Monday, 31 August 2015

What are the Different Ways Projects can be Structured and what are the Pros and Cons? Part Two

Today we’re continuing our look at the advantages and disadvantages of the three organizational structures that are used in projects. Yesterday we examined the pure project, today our focus is on a functional project structure.

The functional project is when the project is housed within a functional division and is completely different to the pure project. The advantages of using this type of structure are:
  • It is possible for team members to work on multi-projects.
  • The functional area is where the technical expertise is maintained so this isn’t affected even if team members quit the project or leave the company.
  • It is possible for functional specialists to advance vertically.
  • The functional area remains even when the project has been completed.
  • Any of the project’s technical problems can be overcome and synergistic solutions are created due to the specialised functional area experts.
The disadvantages of the functional project are:
  • There is often a lack of team member motivation.
  • Response to client needs is often slow as they are not the primary concern.
  • Some of the aspects of the project can get cast to the sidelines if they are not directly related to the functional area.

Saturday, 29 August 2015

ChitChat – Commercial Transportation Trends in 2015

According to industry experts, freight firms are enjoying little success during 2015 as the cost of fuel has decreased and is unlikely to rise to astronomical levels for some time. The volume of traffic in the US and developing countries is improving, especially as the severe recession continues to recede. The recession also forced freight companies to work out ways of improving the efficiency of their operations in a bid to save money and remain afloat. Therefore the operations have benefited the firms in the long run. The streamlined firms were able to gain a powerful position and they saw growth in earnings even while continuing to expand and take on new jobs.

3D printing is considered to be the next threat that freight firms are facing. Despite freight booming, it is important not to rest too comfortably and to face the next danger head on.  Freight firms now have to look to the horizon to try and predict the problems that could result in damaging the firm. 3D printing is a real asset to the manufacturing firms that are seeing it as a way of reducing their costs, improving quality and streamline their own operations. While this is great news for the manufacturers it’s not so positive for freight firms as some of the transportation needs of the manufacturers may be reduced.

The transportation sector may experience a negative impact as a result of 3D printing as manufacturers have often produced several to hundreds of different components that have to be delivered to t he factories to be assembled. If the manufacturers are able to make products using a 3D printer there will be fewer parts that need to be delivered and even fewer raw materials that need to be shipped.

As more industries begin using 3D printing, the need to procure parts and materials from global sources will continue to decrease. The transportation sector will suffer; with 41% of air cargo and 37% of ocean container shipments will be threatened. This may result in reducing the need for global shipping as manufacturers begin to move back to their home markets. At the moment 3D printing is mainly being used to create prototypes, but in the years to come this could change and 3D printing could be used to make final products.

The types of firms that could make use of 3D printing in these ways could include footwear, ceramics, electronics, plastics and toys. Less viable firms who may not cause as much disruption with the growth of 3D printing include perishables and pharmaceuticals.

The freight firms need to respond but at the moment there isn’t a call to make large investments or to invest in new technology, but it is necessary to perform a diagnostic review. This will allow the firms the chance to identify the risks and ensure they have options and a clear understanding about what will happen if the amounts of final 3D products begin to increase. The options include:
  • Remain the same as many transport as many companies do not see 3D printing being a threat.
  • Shifting portfolios to be focused more on the industries that are not likely to use 3D printing.
  • Adjusting the network, to be used by companies who see that domestic networks are not in a good position to deal with the increase of local production and transport.
  • Bringing in new services and making the most of new opportunities that 3D printing will bring. Lay fresh groundwork now for the new services, such as setting themselves up to become feedstock supply chain champions.

Friday, 28 August 2015

What are the Different Ways Projects can be Structured and what are the Pros and Cons? Part One

There are three ways that a project can be structured. We shall be looking at these three organizational structures over the next three days. Each one is used to tie a project to the parent company and they are known as a pure project, functional project and matrix project. Each one has advantages and disadvantages. Today we’re kicking off with the pure project pros and cons.

Pure Project

A pure project often goes by the nickname skunkworks when a self-contained team is assigned to work on the project full time. An output that was created using the pure project is the Motorola RAXR mobile phone. 

The pros of using this organizational structure are as follows:
  • There is a project manager who is the one who, having the authority over the complete project.
  • All of the members in the team report back to the one project manager thus removing loyalty concern issues. Communication is made easier as the lines of communications are shorter, so any decisions that need to be made are done quickly.
  • Commitment, pride and motivation among the teams remain high. 
The cons of using pure project structure are:
  • There are risks of resource duplication as people and the equipment used in the projects separate
  • Policies and the organizational goals are often ignored as the team members may be removed from the headquarters both physically and psychologically.
  • There is a risk that the organization will fail to keep up date with the latest technology due to the weak functional divisions.
  • Team members worry about the life after the project and this can result in delaying the project termination.

Thursday, 27 August 2015

What is Project Management and Why is it Important?

A number of different but related jobs that are focused on a major output may take a long time to complete and this is one of the definitions used for a project.  The definition of project management is the planning that is involved along with the direction and the management of the different resources, such as materials and people, in order to meet the demands of the project. These demands include meeting the costs and ensuring the project is completed on time while meeting the technical constraints imposed as projects are not always a one time activity.

Some projects continue to be repeated several times over, or they are transferred over to different projects and settings.  This results in the completion of a different project output. Contractor’s projects may result in the completed building of a house while a company may result in creating products in low volumes, including making computers, trains or perhaps linear accelerators for example.

Wednesday, 26 August 2015

Chit Chat: From Milano to Guangzhou.....Make It Happen

At Royale International our clients consistently put us to the test with critical requests. We always find a way to #makeithappen.

The Mission: One of Royale International's clients called us with an urgent consignment of high quality leather to be moved from Italy to their factory in Southern China. Production delays and deadlines to retail stores meant that speed was of the essence.

The Challenge: With limited time and a complex customs clearance procedure to follow in China- all odds were against us. With a clearance procedure that can take up to 5 days as standard with both commodity and standard inspections timelines were tight.

Royale's Solution: With a dedicated vehicle collection and direct drive to Milan, we utilised a Next Flight Out express airfreight option to Guangzhou. Overtime customs clearance was arranged to knock 48 hours off the standard clearance time and a dedicated vehicle used for delivery as soon as released.

 A tricky job completed in a rapid time frame. Make it Happen!

This article is contributed by Royale International Couriers Ltd. International Sales Manager Mr. Philip Murton - To contact or view more on Philip's adventures? Follow him at LinkedIn or follow us at Royale International's Blog.

What is the Framework for Operations and Supply Strategy?

An operations strategy needs to link with the customer as well as other parts of the business.  The vertical links to the customer focus on the needs of the customers, the manufacturing operation requirements, performance priorities and the capabilities of the resources in order to satisfy the customers. The senior management is responsible for the strategic vision for the overlying of this framework. The strategic vision will generally identify the following:
  • Target market
  • Core enterprise capabilities
  • Operations capabilities
  • Product line
A target market has to be defined by examining the core capabilities that separate the service or products from the competitors and determining the most suitable target market. This may result in eliminating some customers that would prove to be unprofitable based on the capabilities of the firm.

Firms often have a hard time leaving the traditions behind and leaving behind aging innovations. The managers are too comfortable in allowing the current system to continue. If there are advanced technologies that would make significant improvements and enhance the competence of the firm, those will help them to stand out and apart from the competitors.

Tuesday, 25 August 2015

What is Order Winner and Order Qualifiers in Operations?

It is necessary to understand your business markets from the perspectives of marketing and operations, so an interface is needed between the two. The terms “order winner “and “order qualifier” have been identified by Oxford University professor, Terry Hill. These two terms describe the marketing oriented dimensions that are required for competitive success.

Order Winner
The order winner differentiates services or products of one firm from the services or products of another firm. The criteria for the order winner could be:
  • Price of the service or product
  • The quality and reliability of the service or product
  • The dimension that is the focus of the competitive position of the firm
Order Qualifier
The order qualifier can allow a product or service to become a candidate for purchase.  This screening criterion could change as time moves on with the order winner.

Consumer groups will monitor the reliability and quality criteria of firms and therefore the top performing companies are requalified and can be requalified at any time.

Monday, 24 August 2015

What is the Notion of Trade-Offs in Operations and Supply Strategy?

It is not possible for an operation to excel at all times at all competitive dimensions. Therefore, it is down to the management to select the parameters of performance that are most critical to the success of the firm. Then the management needs to ensure that the resources of the company are concentrated on those characteristics.  Here are a few examples for you to look at:
  1. A firm that wants to provide their customers with a fast speed of delivery will not be able to be highly flexible when it comes to their product range.
  2. Firms dedicated to lower costs will find it hard to provide their customers with a speedy delivery service.
  3. High quality products are unable to be low cost products.
Strategic positions are not able to be maintained unless other positions are compromised and so trade-offs do occur. Straddling is a risky strategy is when companies attempt to match the benefits that are experienced from one successful position while maintaining the current position. If they introduce new activities, features or technologies into the activities that they currently perform, the trade-offs may result in a possible huge loss of money and possible reputation damage of the company.

Saturday, 22 August 2015

Chit Chat: Consumer Goods Trends in 2015

There are two main challenges being faced by the manufacturers of consumer packaged goods in 2015. These challenges are:
  1. The negative growth of the disposable income of the consumers
  2. Changing attitudes towards brands and products
Fragmentation in consumer markets is underway and companies are now faced with the challenges of shifting the ways they reach their customers in communications and the distribution of their products.

Consumers are having the slow or negative growth of disposable income, which is caused by lack of pay increases over the past five years. Consumer wages are squeezed and therefore spending is limited, even in countries where the economies are improving. The emerging market disposable income growth is also proving to be slower than previously anticipated. The lack of growth is sadly expected to continue for some time.

Changing consumer behaviours and responses to the market is experienced in the emerging and the developed markets. The markets have multiple types of consumers and growth can be seen where the consumers are happy to pay more for quality goods and where consumers are focused on the best value products. However, the middle area of the market is downsizing.

Shoppers are no longer choosing to do one big shop per week at a supermarket; instead they make regular visits throughout the week visiting a variety of shops, from the supermarkets to discount and premium stores, along with making online purchases. The shoppers became used to working to find bargains and this trend has continued on from the recession. Many businesses had to reduce the size of the business or close the business down as a result of bargain hunting.

There are more sales channels than ever before and customers are enjoying finding areas to save money by using all the available channels. Retailers experimenting with the multiple channels are a direct response to the changing habits of the consumers. Additionally, consumers also have access to many different channels of media and each different type requires attention in order to appeal to the different types of consumer using each channel.

The CPG companies have to face all these challenges in order to manage their brand and to come up with new and appealing approaches and business portfolios. It is important to track the behaviour of their consumers the performance of promotions and products. Tracking and evaluating and using analytics in these areas will help to improve the results and compete.

Friday, 21 August 2015

What are the Competitive Dimensions that Forms the Competitive Position of a Firm – Part Three

Today is our final part of our examination of the different competitive dimensions that form the competitive position of a firm.  The dimensions we discussed in parts one and two are the most common choices. Here are the less common options that are mainly found in firms offering special services to enhance the sale of manufactured products.

Technical Liaison and Support
It’s not uncommon for suppliers give their customers technical assistance for product development. This is expected during the early design and manufacturing stages.

Meeting a Launch Date
Some firms are expected to work and coordinate with other firms when projects are complex.  Manufacturing can sometimes begin even when the development work is yet to be completed. Coordination between the different firms and working together on projects is a good way in saving time and completing projects quicker than their competitors.

Supplier Aftersales
Aftersales support is considered to be an important competitive dimension. Firms focus on providing support for their products after the sale has been made. Types of after sales support include the replacement of parts and modification to bring older models up to the new performance levels.  An important aspect of supplier after sales is the ability to respond and react quickly.

Other Dimensions
There are other dimensions worth mentioning, including:
  • Additional options such as colours
  • Different sizes and weights
  • Customisation
  • Product mixes
  • Location

Thursday, 20 August 2015

What are the Competitive Dimensions that Forms the Competitive Position of the Firm? Part Two

Today we’re continuing our look at the competitive dimensions that for the competitive position of the firm.

Delivery Speed
Some companies would focus on quick service or product delivery. If a firm is able to deliver at speed, they will be able to gain a competitive advantage over their competitors. The firms that can deliver a service within a couple of hours are more appealing to customers that have to wait 24 hours or longer for the same service.

Delivery Reliability
It is a competitive advantage if a firm is able to deliver their products or services when they are promised to the customers, or before the due date. This dimension is essential for some firms that offer delivery services to their customers but also to all other industries. For example, car manufacturers depend on having the car tires ready to be assembled at a certain point of production. If the tires are late, production will be ceased, costing time and money and resulting in their own end customers being unsatisfied?

Coping with Changes in Demand
There are many industries that experience increases and decreases in demand. Firms can gain a competitive advantage if they are able to respond quickly to these fluctuations. Dealing with increasing demands is good news for firms, who are able to reduce their costs due to economies of scale and invest in new technologies. On the other end of the scale firms that have to respond quickly to decreased demand have to face multiple challenges that may involve firing employees and reducing company assets. Long term operational strategies must work out the most efficient ways of dealing with demand changes.

Flexibility and New Product Speed

Companies which use the flexible and speedy product production and launch dimension are focused on providing a reliable array of products or services to their customers.  Firms must have the time and the ability to develop products and come up with new processes that will allow them to offer the new products to market.

Wednesday, 19 August 2015

What are the Competitive Dimensions that Forms the Competitive Position of the Firm? Part One

Customers have many options when it comes to buying different products and whom to buy it from. Deciding what and where to buy depends on the different attributes that attract them. Some customers may be concern only on the price of a service or product. Hence, some companies will focus on attracting them by offering low prices. Over the next three days we’ll be looking at the competitive dimensions that dictate the competitive position of a company.

Castor Price
All industries have a section of the market that focuses on low prices. They make a product or they provide a service cheaply, passing on the cost savings to their customers. The only way firms can position themselves in this niche is by becoming a low cost producer. The problem is the system can make it difficult for firms to make profits and customers find it difficult to find a favourite firm to choose from as they are all similar. The large-scale firms often depend on large unit volumes to make money. But the competition can be aggressive and failure is common.

Producing low cost products and services with standard quality is not the only option for businesses. There are plenty of companies that provide high quality of service, products and customer care.  Quality includes two characteristics of products and services which are design quality and process design.
  • Quality of design is determined by the features of the product or service. The quality needs to meet the demands and needs of the customers who are happy to pay for the quality and the additional features. Firms have to find a balance to ensure that they don’t end up adding too many unwanted features that customers are not prepared to pay out for. It is important to set up an appropriate level of design quality in order to meet customers’ requirements. Products and services with inappropriate features may be seen as unreasonably expensive in the eyes of the customers. 
  • The second characteristic of quality is process quality referring to the reliability of the product or service. Customers want to buy products that work and come without defects. Process quality is therefore focused on the production of defect free products and services, defining the creation of the products and services using specifications of error rates or dimensional tolerances.  Following the specifications is essential so that the service or the product can be provided with reliability.
Return tomorrow for part two.

Tuesday, 18 August 2015

What is the Operations and Supply Strategy?

The operations and supply strategy are part of the planning process that works to coordinate the operational goals of the company. They have to be able to be compatible with any future changes and anticipate the requirements that could arise in the future.

The operations and supply strategy involve establishing policies and planning for the use of the resources that are able to support a company’s long term competitive strategy. The long term processes have to incorporate actions, policies and plans for the change that is inevitable. It also involves decisions that relate to the infrastructure required to support the processes and the design of the processes.
  • Process design involves selecting the type of technology that is appropriate to use, the process sizing, the inventory role in the process as well as process location.
  • Infrastructure decisions are centred around the planning and the control systems along with the payment structures, operation function organisation, quality assurance and control.

Monday, 17 August 2015

How to Manage Expectations with your 3PL

The relationship with 3PL needs to be managed.  As the outsourcing company it is necessary to understand and express expectations to the provider. The provider will also have expectations on the outsourcers. The expectation should be communicable, mutually beneficial and able to run for the long term. When the expectations are not shared and agreed upon result in a relationship that fails. Both parties must be working towards the same goals and understand the expectations on each side.

Manage the Relationship

Check the service levels that have been agreed upon and monitor the service to ensure that they are delivered at a suitable cost. The performance can be monitored using customer service or financial measures and use performance KPIs to measure the additional learning, innovations and internal processes. Businesses will need to have set targets and build historical date along with the industry standards and budget constraints.

Operation Controls

Translate the performance measures into an operational plan. This is where the costs are divided up into the chosen period of time, the functional elements, and logistics component and by the activities.  The operational plan must be implemented and monitored so businesses will be able to find any deviations that arise between the targeted and actual measurements. There are main three causes of deviation that are:

1.     Level of activity changes
2.     Changes in the efficiency/performance
3.     Changes in costs/price

Saturday, 15 August 2015

Chit Chat: 2015 Aviation Trends

Slim profit margins are one of the challenges that are present in the airline industry; thus, carriers are focusing  on how to increase their revenue and improve customer interactions while reducing costs. Despite this challenge the airline industry continues to grow on a global scale but consistency and profits remain problematic. One of the major growth drivers in the past decade is thanks to the low cost carriers that are from the emerging markets who now command around 25 per cent of the market. However, they do have low profit margins equalling less than 3 per cent.

When examining the commercial sector the main players in the value chain do make sizable profits. These players are the travel agents, airports, airplane manufacturers, service providers and jet engine manufacturers to name just a few in the chain.

The commercial links in the value chain are doing well, while the links of the chain responsible for the movement of people are barely able to make a profit. The reasons for this are:

  • Complex regulations
  • Vulnerability of the airlines to natural disasters, diseases and security risks
  • Price pressures and competition
  • Increased expectations from passengers and customers
Airlines need to continue focusing on the top line growth, increasing their productivity and try to increase the profit margin in the face of these unique challenges.  One of the ways they can work towards increasing revenue is by improving the soft product rather than focusing on the hard product (the aircraft). The soft product can be improved by improving customer experiences throughout the entire process, from making the reservations to leaving the aircraft.

Large improvements and often changes of the wholesale behaviour of the company of often required as the implementation of improved soft products can be difficult. Firms must work on both reducing costs while making improvements in the overall operations and this isn’t easy to do. 

Cost Reduction Options

  • Fleets should be improved over time in order to benefit from modern fuel efficient aircraft
  • Expansion of routes in the long term
  • Improving the operational model
  • Improving work practices
  • Improving the structure of the organisation
The carriers in the emerging markets such as Asia and the Middle East are now competing and gaining customers while being reliant on connecting traffic.  They are attracting the first time flyers but are working hard to meet the expectations of the market and make improvements that save money and increase customer experiences. Their challenge is to make the right investments that will continue to give them a cost advantage while giving the customers what they want.

Friday, 14 August 2015

What is the Typical Reason Outsourcing Relationships Fail?

Outsourcing relationships aren’t always successful and as a result, they may fail and ending in a dispute. The responsibilities of this failure may lie within the 3PL, outsourcing company or both. Here are some of the reasons why failure can happen.

Failure Reasons as a Result of the 3PL
·  Too little involvement
·  Over promising on their capabilities
·  Not a clear understanding of the customer requirements
·  Poor implementation
·  Poor performance
·  Poor service levels
·  Failing to act as part of the customer’s supply chain

Failure Reasons as a Result of the Outsourcing Firm
·  Lack of resources that are required to manage the 3PL
·  An unrealistic expectation of the outcome
·  Focusing too much on cost reduction
·  Lack of or inaccurate volume information
·  A lack of SLA

Failure Reasons both Parties are Responsible
·  A contract that is unclear
·  No performance measurements in place
·  A lack of goals
·  Poor communication
·  Inadequate implementation

Thursday, 13 August 2015

What are the 9 Steps Process of Outsourcing? – Part 2

Today we will look at the remaining 9-step processes involved when a company is looking to outsource.

Step Five

Time is needed during step five so companies are able to access, reflect and discuss the responses. The discussions should include multiple individuals and teams within the company including Human resources, finance department, procurement and logistics.

Step Six

With all the information, thought and discussions you will find making the contract selection an easy task. Visit the top 3PLs in your list and visit them on site. Also, you will need to assess the risks at this stage and evaluate:
  • The operational service risks such as sudden changes in demand and the introduction of new products.
  • Business risks such as problems with tax and if the 3PL was to go under.
  • External risks such as floods and fire.
Step Seven

Formulate and agree on the final contract with the selected 3PL. The contract needs to contain all the information and the key areas are the object, service and cost.
  • Objects include the equipment, personnel and warehouses
  • Costs include the capital investments, management costs and operational costs.
  • Service is the service level agreement
Step Eight

This is the time when companies implement the contract with the selected 3PL they will need to apply project management to this step in order to avoid some problems that can be experienced. Define the tasks and come up with some contingency plans to reduce the risks. Plan very carefully for each of the outsourced processes and have a backup plan for each one.

Step Nine

The final step is ongoing as it involves the management of the relationship with the provider.

Wednesday, 12 August 2015

What are the 9 Steps Process of Outsourcing? – Part 1

 Let’s look at the 9-step processes involved when a company is looking to outsource. These are:

Step One
Outsourcing begins by reviewing the scope for outsourcing and reviewing the requirements. Examine the way the company currently operates and establish the areas where outsourcing could be beneficial and tighten up any problems and failures in your current systems.  It is also important to decide if you would like dedicated (exclusive resources) or shared resources.  

Dedicated services can cost the company more money, especially during periods of reduced demand, such as between seasons. The downside of shared resources is that the 3PL will be less specialised to meet the requirements of the business and they may not have the expertise necessary.

Step Two
Once you know what needs to be outsourced the next step would be to identify the potential service providers. Check each provider to see if they:
  • Have up to date systems and make use of technology including online links and real time tracking.
  • They have the human resources.
  • The ability to meet the specific requirements for your business.
  • The infrastructure, network coverage, depots and fleets to cope.
  • The ability to provide a full logistics package.
  • An excellent quality service.
  • Provide a reliable service.
  • Have access to top management.
  • Formed strong partnerships.
Step Three
It is necessary to contact a shortlist of providers for information using an RFI document. This allows businesses to check that the 3PL wants to work with them. Once the businesses receive the completed RFI they can then make the decision based on the key criteria and have between 5-10 contactors for tender.

Step Four
The next step is to issue the Request for Quotation that must be prepared first. This document will help firms to make your comparisons and should include the following sections:
  • A description of the business and a short background
  • The data that was shared through the RFI
  • The physical distribution network
  • Information systems
  • Risk assessment
  • Performance monitoring and the distribution service levels
  • Structure of charges
  • Terms and conditions
  • Selection procedures, deadlines and the format of the response
Return tomorrow for the remaining part 2 of the outsourcing process.

Tuesday, 11 August 2015

What are the Common Reasons to Outsource?

There are three common reasons that result in outsourcing supply chain activities:

1.     Increasing the flexibility of operations
2.     Reducing the number of fixed assets
3.     Increasing the efficiency of operations and the business

Increasing flexibility is one of the benefits experienced in outsourcing. You can gain access to different types of transportation or use different modes of transport types, helping the company to cope with multiple challenges, such as seasonal swings. It saves money and it also reduces the amount of fixed assets that are required as the third party providers have the assets in place already.

Finally the company is able to reduce the operating costs, spending less but still improving the efficiency and flexibility of that is required. The results are improved while money is saved, making outsourcing a powerful choice to make.

However, it is also important to recognise some of the concerns that are found in outsourcing. One concern is losing touch with the customer by using the secondary transport of the provider. It can result in reducing customer contact and lead to losing control with the relationship with the customer, which is why it is important to use 3PLs and have in-house systems that make use of technology and real time reporting.

Monday, 10 August 2015

What is Outsourcing and its Growth Drivers?

Outsourcing is used by companies that do not have the ability of resources to perform a task. They turn to a different provider or organiser in order to get the task done. Many companies outsource multiple roles but one that is becoming increasingly common is outsourcing activities in the supply chain and it is expected for this trend to continue to grow in the future. Even the larger brands, such as Nike and Benetton are known for outsourcing their manufacturing, retailing and distribution, allowing them to concentrate on their areas of expertise, the creation of their products.

The grown drivers in outsourcing are:

  • Globalisation
  • Complexity
  • Emerging markets
Companies that serve global markets know that the operation involved is a lot more complex compared with serving a local market. This is why many of the third party logistics providers have now branched out and now provide transportation and distribution on a global scale as part of their service.  The complex nature of supply chain management links to global business, it is necessary to avoid the pitfalls and reduce the in-house complexities by choosing to outsource logistics to the experts. Finally the growth seen in Eastern Europe and the Far East is another reason why companies are outsourcing.

Saturday, 8 August 2015

Chit Chat: Why Industry/People Uses Hand Carry Services?

By definition, a ‘Hand-Carry’ shipment is physically carried on board an aircraft by a professional OBC (On Board Courier). Royale International has more than twenty years experience handling such shipments and is regarded as being the market leader globally. We are working with many top global clients who need this type of service on a regular basis but the most common industries include the automotive, technology, medical and aerospace sectors. What unites these very different industries is their need for speed, the need to have a shipment delivered faster than any other express courier or air-freight service could achieve.

In most cases our customers have complex global supply chains and this combined with a trend of keeping inventory levels at the minimum level means the need for this service is always there for our customers, even though they do their absolute best to avoid using a hand-carry due to cost. When you add other factors such as weather, natural disasters, supplier quality issues and airline strikes to the mix, it creates what is a large market for such services. It could be said our time critical logistics team is the logistics version of an ambulance or fire service in that we’re called upon in emergency situations when our customers have exhausted all other options and are in great need of assistance. For this reason we ensure we are always available for our customers with a 24/7/365 operation and ensure our service level in terms of response times and communication is flawless. Communication is key to what we do and what makes us stand out.

From a personal perspective as Sales Manager for our time critical logistics team, the job is both challenging and rewarding at the same time. You are constantly working in a high pressure environment dealing with stressed customers who are trying to solve major supply chain problems with potentially major consequences. For example if one of our tier 1 automotive clients stops the production line of their customers, they can be liable for fines in excess of US$ 6000.00 per minute that the production line is stopped. Such numbers certainly create a highly stressful environment and you really feel with each shipment that you’re on a mission which cannot fail.

The rewarding part is when you deliver the shipment and customers clearly appreciate all the effort which went into the organization. Our job is to make sure the operation is smooth from beginning to end, leaving no stone unturned in terms of the preparation and execution. This is why we have been so successful in this highly specialist and niche market. The other part of the job which I personally enjoy is that you never know what you’re going to see each day which makes things very interesting. On any given day we may see shipping requests for aircraft parts into Afghanistan, medical devices into Costa Rica or even parts for a satellite tracking site in Kiribati. Dealing with customers and building up relationships with customers and partners all over the World is also enjoyable.

Submitted by: Peter Harrod - Asia Sales Manager of Time Critical Services for the Royale International Group.

Friday, 7 August 2015

What are the 6 Supply Chain Performance Levers?

There are 6 supply chain performance levers that can be seen in businesses with supply chains and can be used as an auditing check list:

  1. Demand – The customer transfers the demand onto the next stage of the chain and it can be in the form of an order or a forecast. This is usually the start of the supply chain.

  2. Supply – Upstream is the supply and this needs to be an efficient supply as it has an impact on the efficiency of the entire chain.

  3. Lead times – The key measurements of the success of the chain is responsiveness and lead time.

  4. Information – Information is necessary as it shares details regarding delivery and the product details such as size and destination.

  5. Physical Quality – The product needs to be delivered free from damage and in good conditions. This information needs to be recorded.

  6. Throughput Efficiency – This is the final lever in the supply chain and it is the amount of working capital that is in the supply chain and also how efficiently the network is.

Thursday, 6 August 2015

The Logistic Business Process – Gearing, Returns and Hurdle Rates

The aim of a business is to generate money and to give investors a return, plus making a profit is another aim. However, it is possible to continue to run a business when no profits are made and even when losses are recorded, up until the money runs out. There are key areas of supply chain finance that are beneficial for helping with the management of financial responsibility, these are listed below.

·         Gearing
Gearing is a term that is used in business finance that identifies the amount of capital investment funded by the external and by internal funds.  This is a measurement of the financial leverage, showing the number of activities of the business that are funded by the funds provided by the owners (equity) and the creditor’s funds (debt).

·         Returns
Investors and banks may provide capital for businesses to start trading. Both of them would like to see a return from their investments. If the business is going to be bankrupted, the assets will be retained by the bank and the shareholders would lose out on their investment. Shareholders can receive greater dividends and capital growth by taking higher risks.

·         Hurdle Rates
Cost of Capital is the cost of the debt capital and the cost of the equity capital. Businesses are usually financed using both debt and equity and they need to find a balance between both, such as 50% debt and 50% equity. The amount of the expected return must be established using the Weighted Average Cost of Capital. For example, if the debt has a 5% return and the equity has a 15% return the WACC is 10%, which is the hurdle rate.  The hurdle rate is the required amount of return so the business needs to make sure that they will see a greater return than the WACC to make the investment to be paid off financially.

Logistic companies have to ensure they can earn higher returns than their customers hurdle rate and also meet their own hurdle rates with each solution that they implement.

Wednesday, 5 August 2015

How to Apply the Supply Chain Learning Style

Yesterday we took a look at the four different types of learning styles used in supply chain learning:
  • Listening – Provides through talks, lectures, seminars, podcasts and e-learning.
  • Reading – Printed or digital information to read inside and outside the classroom environment.
  • Simulating – Hands on learning opportunities and on the job training.
  • Looking – Using visual aids in order to learn, including supply chain mapping.
There are different learning styles and they each need to be made available to help improve the performance of the employees within the supply chain. It is therefore necessary to provide multiple opportunities that will allow each of the employees the chance to learn in order to improve, regardless of their preferred learning style.

There are many different methods that can be used for each employee, including providing classroom training, e-learning and training on the job. When employees can choose their preferred method of learning they are more likely to work harder and become stimulated to achieve the best results possible.

Tuesday, 4 August 2015

What are the 4 Types of Learning Styles in the Supply Chain?

Not everyone learns and absorbs information the same way. In supply chain learning, many courses are dominated by facts and it is crucial that different learning styles are applied. Here are the four methods that are used in supply chain learning.
  • Looking in order to understand complex supply chains
Talking isn’t enough when learning about supply chains, we need to visualise the information so that the complexity of the product and information flow can be fully understood. One of the methods that are commonly used is asking the learners to create supply chain mapping. This allows them to see and understand the challenges that are found in global supply chains, such as geographic locations, transport delays and consumer response times.
  • Careful Listening to Improve Financial Performance with Supply Chain Management
It is necessary to understand the impact logistics are having on the business finances and strategies, and this can be difficult. An effective way of teaching how to translate the performance of the supply chain into financial returns is to invite speakers to talk about their experiences. Inviting speakers and holding talks is especially useful for auditory learners.
  • Reading to Learn about Personal Benchmarking and Best Practices
Pre-reading before classes and asking learners to come with their feedback from their reading is a useful way of teaching supply chain best practices and making use of case studies. The learners have the time to read and take in the information before preparing their feedback, a learning style that is particularly suited to learning through reading and writing.
  • Simulating the Pulse of the Supply Chain
Letting learners get hands on experience of the stresses of the supply chain teaches through simulation. Supply chain simulations provide a great deal of information regarding product flow, inventory management and all of the different players within the supply chain. This stage is excellent for kinaesthetic learners.