply chain measures be tracked on the following four perspectives: Financial perspective Customer perspective Internal business perspective Innovative and learning perspectiveSupply Chain Council's SCOR ModelIt advocates a set of supply chain performance measures comprised of a combination of: Cycle time metrics Cost metrics Service/quality metrics Asset metricsThe Logistics ScoreboardIt recommends the use of an integrated set of performance measures under the following categories: Logistics financial performance Logistics productivity performance Logistics Quality performance Logistics cycle time performanceWhile the above approaches provide guidance for measurement, they provide less help in assessing specific metrics to be used. Supply chain strategy differs for every company and depends upon its current competencies and strategic direction.Ten Dimensions of Service Quality The recommended metrics for evaluating the Supply Chain's effectiveness in delivering 'value to a customer' is the following: Tangibles: A company should evaluate the appearance of the facilities, equipment and personnel Reliability: It reflects a company's ability to keep its promises. Responsiveness: A company's willingness to help customers and provide prompt service Competence: It refers to employees' mastery Of the skills and knowledge to perform specified servicesCourtesy: This relates to politeness, respect, consideration and friendliness the company's contact personnel show to customersCredibility: This monitors how well the company delivers on promises to customersSecurity: This refers to freedom from danger, risk and conflictAccess: This relates to approachability and ease of contact with members of the companyCommunication: This refers to commitment to keep customers informed in a language they can understand and listening to themUnderstanding: This relates to how well the company understands it's customersAs difficult as the task might be, businesses will have to find ways to incorporate some of the metrics listed above in their supply chain measurement programs.SCOR Level 1 MetricsAverageBestDelivery Performance85%95%Fill Rates94%98%Perfect Order Fulfilment80%90%Order Fulfilment Lead Times7 days3 daysProduction Flexibility30 days20 daysTotal Logistics Costs13%3%Inventory Days of Supply55 days22 daysCash-to-Cash Cycle Time80 days28 daysNet Asset Turns8 turns1 9 turnsSupply Chain ScorecardThe Supply Chain Operations Reference Model, better known as SCOR, is a reference that has been 'developed and endorsed by the Supply Chain Council, as the cross-industry standard diagnostic tool for supply chain management [3] It enables users to address, improve and communicate supply-chain practices within and between all interested parties. It is a management tool spanning form the supplier's suppler to the customer's customer and a tool kit that can be used to define, measure and manage supply-chain processes. The SCOR model is a pyramid of four levels that represents the path a company takes on the road to supply chain improvement.Level 1 - it provides a broad definition of the plan, source, make and deliver process types and is the point at which a company establishes its supply chain competitive objectives.Level 2 - it defines the 17 core process categories that are possible components of a supply chain, A company can configure both its actual and ideal supply chain by selecting from the core processes.Level 3 - it provides a company with the information it needs to successfully plan and set goals for its supply chain improvements. Planning elements include process definitions, target benchmarks, best practices and system software capabilities to enable best practices.Level 4 - it focuses on implementation, when companies put specific supply chain improvements into play. It defines practices to achieve competitive advantage and to adapt to changing business conditions.The Supply Chain Council has published a supply chain Scorecard representing the performance metrics as under fig 1.Survey of Top PerformersThe Performance Measurement Group (PMG), a subsidiary of PRTM Management Consultants, have released results of the first survey in its 1900-2000 Supply Chain Management Benchmarking Series [4] The survey is based on "Level 1" metrics from the industry standard framework, SCOR model. These process performance measures have a wide-ranging strategic significance to organisations. PMG examined best-in-class industry performance of customer-facing and internal-facing measures in Supply Chain Management. Customer facing measures, such as upside production flexibility and delivery performance to request, quantify how well a supply chain delivers products to the customer. Internal-facing measures, including total supply-chain costs and Cash-to-cash cycle time, quantify how effectively an organisation uses resources in creating value to the customer or how efficiently a supply chain operates. These measures help companies to evaluate the full scope of their supply chain performance against best-in- class performers. The results are based on data from 110 subscriber organisations from North America, Europe and Asia, in chemical and Pharmaceuticals, computers and electronic equipment, defence and industrial, telecommunications equipment and packaged goods sectors. The key performance metrics chosen for the study were:Delivery Performance to Request: the percentage of orders that are fulfilled on or before the customer's requested date.Upside Production Flexibility/ Material availability: the number of days required to achieve an unplanned sustainable 20% increase in production.Total Supply Chain Costs: the total cost as a percent of sales to manage order processing, acquire materials, manage inventory and manage supply chain finance, planning and MIS costs.Cash-to-Cash Cycle Time: the number of days between paying for raw materials and getting paid for product, as calculated by inventory days of supply plus days of sales outstanding minus average payment period for material.Best-in-class: the PMG selects the top 20% of a population and averages the results to calculate the best-in-class measure.A typical finding of the performance of 'Consumer Packaged Goods' sector, was:Major findings of the survey were:Manufacturers are more accurately adjusting forecasts and production cycles to respond to rapid changes in demand. Best-in-class performers now operate with less 40 days of inventory throughout the supply chain. Leading companies have cut their supply-chain management costs between 4% to 5% of sales. They are adopting innovative practices such as exploiting the Internet to integrate information and decision-making around the globe.Cash-to-Cash cycle time for the best-in-class companies is less than 30 days. Companies pay their suppliers quickly, collect from their customers just as quickly and move inventory continuously. Best-in-class Upside Production Flexibility has dipped below two weeks and in some industries it is less than a week.Best-in-classMedianDelivery Performance97.681.2Production Flexibility8.342.0Total Supply Chain Costs4.99.2Cash-to-Cash Cycle Time24.766.6Performance of Indian IndustriesProf. M. G. Korgaonkar, Head-School of Management, IIT Bombay [5] has reported his findings as under:The total logistics cost in the country is estimated at 4.59% of sales.Nearly 60% of the logistics cost is in transportation (35%) and inventory costs (25%); the rest is due to losses (14%), packaging (11%), handling and warehousing (9%) and customers' shipping (6%) growing number of manufacturers are taking proactive and reactive steps to control logistics cost and improve customer service.There is major transportation and other infrastructure bottlenecks related to SCM in India, including roads, railways, ports, shipping etc.Several new SCM related activities have started in India, these include, emergence of trucking companies, information technology including service, containerization, private warehousing, multi modal transport operators, inland container depots, container freight stations and third-party logistics providers.The average inventory turns is 4.5 per year. Over 50% of the inventories are of raw materials, due to inadequate control on the supply side.Supply chain performance is far satisfactory, in respect of lead times, inventories and deliveries. However, several action programmes have been undertaken by firms to improve supply chain performance.There is a growing trend to outsource supply chain related services; these include inventory management, transportation, warehousing, forwarding and clearing, information technology etc. However, service providers with adequate skills, competency and technology are limited.ConclusionIndian companies are yet to leverage the supply chain for competitive advantage and as such there are no initiatives to measure the performance of their existing supply chain systems. However, multinationals dealing in FMCG are fully exploiting the benefits and are also moving towards web-enabled supply chains.In view of globalisation and liberalisation of the economy including EXIM policies, Indian companies are being forced to change their ways of doing business to meet the competitive pressure. In the recent past, many progressive companies are re-engineering their business processes and exploiting the use of Information Technology to challenge the ever-increasing competitive pressures in the market place. In this context, Supply Chain Management initiatives could be a competitive tool and measuring the performance against industry standards would go a long way in achieving international standards.

LOGISTICS QUANTIFICATION PYRAMID Logistics Quantification Pyramid another categorization of performance metrics

A major financial objective for any organization is to produce a satisfactory return for stockholders. The absolute size of the profit must be considered in relation to the stockholders net investment, or net worth. An organizations financial performance is also judged by the profit it generates in relationship to the assets utilized, or return on assets (ROA). Return on assets (ROA) is a metric that is used as a benchmark to compare management and organization performance to that of other firms in the same or similar industry. The supply chain plays a critical role in determining the level of profitability in an organization.

CHAPTER VStrategic planning for logistics and supply chain management2013 Trends andStrategiesin Logistics andSupply Chain Management: Embracing Global Logistics Complexity to Drive Market Advantage The key results of this study by BVL International on trends and strategies in logistics andsupplychain management are summarized, as follows. They are based on 1757 responses collected in an international survey from supply chain executives (includinglogistics serviceproviders (LSPs), retailers, and manufacturing companies).Key TrendsThe general observation from both the interviews and the study results is that logistics complexity in the form of fragmented channels, increased product variations, and consumer demands for customized solutions has increased. Several trends demonstrate that a number of major challenges lie ahead, as the world becomes a more complex place to operate logistically.Customer expectations:In essence, logistics and supply chain management should primarily enable acompanyto satisfy its customers needs. Increasing customer expectations were ranked by respondents of our study as the most important trend, and meeting customer requirements has been ranked by more than 20%of therespondents as the number-one logistics objective. But, as customers are becoming ever more demanding and critical, traditional measures often fail when pursuing strategies to satisfy customers.Networked economy:In the past, companies have typically considered themselves to be independent players in the market and, at best, managed interfaces to direct suppliers and customers. In todaysnetworkedeconomies, this is just not enough anymore. Companies are often forced to collaborate with partners both vertically and horizontally in their extended supply chain network, and these partners expect them to integrate their processes and systems. Companies are forced to adopt network thinking rather than company thinking.Cost pressure:Customers continue to expect low costs. Although other requirements such as sustainability, social issues or risk-mitigation capabilities are increasingly discussed in the media, cost pressure seems to remain the ultimate criterion for customers. Given the trend towards increased customer expectations, it has become ever more difficult toreduce costsany further. Logistics costs are playing an important role in reducing overall costs. Logistics costs share of overall revenue is as low as 4% and 6% in the electronics and automotive industries, respectively. However, our results show that costs are on the rise (larger than 8% on average for manufacturing industries). A concerning result is that as many as 14% of the respondents cannot estimate their logistics costs.Globalization:As globalfootprintsexpand, logistics performance as measured by delivery reliability has deteriorated, due to increasing customer requirements, greater volatility, and problems with infrastructure. Two out of three respondents stated that their companys logistics capability is negatively influenced bypoortransportation infrastructure, which is a problem particularly in emerging markets. In sum, globalization clearly amplifies other trends and leads to an increase in complexity, particularly in regions of growth such as Russia, EasternEurope, India, and Africa.Talent shortfalls:Across all regions and sectors, talent shortages in logistics is considered one of the most important challenges in the coming years. Shortages are being seen at both the operational level as well as the planning and controlling function. In particular, about 70% of the respondents experience a shortage of skilled labor. The most important strategies to cope with talent shortage aretrainingand qualification programs and strategic cooperation with universities andresearchinstitutions. In the United States and Europe, talent shortages are also a function of demographics. Inemerging nationsstrong competition from other fields like finance, strategy and IT contributes to the talent shortage. Volatility: In the last years, market turbulence on the supply and demand side has increased. This was amplified by the economic and financial crisis, which demonstrated how fluctuations in one part of the world can build up to dramatic problems in other parts of the world. Respondents of this study believe that volatility will continue to increase and more than 50% of them consider it to be a very important trend in five years.Sustainability pressure:This trend has emerged as a very serious topic. Already more than 55% of the respondents stated that green issues are part of their logistics strategy.Corporate social responsibilityhas also emerged as a highlight for debate. However, there remains a great deal of uncertainty in the deployment of these strategies, especially relative to measurement systems, evaluation and setting goals and strategies for logistics sustainabilityIncreased risk and disruption:The majority of companies (irrespective of size, sector, country and position in the supply chain) consider the mitigation ofinternal and externalrisks essential. Strategies for 2013 Trends and Strategies in Logistics and Supply Chain Management 9 managing risk around demand and planning are also considered important. Executives concur that strategic frameworks and tools are needed for engaging the entire network in themanagement of riskand disruptions. Solutions focused on improving transparency of tier two suppliers, inventory and demand impede mitigation and force companies into reactive strategies. Proactive strategies should include research and development, procurement, production and sales.New technology:The majority of companies are recognizing the growing need forinvestments innew technology, with about 60% of the respondents planning to invest in big data analysis tools within the next five years. Those tools seek to develop capabilities around the comprehensive handling and intelligent connection of data to increase planning and control outcomes. The new wave of decentralized automated network technologies are in their infancy. Predictions from the last study concerning the use of those technologies have not yet materialized.Strategic Supply Chain ManagementStrategic supply chain management decisions are made at an enterprise level that determine benefits and efficiencies of the supply chain. These articles and links examine these strategic decisions and how they affect a company's supply chain.Is It Time For The Chief Supply Chain Officer?Companies today have CEO's and CIO's, some even have Chief Technology Officers, so is it time that businesses look to the future and appoint a Chief Supply Chain Officer?Purchasing Managers Index (PMI)Purchasing Managers Index (PMI) is released on the first business day of each month and is a key near-term indicator used by financial analysts and economists. Economists believe that the PMI is the single best snapshot of the condition of the factory sector and helps predict industrial production. this article looks at the PMI and how it is...Project Methodology

Project management methodology is important when a company initiates a number of projects across their enterprise. By either developing an in-house company methodology or adopting a standard methodology, each project should operate along a given set of principles that can be transposed from project to project. This article looks at what should be included in a project methodology.

Total Productive Maintenance

In any modern manufacturing facility the equipment used requires a level of maintenance to ensure that the manufacturing process is not disrupted and the production plan can be achieved. World class organizations spend time and resources on maintaining their equipment using a preventative maintenance plan. This article looks at the processes included in Total Productive Maintenance (TPM).

Master Scheduling

Master scheduling is the detailed planning process that tracks manufacturing output and matches this against customer orders that have been placed. The master schedule is the next step in planning after the sales and operations planning (S&OP). This article will examine the master scheduling process.Project Management

A company will have any number of projects in progress at one time. These may be as complex as installing a new enterprise wide computer system, creating a new warehouse, or as simple as purchasing a new commercial vehicle. Project management incorporates all of the interactions and interrelationships that need to occur to make the project successful. This article examines the basics of project management.

Prince2 Project Methodology

In the United Kingdom the Office of Government Commerce has specified a project management methodology to be used for projects that involve the agencies of the British government. The methodology is called Projects in Controlled Environments, or more commonly known as PRINCE. The methodology was updated to PRINCE2 in 1996, and in 2009 a new version was released of PRINCE2. This article looks at the new aspects of the latest version of PRINCE2.

Agile Project Management

Agile project management is based on a set of ideals that have been adopted to overcome some of the shortfalls of traditional project management methodology. The ideas behind Agile have been developed over many years based on academic studies and real world experiences. This article looks at the methodology of Agile and how successful projects can benefit.

Scrum Methodology

The Scrum project management methodology was developed in the 1990s alongside the Agile methodology, as a method to allow teams to work together to get products developed. It offers only a small number of rules within the framework but allows complex projects to be completed in a short timeframe. This article looks at some of the highlights of the Scrum methodology.

Time-Based Strategies Reducing Cycle Time Logistics activities that shorten the length of the order/replenishment cycle have been the focus of much recent attention.Time-Based Strategies Reducing Cycle Time Reductions in cycle time are based on three factors: processes, information, and decision making. If logistics is seen as a series of processes, performing those processes faster will reduce cycle time. Utilization of faster, more efficient forms of order transmission- primarily the Internet-- can significantly reduce the time needed to complete the transaction. Finally, empowering individuals to make decisions can be one of the most important ways to speed cycle time, Pre-approvals and other delegated decision making models can lead to making mistakes, but the risk is justified in terms of time saved and improvement in customer responsiveness Time-Reduction Logistics Initiatives Push to Pull Cross-docking, JIT, VMI, ECR / QR and Continuous Replenishment are all contemporary approaches that help logistics systems move from push to pull. Each strategy reduces the order cycle by shortening the total time from vendor receiving orders to customer delivery.Anticipate customers needs

Improved ability to anticipate through collaborative planning, forecasting, and replenishment (CPFR) enables the logistics and supply chain processes to make a more valuable contribution to corporate objectives. The switch from push to push is a more demand- responsive system, but requires changes that may be difficult to achieve depending on the corporate culture in place. Time-Reduction Logistics Initiatives Manufacturing impacts Pull approach requires a very fast manufacturing / distribution system. Risk of low or no inventory depends on fast and frequent replenishment. Responding to demand Consistent with time-compression strategies Produce to order typically furniture, some white goods,motor car assemblers, local farm implement manufacturers.Time-Reduction Logistics Initiatives Principle of Postponement involves not completely finishing a product until an order arrives. Dell Computers classic example

Asset Productivity Strategies Inventory Reduction Much evidence that companies have been successful in reducing inventories. Time reduction strategies have also contributed. Facility Utilization Strategy to keep the goods moving throughout the logistics and supply chain system has contributed to effective use of logistics facilities thus squeezing more productivity from these assets. Equipment Utilization Strategies Eg. transport vehicle asset management Some reductions have occurred as a result of equipment dispatching software Doing more with less is a result of leaner enterprises. Third-Party/Contract Logistics Services Use of 3PLs has resulted in dramatic positive impact on asset productivity. Companies focus on managing logistics services rather than on the assets themselves.Examine next slide on 4PLs potential impact.

Fig16-4 - Fourth-Party Logistics

Technology-Based Strategies E-Business, e-Commerce, e-Procurement and electronic marketplaces will continue to grow in importance.Fig 16-5 - Shifts in Technology

Relationship-Based Strategies Collaboration All parties involved actively share information. Group benefits more than individual benefits. All parties modify their business practices. All parties conduct business in new and visibly different ways. All parties provide a mechanism and process for collaboration to occur

Value Nets Taking the place of the old supply chain, the value net starts with the customer and is built around three powerful value propositions: High levels of customization Super service Convenient solutions

Synthesis and Future Directions Shift from Vertical to Virtual Integration (the e orientation) Collaboration Knowledge of Own Core Competencies Expertise / detailed knowledge of costs Strategic fit Ability to trust Technology and Connectivity Managing-the-People Skills Comprehensive Supply Chain Perspective