Friday, 31 March 2017

What are the three kinds of technology operations management is primarily concerned with?

Three types of technology that operations management is mainly concerned with are:
  •         Product and service technology
  •        Process technology
  •        Information technology

Product and service technology

Product and service technology is the discovery and development of new services and products. Researchers or engineers develop new knowledge with scientific approaches that can be converted into applications.

Process technology

Process technology is the procedures and equipment that are used to provide services and product goods for sale. Supply chain processes are included in process technology along with the processes of the organisation.

Information technology

IT is the use of computers and electronic equipment to send, store and process information.  Information technology is deeply ingrained in business operations and is used in a variety of ways, including ecommerce, the internet, point of sale information, tracking goods and so on.

Thursday, 30 March 2017

About Operations Today

Two of the main influences on operations management are information technology and global competition. E-business uses the Internet to perform business and it’s changing the way businesses connect with both customers and suppliers. The internet does provide many benefits for modern business. However, it’s vital to understand the risks before deciding how to use the internet for business.

The public is pretty familiar with e-commerce as this is where they buy goods and services online. E-procurement is where business to business transactions take place and this is another important part of ebusiness. E-business is getting a lot more attention from the business owners and managers as they make decisions and develop their strategies.

Technology has many definitions but in general, it applies scientific discoveries to develop and improve goods and services. The most advanced methods and machines are known as high technology. 

Wednesday, 29 March 2017

Why learn about Operations Management?

There are very good reasons for wanting to learn about operations management, even if you’re not considering working in operations. It is because operations spans across all aspects of business, it affects everything. Operations are one of the two line functions in a business, the second being sales. All of the other functions, spanning from accounting to IT, supports both of the line functions. The following are the service jobs that are closely related to operations:
  • Marketing
  • Financial
  • Information

There are other reasons why it can be beneficial to learn about operations management that don’t have anything to do with careers or working in business. Operations and the supply chain management can be beneficial in learning about the world and understanding how things work. It teaches about global dependencies, gives an insight into the reasons why some organisations will fail and why some go on to be successful.  You can also learn about why it’s important to work with others through operations. By working together, employees are able to learn their own roles and the roles of other people within the organisation.
Here are some of the activities that finance and operations managers exchange their expertise and share information on:
  1. Budgeting
  2. Provision of funds
  3. Economic analysis of investment proposals

Tuesday, 28 March 2017

What is the scope of operations management?

Operations management spans across organisations. The people working in operations management can be involved in a variety of different positions, including:
  • Product and service design
  • Technology selection and management
  • Process selection
  • Facilities planning
  • Location planning
  • Work system planning
  • Quality improvement

There are many interrelated activities in operations function, which include the following:
  • Forecasting
  • Capacity planning
  • Quality assurance
  • Inventory management
  • Scheduling
  • Motivating staff

All companies will have operations but they will be different as they are dependent on the businesses themselves, but they will also have things in common. Regardless of the business, most organisations will have operations such as scheduling activities, ordering and managing supplies and motivation employees and so on. 

Monday, 27 March 2017

What is process variation and the four basic sources of variation?

All business process experience variation to some extent. The variation could be a result of random variability or perhaps as a deliberate choice in management. 

Variations can be disruptive to supply chain processes and operations as they interfere with functions.  They can cause a number of problems such as increased costs, unhappy customers and product shortages. Here are the four basic sources of process variation:
  1. A variety of services or goods being offered by the company. Variation will be greater if there is a wider amount of variety in the goods or services that are offered.
  2. Structural variation. Structural variation in demand is caused by trends and variations that occur with seasons. These types of variations can be predictable and they are vital for capacity planning.
  3. Random variation is naturally occurring and found in all processes and the demand for services and products. Managers have little influence over random variation.
  4. Assignable variation has many different causes, such as failing to follow the correct working methods and defective inputs. Analysis can be used to reduce or remove assignable variation along with corrective action.

Saturday, 25 March 2017

Chit Chat: Automotive Trends 2017

Cars are evolving into more technological machines that fit in with modern day life. Let’s look at some of the trends that are expected in the near future.

1.    Parking has always been an area that many drivers have problems with, especially learners and new drivers. Parking can even be difficult for the most seasoned drivers, especially when there is a large amount of traffic. Premium cars now have the ability to remove the struggle thanks to parking assistance features. Cats have cameras and sensors to assist the driver. This addition is about to be expanded upon. Mercedes and BMW are both about to launch new features that will give drivers the option of parking using their smartphones.
2.    Cars are being improved and designed in ways that will absorb impacts. Volvo is committed to reduce impacts related to deaths and they wish to stop anyone from dying in their vehicles by 2020.
3.    Hands-free driving on motorways is the aim of many car manufacturers.
4.    Smart headlights are heading our way. Audi is working to create headlights that avoid blinding oncoming drivers. Volvo is working on swivel headlights that turn to match the turn of the wheel to help drivers see more of the road ahead. LEDs are also on their way into the mass market.
5.    Hybrids to be designed to appeal to more drivers. BMW is set to release a drop top i8 that certainly hits the spot.

Friday, 24 March 2017

What is process management and the three categories of business process?

Process management is a central role of management. A process has one or more actions that are needed to change inputs into outputs. A business is made up of many interrelated processes but there are three categories of business processes in general. The three categories are:
  • Upper management processes
  • Operational processes
  • Supporting processes

Upper management processes, such as organisational strategy, govern the operations of the business as a whole. Operational processes are what make up the value stream and they are the core processes of the business. Examples of operational processes include marketing, sales and purchasing. Supporting processes are what support the core processes.  Accounting and HR are both examples of supporting processes.

Thursday, 23 March 2017

What is the production of goods versus delivery of services?

There are differences between the production of goods and delivery of services. The differences affect the management of these two. The end result of the production of goods is tangible. It could be a tennis ball, a bed sheet or a toothbrush. It’s something that we can touch and see. Farming produces goods that aren’t manufactured while other goods are made up in a factory. They are both goods whether they’re manufactured or not.

The delivery of services is essentially the provision of acts. These acts could be having someone come to mow your lawn or DJ at your event. There are many different service jobs that will fall into the following general categories:

  • Professional services
  • Mass services
  • Service shops
  • Government
  • Education
  • Retail and wholesale
  • Food services
  • In-house services
  • Residential services
  • Shipping and delivery
  • Transportation
  • Travel and hospitality
  • Miscellaneous services

Service and manufacturing often have differences in terms of what is performed but they will have similarities in how they are performed. They have a certain amount of customer contact, require some form of labour and have uniformity of inputs.  Other areas of comparison include a measure of productivity, inventory, are patentable, require the payment of wages and quality assurances are required.

Wednesday, 22 March 2017

What is operations management?

Operations management is basically the management of systems and the processes that are used to create goods and services provided by the business. The goods refer to any physical items that are made up from raw materials and parts or they may go into the final products such as vehicles. Services are activities that can provide location, value, form, and time. Goods are similar to the services that surround us at all times and can be found in what we use on a daily basis. Operation functions in business impact the national economy and play a part in competing with other nations.

A business must work towards meeting demand with supply in order to be cost efficient and satisfy customers’ wants. Operations and supply chain are essential functions of supply, while sales and marketing are the key functions of demand. Finance is concerned with budgeting and securing financial resources and providing enough funding for operations. Operations are responsible for providing services and producing goods that are provided by the business, it’s the core of the business.

Tuesday, 21 March 2017

What are the challenges for economists in logistics?

Textbooks will often begin with definitions of logistics and come up with new terms within the industry without giving practical benefits. The same textbooks will give heavy focus on the history of logistics and there will be many surveys on the trends of logistics. Economists contributed more to logistics in the past. 

These days, scientific economists are focusing on logistic controlling and logistics management. Many textbooks will give promises regarding cost reductions. However, companies need costing and pricing methods to make themselves become more feasible and not simply visions of the future. They need remuneration schemes and marketing and pricing strategies.

Economists need to develop strategies that can solve relevant problems in logistics. They also need to share advice for practical use. Some of the challenges are bottlenecks and demand saturation. Bottlenecks cause the economy to become stuck and logisticians, economists, and engineers need to find practical solutions. The aims are to create efficient supply chains that are effective regardless of bottlenecks and that meet the demand of consumers.

Monday, 20 March 2017

What are the contributions of economics to micrologistics?

Logistics and supply chain management are seen as new business approaches by some economists. They are equal to consumer orientation and part of all processes and networks.  It requires a holistic approach and built up collaborations to become an effective supply chain. However, for the sake of practical use, economists need to solve the problems below:

  • The standardisation of logistics accounting and costs
  • Standardised use dependent depreciation
  • Establishing the potentials and limitations of universality and diversification in logistics
  • Fixed costs
  • Standardisation for costings and pricings of the different logistic tasks and services
  • Fixed cost compensation solutions
  • Price lists and bill quantities for standard logistic performances
  • Production of standard tender documents for contract logistics
  • Continued development of logistic marketing
  • Inter-organisational supply chain management

The topics above are rarely discussed in company logistic text books and the focus on practical information, solutions, recommendations and rules are uncommon. It’s essential to apply use related cost rates and prices based to create an optimised supply chain and inventory.

Saturday, 18 March 2017

Chit Chat: Logistic Technology Trends 2017

Logistics and transportation continue to rapidly evolve. We’re facing an era of Internet. Logistics and transportation companies are using advanced technologies to provide reliable and faster deliveries for their customers. Let’s take a look at some of the future trends we’re excited about for the year ahead, and beyond.

The Internet of Things
The Internet of Things will continue to play an exciting role in modern day logistics. Expect IoT to play a more important role in reducing waste, saving money and increasing delivery speeds. There is talk of IoT working with RFID and AIDC too. This communication will help to spot areas of weakness that require work to meet the demands of the customer.

Bluetooth will be found more in logistics. Bluetooth can be used to improve the tracking of shipments and work to ensure accuracy in logistics. Expect to see Bluetooth devices being used throughout the logistics process.

Amazon is one company that is already working with robots alongside human workers in warehouses. Automation is becoming more reliable and cheaper and they provide companies with a way of reducing costs, improving accuracy and improving speed.

Electronic Logging
Electronic logging devices help logistic providers stay competitive. The devices log the driving hours and helps companies make and record accurate records.

Autonomous Vehicles
Self-driving vehicles are being tested and continue to be worked on my car makers. Driverless trucks will help to improve and streamline services. This may not appear this year, but work continues to be done and self-driving vehicles is an area worth keeping an eye on. 

Friday, 17 March 2017

What are the contributions of economics to macrologistics?

Economic contributions can be applied to macrologistics by investigating problems, including the following topics:

  • The effects logistics has on the national and international economy
  • Price structure effects on how resources are used
  • Fair price structures and principles in logistics
  • The quantification of logistic markets
  • Cross price subsidies and allowances
  • Economies of scale limits in logistics
  • Intercompany supply chain management limits and potentials
  • Private household purchasing strategies
  • Fixed cost consequences
  • The need for political action

Many of the macrologistic topics are solid disciplines, such as transport economy and waste management. There are lots of other areas that are still worth investigating as they provide many opportunities. These include: network economy, pricing and segmentation of markets.
Economists should be paying more attention to logistics and supply chain management as it’s a new approach to business. Company logistic problems that should be investigated by economists include:

  • Limitations of diversification and universality in logistics, and the potentials
  • Standardisation of accounting and costs in logistics
  • Allocation of fixed costs
  • Standardisation of costing and pricing based on the type of logistic services and tasks
  • Solutions for fixed cost compensation
  • The development of marketing in logistics
  • Direct and indirect revenues in logistics

Thursday, 16 March 2017

About economics and logistics

The main goal of the economy is to give society the goods and services that it needs at the lowest prices. For a company, the goal is to achieve the best possible profits for the lowest cost. When it comes to logistics, the main goal of the services and performances need to be provided at the lowest cost for the maximum profit.

Logistics economics are closely related to technology in logistics. Technology is used to simplify logistics and to improve the logistic performances. The objectives are to improve the quality and efficiency of the performance, streamline the administration processes and to help in the development of business strategies for pricing, costs and marketing.

Wednesday, 15 March 2017

What are price building process and rules of fair trade in logistics?

When the seller is working towards achieving the highest revenue at the lowest cost and the buyer is looking for the best benefits for the lowest price, it is price building. It’s like a competition and the result is never known. There are some market rules to follow during the price building process. Some of the rules are law and therefore they have to be followed, others are general. The regulations that are not law can be agreed upon by the seller and the buyer in the process. Following t he rules of fair trade should not be negotiable for either party. Let’s take a look at some of them:

·         The rules must be accepted by both parties before trading starts
·         Both parties must follow the rules
·         Rules shouldn’t be changed, removed or cancelled during the trade
·         Both parties must not take advantage of an emergency
·         When the rules are lacking, the price building process is halted until the regulations have again been agreed upon
·         No one is forced to participate in a trade
·         No one should be hindered if they meet the admission criteria

Disputes in the process of price building will need to be settled by a neutral party that’s accepted by both parties before the trading commenced. The neutral party should be an authority, such as an expert or consultant. 

Tuesday, 14 March 2017

About logistics tariffs and discounts

Logistics tariffs are calculated by a basic order tariff and specific performance tariffs. The order tariff is based on each specific order for each shipment or another unit that will cover every basic task, performance and service. The performance tariffs are for more specific performances that will include all the costs related to the specific performance unit.

Using the tariffs above, an executed order would look like this:

Price = Basic Unit x Order Tariff + Specific Units x Performance Tariff

Handling orders tariff, including the packing of the order along with loading, sorting and unloading, will include all of the costs that are created by the order. The performance tariff will cover all the costs depending on the amount of items that need to be handled, sorted and transported. The storage orders will be charged based on a cost that includes an in and out storing tariff for the storage of the single load units. There’s also a store place tariff applied that will cover the cost of storing the load unit for some time.

A basic tariff, handling tariff and distance tariff is used for freight orders. The basic tariff covers transport provision, transhipment points and the roll-up. The handling tariff covers the sorting, load and unloading and the transportation of the unit over a set distance is covered by the distance tariff.

Discounts are only applied when there a re expected savings to be made or when higher usage is a result. Here are a couple of examples:

  1. Logistics quantity discounts are used to improve customer loyalty and drive more usage of the service. They are dependent on the amount of units that are ordered by the same customer over a long period of time.
  2. Logistics order discounts are given to encourage orders being placed for complete logistic units – such as full transport units or packages.

Monday, 13 March 2017

What are definitions of quality defects in logistics?

Quality standards and their measurements have to be specified once quality defects have been penalised. It’s important to remember that the risk surcharge will rise alongside the amount and the precision of quality standards when you’re requiring a certain quality level.  Here are some of the quality defects and deficiencies of logistic performance systems:

  • Quantity deviation
  • Incomplete
  • Damages
  • Insufficient shipment
  • Wrong articles
  • Loss
  • Scheduling and delivery insufficiencies
  • Insufficiencies delivery abilities and performance ability
  • Unavailability of storekeeping articles
A defect penalty must be agreed once there is any deviation in quality. The height of the defect penalty is often related to the performance price. An example of this is when the penalties are double or even triple the regular price for the performance.  Direct damage settlements need to be regulated independently from the defect penalties and they can be covered by appropriate insurance.

Saturday, 11 March 2017

Chit Chat: Retail Industry Trend 2017

Here are some of the top retail industry trends to keep an eye on in 2017.

  1. Shopping with Alexa, Amazon’s virtual assistant. Amazon satisfies their customers by offering competitive prices, excellent customer services, same day and next day deliveries and more. Alexa is making shopping even easier for Amazon customers. Users can ‘Just Ask’Alexa who already has details such as the payment option, delivery address and their buying history.
  2. Brick and mortar stores are still relevant but they are not expected to grow in the next 12 months. Consumers are using the Internet to do more research regarding purchases but there’s still a need to go and see products in person before buying.
  3. Pop-ups and expanded locations provide brands with a great way of reaching their audience on a face to face level.
  4. Customer experience is more important than ever. It’s not about the products, it’s about the experience consumers have when shopping. A customer experience can be used as a competitive differentiator.
  5. Malls are growing by including not only shops but also libraries, doctors’ offices, cinemas and even apartments.
  6. Virtual reality providing new convenient and exciting shopping experiences. Customers can design their own interiors before buying or even try on outfits without the need to change their clothing.
  7. Increasing sales with instant gratification – allowing customers to pick up their orders immediately as a way of gaining repeat business and building reputation.
  8. GPS tracking allowing consumers the ability to locate their deliveries is a must. Customers are not happy unless they are able to pinpoint deliveries.
  9. Packaging is playing an important role in satisfying customers and providing them with improved experiences

Friday, 10 March 2017

What are the different surcharges in logistics?

The surcharges in logistics include:

  • Sales and Admin Surcharge – Covering sales expenses, overheads and administration costs that were not working out when setting the cost rates. The use of sales surcharges is not necessary for long-term contracts. For contracts spanning more than five years, the common admin surcharge is commonly set between 8 and 10%. Large logistic providers may set their sales and admin overheads anywhere between 20 and 50%, while smaller providers with a lot of competition will set surcharges between 10 and 15%.
  • Failure Risk Surcharge – Covering risks and warranties that arise from not reaching expected quality standards and performance failures. The fines are based on failures that can be measured. The failure risk surcharge for logistic service providers that are well managed and focused on reaching quality standards are set between 3 and 5%.
  • Utilisation Risk Surcharge – Provides protection for the service provider for when the services are underutilised based on what has been planned. There’s no need to set utilisation risk surcharges for customers that have a contract guaranteeing minimum utilisation or if the performance prices can be adjusted based on the utilisation.

Thursday, 9 March 2017

About performance cost and prices in logistics

The legal relation between logistic providers and their users are what dictate the calculation of performance prices and the remuneration for performances being provided. There are some businesses that provide logistics but not as part of their core business will often include the costs in their surcharges. It is possible to reduce the costs of logistics by creating order and article logistic accounting and by calculating the costs separately.

  • Article logistic costs and order logistic costs are the total costs related to each article unit per order that are a result of procurement, production, and distribution.
  • Article logistic costs that are necessary to procure, produce or distribute are worked out by multiplying the quantities with the cost rates.
  • Logistic providers work out the cost for all their services and tasks are set for the planned utilisation and the performance prices are offered to the market. Costs such as admin and sales overheads are covered by increased costs from the surcharges and profit margins

Wednesday, 8 March 2017

What is the principle of “fair pricing” in logistics?

The best logistic providers give transparent performance prices that relate to the value and costs. The principles of fair pricing are:

  1. Pricing lists that are easy to understand
  2. Performance prices based on utility value and costs with full transparency
  3. The logistic services and tasks are specified in a catalogue
  4. Sales prices cover the entire costs
  5. Individual performance prices and the terms of payment are included in the price list
  6. Sales prices include all tasks including all sub-performances
  7. Providing additional services, insurance fees and extras set of suitable process and available to order if required
  8. Price changes only made when justified
  9. Extra services that are costly are only provided to customers that have ordered them and charges are made separately
  10. Obligations to perform as specified are included with the performance prices
  11. Uncomplicated invoices that only include the performances carried out and the agreed prices

Tuesday, 7 March 2017

What are the pricing principles in logistics?

There are several consequences that come with unfair pricing in logistics. Here are some of the areas where the evidence of such action can be shown.

  1. Prices that aren’t based on cost or related to use
  2. Linking required performances with ones that aren’t necessary or required
  3. Offering only all-inclusive prices
  4. Price changes made too often and for no reason
  5. Complicated price models, subscriptions, and discounts making it too hard to work out the price of the individual performances
  6. Incomplete price lists
  7. Pricing structures that are too complicated to understand

Unfair pricing is a problem commonly found in logistics. The tariffs can be based on outdated tariff models or pricing schemes and so on. Customers may find it impossible to get answers to their pricing questions or working out the price lists. Many customers become annoyed and distrust the providers.

Monday, 6 March 2017

About Logistic Pricing and Marketing

Many companies see logistics as simply a cost to the business. However, logistics can become a value driver. Using marketing strategies that are heavily focused on providing quality along with customer orientated pricing, logistics can be used to increase extra revenue and profits.

In free market economies, the providers of logistic services enjoy being relatively free from the constraints of the law. This means the providers can generally set their own pricing structures. However, some providers take advantage of this situation. Other areas lack the same freedom and they have to follow the set tariffs that are set by the government.

Firms providing logistic services can influence the pricing they ask. They will put together a tender that will show their pricing schemes, the costs and the value of the services. Negotiations can then be made based on this information. Long term relationships can be generated by offering fair pricing schemes. This is also useful for building a good reputation.

Saturday, 4 March 2017

Chit Chat: Retail Forecast 2017

 Retailers are set to enjoy increased sales and shoppers increase in confidence and begin spending more money due to the signs of wage acceleration and more job opportunities. This year is set to become more successful than 2016 but this does depend on how the economy grows.  Economists do suggest that an increase i n the Gross Domestic Product will be experienced by businesses and consumers.  The economy is being driven in a positive direction thanks to the increase in wages and employment. These increases will see more disposable money in consumers’ pockets.

Another area that will drive sales in 2017 is the housing market. This market is expected to increase further this year, even though it’s growing slowly. The lack of growth is being put down to the lack of supply. There is a lack of skilled workers that are required to build and develop housing as well as difficulties in gaining credit and the lack of building lots.

Both the positive employment and housing sectors will help consumers gain confidence and increase their spending. Confidence inspires spending as they feel stable. Banks are providing their support. Business confidence follows consumer confidence; increases in sales help businesses to concentrate on creating long-term plans.
The challenges being faced include:

  • Deflation of prices
  • The execution of ideas

Friday, 3 March 2017

What are the objectives of operative logisticians and practitioners?

 The objective of logisticians and practitioners concentrate on generating permanent benefits. They achieve this objective by putting the best solutions into practice. The individuals in this group are the plant managers and operators of the logistic systems and centres. Operative logisticians and practitioners mainly work for logistic service providers.  They require the following skills:
  1. Practical thinking
  2. Knowledgeable of techniques and equipment capacities
  3. Aware of the capacity of their sites and systems
  4. Ability to organise processes
  5. Be able to make decisions under all circumstances
Logistic managers have the role of managing operations or the network and therefore are practical logisticians. They are the ones that are responsible for managing a sustainable competitive advantage of the firm they work for.
The practitioners need to perform the following tasks:
  • Schedule orders
  • Operate computers
  • Take the lead of business plans and ensure they’re successful

Thursday, 2 March 2017

What are the objectives of implementing logisticians and planners?

Implementing logistics mainly aims at gaining practical benefit through:
  • Development
  • Planning
  • Organisation
  • Programming
  • Machine set up
  • Sites
  • Networks
  • Systems
The implementing logisticians are made up of project managers and the planners from the following firms, contractors and suppliers of:
  • Conveyor
  • Transport
  • Storage
  • Logistic systems
  • Developers
  • System engineers
  • Control systems software
They all need to have skills in constructive thinking, be organised and knowledgeable in operative logistics. They’re often held to account for any execution failures by the company and not often thanked for success, which falls to the consultant or the client for their forward thinking.

Wednesday, 1 March 2017

Royale Int'l directs Taobao shipments for 7-Eleven on cloud

Royale International, a Hong Kong-headquartered global express delivery services company, has solved 7-Eleven's unique parcel inventory challenge using a combination of Amazon Web Services cloud services. 


What are the objectives of strategic logisticians and theorist?

 Strategic and theoretical logistics have the following objectives focused on the contribution and practical use:
  • Analysis of basic principles of logistics
  • Developing logistic strategies
The group of strategic and logisticians is made up of system analysts, academics, and consultants. There are several prerequisites to possess to be in this group:
  • Analytical thinking
  • Creativity
  • Being open to new ideas
  • Judgement
They need to be knowledgeable about the strategies of logistics and business administration. Skills in algebra, arithmetic, probability and statistics along with operations research are also required. Theorists are generalists and they play an important role in the practical use and benefit of models for logistics.