Core concepts of SCM?

SUPPLY CHAIN MANAGEMENT In commerce, supply chain management (SCM), the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain. Supply-chain management has been defined as the "design, planning, execution, control, and monitoring of supply-chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.” For more explanation visit: https://www.youtube.com/watch?v=Mi1QBxVjZAw LOGISTICS Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption to meet the requirements of customers or corporations. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items. The logistics of physical items usually involves the integration of information flow, materials handling, production, packaging, inventory, transportation, warehousing, and often security. For more explanation visit: https://www.youtube.com/watch?v=Vu3o2-3uSKE CORE CONCEPTS OF SCM Shortly after your alarm clock goes off and the coffee maker kicks on, the aroma of your favorite coffee fills the air. The supply chain is responsible for getting those coffee beans across the world and to your kitchen. Something so common in every household, takes a great deal of planning, demand forecasting, procurement, and logistical expertise to move those beans to local sellers while still fresh. Without a strong supply chain in place, your caffeine-fix options would be severely limited. SCM involves a series of key activities and processes that must be completed in an efficient (fuel-conserving, cost-reducing, etc.) and timely manner. Otherwise, product will not be available when needed by consumers like you. The Seven Rights of Fulfillment The ability to meet customer requirements, for everything from coffee beans to Crocs, is built upon the expectation that everything is done correctly in the supply chain. And that means doing it right the first time – no mulligans, no mistakes are allowed. In the quest to provide quality service and satisfy customers, world-class companies along the supply chain are guided by the Seven Rights of Fulfillment. If you think about it, every order needs to be executed according to these seven goals. You must attempt to deliver a “perfect order” to every customer every time. Doing it right the first time makes the customer happy, saves the cost of fixing errors, and doesn't require extra use of assets. Thus, every part of the organization has a vested interest in pursuing perfection. A “perfect order” delivery is only attained when all Seven Rights of Fulfillment are achieved. To accomplish a perfect order fulfillment, the seller has to have your preferred product available for order, process your order correctly, ship the entire order via the means that you request, provide you with an advanced shipping notification and tracking number, deliver the complete order on time and without damage, and bill you correctly. A seller’s ultimate goal is to make the customer happy by doing the job right, which gives them a good reason to use the seller’s services again in the future. SCM Flows If the goal of SCM is to provide high product availability through efficient and timely fulfillment of customer demand, then how is the goal accomplished? Obviously, you need effective flows of products from the point of origin to the point of consumption. But there’s more to it. Consider the diagram of the fresh food supply chain. A two-way flow of information and data between the supply chain participants creates visibility of demand and fast detection of problems. Both are needed by supply chain managers to make good decisions regarding what to buy, make, and move. Other flows are also important. In their roles as suppliers, companies have a vested interest in financial flows; suppliers want to get paid for their products and services as soon as possible and with minimal hassle. Sometimes, it is also necessary to move products back through the supply chain for returns, repairs, recycling, or disposal. Because of all the processes that have to take place at different types of participating companies, each company needs supply chain managers to help improve their flows of product, information, and money. This opens the door of opportunity to you to to a wide variety of SCM career options for you! SCM Processes Supply chain activities aren't the responsibility of one person or one company. Multiple people need to be actively involved in a number of different processes to make it work. It's kind of like baseball. While all the participants are called baseball players, they don't do whatever they want. Each person has a role – pitcher, catcher, shortstop, etc. – and must perform well at their assigned duties – fielding, throwing, and/or hitting – for the team to be successful. Of course, these players need to work well together. A hit-and-run play will only be successful if the base runner gets the signal and takes off running, while the batter makes solid contact with the ball. The team also needs a manager to develop a game plan, put people in the right positions, and monitor success. Winning the SCM “game” requires supply chain professionals to play similar roles. Each supply chain player must understand his or her role, develop winning strategies, and collaborate with their supply chain teammates. By doing so, the SCM team can flawlessly execute the following processes: • Planning – the plan process seeks to create effective long- and short-range supply chain strategies. From the design of the supply chain network to the prediction of customer demand, supply chain leaders need to develop integrated supply chain strategies. Broadly, the typical sales and operations planning steps are: 1. Define Your Plan using demand planning and statistical forecasting generate a demand plan aligned with seasonality & product life cycle trends. 2. Agree on an Inventory Strategy to achieve desired service levels by defining statistical safety stocks and reorder point replenishment models. 3. Optimize Supply by rebalancing inventory across sites to resolve supply gaps. 4. Manage Your Constraints to ensure that there is enough capacity to fulfill demand increases and balance worker capacity with material levels 5. Make Decisions by evaluating financial trade-offs to maximize revenue and optimize inventory • Procurement – the buy process focuses on the purchase of required raw materials, components, and goods. As a consumer, you're pretty familiar with buying stuff! Procurement is just one of the many roles involved in a good supply chain. It should be considered a core component of a company’s corporate strategy. Proper procurement management is vital because an organization can end up spending over half of its revenue on purchasing goods and services. Procurement makes a huge difference between the success and failure of a business. The procurement process includes the following steps: 1. Identifying requirements 2. Approving the request for purchase 3. Finding suppliers 4. Making inquiries and receiving quotations 5. Negotiating the terms 6. Making a final selection of the vendor 7. Creating a purchase order and goods receipt 8. Shipping management 9. Receiving invoices and making payments • Production – the make process involves the manufacture, conversion, or assembly of materials into finished goods or parts for other products. Supply chain managers provide production support and ensure that key materials are available when needed. Production has following planning steps: 1. Sales Forecasting 2. Sales and Operations 3. Demand Management 4. Detailed Scheduling 5. Production: 6. Material Requirements Planning 7. Distribution – the move process manages the logistical flow of goods across the supply chain. Transportation companies, third party logistics firms, and others ensure that goods are flowing quickly and safely toward the point of demand. It is an overarching term that refers to numerous activities and processes such as packaging, inventory, warehousing, supply chain, and logistics. 8. Customer Interface – the demand process revolves around all the issues that are related to planning customer interactions, satisfying their needs, and fulfilling orders perfectly.

Demand Management?

Demand management is a planning methodology used to forecast, plan for and manage the demand for products and services. This can be at macro-levels as in economics and at micro-levels within individual organizations. For example, at macro-levels, a government may influence interest rates in order to regulate financial demand. At the micro-level, a cellular service provider may provide free night and weekend use in order to reduce demand during peak hours.

Supplier Relationship Management?

Supplier relationship management (SRM) is the discipline of strategic planning for, and managing, all interactions with third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions. In practice, SRM entails creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value and reduce risk of failure. Supply chain management (SCM), the management of the flow of goods and services, involves the movement and storage of raw materials, work-in-process inventory, and of finished goods from point of origin to point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply the chain.

Sourcing & Purchasing?

Sourcing describes all those activities within the procurement process concerning identifying and evaluating potential suppliers, engaging with selected suppliers and selecting the best value supplier.The outcome of the sourcing process is usually a contract or arrangement that defines what is to be procured, on what terms and from which suppliers. Purchasing refers to the portion of the procurement cycle that is actively engaged in buying a product or service from a supplier. Think of purchasing as the transactional portion of procurement. If procurement is the subject, then purchasing is the verb. Tasks that directly relate to the process of how goods and services are ordered are purchased while activities such as strategic sourcing and vendor contract negotiation constitute procurement.

Quality Management?

Quality Management, the six Total Quality Management factors that are related to supply chain performance are leadership, strategic planning, human resources management, supplier quality management, customer focus, and process management.Strategic Supply Management initiatives include: Reducing supply bases and establishing closer relationships with their suppliers, Buyers are working closely with suppliers and potentially launching joint strategic projects, Earlier supplier involvement and joint problem-solving efforts, leading to the early discovery of quality problems ,Inter-firm production scheduling breaks down barriers between organizations, resulting in shorter production runs, and developing a favorable quality culture based upon top-management commitment to improving beyond organizational boundaries.

Introduction to Logistics Management?

Logistics management is a supply chain management component that is used to meet customer demands through the planning, control and implementation of the effective movement and storage of related information, goods and services from origin to destination. Logistics management helps companies reduce expenses and enhance customer service. The logistics management process begins with raw material accumulation to the final stage of delivering goods to the destination. By adhering to customer needs and industry standards, logistics management facilitates process strategy, planning and implementation.

Transportation?

Transportation is defined as the movement of people, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles and operations. Transportation is important since it enables trade between people, which in turn establishes civilizations. I find it an interesting point that transportation is an enabler of civilization, but this makes sense, as it enables the ability to trade and communicate.

Reverse Logistics?

Reverse logistics ae the set of activities that is conducted after the sale of a product to recapture value and end the product's lifecycle. It typically involves returning a product to the manufacturer or distributor or forwarding it on for servicing, refurbishment or recycling. Reverse logistics are sometimes called aftermarket supply chain, aftermarket logistics or retrogistics. The aftermarket processes that a product can undergo in reverse logistics are numerous and include: Remanufacturing, Refurbishment, Servicing, Returns Management, Recycling, Waste Management, Warranty Management, Warehouse Management.

Cold Chain?

The term cold chain or cool chain denotes the series of actions and equipment applied to maintain a product within a specified low-temperature range from harvest/production to consumption. A cold chain is a temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of refrigerated production, storage and distribution activities, along with associated equipment and logistics, which maintain a desired low-temperature range.

Inventory Management?

Inventory management is a discipline primarily about specifying the shape and placement of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The concept of inventory, stock or work-in-process has been extended from manufacturing systems to service businesses and projects, by generalizing the definition to be "all work within the process of production- all work that is or has occurred prior to the completion of production".

Introduction to Warehouse?

A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the outskirts of cities, towns or villages. They usually have loading docks to load and unload goods from trucks. Sometimes warehouses are designed for the loading and unloading of goods directly from railways, airports, or seaports. They often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.

Warehouse Process?

The six fundamental warehouse processes . Optimizing these six processes will allow you to streamline your warehouse operation, reduce cost & errors, and achieve a higher perfect order rate. They are : 1. Receiving 2. Put-Away 3. Storage 4. Picking 5. Packing 6. Shipping

Warehouse VAS?

A value-added service (VAS) is a popular telecommunications industry term for non-core services, or, in short, all services beyond standard voice calls and fax transmissions. However, it can be used in any service industry, for services available at little or no cost, to promote their primary business. In the telecommunications industry, on a conceptual level, value-added services add value to the standard service offering, spurring subscribers to use their phone more and allowing the operator to drive up their ARPU. For mobile phones, technologies like SMS, MMS and data access were historically usually considered value-added services, but in recent years SMS, MMS and data access have more and more become core services, and VAS therefore has begun to exclude those services.

MHE, Safety & Security?

Material handling equipment (MHE) is mechanical equipment used for the movement, storage, control and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption and disposal.The different types of handling equipment can be classified into four major categories:transport , positioning , unit load formation , and storage . MANAGING WAREHOUSE SAFETY AND SECURITY There are many warehouse management procedures you can adopt today to better cultivate industry-leading safety and security. They are : Risk Assessments, Electric and hydraulic safety circuits within machine, Safety fencing and zoning ,Additional warehouse safety guarding.

E-Commerce?

E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.

ERP & TMS?

Enterprise resource planning refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results. A transportation management system is a subset of supply chain management concerning  transportation operations and may be part of an enterprise resource planning system. A TMS usually "sits" between an ERP or legacy order processing and warehouse/distribution module. A typical scenario would include both inbound (procurement) and outbound (shipping) orders to be evaluated by the TMS Planning Module offering the user various suggested routing solutions.

VMI?

Vendor Managed Inventory (VMI) and Collaborative Replenishment is a proven approach to streamlining inventory management and order fulfillment that improves collaboration between suppliers and their distribution partners by aligning business objectives and optimizing operations for all participants. You may be asking, what is the difference between VMI and Collaborative Replenishment. It’s simple, Collaborative Replenishment is an evolution of VMI that includes trading partners working together to ensure an efficient inventory management program. It goes far beyond the capabilities of what traditional VMI is thought of including things like truck building, available to promise and more. It offers companies more choices by enabling orders to be launched by any trading partner, offering multiple routes to market, and utilizing various types of demand signals. In all, collaborative replenishment is a more flexible approach to supply chain management, but at is core Collaborative Replenishment includes VMI and all its benefits.

VISIT?

As part of the Warehousing module on both the Logistics and Supply Chain Management MSc and the Procurement and Supply Chain Management MSc programmes, students have the opportunity to visit a choice of warehouses in the local Milton Keynes area. By visiting the warehouses, students are able to experience the processes and operations within a warehouse first hand and see the practical application of knowledge and skills developed on the course.
E-Commerce Logistics

E-Commerce Logistics: The Evolution of Logistics and Supply Chains from Direct to Store Models to E-Commerce

This post is the first in an extensive 7 post series on all things e-commerce logistics as we head to the Magento Imagine Conference in Last Vegas the week of May 12th with our affiliate partners, WebShopApps, to showcase our partnership whereby we offer an end-to-end less than truckload freight e-commerce logistics management application for Magento shopping carts. At the conference, our plan is to support WebShopApps as they announce some new initiatives and new programs looking to continue their quest to help merchants with better eCommerce shipping extensions and applications.

Cerasis and WebShopApps have helped many freight shippers, who are better suited to ship via less than truckload vs. small package, to create e-commerce logistics solutions.

Over the next week we will cover the evolution of e-commerce logistics and how supply chains have changed, what options you have for charging your customers freight costs when setting up a new online store, the rise of eCommerce by manufacturers, distribution companies, and the industrial space, the role of reverse logistics in e-commerce, and conclude with the coverage on the role of e-commerce in a multi and omni-channel world.

The Evolution of e-Commerce Logistics

E-Commerce Logistics Models

In developed economies, e-commerce logistics represents the latest big driver of change in logistics and physical distribution networks, which have evolved substantially over the past 40 years or so. Currently, it remains the case that as e-commerce continues to grow, most shippers, particularly multi-channel shippers, are still only just beginning to work out what this will entail for their distribution network infrastructures.

Let’s Take a Look at the Evolution of Logistics

From a distribution property perspective, this evolution has passed through various general phases and very broadly in the timeline as follows:

  • In the 1970s, most retail stores were replenished by direct deliveries from suppliers or wholesalers.
  • In the 1980s, retailers started to centralize their store deliveries through new distribution centers which they controlled.
  • In the 1990s, global sourcing (for non-food products) took off, with many retailers developing import centers to receive and process mostly containerized imports.
  • From around 2000, e-commerce began to rapidly expand with pure-play (internet only) retailers leading the way in establishing e-fulfillment distribution networks

ecommerce logistics evolution

E-Commerce Logistics in Developed Markets

In developed economies the growth of online retail has been stronger in sectors such as fashion, electrical and ICT goods, as opposed to food.

In the former, where purchased items are typically distributed via a postal, parcel or freight network, e-commerce logistics models have led to a wave of new demand for four distinct types of logistics functions:

  1. Mega e-fulfillment centers where the merchandise is stocked and picked at item level. These facilities, which are either operated by the retailer or a logistics service provider, are typically 500,000 sq ft to one million sq ft in size, or even larger. They often operate 24/7.
  2. Parcel hubs/sortation centers which sort orders by zip or post code so that they can be delivered to the relevant parcel delivery center for final delivery to the customer’s home or designated collection point.
  3. Parcel delivery centers which handle the ‘last mile’ delivery to the customer
  4. Seamlessly integrated technology where shopping carts connect via API, web xml or some other connection to a transportation management system so shoppers are getting the exact price quote of shipping of larger items more suited for less than truckload modes, as these technology products for logistics, such as a TMS, must accomplish along with the shopping cart for better management:
    1. Ability to organize and track shipment no matter what mode
    2. Online order status and documentation
    3. Online dispatch documentation and invoice, such as a bill of lading and freight invoice
    4. Auto reminder for payments
    5. Seamless interface with existing SCM or ERP system
    6. Online alerts for critical information via text or mobile
    7. Information systems reports on past data analysis, delivery history, etc.

These types of e-commerce logistics systems, based on the above considerations, ensure the following benefits to shippers, customers, and 3PL service providers:

  • Improved communication
  • Transparency into the supply chain
  • Improved customer satisfaction
  • Cost reduction
  • Improvement in efficiency
  • On-time delivery

We will go further into the benefits of setting up an effective e-logistics structure and operation in this ongoing series. However, these are the top things to consider when looking to set up a program.

With E-Commerce in the Equation, Let’s take a Look at Supply Chains, Then and Now (AKA, The Amazon Effect)

It’s been close to 19 years since Jeff Bezos opened his online bookstore from a 400-square foot garage in Seattle.  Today, Amazon is one of the largest companies in America, with operations across the world and a stock valuation greater than most Fortune 500 companies. The concept, initially, was simple: to do business exclusively online, offering customers the convenience of shopping from home and giving the seller little overhead costs.

Since ecommerce was born, everything has changed: the proliferation of the Internet into daily life; the look and feel of the online space; the speed of internet connections; even who is getting online and how they’re getting there!  Convenience and low prices were the driving forces for ecommerce in the early days. But today, with ecommerce retailers catering to every kind of product, service, and shopping experience, the challenge has shifted. Here is a brief look at how direct-to-consumer order fulfillment has evolved over the years to match those challenges.

So, How have Supply Chains Evolved in an E-Commerce Logistics World?

Then: Supply chains handled old-school, brick and mortar retail, where products arrived in warehouses in bulk, were moved around in pallets and selected by the case, and were shipped out to store in bulk.

Now: Ecommerce poses the unique challenge of inventory arriving in bulk, but requires much care from there – receiving bulk orders, then inventorying and picking those SKUs as individual products. Therefore, ecommerce retailers have to find a way to standardize and synchronize business processes to have real-time access and insight to inventory movement. Often, with dozens of suppliers, multiple warehouses, and an extensive number of sales channels, the chances of a misplaced order are much higher.

However, order fulfillment technologies have helped integrate the front-end and back-end of online retail. The back-end process is now a collaborative effort thanks to automated software and real-time fulfillment data. The alignment of important touch-points in the supply chain has reduced inefficiencies and had helped identify redundant processes. Heck, we even have robots that will pick inventory for us AND move it around the warehouse!

How has Freight Shipping Changed in an E-Commerce Logistics World?

Then: In the early days of e-commerce, it was about the convenience of ordering a product from home. No driving to the mall and no waiting in line, just living life and waiting for the package to be delivered to your doorstep. Shippers still used snail mail and phone calls to communicate with customers and order delivery times were in the weeks, not days. Free shipping quickly became a tool that brought in competitors’ customers, since there weren’t many carrier options, no additional costs (such as sales tax) existed, and order delivery times were slow anyway.

Now: E-commerce merchants collect sales tax, fuel charges are much higher, and the ever-popular free shipping is the farthest thing from free to retailers. Other than giants like Amazon, not many retailers have the resources to operate multiple distribution centers in strategic locations and instead are turning to third party logistics service providers to reach their customers.

The evolution of multiple shipping options allowing customers more control over the delivery process than ever before, expanding from only small package from USPS, UPS, and Fed Ex to now get larger items via less than truckload modes.

It’s no longer about being the fastest rat in the e-commerce delivery race. Instead, it is about being able to deliver an order at a time frame and price point that customers want.

How has e-commerce logistics had any impact on your business? Let us know in the comments below.

Stay tuned over the next week for more on the world of e-commerce logistics.