Monday, 31 March 2014

Competitive Advantage with Global Logistics

Location is no longer the only thing that matters for companies seeking global expansion. The emergence of logistics management together with the information technology advancement has help companies improve their customer service, control costs, seize opportunities in emerging markets while boosting their competitive advantage.  Nowadays logistics incorporates supply and demand strategies, covering the entire processes from the gathering of raw materials to reaching the end customer.

Global logistics is big business in the industry; it includes all forms of transportation along with storage facilities, warehousing, inventory management and the distribution management. Billions are spent on the specialist information technology, computer software and the use of third party vendors in order to manage and plan the efficient movement of goods and items around the world. Thanks to logistics there has been an increase in productivity tools, advanced transportation and information communications, control and electronics in order to move goods quickly, safety and efficiently. 

Saturday, 29 March 2014

Archetype Scenarios of Aligned Spare Parts Logistics Strategies

Archetype scenarios
Step 1

Cost Leadership in competitive markets
Service leadership in competitive market
Niche strategy in markets with limited competition
Long term partnership in regulated markets
Highly competitive
Limited competition (oligopolistic situation)
Regulated, certification requirements
Product/part characteristics
Complex, huge number of units (large installed base)
Complex, differentiated
Maintenance strategy
Preventive (never fail policy)
Spare parts obligations
Short delivery obligation
Long delivery obligation (some maintenance contracts)
Long delivery obligation (maintenance contracts with many customers)
Delivery obligation for the whole products lifetime (maintenance contracts with most customers)
Step 2
Life cycle
Long production phase, no information flow about the condition of installed base
Long utilization phase (long lifetime of the product)
Long production and utilization phase
Long R&D phase (intensive cooperation with customers during all phases)
Forecasts are possible due to the short delivery obligation

Subjective estimations and indicators and coefficients
Forecasts are hardly realizable due to long utilization phase

Stochastic and model based methods
Accurate forecasts are possible due to the huge amount of maintenance contracts

Indicators and coefficients
Accurate forecasts are possible due to a good knowledge about the condition of installed base

Indicators and coefficients
Step 3
Profits (major goal)
Differentiation (major goal), customer loyalty, diversification, profits
image (major goal), customer loyalty, profits
Customer loyalty (major goal), reputation, profits
Supply options
Due to long production phase uncomplicated supply out of the regular series production. Final stock during the utilization phase.
Internal production, utilization of compatible parts, reconditioning of used parts
Internal production, separate workshop, final stock
Utilization of compatible parts, separate workshop, final stock
Inventory options
Cost efficient central storage
Local, proximity to customers (extensive service network)
Local and central
Local, very responsible service network

Source:  A strategic framework for spare parts logistics, Vol 54, No 4, Summer 2012

Friday, 28 March 2014

What are Supply Chain Complexities?

supply chainThere are common causes and sources where a complexity in the supply chain can occur. These include the following:

  • Network Complexity
    When you have a network full of links and nodes the network instantly becomes more complex. Therefore outsourcing is rising in popularity to take the pressure of and putting it on expert suppliers of the goods and services required. Extended networks can result in unexpected distributions if the outsources are also dependant on external suppliers.
  • Process Complexity
    Poorly designed processes with multiple steps increase complexity of the supply chain. Any lengthy processes increase the lead time and they can result in an inconsistency in performance.  Process structure needs to be reviewed and planned frequently to reduce the complexity caused by the processes.
  • Range Complexity
    Businesses often find their range of services or products increase over time. Therefore the new products, variants or new services of the brand will have an impact on the forecast accuracy. Often as more va riants are introduced the demand for each different type of variant falls, which then needs to be managed.
  • Product Complexity
    The supply chain can be affected by the design of the products. The choice of materials, life cycle costs and agility all have to be thought out on the drawing board. Logistics must be introduced early into the design process to avoid subsequent complexities.
  • Customer Complexity
    Adding lots of customisable options, or nonstandard services, results in the customer complexity increasing. The costs involved vary and the customers come with different characteristics; ordering different sizes, materials, patterns etc.  The real costs involved in serving customers must be fully understood to increase the profits from these services.
  • Supplier Complexity
    Being collaborative with suppliers is essential. When you work with key suppliers the size of their company must be taken into consideration. The supplier base can increase total transaction costs and the number of relationships that need to be maintained. Finding balance between too few and too many suppliers is key.
  • Organisational Complexity
    It’s a mistake to focus on efficiency without taking into consideration customer satisfaction. Too many hierarchical structures are a common cause of complexity and the different departments lose focus on the main aim of the business. Changing the vertical organisation to a horizontal one improves speed, reliability and builds better teams all working with the end goal in mind.
  • Information Complexity
    Information needs to flow between all the levels of a business, from one end to another. The amount of data flowing can be huge and as a result it’s not always accurate or fully interpreted correctly. Visibility across all levels helps to reduce the information complexity and avoids problems with obscured data, modifications and errors being made along the way.

Thursday, 27 March 2014

What is Spare Parts Logistics?

The spare parts supply chain for computers usually works in two ways:
  1. A depot in the country that will supply the required stock – often holding huge volumes of stock
  2. Country regional locations in major cities
  3. Warehouses supplying test repair centres on local or regional levels providing walk in services for customers
There are two modes that are provided through these spare part systems. The first is under warranty so the customer is able to receive the parts for free under the warranty contract. The second is where the customer needs to pay for the spare part themselves.

logisticsSupply warehouses often receive orders from the test repair centre along with local dealers who provide a service to the end customer. They place the order at the warehouse who then delivers the parts. The regional warehouse will then need to order the parts from the main country depot in order to ensure they have enough stock to keep up with demand. Therefore they need to work on their forecasting and stocking pattern to avoid delays and reduce over or under stocking.

The regional warehouses have to manage two inventory lines alongside their separate processes in order to control the original spare parts and refurbished spare parts that are supplied through vendors. Defective parts also need to be storied and sent back through the defective parts division and sometimes sent back to the original manufacture in their country of origin for a free replacement if covered by warranty.

Without the use of IT applications the management of the supply chain to manage the sales order fulfillment and the inventory management. The use of IT applications makes it possible to track warranties, manage stock and serial numbers. The management of defective parts, following the process of collection, return and refurbishment is also managed through this vital computer system.

Wednesday, 26 March 2014

What is Spare Parts Supply Chain?

supply chainWhen buying a computer, electrical equipment or hardware most customers will ask about the supper service that’s provided by the company before they buy. The service support plays an essential role in the entire image of the brand along with product quality, so it is now an essential part of any business. Critical aspects of service support include the availability of spare parts and the response time. When it comes to corporate installations require onsite support along with the critical down time service level measurements has pushed the formation of spare parts supply chains by the suppliers.

The supply chains for spare parts required for essential installations, such as a server at a bank, have different problems to solve:
  • Installations require the service engineer to be available around the clock. It’s not only the service engineer though; the part needs to be instantly available too.
  • Critical parts to be stored at nearby warehouses.
  • Logistics in place to deliver in the fastest times, often within just a few hours. 
The site engineer has the ability to report his diagnosis to service team, who then send the report to the technical experts to start solving the problem and all of this needs to be coordinated with logistics so everything is fixed within hours.  The tight response times need to be provided and committed largely by the company that supplies the product. 

They, along with the third party logistics provider have to find the fastest methods possible to provide the high level of customer support that is expected today. Therefore logistics are critical when it comes to reducing down time for customers of these products and ensuring a high level of customer service is achieved.

Tuesday, 25 March 2014

What is Finished Good Supply Chain Operations?

supply chain operation
There are lots of activities involved in the finished goods supply chain.  The supply chain is from the delivery point of the plant to the point of sale, involving movement, the storage an d the distribution of goods. The complications increase when the supply chain involves global activities. This is due to the added complications of the variations in regulations and practices involved in each country’s logistics. To understand the processes we shall be taking a brief look at computer hardware.

Computers have a short life span, the technology is forever changing and new models are being released to keep up with the advancements and customer demand. When thinking up the supply chain strategy for the finished goods in computer hardware it’s necessary to avoid problems with obsolete inventory.  To overcome this problem computer hardware manufacturers have set up a strategy involving various assembly parts in multiple countries in order t o supply the global market. Desk tops are using build to stock model where as laptops and other products are using the build to order model.

In addition to the two supply models the manufactures also have to manage the different product lines such as printers and consumables. It is down to the common supply chain division and logistics service departments to keep control of these various divisions. It is the third party logistics providers that bring all the required parts to the manufacturing plants where the products are assembled.  The third party logistics providers have regional distribution centres and stocking points when the items are shipped out to the distributors who then control their own logistics to ship the assembled products to reach the customer point of delivery.  The kits can all be assembled and relabeled at the distribution centre ready to be shipped as one item. This involved intensive inventory management processes, requiring the SKI to be converted from individual items to bundles or kits.

When dealing with finished good supply chain operations it’s necessary to capture the serial numbers when being dispatched from the distribution centre so the warranty tracking us up to date. Being involved with the processed and interactions with the third party logistics providers helps to ensure the service levels are achieved with training and audits. 

Monday, 24 March 2014

Logistics and Customer Value

Although we understand customer plays a huge role in the success or failure of a business but do you know what is customer value?

Customer Value = Perceptions of Benefits/Total Cost of Ownership

It’s the difference between the benefits of the purchase as perceived by the consumer and the amount they have paid.  The total cost of ownership is used instead of the single price that has been paid so all costs can be taken into account, including the inventory costs, running, disposal and maintenance costs for example. This is important especially in business to business markets the total cost of ownership is important as buyers are becoming increasingly sophisticated.  The total cost plays an important role in helping buyers to decide whether or not to buy.

It’s not only the total cost of ownership that is greater than the purchase price, the benefits that customers receive are also greater than what the product offers in features and functionality. Therefore even though there might be only a slight difference between the two often one might be superior compared with the other because of the customer service that’s also offered.

Logistics and Customer Value:

Customer Value = Quality/Cost of Time

Logistics management has an impact on the customer value ratio. There are four elements involved:
  • Quality – Function, performance, technical specification
  • Service – Availability, support and the commitment customers receive
  • Costs – Transaction costs including the price and the life cycle of the purchase for the customer
  • Time – Customer response times such as delivery lead times 
The four elements require constant work to ensure they remain on top, using innovation, improvements and investments to remain competitive in the market. 

Saturday, 22 March 2014

Green Logistics Paradoxes

Reduction of costs through improvement in packaging and reduction of wastes. Benefits are derived by the distributors.
Environmental costs are often externalized.
Time/ Flexibility
Integrated supply chains. JIT and DTD provide flexible an deficient physical distribution systems.
Extended production, distribution and retailing structures consuming more space, more energy and producing more emissions (CO2, particulates, NOx, etc).
Increasing system-wide efficiency of the distribution system through network changes (Hub and spoke structure).
Modes used, trucking and air transportation, are the least environmentally efficient.
Reducing the needs for private warehousing facilities
Inventory shifted in part to public roads (or in containers), contributing to congestion and space consumption.
Increased business opportunities and diversification of the supply chains
Changes in physical distribution systems toward higher levels of energy consumption.
Source: Rodrique, Slack and Comtois (2011)

Friday, 21 March 2014

2014 Ecommerce Trends

If you’re in e-commerce here are the trends you should know about this year.
  1. Shoppers are using their mobile phones and tablets to shop and browse online. For businesses who want to grow, it is essential for them to optimise their sites to suit all handheld platforms so that customers may browse, navigate and buy online.
  2. Businesses are now partnering with companies to offer their customer free or faster shipping option.   For businesses who can’t afford to offer this option, they are developing innovative and additional value to personalise their delivery service to help with their customer’s purchase experience.
  3. Global business is on the rise and SME’s are being encouraged to investigate the opportunities of expanding their e-business overseas. Looking beyond your own borders and taking advantage of high sales in other countries is worthwhile, consider Black Friday in the US for example, or China’s Singles Day.
  4. Content marketing is essential for companies if they’re looking for building trust with their consumers and to encourage buyers to shop with them online. Increasing the content marketing budget is essential.  Content must be high quality and shared online, designed to benefit the reader and not the business.
  5. Guided discovery is a trend that is designed to make the life of the shoppers easier. Sharing information on where to make their purchases saves the consumer time. They browse less but are able to buy more thanks to personalised recommendations.
  6. Customer demand and personalisation provides consumers with original predicts. Businesses need to be creative yet profitable when it comes to meeting the demands of the customers.3D printing will play a huge role in providing personalised products quickly.
  7. Brands are still the major players and it’s essential for all small businesses to develop their brand and work on their brand awareness.  Building a brand requires delivering on promises, clearly stating their missions, working with major influencers and content marketing.
The e-commerce trends for 2014 are benefiting the consumer and merchants. If businesses are able to develop these trends, they will retain their customer’s loyalty and create a growth opportunity for themselves by providing better consumer experiences, prices and service.

Thursday, 20 March 2014

2014 Toy Trends

The latest toy trends for 2014 have been revealed by the Toy Industry Association (TIA).  The two main buzz words are personalisation and open ended play.   There are plenty of toys to choose from, ranging from classic building blocks to virtual worlds and toys for all budgets.

According to experts in the TIA, this year top trend include supersized and classic toys, innovative Remote controlled vehicles (RC), custom built creations and zombie inspired plaything.   Here are some top trends to watch out for over the coming months.

  • Affordable, larger than life toys are increasing in popularity, whether they’re soft toys, remote control toys or construction toys. The trend is balancing out the popularity of micro toys that has been experienced in recent years. These include toys such as baby doll carriages, cars, cribs, dollhouses; inflatable toys; plush, role-play accessories, trucks and trains.
  • Remote Controlled Vehicles with added features for all ages and at all price points. Speed options for older children include helicopters and projectile launchers whereas younger children are looking for RC vehicles for imaginative play.
  • Educational toys are exciting and are designed to encourage children to think outside the box.  Science, Technology, Engineering, Arts and Maths toys, known as STEAM is big news. Art is also being used with science as a form of storytelling to encourage children to get involve and try out the science kits.
  • Zombies, monsters, ghoulish action figures, gothic-style fashion dolls and accessories are becoming more and more popular due to the rise of zombie themed movies, TV shows and video games. Trivia games for fans of popular movies and TV show, like The Walking Dead is also in the rage.
  • Retro and back to basics toys are still very much a part of this year trends with parents and grandparents still sharing their childhood toys with their love ones.  .
  • Custom made and DIY toys are expected to make a huge impact in 2014. The custom made toys span across many different categories from arts to action figures. Children are enjoying the ability to create their own customised toys that fit in with their own personalities and preferences
So what toy trends are exciting you in 2014?

Wednesday, 19 March 2014

What You Need to Know About Online Shopping – Part Three

Today is the final part of our online shopping series, please remember to look back over part one and part two if you’ve missed them for our complete guide.

What’s the Safest Payment Method?
Using a credit card is the safest method of payment when you shop online. If something goes wrong you’ll be protected and you have the right to dispute any charges that are made. You could also use a debit card, check card or ATM card, but these will provide potential thieves with details of your personal bank account, which is something you’ll want to avoid.

To prevent the slightest possibility of transferring money over to someone committing fraud, avoid any company that uses money transfer services (e.g.: Western Union, MoneyGram) for online purchases. Legitimate sellers seldom ask for payments using this method because it is difficult to trace. These types of transfers should only be used when sending money to trusted friends and family but not for shopping online.

Returns, Cancellations and Complaints
Sometimes you may need to return an item or decide to cancel an order, so it’s important to know what the policies are before you confirm your order. Check for:
  • Who is responsible for paying for shipping?
  • Are there restocking charges for return or cancellation order?
  • What are the time limits for returns and cancellations?
  • How long has the company been in business?
  • What are their contact details for complaints?
  • Will you be fully refunded or provided with a replacement or store credit?
  • Is there a warranty on the products and who has to honour the guarantee?
Shipping Facts
Check the way the company intends on shipping your goods. You should be informed of how long the shipment is expected to take. If you aren’t provided with a shipping time frame the company will need to ship the product within a 30 day period or give you an opportunity to cancel the order for a quick refund unless you agree to the delay.  Look for the shipping facts on the website or call the company if you’re unable to see:
  • If there are various shipping options?
  • Who pays for the shipping?
  • If there are shipping restrictions
  • Shipping insurance information
  • The fees for shipping and handling 
If in doubt call the company but always trust your instincts. If you have a bad feeling about a website look for a different merchant that is more trustworthy. 

Tuesday, 18 March 2014

What You Need to Know About Online Shopping – Part Two

Online shopping is convenient, fun and often cheaper when compared with using bricks and mortar stores. We are sharing our tips and advices in order to ensure all your online shopping experiences are successful (check back to yesterday’s post if you missed part one!).

Privacy and Security Policies

All reputable websites will provide you a lot of information regarding their order processes. The information can usually be found under ‘Privacy Policy’ or within the terms and conditions. Here is where you’ll learn more about what the company will do with your information, whether they will share it with third parties, if they will contact you for marketing purposes and how they will contact you if this is the case.  You’ll also be able to read about their data security practices in this section, or it will be found in the separate ‘security policy’ if they have one.

It’s also worth looking to see if the website is run by a company that has signed up for a seal-of approval program such as:
Be aware of potential changes of their security and privacy policies in the future. You may wish to remove your data if you become aware of their potential closure or if they intend on selling to another company.

Cookies and Behavioural Marketing

Behavioural marketing is becoming more common place. It learns about your buying habits and shows you advertising that is targeted to you in order to try and get you to buy. While this marketing may seem intrusive, and it is uncomfortable for many people, it’s something that is now more difficult to avoid.

Online merchants use cookies in order to learn about personal shopping and surfing habits. The cookies track your activity on your browser and record all the sites that you visit. The persistent cookies will only run each time you open and close your browser, but session cookies stop once you close down the browser.  You can disable cookies in your settings but the functions you’re able to perform on their website might be limited as a result.

Return tomorrow for part three of What You Need to know about online shopping.

Monday, 17 March 2014

What You Need to Know About Online Shopping – Part One

Everyone is adapting well to shopping online. It is now common place, with the act of buying online and browsing websites gathering speed so much that it’s now replacing Saturday shopping trips out to the high street and malls. The problem is there are still risks involved when shopping online, but you can avoid them if you know what to look for and how to shop safely online. Over the next three days we’ll be sharing advice and tips to help you avoid the scams.

What Type of Website is best for Online Shopping?

Businesses that provide secure websites using encryption technology to transfer information will help prevent computer hackers from obtaining it. Shoppers should look only for businesses that provide these secure websites to help protect your credit data, personal information and avoid using unsecured websites.

There are a couple of ways to spot a secure website, but the signs may only appear when you get to the order page on the website.
  • A locked padlock appears on the address bar – an open lock isn’t enough, it needs to be closed
  • The start of the website address begins with “https” not “http”
  • Your data should be encrypted when stored on their website
Take the time to investigate how the company works to protect you by reading through their terms and conditions or FAQ page. If in doubt try and contact the company on their social media channels for clarity.

Do Your Research before You Place Your Order

It’s a good idea to use businesses you already know, but there are many excellent start-up firms that could provide you with a great service and products too. If you’re using someone relatively unknown (or at least unknown to you) begin by checking the security and then placing a small order to test out their service. Before you confirm your order it's a good idea to:
  • Look for the physical address of the business and a phone number. If you’re concerned call the phone number and ask a few questions to check they’re legitimate.
  • Ask about their returns policy
  • Research the company online (Better Business Bureau, government consumer protection agency, etc.)
  • Ask friends and family if they have used the company
  • Look on the social media profiles for the business and look at the wall posts, reviews and comments from customers
Return tomorrow for more tips about online shopping.

Saturday, 15 March 2014

The Advantages & Limitation of Using ROI as a Measure of Corporate Performance

  • ROI is a number that includes all revenues, costs, and expenses.
  • It can be used to evaluate the performance of a general manager of a division or SBU.
  • It can be compared across companies to see which firms are performing better.
  • It provides an incentive to use current assets efficiently and to acquire new assets only when they would increase profits significantly.
  • ROI is sensitive to depreciation policy and can be increased by writing down the value of assets through accelerated depreciation.
  • It can discourage investment in new facilities or the upgrading of old ones. Older plants with depreciated assets have an advantage over newer plants in earning a higher ROI.
  • It provides an incentive for division managers to set transfer prices for goods sold to other divisions as high as possible and to lobby for corporate policy favoring in-house transfers over purchases from other firms.
  • Managers tend to focus more on ROI in the short-run over its use in the long-run. This provides an incentive for goal displacement and other dysfunctional consequences.
  • ROI is not comparable across industries which operate under different conditions of favorability.
  • It is influenced by the overall economy and will tend to be higher in prosperity and lower in a recession.

SOURCE: From Higgins. Organizational Policy and Strategic Management, 2nd edition

Friday, 14 March 2014

Tips for Online Shopping

There are many benefits to be enjoyed when using online shopping, two of these are convenience and cost reductions for consumers and businesses.  While more people are becoming confident with online shopping it’s important to know what your rights are and how to stay safe on the Internet. Here are a few tips that will help you with your online purchasing.
  1. Make sure the business or website you’re using is a genuine one. There are many websites that are designed to take your money and offer you nothing in return. Check the company is real online, read their terms and conditions and do your research.
  2. Check the product is legal in your country and that all the warranties and guarantees will still be valid if you’re buying goods from outside your country.
  3. Before you buy check to see what the returns policy is. Will you have to pay for the cost of the returns? How long do you have to return goods and will you have a replacement item sent or have the choice of a full refund?
  4. How much is the item going to cost you in full? Check to see the delivery charges and look to see if you might have to pay any duties or taxes on top. You might be able to reduce the cost by choosing an alternative form of delivery, but often the cheaper rates will take longer for your goods to arrive.
  5. Only share your information on secure websites (look for the SSL certificate and a padlock in the search bar on your browser) and read through their privacy policy. You want to stop your information being shared with third parties or sold on.
  6. Look at the various ways you can contact the company. If problems do occur you want to know you are able to get in touch with them to sort things out quickly. Look for their email address, social network profiles, live chats and phone numbers.
  7. Keep all the records of your online transact ions. Create a folder on your desktop and in your email to store all communications and the invoices/receipts you receive.
  8. If the deal seems too good to be true or the website looks suspicious it probably is. Don’t get conned, look for an alternative source for the goods or services you’re looking for.
These tips should help to keep you shopping happily and confidently online. Remember if in doubt walk away!

Thursday, 13 March 2014

The Difference between Duty and Tariff

When importing goods from another country the government applies various taxes, duty and tariff. The tariff is designed to protect the industries within the country where the goods are being imported to by restricting the amount of goods that can be traded, and it also creates revenue for the government. Duty is the indirect tax that also generates an income for the government and helps to protect the domestic industries. 

Duty Taxes
The custom duty is an indirect tax that the government applies to imported goods during an international trade as we mentioned above. Import duty is levied for goods that are imported. Export duty is the duties that must be paid to the government for exporting goods and it is seen as a consumption tax as the costs are imposed on consumers.

The tariff is the form of duty or tax that is levied on products that has protective and revenue purposes as the goods are transported from one area of customs to another. The prices that need to be paid on each item are established according to the rules of the government. The nation is responsible for paying the cost of the tariff for the importing, exporting and trading products. They are useful for countries as it is beneficial for the government and it can help to protect the developing or underdeveloped domestic industries. Tariffs are used to control the trade between counties and they always add extra money to the amount the consumer needs to pay.