FUTURE DIRECTIONS IN LOGISTICS

A Supply Chain encompasses all activities in fulfilling customer demand. These activities are associated with the flow and transformation of goods from the raw materials stage, through to the end user, as well as the associated information and funds flows. There are four stages in a supply chain: the supply network, the internal supply chain (which are manufacturing plants), distribution systems, and the end users. Moving up and down the stages are the four flows: material flow, service flow, information flow and funds flow. E-procurement links the supply network and manufacturing plant, e-distribution links the manufacturing plant and the distribution network, and e-commerce links the distribution network and the end users. In this assignment we discuss about future developments in th logistics and supply chain management.

The supply chain begins with a need for a computer. In this example, a customer places an order for a Dell computer through the Internet. Since Dell does not have distribution centers or distributors, this order triggers the production at Dell’s manufacturing center, which is the next stage in the supply chain. Microprocessors used in the computer may come from AMD and a complementary product like a monitor may come from Sony. Dell receives such parts and components from these suppliers, who belong to the up-stream stage in the supply chain. After completing the order according to the customer’s specification, Dell then sends the computer directly to the users through UPS, a third party logistics provider. In this supply chain, Dell Computer is the captain of the chain; the company selects suppliers, forges partnerships with other members of the supply chain, fulfills orders from customers and follows up the business transaction with services.

FUTURE DIRECTIONS IN LOGISTICS

Supply Chain Management is a set of synchronized decisions and activities utilized to efficiently integrate suppliers, manufacturers, warehouses, transporters, retailers, and customers so that the right product or service is distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying customer service level requirements. The objective of Supply Chain Management (SCM) is to achieve sustainable competitive advantage. In this modernized world everything has developments, such like that in the sector of logistics there also some developments, that are as follows.

1. Supply Chain Management in an E-Biz Environment: Virtual Integration
2. An Evolution: From Material Management to Supply Chain Management
3. Collaborative Planning, Forecasting, and Replenishment (CPFR) – An e-Biz Solution to Transforming Demand
4. E-distribution and E-procurement
5. Radio Frequency Identification (RFID)
6. Reverse Logistics
7. bar-code system in supply chain
8. knowledge-based supply-chain management

Supply Chain Management in an E-Biz Environment: Virtual Integration

Virtual integration is to use technology and information to blur the traditional boundaries among suppliers, manufacturers, distributors, and end users in a supply chain. Today, the virtual corporation of various firms in a supply chain is a reality with suppliers and customer trading over the Internet in real-time to create maximum value. Virtual integration offers the advantage of tightly coordinated supply chain that has traditionally come through vertical integration. In the age of virtual organizations, managers, engineers, professional staff, and technical workers are no longer the lone custodians of the corporate knowledge base. Knowledge is shared across cultural-boundaries, time-boundaries, and space-boundaries to create strategic frontiers in global and virtual enterprises. A seamless virtual integration of firms within a supply chain requires real-time automation of inter-organization business processes that span across trading partners. In the last decade, organizations involved in a supply chain use e-mail, faxes, and voice mail. These practices introduce delays and often require data to be re-entered multiple times.

An Evolution: From Material Management to

Supply Chain Management

Information technology is the key driving force for moving material management to supply chain management in the second half of the 20th century. In 1970, the cost of one megahertz of computing power was $7,600. By the end of the century, it was 17 cents. The cost of storing one megabit of data was $5,256 in 1970. It is less than 17 cents now2. Ever since the 1960s, technology has enabled business to create tools to ease the management of materials. The development of material management with Bill of Materials (BOM) processor in the early 60s, Material Requirement Planning (MRP) in the 70s, Manufacturing Resource Planning (MRPII) in the 80s, Enterprise Resource Planning (ERP) in the 90s, and supply chain management (SCM) packages in the early twenty-first century. The impact in the evolution of advanced technology and computer power on materials and supply chain management is phenomenal.

Collaborative Planning, Forecasting, and Replenishment

(CPFR) – An e-Biz Solution to Transforming Demand

The essence of recent supply chain development is collaboration across the supply chain. Lack of collaboration in supply chain leads to inefficient production, redundant inventory stock, and inflated costs.

Two examples are given to illustrate the above points3:

1. It often takes a pack of cereal more than three months to be delivered from the factory warehouse to a supermarket shelf due to ineffective distribution strategy.
2. It takes a car an average of 15 days to travel from the factory to a dealer’s showroom, which usually only requires 4 to 5 days traveling time.

Many suppliers and retailers have observed the phenomenon of demand fluctuation in the upstream of the supply chain. Hau Lee describes demand fluctuation for diapers in supply chain. In examining the demand for Pampers disposal diapers, Proctor & Gamble noticed that retail sales of the product were uniform; no particular day or month in which the demand was significantly higher or lower than any other. The distributor’s orders placed to the factory fluctuated much more than retail sales. In addition, P&G’s orders to its suppliers fluctuated even more. This phenomenon of increasing variability in demand in a supply chain is referred to as the bull-whip effect. The bull-whip effect is essentially the artificial distortion of consumer demand figures as they are transmitted back to the suppliers from the retailer. One way to address the bull-whip effect caused by order batching is to collaboratively plan production, forecast demand, and replenish inventory. This will lead to smaller order sizes, smoothed production volumes, and more frequent order replenishment. The result will be a smoother flow of smaller orders that the distributors and manufacturers are able to handle more efficiently. In recently years, retailers have initiated collaborative agreements with their supply chain partners to establish on going planning, forecasting, and replenishment process. This initiative is called collaborative planning, forecasting, and replenishment issues (CPFR). The Association for Operations Management defines CPFR as follows:

“Collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers” - The Association for Operations Management”

- The Association for Operations Management.

The objective of CPFR is to optimize supply chain through improved demand forecasts, with the right product delivered at right time to the right location, with reduced inventories, avoidance of stock-outs, and improved customer service. The value of CPFR lies in the broad exchange of forecasting information to improve forecasting accuracy when both the buyer and seller collaborate through joint knowledge of sales, promotions, and relevant supply and demand information.

E-distribution and E-procurement

E-distribution instructs where to locate the sources of supply and advises how to access them, as well as how to move the materials to the retailers via the Internet or a web-based environment. E-procurement is a part of E-commerce. E-procurement completely revolutionizes a manufacturing or distribution firm’s supply chain, making a seamless flow of order fulfillment information from manufacturer to supplier.

Now we have characterized the nature of supply chain management, we are ready to make a few relevant points:

1. The role of supply chain management is to produce products that conform to customer requirements.
2. The objective of supply chain management is to be efficient and cost-effective through collaborative efforts across the entire system.

3. The scope of supply chain management encompasses the firm’s activities from the strategic level through the tactical and operational levels since it takes into account the efficient integration of suppliers, manufacturers, wholesalers, retailers, and end users.

Radio Frequency Identification (RFID)

Today the largest government and business enterprises in the world are developing plans to deploy electronic product code (EPCTM)-RFID based solutions across their global supply chains and operations. These enterprises have initial deployments and programs that utilize RFID to build faster supply chains, which provide economic payoffs and greater visibility into merchandise movement.

The cost reduction value case is a target area of many consumer packaged goods (CPG) companies, retailers and the United States Department of Defense (DoD). These enterprises expect to reduce inventory and inventory management expenses by billions of dollars over the next several years. Examples of cost-reduction objectives for an RFID program include:

1. Lower inventory stock levels
2. Reduce waste
3. Reduce manual checks
4. Reduce inventory handling costs
5. Reduce logistics costs
6. Reduce claims and deductions
7. Improve asset utilization

Reverse Logistics

“ The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.”

Reverse logistics includes all of the activities that are mentioned in the definition above. The difference is that reverse logistics encompasses all of these activities as they operate in reverse. Therefore, reverse logistics is:

“The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. ”

More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Re-manufacturing and refurbishing activities also may be included in the definition of reverse logistics. Reverse logistics is more than reusing containers and recycling packaging materials. Redesigning packaging to use less material, or reducing the energy and pollution from transportation are important activities, but they might be better placed in the realm of “green” logistics. If no goods or materials are being sent “backward,” the activity probably is not a reverse logistics activity. Reverse logistics also includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery.

Bar-code in supply-chain

Bar codes in the supply chain are used to identify packages and pallets for purposes of accounting, inventory control, shipping verification, billing, and material handling decisions within manufacturing and distribution facilities. Industry standards and specifications for bar code physical characteristics, placement on cases and pallets, and data content have been developed and optimized specifically for these applications. Bar codes can be purchased separately for application to cases, per-printed on to cases at the time of case manufacture, printed real-time directly on to cases, or printed on separately applied labels for cases and pallets. Bar codes are typically read within facilities at points of accounting or ownership transition such as department or shipping doors, or where decisions are required in material flow. They are read by fixed position scanners or readers if the associated material handling systems are automated. They are read by hand-held readers if human operators are required to control package or pallet movement, or if the codes cannot be read by automated means.

knowledge-based supply-chain management

In knowledge-based economy, the environment is more uncertain. Firms rely on great resources to deal with changeable environment. Therefore, they connect with each other to be supply chain in order to obtain core resources and related knowledge and transform them into core competences to create competitive advantages.

In severe international industrial competition, innovation becomes the key of business competition. In order to overcome the challenge and difficulties, firms should make efforts on innovation application and extend value chain activities in order to construct new positions in supply chain. Core competences of firms are the key factors to enhance innovation. Many studies demonstrate that core competences of firms will positively influence innovation

COCLUSION

In this report we discussed about various technologies in logistics and supply chain management. That contains virtual integration, RFID, bar-code, reverse logistics...This developments shows that logistics and supply-chain is essential for success of any business organization. In this age Internet is an important media for supply-chain management. We can, manage our entire supply-chain from our office by the help of internet tools. We can expect some more advances in this sector.