Friday, 31 July 2015

What is the Dimension of Situational Leadership & Team Development in the Supply Chain?

The two dimensions in the supply chain leadership are task orientation and people orientation.
  • Task orientation places its focus on one way communication. This leadership method resembles an autocratic style since it defines the person’s task through micro management while overseeing the performance.
  • People orientation concentrates on two-way communication. Leaders listens, encourage, support and engage  the party in the decision making process. 
From these two dimensions leadership models can be created. Some of the more well-known models are the Managerial Grid and the Situational Leadership model.

Situational leadership model was designed by Hersey and Blanchard in 1977. There are four styles of leadership models that can be used depending on the different work situations and different people. A choice of what style to be used should be decided on the competence of the employees and their commitment while carrying out the job. Therefore the employees and teams themselves play an important role in choosing the different leadership styles which can change over time as the employees change.

Thursday, 30 July 2015

How to Encourage a Learning Culture & Team Development in the Supply Chain

Establishing a learning culture has many benefits for the organisation. The focus of the learning and development cannot only be focused on individual levels, but at the organisational level too. There are eleven areas of development that characterize a learning organisation and applied to learning within the supply chain context:
  • Learning approach to strategy
  • Policy making participation
  • Informating (transforming activity measurements and descriptions into information and making it accessible.
  • Accounting and control
  • Internal exchange
  • Incentive flexibility
  • Enabling structures
  • Boundary workers
  • Inter-company learning
  • The learning climate
  • Providing self-development for everyone
For the self-development opportunities the employees within the supply chain should have access to a wide variety of resources for their learning including seminars, workshops, courses and learning materials for their own self-learning.

Wednesday, 29 July 2015

What is the Importance of People in Supply Chain and how to Construct a Learning and Development Strategy?

People are behind the supply chain operations, they are what drives it, they come up with new innovations to improve it, they challenge it and a supply chain wouldn't work without them. When thinking of people in the supply chain we have to consider the following three perspectives:
  • Individual
  • Team
  • Organisational
The learning and development strategy of the organisational level is set out in a pyramid:

Level 1 - The base of the supply chain learning that is available to a wide range of the supply chain community. Basic understanding of concepts such as processes, systems and roles are focused on here. E-learning is a good tool to use to provide personnel with this training.

Level 2 – The learning at this level is aimed towards the different functions of the supply chain. The employees are taught about applications and analysis to perform their functions.

Level 3 – Managerial skills are the focus of level three. The agenda includes courses and initiatives around issues that are found in the supply chain.

The learning and development strategy of all three levels needs to be closely related to the supply chain strategy. This is to ensure all employees understand the strategy and have a development plant that is linked.

Tuesday, 28 July 2015

What are the Differences between Lean and Agile Supply Chain Strategies and what is Postponement?

In the past, fashion retailers would manufacture their goods in Asia. They would need a long lead time and high inventories to use sea freight to ship the goods. These days the quality retailers have moved their manufacturing closer to their customers. The cost will be higher but the agile supply chain works with a competitive strategy. This agile supply chain is able to respond to the demand faster than the original low cost lean supply chain. And this marks the main difference between the two.

Some businesses are able to use the lean supply chain, when they are able to forecast their product accurately while purchasing large orders over a long period of time. Agile strategies are used when the products have either high or low sales over a short life cycle. There is no single strategy fits all and there is a danger that agile customers are underserved while the lean customers pay more than they should.

Another strategy is to have a combination of the two. A lean supply chain is used for the forecasted products but an agile supply chain is used to serve the customers. A good example of this is McDonald’s.


Many retailers need to hold their products in shops that are located close to their customers using the make and deliver to stock strategy. If they didn’t use this system the shelves would be empty leaving the customers no choice but to shop elsewhere. Postponement is a method that is used in order to postpone the retail order so they have time for the customers to buy goods, reducing the size of the stock, before placing new orders. This can cause issues with money being tied up in the stock, a large variety of products and obsolescence, when product demand drops.

A way round this is to use the postponement strategy at different parts of the supply chain, such as textile operations. Finished goods are moved to distribution centres that finish the product depending on the orders that come in. This reduces the inventory investment and the variety problems, helping to lower the risk of obsolescence.

Monday, 27 July 2015

What are the four drivers of supply chain performance and the five inventory strategies?

There are four drivers of the supply chain performance:
  • Inventory
  • Information
  • Facilities
  • Transport
By providing a structure to support the supply chain strategy, each driver needs to be considered thoroughly to compliment and satisfy the goals of the chain. Inventory decisions that needs to be evaluated include the types, locations and quantities of cycle and safety stocks and online technology systems. Manufacturing and warehouse strategies are also included in facilities and are considered as the strategic location and capacity requirement.

There are also five inventory strategies that are used when the supply chain is considered to be a combination of the processes. They depend on the specific product characteristics and the requirements of the market, which are:
  1. Make and deliver to stock – customers place an order and this works through the supply chain to where the stock is held. The stock is sent to the customer and the order is satisfied.
  2. Make to stock – Stock is moved further up the supply chain and is usually located in a central location such as a warehouse. Customers receive their delivery as it is sent from this central location.
  3. Assemble to order – There are no finished goods held and all of the stock is a work in progress. Customers place their order and the final assembly takes place.
  4. Make to order – The raw materials are held and the manufacturers make the product when the order is placed by the customer.
  5. Purchase and make to order – Product is designed when the customer places the order. The raw materials are then ordered and the production and assembly are then planned so the product can be made and shipped to the customer.

Friday, 24 July 2015

How To Achieve And Support Strategic Alignment In Supply Chain?

In order to work on the competitive strategy it is necessary to develop and operate plans and strategies for the different functions that take place.
  1. Product development strategy – setting out the portfolio of products that the organisation will develop and the function of the products. This also includes if the products are going to be internally or externally manufactured.
  2. Sales and marketing strategy – identifies the product structure and the price, promotion and position of the products.
  3. Supply chain strategy – How to source the materials, the delivery and returns details (how, where, when), customer aftercare and the production details.
All of the different strategies need to be integrated and complimentary of each other in order to create a successful competitive strategy. The supply chain and the competitive strategy must also be working towards the ultimate goal.

Thursday, 23 July 2015

What Are Corporate Strategy and Competitive Strategy

When looking at the strategic view of the supply chain it is important to understand both the corporate and the competitive strategies that are used. These strategies have a direct impact on several activities including outsourcing, customer services, finances and people.

The corporate strategy is the long term direction of the organisation. This direction needs to match the resources to the environments that change, such as the markets and the customers so they are able to meet with the demands and expectations of the stakeholders. The different organisations must find a way of gaining the competitive advantage in the market placed by using one or more of the strategic options: operational excellence, customer intimacy and product leadership.
  1. Customer intimacy is the delivery of goods that the customers want, with excellent service and providing excellent value.
  2. Operational excellence is the delivery of quality products quickly, without errors and at a reasonable price level.
  3. Product leadership is delivering services or goods to satisfy the customers and -excel the performance boundaries.

Wednesday, 22 July 2015

Recovery Network Characteristics and what are the product recovery network types?

The different characteristics of the recovery network are generally categorised into three sections: products, supply chain and the resources.

Recovery options of products are concerned with both economical and physical features of products that have been discarded.

The supply chain characteristics that determine the recovery network characteristics are:
  • Investigating the behaviour of the actors and the supply chain connections between them
  • The behaviour of the one who is disposing
  • The category of the re-user
  • The driving force of the recovery and the re-use of the products being discarded
  • The obligations of the supply chain
Human resources and recovery facilities are included in the resources. The different recovery network types fall into three categories which are:
  • Assembled product remanufacturing
  • Bulk recycling
  • Reusable items

Tuesday, 21 July 2015

What are the main differences between recovery networks?

Today we’re going to take a brief look at the main differences that are found in recovery networks.

  • Amount of levels – This refers to the number of levels are the vertical integration (or depth) measured by the amount of facilities and the sequential good visits.
  • Centralisation– the measure of the network’s horizontal integration (or width) by the amount of locations that perform all activities of a similar nature.
  • The connections between the existing networks show how the new network is able to integrate with the previous networks.
  • The degree of branch refers to the parties that have the responsibility of establishing the network.
  • The structure of the supply chain - Open loop vs closed loop network shows the incoming and the outgoing network flow.

Monday, 20 July 2015

What is Reverse Distribution?

Reverse distribution involves the packaging, collection and tracking the transportation of products that have been used. Reverse distribution can be operated on a different channel to forward logistics or used through the same channel; alternatively it can also be worked through a combination of the reverse or forward logistics.  Combining forward and reverse logistics is tricky especially as there are uncertain or special aspects found in reverse distribution.

In order to structure a reverse logistics distribution channel it is necessary to:
  • Establish who the actors are. The actor has to be involved in the forward channel or from the specialised party and this plays an important part on how reverse and forward distribution can be integrated.
  • Work out the relationship between forward and reverse distribution channels. There are closed loop systems such as the remanufacturing and reuse channels and open loop systems such as recycling where the goods that are returned are not sent back to the producer but are used within other industries.
The process of reverse logistics can operate through specialised logistics suppliers or through the main network as picking up and delivery is able to be separately handled, making the combined two a lot more difficult at the routing level.

Friday, 17 July 2015

About Reverse Logistics and Vehicle Routing

A reverse logistics system involves many strategic level decisions being made, including the type of activity that is required, who must carry out the activity, where the activity takes place. 

The medium term level decision also has to be determined, such as the relationship between reverse and forward logistics along with the redistribution operator. The operational level does depend on the relationship between the forward and reverse logistics as the VRP must be solved for each of the channels when independent reverse and forward logistics are being used.

In essential vehicles are often used when reverse and forward logistic channels are kept separate. Combining the pickups and the deliveries within a single vehicle route helps to avoid this problem from occurring. Customers who are environmentally orientated are proving to prefer companies who provide simultaneous returns and deliveries and redistribution systems. The handling effort being carried out once rather than separately is more popular and is called the VPR with simultaneous delivery and pickup – VRPSDP.

Companies are focusing on gaining a lot more control over the life cycle as the law demands that they take responsibility over the age of their goods. Therefore, with control they are able to improve the quality of the goods that are recovered. Customers often lease the items and then exchange them down the life cycle and this also involves the use of VRPSDP.

Thursday, 16 July 2015

About Information Technology and Reverse Logistics

A huge challenge found in reverse logistics is the problem of controlling the less standardised products that move through the system. Technology plays a huge role within reverse logistics to help manage these uncertainties. Technology is working hard to improve many processes and can improve the efficiency of the processes in the following ways:

Minimising returns proactively - Databases can be used to reduce the number of products that are returned from working through any misunderstandings.

Returns and 3PLs – Third party providers are now providing online applications that run in real time, giving access to the customer return supply chains.

Consolidating return channels – OEMS are mixing their channels in order to create a central stream. E-commerce for reverse logistics is proving to be hugely popular and is being used for second hand goods as well as the new products.

Reducing the uncertainty of returns – Systems can be used, that register the number of products being returned and monitoring when, where and why they are being returned from the customer.

Wednesday, 15 July 2015

What are the Reverse Logistics Processes?

There are four main processes found in reverse logistics: collection, inspection, including selection and sorting, reprocessing and redistribution. Let’s look at each process in a little more detail.

Collection involves the movement of used products that need to undergo some forms of treatment.

Inspection and separation processes a collection of the goods being inspected, split up and reused based on their usability. This can include activities such as shredding, disassembly, testing, storage and sorting.

Reprocessing refers to a used product that can be converted into a product that can be used again. There are different levels found in reprocessing that are recycling, remanufacturing, repair, refurbishing, incineration and retrieval.

Redistribution refers to the products which are sent out to the different markets involving sales, storage and transportation.

There are other steps involved in these processes too:

  • Refurbishing is when the products are upgraded
  • Incineration is when the products are burned and the energy that is released through the burning is captured.
  • Repairing is when the products are improved by having repairs that restore the life cycle of the goods.
  • Disposal is when the product needs to be discarded as it cannot be reused.
  • Recovery is when the materials are remanufactured, captured or repaired in a way that adds value to the product.

Tuesday, 14 July 2015

Third-Party Providers and Reverse Logistics

Companies often don’t have the capabilities, resources or expertise that is required for reverse logistics. Third party providers are called in when this is the case and the reverse logistics are outsourced, often along with other activities including warehousing, transportation and disposal.

The outsourced parties are able to provide an excellent service at a lower cost for the companies than doing it in-house. They are also able to provide value adding services including refurbishing, repackaging and remanufacturing.

The task of finding the right third party provider is a time consuming job and involves complex decision making. Companies have to work through many decision making criteria and use different methods to find the right supplier:
  • Integrated approached
  • Probabilistic approaches
  • Mathematical programming approaches
  • Matrix/weight approaches
  • Artificial intelligent techniques

Monday, 13 July 2015

The Different Product Types

Product types can be categorised into the following:
  • Food
  • Consumer products
  • Transportation facilities
  • Civil objects
  • Industrial facilities
  • Chemical and oil products
  • Pharmaceuticals
  • Items for packing and distribution
  • Equipment for the army
Each of the product types have different recovery processes and take a different place.

Friday, 10 July 2015

What are the types and characteristics of returned logistics products?

There are three aspects of returned products: use pattern, deterioration and composition.

Patterns of use have two problems:

  1. For place of use – when a product can be applied in different usages and in multiple places, making the correction operation difficult. Therefore, collection difficulty is related to the number of the usable place.
  2. The length and intensity of use – if the length of use is short the product can be reused without the need for recovery.
Composition has elements that are of concern to the manufacturer, including:
  1. Disassembly ease – such as pieces of an electronic device that can be reused elsewhere
  2. The ease of transportation – concern specific transport of products. The products will have separate distribution systems so that they can’t become contaminated by old products.
  3. Homogeneity of constituent elements – concerned with the products that have dangerous materials that must not be recycled, such as batteries.
Deterioration occurs when the product has come to the end of its use and the recovery options available will depend on how much functionality the product has. There are important roles to consider such as the following:
  1. Inherent deterioration – when products are fully consumed during use or when they become useless quickly.  Examples include petrol and batteries.
  2. Fixing – How easily a product can be refurbished to improve the condition. An example of this is rechargeable batteries that can be restored.
  3. Homogeneity of deterioration – measuring whether the entire parts of a product age at the same rate or not.
  4. Economic deterioration – measuring the economic functionality of a product and if it will come obsolete.

Thursday, 9 July 2015

What are the reasons for logistics return?

Returns come from several sources, from manufacturing, customers or from the distribution. There are reasons for each one.

Manufacturing returns happen when the products are recovered during the production process due to:

  • The surplus of raw materials that are not needed
  • Quality control returns
  • By products and leftovers from the production process
Distribution returns arise when the products have been moved on from production into distribution, but the goods need to be returned to production for reasons including:

  • When products have been recalled due to health or safety issues
  • When products become outdated and when store adjustments are made
  • Business to business, commercial returns from the buyers. This is when the contract allows for products to be returned because they are unsellable or are damaged during delivery.
  • This also includes the return of functional materials or products that are used to move the products, pallets for example.
Customers also return goods due to many reasons. These may include:

  • Returns under warranty, which allows for the products to be returned because there are problems that have been found during usage.
  • End of use returns that include products that can’t be used again, but can be returned, such as bottles.
  • Reimbursement guarantees let customers decide not to buy the product and this allows them to be returned.
  • EOL returns are the products that come to the end of their physical or economic life.

Wednesday, 8 July 2015

What are the driving forces behind Reverse Logistics?

There are three categories that are used to explain the driving forces behind reverse logistics. These are economics, corporate citizenship and legislation. Let’s take a look at each category with more details.
  • Economic factors have some very positive benefits for organisations by the choice of inputting materials, reducing the costs and value added recovery. There are other benefits but these are less direct such as the protection of the markets, creating and maintaining a green image, making improvements in the relationship between suppliers and the customers along with anticipating legislation.
  • Corporate citizenship is a set of values which make organisations behave responsibly through reverse logistics.
  • Legislation is the final category. This is a number of laws that the companies have to follow when they work to accept returns and recover goods through reverse logistics.

Tuesday, 7 July 2015

What is the difference between Forward and Reverse Logistics?

To distinguish the difference between forward and reverse logistics, it’s necessary to understand the processes involved in them.

Forward logistics deal with uniform pricing, packaging and product quality and it is quite straightforward to predict the activities, demand and processes. Transportation lead from many different destinations and these destinations are clearly defined, planned and routed along a standard channel. It involves inventory management where the product life cycle is controlled and real time data is used to track the products. Clear marketing strategies and accounting systems are used to monitor the cost of distribution.

Reverse logistics are difficult to predict and the routes and destinations are unclear. The transport involves many different origins leading to one point and the packaging is not uniform. There is a deviation in channel and the items themselves determine the pricing. It is very difficult to measure the costs of reverse logistics and estimate the product life cycle. The process is not clear to see and inventory management is problematic.

There are clear differences and it is easy to see that reverse logistics is a lot harder to manage, predict and monitor.

Monday, 6 July 2015

What is the difference between Waste Management and Reverse Logistics vs Green Logistics and Reverse Logistics?

Reverse logistics continue to grow in importance and concerns in many organisations, along with other challenges including environmental laws and environmental worries. Reverse logistics is a term that is used to describe the role logistics plays in waste disposal, the management of hazardous waste and materials, waste disposal and recycling.

Additionally, reverse logistics relate to the activities of substitution, disposal, reusing materials and source reduction. The role involves the planning, the implementation and control of raw material flow, process inventory, finished goods, point to point recovery, manufacturing and distribution.

There is a difference between waste management and reverse logistics. Waste management involves the collection and processing of waste in an efficient manner. Whereas, reverse logistics deal with the products that still have some value that can be recovered.

Green logistics focuses on reducing the ecological impact of logistics and not the recapturing the value of goods.  This is where the environmental aspects and impacts of logistics are considered, especially when concerning forward logistics.

Saturday, 4 July 2015

Chit Chat: Automotive Industry Outlook Part 3

Manufacturers are relocating so they are able to be closer to their customers by using supply chain reorganisation and value added services.  Manufacturers are making changes to their business models in order to find a balance between growth strategies and costs.

 An example of this is when manufacturing facilities are moved closer to the end market in order to manage costs more efficiently and localise products with improved speed, accuracy and agility. It is expected for this trend to increase in the next 12 to 24 months.

Manufacturers are preparing for growth and working on improving their value added services, using them to increase revenue and improve customer services. The global economic recovery is still volatile but this hasn’t stopped manufacturers from feeling more optimistic about the future. They do expect the global economy to take another 2 or 3 years to recover to healthy levels, although they consider their own businesses to be in a good position. 

The manufacturers are focused on improving the efficiency of the processes they use and on their core offerings and capabilities. Leaving behind unprofitable product lines and geographies is predicted as becoming more important in the next year or two. They are preparing for significant growth that will return high margins

Friday, 3 July 2015

What 3 Inventory Control Questions Should You Ask Yourself?

Inventory control involves numerous activities that work together to coordinate purchasing, manufacturing and distribution. There are three questions used for inventory control that will help you to maximise raw material availability used in manufacturing or to maximise the available finished products that are ready to be sold and sent to customers. The three questions are as follows.

Ask yourself about the types of items that need to be kept in stock.
The warehouse managers are involved in this as they have to work out the advantages and the disadvantages associated with keeping the item in the warehouse before it is moved to the inventory. All items that don’t have a clear benefit should be removed.

When should the order be placed?
There are three ways to answer this question: Establish a fixed interval time when an order for the required item can be placed on the quantity that is needed. The second way is to monitor stock levels continuously and order in fixed sizes once the stock falls to a pre- determined level. Finally stock should be ordered after the demand over set out time periods have been established. In this case the time period and the quantity can change based on demand.

What quantity should we order?
Make a trade-off between the following costs: Large order size and long times between orders decreases costs of shipments but increases inventory costs. Small order sizes and more frequent orders decrease the inventory holding costs but increases ordering an d inventory shipping costs.

Thursday, 2 July 2015

What are the Different Types of Inventory that can be Warehoused?

Here is a list of the different inventory types that can be warehoused:
  • Cycle stock is inventory that is predictable in its turnover and must be replenished.
  • Safety stock protects against demand and lead time uncertainties. It is inventory that is concerned with the short range variations in replenishment or demand.
  • Transit inventory, also known as pipeline inventory is the products that are being moved between the producer and purchaser but is not ready to be sold or used.
  • Seasonal stock is held ready for periods of demand, such as Christmas decorations around the holidays or chocolates for Mother’s Day.
  • Speculative stock is kept to cover shortages that are caused by changes in demand, price increases or material shortages. Speculative stock works to satisfy the demand until the stock is replenished.
  • Dead stock is the stock that is no longer selling due to lack of demand. Dead stock needs to be moved when possible as they have tax cost implications for the company.

Wednesday, 1 July 2015

What are the 12 Principles for Better Order Picking?

Order picking can become more efficient by following the principles listed below:
  1. Follow Pareto’s Law: 80% of storage and retrieval activities are dedicated to 20% of differing SKUS. 15% of activities are dedicated to 30% of the SKU types. 5% of those are dedicated to the remaining 50% SKU types. Grouping the popular products together it is possible to reduce the time it takes to order pick.
  2. The picking document needs to be easy to read and understandable. The instructions should be set out in a font that is easy to read and clear, allowing the order pickers are able to carry out their job effectively and reduce the number of errors that are made.
  3. The stock location system needs to be effective and well-maintained.
  4. Combine tasks and eliminate unnecessary tasks in order to reduce the time that is needed to be dedicated to order picking.
  5. Decrease the order picking task time by picking a whole group of orders each time.
  6. Position the most popular items in areas that are easily accessible.
  7. Position items that are similar to each other or commonly ordered together in order to reduce picking time.
  8. Reduce congestion by keeping a balance between the activities and picking locations.
  9. Make sure order pickers are accountable for the time and the effort they put in.
  10. Reduce errors by designing order picking vehicles.
  11. Scrap the need for paperwork by using new technologies including RFD.
  12. Introduce electronic weighing scales to reduce errors in counting.