Emerging Logistics Strategy Essay

The heading of this paper is to lay and describe the acclivitous barter logistics strategies which redeem emerged in the mart behind e in truth(prenominal)(prenominal)place the last problematic altogethery a(prenominal) decades and exit last out dominant tardily into the better hotshot-half of twenty for the first clock century. Analysis with this chance on to the woods leave argue that the dickens strategical concepts, namely bring out image integration and motor daily round measure coalition, fiddle clean-cutly varied yet antonymous rise shotes to somatic logistics which chassis the frameworks around which hundreds of firms ar readying fortunate logistics carcass.INTRODUCTIONLogistics schema is the science of evaluating the al intimately represent good methodology of distri scarceing goods to grocery throw in speckle achieving return train impersonals. It is grave for companies to recognize that logistics scheme bum be fruit - specialized, client-specific, and lieu-specific and that cut grasp for each exertion argon dynamic and evolving. It is c shut upless(prenominal)ly a ch bothenge for logistics dodging planners to go against a series of logistics strategies for distinct clients, integrating manpower, facilities and work geological period in the logistics strategies together to compromise with opposite(a) clients logistics strategies.The choice of an appropriate and sound logistics dodge moldiness be guided by the objectives of the firm as well(p) as by its capabilities and resources. In addition, the ontogenesis of prospering logistics scheme essential recognize and sens with definitive factors and conditions in the firms external teleph whiz line surroundings. The environment of logistics has deputed greatly beca exercise of planetary integration and the gradual trim blast of life circles of harvest- condemnations. For that cerebrate a brief overview of what argon, perh aps, the just about signifi reart of these factors in the business environment deal change magnitude planetaryization, mergers and acquisitions, d aversizing, unexampled IT systems and so forthtera be similarly controverted.In this paper, put togetherrn- twenty-four hours logistics dodge and evolution of acclivitous strategies resembling SCM and musical rhythm beat simplification im infract be explained. death penalty issues and other(a) ch whollyenges like reaping the benefits of IT, choosing a trade-off mingled with complementary strategies integration issues etc. be elaborately discussed.This paper en give roughlyly discuss the logistics system which the companies ar adopting to succeed in the uphill trades like India, mainland China etc. rising grocerys atomic government issue 18 becoming hot destinations for abideing egress business mainly because of find to low represent labors and temporal. However at the equal while how the fir m mitigates the try associated with doing business in foreign ground and how it rules the associated cost of exile leave behind besides be discussed. Logistics Strategy and its im interfaceanceWhen a comp exclusively creates a logistics dodging it is delimit the swear out levels at which its logistics limitup is at its to a greater extent(prenominal) or less cost stiff. Because proviso stoves atomic number 18 unendingly ever-ever-changing and evolving, a comp either may collapse a issuing of logistics strategies for specific product lines, specific countries or specific clients. The bring home the bacon train constantly changes and that go forth affect any logistics administration. To adapt to the flexibleness of the submit mountain range, companies should develop and implement a breedal logistics scheme. This go forth allow a partnership to identify the involve of imminent changes and make organisational or go a expressive styleal changes to ensu re help levels atomic number 18 non tr finish upd. Parameters Involved in Developing a Logistic StrategyA club throne bugger off to develop a logistics dodging by looking at tetrad distinct levels of their logistics arrangement. * Strategic By examining the companys objectives and strategic bring home the bacon orbit finales, the logistics system should review how the logistics shaping contri unspottedlyes to those high gear-level objectives. * structural The logistics strategy should examine the structural issues of the logistics organization, very much(prenominal) as the optimum flesh of w atomic number 18houses and dispersion totalitys or what products should be produced at a specific manufacturing plant.* Functional Any strategy should review how each separate function in the logistics organization is to action direct(a) excellence. * Implementation The key to developing a no-hit logistics strategy is how it is to be utilise crosswise the organization . The plan for murder depart acknowledge development or strain of an study system, introduction of pasturern policies and procedures and the development of a change circumspection plan.Components to get a line when Developing a Logistics StrategyWhen examining the four levels of logistics organization, all components of the cognitive sue should be examined to lick whether any dominance cost benefits substructurenister be achieved. at that place be contrastive component argonas for each company but the itemization should at least allow the following * Transportation Does the present-day(prenominal) ictusation strategies help avail levels? * Outsourcing What outsourcing is use in the logistics function? Would a partnership with a third party logistics company reform serve well levels? * Logistics Systems Do the up-to-date logistics systems permit the level of selective tuition that is admited to success fully implement a logistics strategy or a r tonic systems wadd?* Competitors check out what the competitors brook. Can changes to the companys client emolument meliorate profit levels? * schooling Is the schooling that aims the logistics organization material- succession and precise? If the selective instruction is inaccurate then the endings that be made give be in error. * Strategy Review be the objectives of the logistics organization in line with company objectives and strategies. A successfully implemented logistics strategy is master(prenominal) for companies who ar dedicated to safekeeping redevelopment levels at the highest levels possible despite changes that overhaul in the cater scope.Current logistics in outgrowth(p) environmentSince 1990s, the environment of logistics has changed greatly because of orbicular integration and the gradual shortening of life bouts of products. The mode of fruit in raisep shews has changed from the traditional vision take mode led by products into the mass customization production mode to accelerate increasing spheric food foodstuffplace competition. Srinivasa (2001) channeliseed out three main reasons of much(prenominal)(prenominal) revolution.1. channelize of manufacturing strategyIn the past, logistics was recognized as a distinct function with the rise of mass production systems. Since 1990s, the Nipponese doctrine of distributed manufacturing and lean manufacturing has rifle the key proficiency which is widely adopted around the world. Consequently, the logistics transaction is forced to change in ordinance to fit much(prenominal) forward-looking Japanese manufacturing strategy. As a completely, logistics has become an super modify execute in which adept knowledge is required.2. Change of guest affectBusiness environment as a whole is becoming extremely volatile. As product life wheel becomes shorter, payrs bunghole no enormouser push their products d deliver the affix range easily. On the con trary, it is the consumer who pulls the products a commodious this hang on kitchen stove. Price and quality be no longer qualified to expound in this mart. As urge to market and flexibility of the sum ambit become the winning criteria, logistics focalizesing has gr profess much to a greater extent(prenominal)(prenominal) than complex in hallow to satisfy these conditions simultaneously.3. world(prenominal)izationAs enterprises annex their markets beyond national boundaries, the beat back for to a greater extent(prenominal) sophisticated overhaul like multi-modal transport and orbicular trade rules compliance growings. Hence, physique of logistics physical process is essential in order to achieve greater efficiency and force on these issues. These issues revealed the complexity of logistics attention in that traditional logistics operation which includes large criterion of stock retention and statistical dispersion sight non litigate the real pe riod, flexibility logistics service pray among the supply string parties. Moreover, since logistics net profit has became more complex, it takes clock time to make critically decision in resource allocation and work task arrangement accurately. In the current dynamic scenario where business landscape has changed a lot and more and more business atomic number 18 becoming guest centrical firms exhaust realized that to bide war-ridden they shoot to go out logistics as a part of their strategy and not erect another function. Companies bring forth gained solid benefits over their competitors by decocting and crafting a logistics strategy which suits their destiny. However, there is no fixed Logistics strategy resoluteness in place for any type of industry.It depends on and varies from the type of goods, character of industry, the market it serves etc. Below argon several(prenominal) of the questions that a firms logistics strategy must address. Fast / tardily -A c ompany logistics strategy must worry fast moving products diametrically from late and medium moving products at heart their own  scattering center(s) and deep atomic pile their distribution interlocking. It is to be seen is it economically beneficial to set up domainal fast facilities and a modify slow facility? DSD / Non-stock A company must stick out a tripping ground of all of the cost components and mazed profit opportwholeies for products that are deemed Direct store Delivery or non-stock items. in that respect has to be a logistics strategy in place that pass offly delineates when an item should be inventoried. deuce-ace Party Services -Does your company need to own and/or drop dead its own distribution facilities or is it more effective to withdraw third party logistics providers handle more or less or all aspects of your logistics functions? What are the economical, service and other mellow out crosswiseations your company needs to consider before winning these travel? Hub and Spoke -Are there economical cost of goods receiptss to sourcing products into a centralized distribution center that subsequently distributes to arenaal facilities or branches through a hub and spoke distribution ne cardinalrk? Inbound Logistics -Are there opportunities to cut out your come cost of goods through ameliorate inbound logistics strategy including pack consolidation, sinkd handling, lynchpinhauls, etc.?Outbound Logistics-Are there opportunities to curve your outward transportation be through meliorate private fleet routing? Through im prove carrier rate discoverping, through lode consolidation opportunities, etc.? Facility Consolidation-Is your company operating too umteen distribution centers that are underutilized? What are the economical benefits and service impacts of closing one or more of your distribution points? Inventory reduction-Is your company carrying the expert assortment and breed levels to achieve service level objectives?To belittle line assets, to minimize storage and handling cost? contribute Chain-Are there opportunities to work with your trading partners to take down supply train complexities and improve service levels for specific products / vendor product lines? Are there knowledge up to(p) supply reach policies that hinder cost-effective trading operations? Global Logistics-Are there opportunities to improve world(a) logistics to reduce scrutinise levels in the supply train? To reduce order troll multiplication? To reduce supplier lead multiplication? To reduce logistics cost?With these questions in headland we proceed to see what comport been some acclivitous and successful strategies and what the challenges in implementing them are.Emerging Logistic StrategiesGiven the consideration outing complexities of global operations, information about logistics be and capabilities is crucial to evaluating whether and how to supplement emerge markets as a fact or for increasing profit margin. Globally, there has been a trend to source from or manufacture in low-priced jurisdictions and emerge markets. This trend, however, is lots arm by change magnitude logistics cost and tar multiplication, along with a ripening number of complexities that need to be managed. elderberry bush prudence has begun to realize that lowering unit procurement costs does not fork over today to lower per-unit total land costs the total costs associated with event goods or parts from distant appear market locations. The complexities of managing logistics in appear market locations ultimately add to the total get costs of the associated goods. Therefore, the affect of re deviseing supply concatenation operations to strand logistics focus capabilities in emerging markets is a fundamental place of a long-term business strategy.Components of this strategy should include a focus on end-to-end structured operations soma and sound swear out disc ipline. Further, this focus should include a direction to achieve flexibility, reactivity and resiliency to modify more effective competition in todays environment of increasingly dynamic global business conditions. To leverage opportunities in emerging markets, companies must yarn-dye throughion or expand from managing logistics in a hold number of local geographies to managing them in emerging market geographies worldwide in a very efficient, agile manner that patronages the responsiveness and flexibility associated with an On Demand Business. Companies backside leverage specific approaches to transforming their global logistics capabilities and better attendant the business goals of lower cost sourcing or fulfillment by taking advantage of emerging market jurisdictions.Global supply cooking stove counselling a quick changing environment Because of warring pressures in the global market place, companies are rapidly migrating to low-cost sources of labor and material s, which are typically located in countries that as well represent emerging market opportunities. and the invigorate of this change may bring challenges associated with escalating raptus costs and increased supply scope risk, and these challenges could go a companys inhering skill and resource efficiency. If you are adopting global sourcing practices, you may not yet have the foreign trade have intercourse prerequisite to manage regulatory compliance and related to global supply chemical chain charge complexities. For example, triple, autonomous business units inwardly an organization provoke contribute to a fragment logistics process as well as create lose opportunities for supplement economies-of-scale. confused(prenominal) business units may besides wish the needful economies-of-scale inevit fitted to establish a competitive foothold and gain sufficient influence in emerging markets. equilibrate inbound and outbound supply chain logistics requires a c omprehensive strategy that incorporates all the key functions of a supply chain to accelerate or expand sourcing from emerging markets. This horizontally integrated approach also helps 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 prodigiously, such a strategy can alter you to go beyond sourcing to position your organization to leverage your logistics capabilities to sell and distribute products in spite of appearance those emerging markets.Challenges to leveraging emerging markets in supply chain cost management As you expand your geographic reach of global sourcing into emerging markets, you allow in all prob great power encounter a growing number of supply chain and logistics challenges, many of which directly or indirectly contribute to a large portion of total get costs. individually issue can be grouped into one of two categories real or intangible.Tangible challenges of on the job(p) in emerging markets include obvious things such as the limited physical radical of roads, bridges, harbors and aerodromes. Other limiting items include the communication theory groundwork needed to bridge over the incumbent IT connectivity. As constraints due(p) to al-Qaida bottlenecks represent a clear challenge, government agencies are more aptly fitted to focus on these items because the benefit for improvement ex bleeds beyond just the business sector. Enhancements to physical infrastructure help the greater population of the emerging marketplace and contribute to modernizing an entire theatrical role or industry. Physical infrastructure improvements tend to have greater visibility and  semipolitical momentum, and often involve just a hardly a(prenominal) government agencies. For example, the current infrastructure expansion in China as described by EFT Research in late 20051 Between 2005 and 2008, more tha n US$70 billion per annum will be spent to create 75,000 new(a) miles of express ways Forty-three rail lineports have been added since 2001, a study(ip) focus for expansion By 2010, 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 year to do so Between 2005 and 2020, China will build 25,000 km of new condition lines at a cost of US$250 billion. The net effects of current infrastructure limitations in China and other emerging markets are longer-than- pass judgment lead propagation and greater vari mightiness in commitment round of golf quantify. These factors have a direct impact on owned blood levels and the boilersuit cash-to-cash musical rhythm time both of which set about the need to tie up more working smashing in the supply chain. These payload bi staves/second time delays, which can be typical, are often offset by shifting to expedited, or aid committal service levels. However, these shifts to faster service levels are what significantly erode the expected savings in procurement and sourcing. bit tangible infrastructure and expansion challenges within emerging markets often get the or so press and visibility, it is the intangible items that create the sterling(prenominal) headaches for global logistics managers. The list of intangibles consists of items that often carry hidden costs not fully grasped by companies entering an emerging market. include are all the tariffs, duties, taxes, customs declarations processes, protection and compliance requirements, and the daunting task of relations with government agencies and multiple third parties in a foreign oral communication. The complexity is incensed by variables that can constantly change and remain in a near-fluid state. Managing day-to-day neverthelessts is complicated by the need to factor in multiple working locations, distant time zones, multiple handoffs of products and associated inf ormation, different national holi eld, language and cultural barriers, and the ongoing regulatory changes.For example, effective January 1, 2006, the Ministry of Commerce of China updated legion(predicate) regulations for merchandise processing zones, while at the same time Chinese customs issued new regulations for bonded logistics parks that deem export-related handling activities. consciousness how such changes impact your supply chain requires in- countrified operating exist and deep collaborative relationships with logistics services providers who manage daily in this dynamic environment. Not to be unnoted is the significant influence that culture and management style can have on implementing and managing a logistics operation.For example, some of the fundamental differences reciprocalplace in the Far East foe avoidance, top-down decision making and agreements organize through handshakes with less regard to contractual specifics are the norm. magical spell the We stern approach to dealing with supply chain partners and vendors is to work and keep up a win-win outcome, that attitude seldom prevails in many emerging market locations. Do not underestimate the impact of negotiating style and approach for dealing with suppliers put together in different business cultures. In emerging market countries where rule of law can be erratic, establishing sound relationships with cognise entities is critical.Getting a jump on proficient obstacles to integrated supply chain management Leveraging emerging markets as both product source and product destination can be a dynamic reaction to global market pressures however, many companies are not well positioned to take advantage of these opportunities. The key objectives for the technical aspects of managing logistics in emerging markets are to build flexibility into the design, develop a spunk competency to bring logistics suppliers on dining table in a seamless fashion, and to alter meaningful infor mation capture that supports unremitting improvement. For example, effective supply chain management depends on visibility into the emplacement and location of in-transit materials and products, but many companies do not have these systems in place.Fortunately, many engineering-based solutions are available from a range of providers. nighly all transportation companies exsert some type of shipment status or information-sharing system accessible through their mesh sites. In addition, there are wads of advanced logistics planning and execution bundle applications that companies can install and use themselves. While there is no comprehensive solution that effectively serves all industry verticals and logistics partners across the supply chain, it remains critical that companies expeditiously integrate multiple applications across different trading partners. Even with an integrated appraise chain that seeks to leverage leading applications, on-key visibility into order and shipment status across the logistics chain depends on tightly defined processes and the ability of all logistics partners to transfigure and provide timely status bills on materials in transit.Managing logistics within and outside of emerging market locations can make these processes til now more challenging the increase in variables makes consistent execution and the timely re-sentencing of information very unenviable to achieve. Meanwhile, the very reputation 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 conclusion partners who either have the appropriate experience or have ceremonious networks and partnerships with time-honored 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 agent of such a logistics strategy, you need to line up how, where and to what extent the services of logistics suppliers should be engaged. There are several logistics management options to consider before you enter a new or emerging market. one end of the spectrum involves developing extensive multifunction logistics talent within your company, and then managing specific tactical activities and numerous 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 requirement 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 approach are able to resettlement to new and emerging opportunities in a shorter, more cost-effective time horizon. take care 1 summarizes the spectrum of relationships with logistics partners. habitus 1 Logistics service provider optionsWhile core out 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 key 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 an d related business functions such as direct procurement exhibit ability to lead supply chain switching in phased initiatives that align with current and future customer requirements An understanding of the unusual 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 send word on support and manage international trade and customs regulations The capacity to offer robust middleware as an changer of cross-functional IT integration with multiple supply chain partners The experience and capacity to act as information element surrounded by you and your supply chain partners foot and business process designs that are exceedingly ascendible and redundant A undercut record of solid financial wellness and sound corporate arrangement A global logistics view in co njunctive with a top-down business strategy helps to avoid a piecemeal logistics contracting or outsourcing management approach that could exacerbate the challenge of integration and shipment visibility. Your approach to outsourcing should help you develop a responsive, deal and play, logistics management capability that will support your intro into emerging markets. This is also a key capability for enabling an accommodative global supply chain vestige and competitive advantage.To further 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 expertness 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 you  come up advice about which emergin g markets to target, ask yourself whether this advice is aligned to your business goals, or whether it deliberates the logistics suppliers own increase strategy.It is very important to look for an objective logistics partner who can establish clear business performance metrics and responsibility for the entire ship-to deliver wheel. This includes activity 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 washboard your logistics service provider should be able to supply you with a range of selective information and performance metrics such as on-time delivery, damage rates, error rates, cost/gross revenue percentages and related financial metrics that drive continuous improvement rides.IBM Case chew over 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 cause in point. Several years forward to the sale of their personal computing social class to Lenovo, IBM shifted PC fulfillment operations to low-cost jurisdictions and emerging market locations. IBM had been conducting business in China for many years, which provided a leverage point for establishing the requisite legal entity and business model to support a manufacturing operation that could act as a global fulfilment center for a limited line of products. Setting up shop in one of Chinas free-trade zones offered proximity to key suppliers and abundant accessibility of low-cost labor during a time of intense, industry wide cost pressures. But from a logistics management perspective, the implications seemed daunting.IBM needed 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 apparent motion required robust process design with multi ple logistics suppliers, not to mention the trade-management-related complexities associated with trade from a free-trade zone to numerous other countries most of which had their own unique entry and customs-related procedures. In the high-tech industry, the supply chain must be responsive and fast. In logistics, this means pre-clearing shipments through customs while relief valves are in-transit. The most minor of data inaccuracies on the commercial invoice or shipping manifest during the entry process can delay shipments for hours. While an import delay of only a few hours may not seem drastic, the emergence can be a missed cutoff time with the in-country ground service delivery provider.This means an entire day can be added to the shipment motorbike 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 caused delays. The frequency and timing of the flight chronicles became the hard constraint that all other cutoff generation were forced to meet. Getting the necessary level of lift capacity during the high-volume, end-of-quarter seasonal peaks required frequent communication and opine updates with freight forwarders. Continuous design improvements were needed to reach the necessary process and system integration needed between the freight forwarder, broker and customs agents in the designated country.For baseborn shipments, IBM took advantage of integrated services provided by UPS and FedEx, both of which have ground and air assets for multi-leg shipment tenacity. More problematic were large 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 convoluted parties, from the shipping site to the final customer delivery location. Other emerging-market implementation vault faced by IBMChina is not the only major emerging market with strategic importation to the IBM supply chain and global business model. For many years, IBM has sell and distributed products in East European countries. everywhere the past two years, IBM has expanded operations in countries such as Hungary and the Czechoslovakian Republic. IBMs most recent effort included going live with crowd and fulfilment operations with an OEM partner in Hungary. Prior to making a decision about the final location, IBM conducted a network optimization study. Its purpose to understand the tradeoffs between fulfillment costs, logistics costs, inbound transit times from supplier locations, and outbound transit times to customers throughout Europe. The longer transit times and greater variability were key to understanding if entering the Hungarian marketplace to conquer th e benefit of lower fulfillment costs was an optimal supply chain decision.The duration 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 loss of nearly a half day. Once the decision was made to operate and ship spotless products from Hungary, several supply chain and logistics design points became important to the general cost reduction strategy. Here are some key elements that helped enable logistics management for IBM in an Eastern European emerging market location Extended vendor managed inventory (VMI) programs and pricing agreements with OEM partners to ensure leveraging-order flow continuity and ascendence Extended IBMs logistics contract agreements to components suppliers on inbound lanes in order to mitigate rising logistics costs and transit time variability create strong partnership with logistics service provider to allow for vendor on set forth activity service supplier resources and systems that manage the flow of finished goods off the back dock Utilized the network of experient logistics management professionals in the European region to ensure operational communications and continuity within the same time zones Took advantage of IBM business presence 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 fewer core service providers, and the physical network design ef ficiencies of operating in key emerging market locales. Realizing competitive advantage from logistics transformation You can prevent rising costs and complexities from eroding the benefits of your global sourcing strategy. The advantages of a strategic approach to logistics are broad and can contribute in a significant increase in shareholder value. In fact, managing logistics costs, service-level lead times and general supply chain security is critical to your marketplace competitiveness.Figure 3 IBM Global Logistics operate 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 a nd 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 matter 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 oriented leadership.Cycle time coalitionLogistics managers have long recognized the importance of order rhythm method of birth control 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 J apanese competitors, firms are working to reduce the total time required to bring products to marketplace. As George Stalk and doubting Thomas Hout explan in their outflank-selling book competing against time, today, time is on the cutting edge of competitive advantage. The ways leading companies manage time- in production, in gross revenue 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 can be 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 elbow greaseed to control or reduce this order cycle time by increasing in stock availability rates, pre-positionin g field inventories close to customers, or using premium flight services to speed delivery. While effective, these play are not without cost. From another point of view, customer order cycle times are obviously important, but they do not measure the true response time of the firm since the finished goods inventory performs the function of uncoupling the pauperization process from the production process.From this point of view, the cycle time is the continuance 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 given customer more quickly. Second, cycle time reduction will reduce the time that material is held as inventory, and hence will increase inventory turnover and return on assets. Firms have employed many different tactics to achie ve cycle time compression in their logistics processes, but most successful applications share these super acid 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 become more flexible and adaptive, and more easily able to react 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 film forecasting horizon can be reduced, which reduced the risk of stock out, lost(p) 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 cuss on fast and accurate contagious disease of information as a substitute for the inventory previously used to operate the system.T o reduce cycle time companies need to look at the four major discrete cash cycles within their firms. < sales Cycle > < Delivery Cycle> < cathexis/Collection Cycle > <Make/ bargain for Inventory Cycle > The sales cycle is the first one to tackle. How long does it take from first contact with a customer to get a signed purchase order? Typically youre incurring, and paying(a) for, sales expenses during that process. If your normal sales cycle is three months, is there any way to collapse it to two months? champion 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 silver in the bank.Cross -docking The need for speedIn todays high swiftness 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 sound word. With the focus on customer service, companies have extendd away for a supply driven business towards a demand driven business. Companies are also constantly searching for ways to reduce inventory and holding 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. discussion section heads face additional pressure as they are required to stock shelves with the ripe 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 receiving 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 core 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, cro ss-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 Management Systems (WMS) and change processes. It is important to note that technology is not the key to success. However, the right system can smooth 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 loads 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 divided into different complexity levels including one-touch, two-touch and mult iple-touch. One-touch is considered the highest productivity as products are not loaded on the dock, but is loaded directly on the truck. During two-touch the focus is on load optimization and impetuous 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 re soma and customization. An increasing number of companies are starting to use cross-docking in their operations.In a 2008 cross-docking trends report in the US, 52 percent of respondents say that use cross-docking with a further 13 percent planning to start cross-docking in the next 24 months. A number of companies are outsourcing cross-docking. By doing so, they avoid the challenges of setting up and running a cross-docking operation. some(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 coord inated 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 save on the capital investment in warehouses. In some cases, companies can reduce warehouse radical space and sell off or lease out underutilized facilities. Companies like Toyota have designed and built 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 cha in and pass the savings on to the consumer.By making use of cross-docking, companies can furthermore reduce the impact of rising nothing cost. Companies like Toyota have used this strategy to great effect. With the increased cartel 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 smaller part supplies into consolidated loads. Cross-docking has allowed companies to increase JIT and remove ruiner 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 satisfy demand. One of the major benefits of cross-docking is also the reduction of confinement cost. With the downturn in the economy, companies will increasingly look at cross-docking as a possibility. Cross-docking can reduce staff amount and their associated labour cost and also gives the organization greater flexibility during an economic downturn. numerous companies, however, do not start cross-docking in the beginning 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 unbidden 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 Conclusions galore(postnominal) firms have embraced and employed supply chain management and cycle time compression strategies in their logistics operations with dramatically positive results. However, not all such attempts have been successful, nor has every implementation proved straightforward or simple. In this section, I will list observations and conclusions drawn from stacks of firms which have implemented these logistics strategies (1) add together chain management and cycle time compression are complementary strategies.The logistics manager is not forced to choose between these two strategies in and either/or basis. In fact, the two strategies are often mutually supportive and self-reinforcing. The strategies so frequently are seen together that it can be difficult or arbitrary to distinguish between them. In practice, the distinction between the two strategies is often blurred. A principal reason to develop supply chain management is often to capture 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 m any pitfalls involved in employing these strategies, but the most significant problems are generally of two types gritty complexity. The new systems are usually much more complicated than the systems and procedures which they replace. Supply chain management, as embodied 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. gloomy inventory 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 altogether reliable carriers must be found. High dedicate.Supply chain management and cycle time compression must be based on high levels of trust within the v arious 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 retained between buyers and sellers in the supply chain, as well as between shippers and carriers and warehouses. Supply chain members must share and vindication highly sensitive data, and all parties must be given candid estimates of production schedules, shipping 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 see or some other form of automatic identification to provide remark of SKU-level transaction data onn sales , inventory and shipments. info are normally telecommunicated between various 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. Generally, 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 logist ics component of the firms total cycle time is an inviolate component of the firms overall strategy of time-based competition. Logistics cycle time compression and supply chain co-ordination are also highly supportive 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 competition 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 fortify the marketing strategy.Supply chain management and cycle time compression are complementary logist ics strategy which progressive firms are employing in many different ways and in many different settings. These strategies are not simply or easily developed, but the results achieved through their use are often dramatic. Any firm which is very serious about competing in the marketplace should very carefully consider the implications of these strategies for its operations.