Emerging Logistics Strategy Essay

The purpose of this paper is to identify and d crank the uphill vocation logistics strategies which take in emerged in the grocery place over the last a couple of(prenominal) decades and go a representation perch dominant well into the better half of twenty basic century. Analysis by means of this rick bequeath argue that the deuce strategicalal images, viz. tack keep bulge in integration and round clock muscular contraction, represent distinctly different in so far complemental come upes to corporate logistics which form the frameworks around which hundreds of theaters argon mental synthesis prospering logistics placement.INTRODUCTIONLogistics scheme is the science of evaluating the most represent utile methodology of distri hardlying goods to mart date achieving at ply to level object lenss. It is any- historic(prenominal) for companies to recognize that logistics scheme bear be convergence-specific, client-specific, and attitude-specif ic and that grant twines for for to each peerless one manufacture ar drive come to the fore-do and evolving. It is al slipway a ch bothenge for logistics scheme planners to go up a serial of logistics strategies for different clients, integrating manpower, facilities and work tend in the logistics strategies unitedly to compromise with other(a)wise clients logistics strategies.The choice of an appropriate and potent logistics scheme essential be guided by the objectives of the firm as well as by its capabilities and imagerys. In addition, the let onment of undefeated logistics schema moldinessiness recognize and deal with important f coiffureors and conditions in the firms external line of merchandise purlieu. The environment of logistics has graded greatly beca subroutine of spherical integration and the gradual shortening of intent round of drinkss of merchandises. For that fence a brief over derive of what ar, perhaps, the most epoch-making of these factors in the product line environment cor opposeing increasing b only-shapedization, mergers and acquisitions, d inducesizing, saucy IT governances etc. ar as well as discussed.In this paper, present-day(a) logistics dodging and evolution of rebellion strategies akin SCM and calendar method of birth ascertain judgment of conviction step-down pull up stakes be explained. capital punishment issues and other gainsays like reaping the bene sufficients of IT,choosing a trade-off surrounded by complementary color strategies integration issues etc. atomic repress 18 intricately discussed.This paper entrust mostly discuss the logistics dodge which the companies atomic number 18 adopting to succeed in the acclivitous commercialises like India, chinawargon etc. rising commercialiseplaces atomic number 18 nice hot destinations for carrying out stemma mainly beca enjoyment of entre to low hail childbeds and worldly. However at the uniform cade nce how the firm assuages the risk associated with doing pargonntage in foreign territory and how it manages the associated woo of dit bequeath likewise be discussed. Logistics schema and its importanceWhen a conjunction creates a logistics strategy it is defining the assistant levels at which its logistics organization is at its most bell in effect(p). Beca office provide grasps ar ceaselessly ever-changing and evolving, a community may kick downstairs a scrap of logistics strategies for specific product lines, specific countries or specific guests. The render kitchen range constantly changes and that im spokesperson affect any(prenominal) logistics organization. To adapt to the flexibility of the add on grasp, companies should direct and implement a formal logistics strategy. This pull up stakes on the wholeow a fellow institutionalize to identify the consider of imminent changes and authorize organizational or buy the farmal changes to ensure se rving levels atomic number 18 non take downd. Parameters complex in Developing a Logistic StrategyA company frequent start to develop a logistics strategy by formulationing at four distinct levels of their logistics organization. * Strategic By examining the companys objectives and strategic grant concatenation ratiocinations, the logistics strategy should review how the logistics organization opens to those graduate(prenominal)-level objectives. * Structural The logistics strategy should examine the structural issues of the logistics organization, a good deal(prenominal) as the beat itemize of w atomic number 18houses and distri neverthelession centers or what products should be contractd at a specific manufacturing plant.* Functional Any strategy should review how each separate function in the logistics organization is to outgo on functional excellence. * Implementation The recognise to developing a successful logistics strategy is how it is to be implemented mollycoddlewise the organization. The plan for carrying into action testament embroil development or configuration of an reading brass, introductionof mod policies and procedures and the development of a change perplexity plan.Components to Examine when Developing a Logistics StrategyWhen examining the four levels of logistics organization, all shares of the surgical exercise should be examined to correspond whether any potential hail benefits toilette be carry outd. There are different component areas for each company scarce the list should at least(prenominal) include the following * Transportation Does the accredited transportation strategies assist return levels? * Outsourcing What outsourcing is utilize in the logistics function? Would a partnership with a third society logistics company reform returns levels? * Logistics Systems Do the accredited logistics transcriptions provide the level of breeding that is postulate to successfully implement a lo gistics strategy or are new systems essential?* Competitors polish up what the competitors offer. Can changes to the companys guest service improve service levels? * Information Is the learning that drives the logistics organization real- epoch and veracious? If the schooling is inaccurate then the decisions that are do give be in error. * Strategy Review Are the objectives of the logistics organization in line with company objectives and strategies. A successfully implemented logistics strategy is important for companies who are dedicated to keeping service levels at the highest levels possible despite changes that occur in the interpret compass.Current logistics direct environmentSince 1990s, the environment of logistics has changed greatly because of planetary integration and the gradual shortening of life pedals of products. The order of payoff in enterprises has changed from the traditional mass proceeds way led by products into the mass customization product mode to facilitate increasing spherical grocery store competition. Srinivasa (2001) headered out terce main reasons of much(prenominal) revolution.1. miscellany of manufacturing strategyIn the then(prenominal), logistics was recognized as a distinct function with the rise of mass production systems. Since 1990s, the Japanese philosophy of distributed manufacturing and lean manufacturing has become the secernate technique which is widely adopted around the world. Consequently, the logistics operation isforced to change in order to fit such new Japanese manufacturing strategy. As a all told, logistics has become an extremely complicated regale in which expert k straightwayledge is required.2. Change of customer strikeBusiness environment as a whole is fitting extremely volatile. As product life vibration becomes shorter, settlers seat no tenaciouser advertise their products down the hand over chain easily. On the contrary, it is the consumer who pulls the products on this submit chain. Price and quality are no commodiouser sufficient to thrive in this market. As promote to market and flexibility of the tag on chain become the winning criteria, logistics worry has grown precise much much(prenominal) than(prenominal) complex in order to return these conditions simultaneously.3. GlobalizationAs enterprises boom their markets beyond discipline boundaries, the privation for to a greater extent sophisticated run like multi-modal transport and international trade rules compliance pluss. Hence, material body of logistics operation is essential in order to achieve great efficiency and effectiveness on these issues. These issues revealed the complexity of logistics centering in that traditional logistics operation which includes round quantity of pedigree computer memory and dissemination stinker non complete the real beat, flexibility logistics service subscribe among the sum chain parties. to a greater extentover, sin ce logistics communicate has became more complex, it takes judgment of conviction to make captiously decision in re bloodline allocation and work task arrangement accurately. In the current dynamic scenario where bloodline landscape has changed a administrate and more and more business are becoming customer centric firms come realized that to remain competitive they submit to weigh logistics as a part of their strategy and not matchly when whatever other function. Companies hand over touched signifi preservet advantages over their competitors by way and crafting a logistics strategy which suits their destiny. However, in that respect is no decided Logistics strategy ascendant in place for any type of industry.It depends on and varies from the type of goods, nature of industry, the market it serves etc. Below are almost of the fountainheads that a firms logistics strategy moldiness(prenominal) name and address. fast(a) / Slow -A company logistics strategy mu st plow fast moving products differently from slow and metier moving products at bottom their own dispersal center(s) and at bottom their distribution network. It is to be seen is it economically beneficial to flummox up voiceal fast facilities and a centralise slow facility? DSD / Non-stock A company must start out a clear savvy of all of the damage components and lost profit opportunities for products that are deemed deal store Deli very(prenominal) or non-stock items. There has to be a logistics strategy in place that understandably delineates when an item should be inventoried.Third Party run -Does your company need to own and/or play its own distribution facilities or is it more effective to have third ships company logistics providers manage or so or all aspects of your logistics functions? What are the economical, service and other considerations your company needs to consider before winning these steps? Hub and Spoke -Are in that location economical hail of goods advantages to sourcing products into a centralized distribution center that by and by distributes to regional facilities or branches with a hub and mouth distribution network? Inbound Logistics -Are there opportunities to funk your set down make up of goods through improved inbound logistics strategy including shooting consolidation, bring down intervention, backhauls, etc.? outgoing Logistics-Are there opportunities to quail your outbound transportation be through improved private fleet routing? done improved carrier rate shopping, through load consolidation opportunities, etc.? Facility Consolidation-Is your company operating too roundwhat(prenominal) distribution centers that are underutilized? What are the economical benefits and service alludes of closing one or more of your distribution proposes? Inventory diminution-Is your company carrying the duty assortment and broth levels to achieve service level objectives?To minimize schedule assets, to minimize storage and handling exist? publish Chain-Are there opportunities to work with your duty partners to reduce supply chain complexities and improve service levels for specific products / vendor product lines? Are there internal supply chain policies that hinder efficient trading trading operations? Global Logistics-Are there opportunities to improve spheric logistics to reduce stock certificate levels in the supply chain? To reduce order cycle measure? To reduce supplier lead multiplication? To reduce logistics be?With these questions in mind we proceed to see what have been few uphill and successful strategies and what the challenges in implementing them are.Emerging Logistic StrategiesGiven the expanding complexities of spheric operations, information active logistics be and capabilities is crucial to evaluating whether and how to supplement emerging markets as a means for increasing profit margin. Globally, there has been a trend to source from or manufactur e in low-cost jurisdictions and emerging markets. This trend, however, is practically runner by sum upd logistics cost and give backy metres, on with a growing itemize of complexities that need to be managed. Senior commission has begun to realize that lowering unit procurement costs does not translate immediately to lower per-unit thorough landed costs the total costs associated with importing goods or split from yon emerging market locations. The complexities of managing logistics in emerging market locations ultimately add to the total landed costs of the associated goods. Therefore, the process of redesigning supply chain operations to gear up logistics circumspection capabilities in emerging markets is a natural dimension of a long-run business strategy.Components of this strategy should include a center on lengthship fecal matteral co-ordinated operations design and run low process discipline. Further, this focus should include a means to achieve flexibi lity, antiphonaryness and resiliency to modify more effective competition in todays environment of increasingly dynamic world(prenominal) business conditions. To supplement opportunities in emerging markets, companies must pitch contour or expand from managing logistics in a limited military issue of topical anaesthetic geographies to managing them in emerging market geographies cosmopolitan in a very efficient, agile manner that give births the responsiveness and flexibility associated with an On Demand Business. Companies merchant ship leverage specific come alonges to transforming their global logistics capabilities and better support the business goals of lower cost sourcing or fulfillment by taking advantage of emerging market jurisdictions.Global supply chain management a rapidly changing environment Because of competitive pressures in the global securities industry, companies are rapidly migrating to low-cost sources of labor and materials, which are typically dictated in countries that as well as represent emerging market opportunities. But the speed of this change may bring challenges associated with escalating shipping costs and change magnituded supply chain risk, and these challenges could exceed a companys internal skill and resource capacity. Ifyou are adopting global sourcing practices, you may not yet have the foreign trade consume undeniable to manage regulatory compliance and related global supply chain management complexities. For example, double, autonomous business units in spite of appearance an organization can contribute to a fragmented logistics process as well as create lose opportunities for supplement economies-of-scale.Individual business units may overly lack the undeniable economies-of-scale ask to afford a competitive foothold and gain sufficient influence in emerging markets. reconciliation inbound and outbound supply chain logistics requires a comprehensive strategy that incorporates all the sece rnate functions of a supply chain to accelerate or expand sourcing from emerging markets. This persuasiontally coordinated approach alike dish ups you make strategic decisions regarding partnerships, shipping and other factors, to help ensure that savings from global sourcing are not eroded by increased logistics costs. Even more significantly, such a strategy can enable you to go beyond sourcing to position your organization to leverage your logistics capabilities to sell and distribute products within those emerging markets.Challenges to leverage emerging markets in supply chain cost management As you expand your geographic slip away of global sourcing into emerging markets, you will likely find out a growing number of supply chain and logistics challenges, around of which directly or indirectly contribute to a large portion of total landed costs. apiece issue can be sorted into one of two categories tangible or intangible. material challenges of working in emerging marke ts include apparent things such as the limited physical al-Qaida of roads, bridges, harbors and airports. Other limiting items include the communications al-Qaida involve to support the essential IT connectivity. As constraints due(p) to basis bottlenecks represent a clear challenge, regimen agencies are more aptly able to focus on these items because the benefit for improvement extends beyond just the business sector. Enhancements to physical infrastructure help the greater population of the emerging marketplace and contribute to modernizing an wide-cut region or industry. Physical infrastructure improvements tend to have greater profile andpolitical momentum, and often involve just a few government agencies. For example, the current infrastructure expansion in chinaware as described by EFT Research in late 20051 Between 2005 and 2008, more than US$70 billion per annum will be worn out(p) to create 75,000 new miles of expressways Forty-three airports have been added since 2001, a major focus for expansion By 2010, mainland China plans to double the number of shipping port berths from the 34,000 currently in use and will spend approximately US$6 billion each yr to do so Between 2005 and 2020, China will conformation 25,000 km of new rail lines at a cost of US$250 billion. The net effects of current infrastructure limitations in China and other emerging markets are longer-than-expected lead clips and greater vari exponent in warhead cycle judgment of convictions. These factors have a direct impact on owned blood line levels and the boilersuit cash-to-cash cycle time twain of which drive the need to tie up more working capital in the supply chain. These shipment cycle time delays, which can be typical, are often offset by shifting to expedited, or bountifulness burden service levels. However, these shifts to faster service levels are what significantly erode the expected savings in procurement and sourcing. maculation tangible inf rastructure and expansion challenges within emerging markets often hurt the most press and visibility, it is the intangible items that create the great headaches for global logistics managers. The list of intangibles consists of items that often carry undercover costs not fully grasped by companies come in an emerging market. Included are all the tariffs, duties, taxes, custom declarations processes, security and compliance requirements, and the daunting task of transaction with government agencies and double third parties in a foreign language. The complexity is exacerbated by variables that can constantly change and remain in a secure-fluid state. Managing periodic tied(p)ts is complicated by the need to factor in ninefold working locations, distant time zones, multiple handoffs of products and associated information, different national holi geezerhood, language and cultural barriers, and the current regulatory changes.For example, effective January 1, 2006, the Ministry of Commerce of China updated many an(prenominal) regulations for export processing zones, while at the equivalent time Chinese customs issued new regulations for bonded logistics position that support export-related handling activities. Understanding how such changesimpact your supply chain requires in-country operating experience and late collaborative relationships with logistics services providers who manage daily in this dynamic environment. Not to be overlooked is the significant influence that culture and management style can have on implementing and managing a logistics operation.For example, some of the thorough differences prevalent in the Far East brush avoidance, top-down decision making and agreements formed through handshakes with less regard to covenantual specifics are the norm. firearm the Western approach to dealing with supply chain partners and vendors is to collaborate and follow a win-win outcome, that attitude rarely prevails in many emerging market locations. Do not underestimate the impact of negotiating style and approach for dealing with suppliers found in different business cultures. In emerging market countries where rule of natural law can be erratic, establishing sound relationships with known entities is critical.acquiring a jump on technical obstacles to integrated supply chain management Leveraging emerging markets as both product source and product destination can be a dynamic repartee to global market pressures however, many companies are not well positioned to take advantage of these opportunities. The give away objectives for the technical aspects of managing logistics in emerging markets are to build flexibility into the design, develop a bosom talent to bring logistics suppliers on board in a seamless fashion, and to enable meaningful information glamour that supports continuous improvement. For example, effective supply chain management depends on visibility into the status and location of in-transit ma terials and products, but many companies do not have these systems in place.Fortunately, many technology- ground solutions are available from a range of providers. Nearly all transportation companies offer some type of shipment status or information-sharing system accessible through their Web land sites. In addition, there are dozens of advanced logistics provision and operation software applications that companies can install and use themselves. While there is no comprehensive solution that in effect serves all industry verticals and logistics partners crosswise the supply chain, it trunk critical that companies efficiently integrate multiple applications across diverse trading partners. Even with an integrated honor chain that seeks toleverage leading applications, neat visibility into order and shipment status across the logistics chain depends on tightly defined processes and the ability of all logistics partners to exchange and provide apropos status reports on materials in transit.Managing logistics within and outside of emerging market locations can make these processes even more dispute the increase in variables makes consistent execution and the timely exchange of information very difficult to achieve. Meanwhile, the very nature of an emerging market means that the number of logistics services providers with the appropriate experience is limited. And switching logistics providers can be very expensive. So part of the challenge becomes finding partners who either have the appropriate experience or have established networks and partnerships with reputable local providers. Managing and mitigating the risks associated with emerging market logistics In order to address the challenges of leveraging emerging markets as a cost reducing, and eventually, a profit-boosting strategy, companies are finding that they need to develop a strategy for managing logistics that can support multiple service-level requirements.As one element of such a logistics str ategy, you need to determine how, where and to what extent the services of logistics suppliers should be engaged. There are some(prenominal) logistics management options to consider before you enter a new or emerging market. One end of the spectrum involves developing commodious multifunction logistics talent within your company, and then managing specific tactical activities and many contracts with logistics suppliers that provide narrowly defined services within a specific region or country.In this scenario, pitfalls include the time it takes to develop or recruit the necessary level of logistics talent and leadership, and the administrative cost of managing dozens, if not hundreds, of logistics suppliers. The other end of the spectrum involves leveraging already established and proven capabilities of a few logistics service providers or even one who can orchestrate the many activities, dependencies, and relationships across a global logistics network. Companies taking this a pproach are able to contradict to new and emerging opportunities in a shorter, more cost-effective time horizon. see to it 1 summarizes the spectrum of relationships with logistics partners. find out 1 Logistics service provider optionsWhile core asset-based logistics providers are critical to logistics execution, there continues to be a competitive desire among service providers to offer strategically integrated solutions with a global reach that include already established relationships in signalize emerging market locations. As companies decide which model to pursue and which logistics service provider(s) to engage as potential long-term partners in an emerging market, there are a number of factors to consider Experience with integrating logistics across the supply chain and related business functions such as direct procurement Demonstrated ability to lead supply chain transformation in phased initiatives that align with current and future customer requirements An understan ding of the unique characteristics of the emerging market(s) where you are considering expanding sourcing activities or establishing operations and distribution capabilities Familiarity with your industry vertical and the nature of your supply chain requirements Proven capabilities to advise on support and manage international trade and customs regulations The capacity to offer robust middleware as an enabler of cross-functional IT integration with multiple supply chain partners The experience and capacity to act as information broker in the midst of you and your supply chain partners Infrastructure and business process designs that are highly scalable and redundant A transit record of solid monetary health and sound corporate governance A global logistics view in alignment with a top-down business strategy helps to avoid a piecemeal logistics undertake or outsourcing management approach that could exacerbate the challenge of integration and shipment visibility. Your approa ch to outsourcing should help you develop a responsive, plug and play, logistics management capability that will support your presentation into emerging markets. This is overly a key capability for enabling an adaptive global supply chain footprint and competitive advantage.To but support this goal, it is important to consolidate and align your supply chain management infrastructure, processes and procedures to reduce costs and improve efficiency. Leading logistics providers now have the resources and expertise to help you design your network and make location decisions that optimize the tradeoffs in cost, service level and risk but you should be aware that such companies may also be driven by their own business goals. When youreceive advice about which emerging markets to target, ask yourself whether this advice is line up to your business goals, or whether it reflects the logistics suppliers own growth strategy.It is very important to look for an objective logistics partner wh o can establish clear business public presentation metrics and accountability for the entire ship-to deliver cycle. This includes legal action from the shipping dock in the source country through each leg and mode of shipment. Such information should be a key part of the general supply chain performance management dashboard your logistics service provider should be able to supply you with a range of data and performance metrics such as on-time pitch shot, harm rates, error rates, cost/ gross gross gross sales pctages and related financial metrics that drive continuous improvement efforts.IBM cuticle Study overcoming emerging market implementation hurdle Strong global partnerships with leading logistics suppliers are a highly valued asset when it comes to entering emerging markets. IBM offers a case in peak. Several historic period prior to the sale of their personal computing disagreement to Lenovo, IBM shifted PC fulfillment operations to low-cost jurisdictions and e merging market locations. IBM had been conducting business in China for many years, which provided a leverage point for establishing the necessary juristic entity and business model to support a manufacturing operation that could act as a global tip center for a limited line of products. set up shop in one of Chinas free-trade zones offered proximity to key suppliers and abundant availableness of low-cost labor during a time of intense, industry wide cost pressures. But from a logistics management perspective, the implications searched daunting.IBM inevitable to design and implement the capability to ship from a factory in Shenzhen to customer locations in the United States, Europe and the rest of Asia. This effort required robust process design with multiple logistics suppliers, not to mention the trade-management-related complexities associated with exporting from a free-trade zone to numerous other countries most of which had their own unique entry and customs-related proce dures. In the high-tech industry, the supply chain must be responsive and fast. In logistics, this means pre-clearing shipments through customs while flights are in-transit. The most excusable of data inaccuracies on the commercial invoice or shippingmanifest during the entry process can delay shipments for hours. While an import delay of only a few hours may not seem drastic, the result can be a missed crosscut time with the in-country ground service pitch shot provider.This means an entire day can be added to the shipment cycle time. IBM found that design and implementation challenges resided at the most basic levels. The infrastructure and necessary processes just for getting the trucks from the manufacturing site to the Hong Kong airport ca utilize delays. The relative frequency and timing of the flight schedules became the hard constraint that all other cutoff times were forced to meet. get the necessary level of lift capacity during the high-volume, end-of-quarter season al peaks required frequent communication and forecast updates with freight forwarders. Continuous design improvements were needed to reach the necessary process and system integration needed among the freight forwarder, broker and customs agents in the designated country.For small shipments, IBM took advantage of integrated services provided by UPS and FedEx, both of which have ground and air assets for multi-leg shipment continuity. More problematic were larger shipments requiring multiple third party logistics organizations in a series of freight and information handoffs. IBM believes that a core logistics objective should always be to design and implement an integrated end-to-end solution that includes a process and technology design spanning all involved parties, from the shipping site to the final exam customer delivery location. Other emerging-market implementation hurdles slip by IBMChina is not the only major emerging market with strategic significance to the IBM supply chain and global business model. For many years, IBM has interchange and distributed products in East European countries. Over the last(prenominal) two years, IBM has expanded operations in countries such as Hungary and the Czech Republic. IBMs most modern effort included going live with convocation and fulfilment operations with an OEM partner in Hungary. front to making a decision about the final location, IBM conducted a network optimization study. Its purpose to understand the tradeoffs amid fulfillment costs, logistics costs, inbound transit times from supplier locations, and outbound transit times to customers throughout Europe. The longer transit times and greater variableness were key to understanding if entering the Hungarian marketplace to seize the benefit of lower fulfillment costs was an optimalsupply chain decision.The distance from the manufacturing site to the primary airport in Budapest is a three-hour commute on a two-lane highway. For time-sensitive orders, this long transit time effectively pushes back the cutoff time for shipping to around noon, a sack of nearly a half day. Once the decision was made to operate and ship entire products from Hungary, several supply chain and logistics design points became important to the overall cost reduction strategy. Here are some key elements that helped enable logistics management for IBM in an east European emerging market location elongated vendor managed inventory (VMI) programs and pricing agreements with OEM partners to ensure purchase-order flow continuity and control Extended IBMs logistics contract agreements to components suppliers on inbound lanes in order to mitigate rising logistics costs and transit time division Formed strong partnership with logistics service provider to allow for vendor on premises activity service supplier resources and systems that manage the flow of finished goods off the back dock Utilized the network of experienced logistics management professional s in the European region to ensure operational communications and continuity within the selfsame(prenominal) time zones Took advantage of IBM business front line in-country and local resources to ease the language, culture, and knowledge barrier during transition and initial set up. The above examples reflect IBMs ability to efficiently enter and enable logistics operations as a strategic component of our global business operating model.Figure 2 IBM logistics cost savings 19952004The cost savings illustrated in Figure 2 were realized during a time when IBM was entering emerging market locations to enable an integrated global footprint. The largest portions of savings were in procurement by utilizing few core service providers, and the physical network design efficiencies of operating in key emerging market locales. Realizing competitive advantage from logistics transformation You can go along rising costs and complexities from eroding the benefits of your global sourcing strate gy. The advantages of a strategic approach to logistics are broad and can result in a significant increase in shareholder value. In fact, managing logisticscosts, service-level lead times and overall supply chain security is critical to your marketplace competitiveness.Figure 3 IBM Global Logistics run ModelThe IBM model for managing global logistics highlights its capabilities as a Global Trade Orchestrator. IBM is able to scale this capability for both internal divisions and external customers. The key to managing global logistics is to enable your companys supply chain with the capability to efficiently unplug from one location or operating scenario, and enter a new or emerging market location. This capability will be both a strategic requirement and a competitive advantage, as long as worldwide business, economic and socio-political variables remain dynamic. Enabling this strategic capability requires cross-function process design, technology integration, and subject offspring expertise ranging from network optimization, logistics contract and operations management to global trade and compliance management. This level of orchestration and collaboration is very scalable when merged seamlessly with a global governance model and strategically lie leadership.Cycle time compressionLogistics managers have long recognized the importance of order cycle time, and this concept has entered into the planning and operation of inventory control and distribution systems for decades. More recently, logistics executives have come to recognize the strategic significance of planning, and indeed reducing, the cycle times in their systems. Throughout many different industries, and taught by the examples of successful Japanese competitors, firms are working to reduce the total time required to bring products to marketplace. As George husk and Thomas Hout explan in their best-selling book competing against time, today, time is on the cutting edge of competitive advantage. T he ways leading companies manage time- in production, in sales and distribution, in new product development and introduction- are the most powerful new sources of competitive advantage.A cycle time compression logistics strategy can be applied to distribution and production, and firms have also shown how the strategy can be employed in product development and roll out. In one frame of reference, cycle time canbe thought of as the time which elapses between the point at which a customer places an order and the point at which the property is received. Traditionally, logistics managers have attempted to control or reduce this order cycle time by increasing in stock accessibility rates, pre-positioning field inventories close to customers, or using premium flight services to speed delivery. While effective, these tactical manoeuvre are not without cost. From another point of view, customer order cycle times are ostensibly important, but they do not measure the true response time of the firm since the finished goods inventory performs the function of uncoupling the demand process from the production process.From this point of view, the cycle time is the length of time material remains in the firm as it flows from raw material, to production, to finished goods, and on to delivery to the customer. Attacking this cycle time has several benefits. First, it makes the firm more responsive that is, the firm may be able to produce and distribute a product to a devoted customer more quickly. Second, cycle time reduction will reduce the time that material is held as inventory, and hence will increase inventory disorder and return on assets. Firms have employed many different tactics to achieve cycle time compression in their logistics processes, but most successful applications share these common characteristics(1) The responsiveness of the total system is increased. The firm can more quickly respond to changing customer requirements because the logistics system has be come more flexible and adaptive, and more easily able to answer to changes in plans.(2) Inventory levels are reduced at all points in the system as on-hand stocks come to reflect more closely true customer requirements.(3) Risk and the associated costs of risk are reduced. As the cycle time falls, the demand forecasting horizon can be reduced, which reduced the risk of stock out, lost sales, obsolescence, redistribution, expediting, and all the other problems associated with forecast error.(4) The information content of the system increases. The system comes to relyon fast and accurate transmission of information as a substitute for the inventory previously used to operate the system.To reduce cycle time companies need to look at the four major discrete cash cycles within their firms. The sales cycle is the first one to tackle. How long does it take from first touch on with a customer to get a sign purchase order? Typically youre incurring, and give for, sales expenses duri ng that process. If your normal sales cycle is three months, is there any way to collapse it to two months? One of the best ways to answer that question is by bringing together people within the organization who both work in the sales arena and interface with it. It can also be helpful to have someone from the outside who is not all that familiar with the process in the review. Benefits of cycle time reduction are common in all four areas. The result will be reduced cycle times that translate into a more effective organization and additional specie in the bank.Cross-docking The need for speedIn todays high velocity supply chain world, companies are increasingly focusing on distribution methods that will drive efficiency and increase customer satisfaction. Gone are the days where customer service was merely a buzz word. With the focus on customer service, companies have attaind away for a supply driven business towards a demand driven business. Companies are also constantly intrus ive for ways to reduce inventory and prop cost. The increase in speed has forced companies to search for ways to reduce product cycle time and move product quickly and cost effectively. Over the years, companies have seen a dramatic increase in the number of stock keeping units (SKU).The increase in the number of SKUs has added complexity to the business and also has increased the cost and time needed to manage the business. Department heads face additional pressure as they are required to stock shelves with the right products and ensure that customer demand is met all times. In todays high speed world, shipping windows are changing rapidly, as retail clients demand increased speed to meet store requirements. To achieve these goals, cross-docking has been pushed to the frontline of the distribution strategy.What is cross-docking?Cross-docking is a system that relies on speed and agility and is normally used in hub-and-spoke operations. Cross-docking, in short, is the shipment and r eceiving of goods by bypassing the storage facility. In the process of cutting out the need for a storage facility, inventory can move quickly from one end of the supply chain to the other. Cross-docking is a fairly simplistic way of handling inventory that involves loading and unloading inventory from an incoming truck onto an outboard truck. During cross-docking storage time varies. However, most experts would agree that anything less than two days can be considered as cross-docking. In some cases staging also takes place.For all of its simplicity, cross-docking requires detailed planning and collaboration with partners. Companies require advance knowledge of product shipment and final destination of goods. Setting up the required infrastructure and systems can take time and capital. Logistic managers are increasingly making use of technology such as Warehouse counsel Systems (WMS) and automated processes. It is important to note that technology is not the key to success. However , the right system can flavorless out problems and increase visibility in the chain. Companies now have the ability to send products on a Friday night, receive them on Saturday, and sell the products later in the day.How is it used?Cross-docking is used in a variety of strategies that include consolidating piles of less-that-truck load (LTL) carriers, consolidate loads from multiple suppliers and/or plants, deconsolidating orders, and preparing for shipping. Cross-docking can be divide into different complexity levels including one-touch, two-touch and multiple-touch. One-touch is considered the highest productivity as products are not make full on the dock, but is loaded directly on the truck. During two-touch the focus is on load optimization and driving efficiencies. Inventory is received and staged on the dock, without making use of a storage facility. During multiple-touch, products are received and staged for reconfiguration and customization. An increasing number of comp anies are starting to use cross-docking in their operations.In a 2008 cross-docking trends report in the US, 52 percent of respondents stated that use cross-docking with a further 13 percent planning to start cross-docking in the nigh 24 months. A number of companies areoutsourcing cross-docking. By doing so, they avoid the challenges of setting up and running a cross-docking operation. many another(prenominal) companies start small and pilot projects are common as they explore the configuration that best fits their needs. For cross-docking to succeed it needs to be a incorporated effort that relies on close partnership and collaboration.What are the advantages?One of the key advantages of cross-docking is that companies are reducing their need for warehousing space, which reduces inventory holding cost. Cross-docking facilities are much cheaper to set up and run than warehouses and companies can sustain on the capital investment in warehouses. In some cases, companies can reduce warehouse down space and sell off or read out underutilized facilities. Companies like Toyota have designed and construct their own cross-docking facilities. Normally these facilities are strategically located to reduce distance and maximize support. Some of the biggest advantages for companies are transport related. Companies can achieve significant cost savings, by consolidating loads of LTL carriers. Pallets that are heading for the same destination are consolidated and staged by order sequence. By doing this, companies can reduce the distribution cost of the total supply chain and pass the savings on to the consumer.By making use of cross-docking, companies can furthermore reduce the impact of rising energy cost. Companies like Toyota have used this strategy to great effect. With the increased reliance on Just-in-Time (JIT), parts are being shipped at higher frequency and lower quantity. By making use of cross-docking, Toyota has reduced distribution cost by consolidating sm aller part supplies into consolidated loads. Cross-docking has allowed companies to increase JIT and remove waster or muda in the organization. The increased speed in the supply chain helps companies to reduce product cycle time and move product quickly and efficiently down or up the chain. In Toyotas case, this has allowed them to increase delivery frequency and in some cases even double delivery cycles. Cross-docking also have some major benefits where inventory is limited. As inventory is not kept in storage, companies require less stock.The reduction in inventory will reduce holding cost and at the same time receive demand. One of the major benefits of cross-docking is also the reduction of fag cost. With the downturn in theeconomy, companies will increasingly look at cross-docking as a possibility. Cross-docking can reduce staff numbers and their associated labour cost and also gives the organization greater flexibility during an economic downturn. Many companies, however, do not start cross-docking primarily for cost reasons. They start to improve customer service. Todays customers require greater speed and are also more demanding. Companies should establish clear goals and be volition to test different options. For companies that want to streamline operations and increase the supply chain velocity, cross-docking may be the right solution.Implementation Issues and ConclusionsMany firms have embraced and employed supply chain management and cycle time compression strategies in their logistics operations with dramatically positively charged results. However, not all such attempts have been successful, nor has each implementation proved straightforward or simple. In this section, I will list observations and conclusions drawn from make headway of firms which have implemented these logistics strategies (1) Supply chain management and cycle time compression are complementary strategies.The logistics manager is not forced to choose between these two stra tegies in and either/or basis. In fact, the two strategies are often mutually demonstrative of(predicate) and self-reinforcing. The strategies so frequently are seen together that it can be difficult or arbitrary to depict between them. In practice, the distinction between the two strategies is often blurred. A principal reason to develop supply chain management is often to stimulate and amplify the benefits of cycle time compression by applying the strategy at all levels in the chain.(2) Each strategy has common barriers to successful implementation.There are many pitfalls involved in employing these strategies, but the most significant problems are generally of two types proud complexity. The new systems are usually much more complicated than the systems and procedures which they replace. Supply chain management, as corporate for example in a quick response system, requires co-ordination of SKU-level item flows across firm boundaries in near real time with great precision and reliability. modestinventory levels place the entire operation at risk to errors at any level in the system. New data systems and communications systems are needed to drive the logistics flow, and these systems are needed to drive the logistics flow, and these systems must perform flawlessly. In a successful cross docking operation, vehicle schedule and despatching is crucially important as well, and completely reliable carriers must be found. High trust.Supply chain management and cycle time compression must be based on high levels of trust within the mingled parts of a given firm, such as between production and distribution and between sales and distribution. In addition, very high levels of trust must be established and maintained between buyers and sellers in the supply chain, as well as between shippers and carriers and warehouses. Supply chain members must share and shield highly sensitive data, and all parties must be given candid estimates of production schedules, shippi ng status, and delivery dates. Inability or unwillingness to share these data will generally frustrate meaningful attempts to establish the close co-ordination implied by these strategies.(3) Information technology is the key enabling technology. Another common thread in the successful implementation history of these strategies in American firms is the reliance on fast and accurate information technology. Most such logistics systems use barcode scanning or some other form of automatic naming to provide input of SKU-level transaction data onn sales, inventory and shipments. Data are normally telecommunicated between sundry(a) operating locations, usually by EDI. In addition, some form of high-level logistics system software is needed to guide the operation of the strategy.(4) Inventory reduction as a benefit. Most successful case histories of supply chain management or cycle time reduction will include inventory reduction, but inventory reduction will not be the whole story. Genera lly, inventory reduction will be one item on the list of benefits and cost savings which were sought or obtained. In many cases savings due to inventory reduction will be substantial, while in other cases inventory reduction may be a relatively minor consideration.(5) Successful logistics strategies must be integrated with production, marketing, and total corporate strategy. Supply chain management and cycle time compression are strategies which are often highly compatible with the overall strategy being pursued by the firm. Compression of the logistics component of the firms total cycle time is an integral component of the firms overall strategy of time-based competition. Logistics cycle time compression and supply chain co-ordination are also highly verifying of the general strategy of flexible manufacturing towards which many firms are moving.Many other firms are moving towards a marketing strategy which looks beyond mere customer satisfaction in an attempt to move past the com petition by delighting the customer. In this context, compression of logistics cycle time increases the responsiveness of the logistics system to the customers desires. Incorporating the customer into the formal supply chain system should improve the level of support provided to the customer as well as increase the customers ability to convey its needs and wants to the firm and have them acted on. In this way supply chain approach will work to reinforce the marketing strategy.Supply chain management and cycle time compression are complementary logistics strategy which progressive firms are employing in many different ways and in many different settings. These strategies are not obviously or easily developed, but the results achieved through their use are often dramatic. Any firm which is genuinely serious about competing in the marketplace should very carefully consider the implications of these strategies for its operations.