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Process management and business logistics improvement

Table of contents:

Anonim

The current environment is characterized by a high rate of renewal, change and competitiveness, where organizations must continually improve their management systems to survive. Business logistics is prevailing as the new factor of competitive differentiation. The logistics system is made up of a "network of autonomous and coordinated units that guarantee the satisfaction of end customers in terms of time, quality, quantity and costs demanded".

management-by-processes-improvement-logistics-business

Customer service and transportation are two key activities of the logistics system. Process management in the organization constitutes a tool for the improvement and development of business logistics activity, contributing to the maintenance of its mission and the achievement of better effectiveness, efficiency and competitiveness in the performance of its functions. The methodology to be applied consists of the various steps that begin from the identification of the key processes of the organization, the elaboration of the Process Map, and ends with the proposal of indicators to measure performance.

Process management as a tool for improving business logistics.

Logistics definition.

The current environment is characterized by a high rate of renewal, change and competitiveness, where organizations must continually improve their management systems to survive.

Until a few years ago, no one imagined that the success of an organization depended on the ability of management to integrate its business relationships. Still less, that the businesses not only competed as autonomous entities, but also as part of the production and marketing chains.

In this sense, new management styles have been developed in the field of logistics, mainly in the most developed countries, since it constitutes an essential element in competitiveness.

Logistics Management means a good administration of the resources that the company needs to be able to operate efficiently and effectively and whose final product must reach the consumer in the agreed time and quality.

The logistics concept that is applied in companies is characterized by playing a role of integration of activities that have to do with ensuring a flow aimed at supplying the customer with the products and services that they demand at the time they demand it, with the quality demanded and at the cost you are willing to pay. For this, it focuses its activity on coordinating the following activities in order to ensure the flow that guarantees a high level of customer service and cost reduction.

In today's market, where globalization is developing rapidly under the influence of information and communication technologies, logistics is establishing itself as the new factor of competitive differentiation. That is why it is important to know how logistics is in Cuba today.

The differences that exist between Cuban companies and those of other Latin American countries make the path of accumulating their own experiences unfeasible to reach competitive levels of logistics.

From 1990, with the collapse of the socialist camp and later with the disappearance of the USSR, in a very short period of time, Cuba lost its main trading partners with whom it had maintained a stable exchange for almost three decades, in a framework of mutual benefit.

  • The scarcity of resources, the paralysis of industries and the lack of transportation, force the country to face new realities. From then on, a group of measures are taken that gradually act and produce changes in the economy and society.

The current context of companies, characterized by the scarcity of material resources, requires them to multiply their efficiency and effectiveness as a means of supplying this situation. In this case, the analysis of logistics processes plays an essential role in organizations, with the aim of detecting where the main difficulties lie and solving critical problems.

In the specific Cuban scenario, the presence of two constant parameters such as scarcity and, sometimes, the absence of material and financial resources, has been a difficulty for years and the logistics scenario is also affected by the uncertainty of the purchasing markets. and sale. It seems necessary then, to reorganize the schemes of the companies of our country to operate in similar environments and to introduce strategies that tend to guarantee that the goods are available when and where customers are ready to buy them in quantity and with the agreed quality, at the lowest possible cost.

That is to say, it requires a logistics focused on the client aimed at satisfying their demand. In this case, it is essential to consider that the client is the most important person for an organization, who ultimately depends on him, so he must be able to satisfy all his expectations with the aim of increasing the competitiveness of the company, present aspect in Business Improvement, increasing the level of customer service and decreasing costs.

Overview of business logistics.

Logistics systems and logistics activities.

Logistics, as an integral process, dynamically and concatenates links the Supply, Production and Distribution subsystems.

The design of a logistics system in an organization includes the implementation of the processes of Planning, Procurement, Production, Distribution and Customer Service. In order to integrate all these processes, it is necessary to work on the solidity of the flows, that is, to decide on the definition of their distribution networks, the location of their warehouses, the way of managing their inventory and how to join all these parts with the actors in the Supply Chain (Suppliers, Distributors and Customers). And through the development of transport management.

Dr. Martha I. Gómez Acosta and Dr. José A. Acevedo Suárez, for their part, define the logistics system as "the network of autonomous and coordinated units that guarantee the satisfaction of final customers over time, quality, quantity and costs demanded ”.

Taking into account the aforementioned, for a better study of the logistics system it is possible to group activities through the so-called logistics chain, which responds to the following functional classification:

  • Supply Logistics or Supply Logistics. Production Logistics. Distribution Logistics. Return Logistics.

This fourth phase is related to the flow of materials in the opposite direction, this means that this phase establishes the new use that will be given to final products and waste once its life cycle has ended.

Packaging that can be reused should also be considered.

Logistics activities.

Dr. Maritza Ortiz Torres relates in her doctoral thesis the following key and support activities that are part of logistics, which is considered very useful for the development of this work, fundamentally for the elaboration of the map of entity processes under study..

  1. Customer service.

It is a very important factor in competitiveness today. It has been proven that the success of a company can be in customer satisfaction, so all functional areas of the company must be prepared to achieve it.

  1. Transport.

It is related to the movement of the product through the entire logistics chain. It must be carried out on the basis of criteria of cost, speed, availability, frequency, reliability and capacity of the means of transport to adapt to the characteristics of the merchandise.

  1. Inventory management.

It is of vital importance within logistics management, since it is not possible to produce and sell immediately. This intermediate link between the time of production and demand, aims to maintain the availability of the product when the customer requests it.

  1. Processing of orders.

It constitutes an important part of the total time of reception, by the client, of the products or services requested. Includes receipt of order, shipment of customer order, invoice and receipt of payment. The distribution is carried out from the order of a client and it is essential to shorten the time that elapses between the request for an order and its payment.

Support activities.

  1. Storage, Merchandise management, Purchases, Information management.

Due to its importance in Cuban business activity, the main concepts of two key activities are summarized: customer service and transportation.

Customer service.

Customer service is a source of competitive advantages for the organization through providing competitive advantages to customers. A good design of customer service depends on the design of the logistics system of the company and this in turn has as its ultimate objective the fulfillment of the service parameters, since the best measure of any logistics system is compliance with the Service Level at Client.

It can be defined as:

  • A set of activities that include all areas of the business, which combine to provide an invoice for the company's products, in a way that is perceived as satisfactory by the customer and that advances the company's objectives.

The important thing is that the focus on the customer is present in each of these concepts. The fundamental characteristics of the services are the following:

  • They are not materials, they cannot be previously inspected or stored. They are facilitated simultaneously with their elaboration. Sometimes the client takes an active part in the provision of the service in a period of time and fulfilling quality requirements based on the client's perception.

What is a customer?

  • It is the most important person or entity with which a supplier is related. It is to whom the articles or services that the supplier owns are delivered, sold or distributed.

But on the other hand, if a customer has found the product they were looking for or not, they receive poor attention, not only will they stop visiting us, but they will most likely also speak ill of us and tell of the negative experience they had on average 9 to 20 people depending on their degree of outrage.

If we add to this the fact that the competition is increasing and the products offered in the market are increasingly equated in quality and price, it is possible to affirm that today it is essential to provide good customer service if we want stay competitive in the market.

Control of customer service processes

Any company must maintain strict control over internal customer service processes.

It is verified that more than 20% of the people who stop buying a product or service, give up their purchase decision due to failures of information of attention when it is interrelated with the people in charge of assisting and motivating the buyers. Given this reality, it is necessary that customer service is of the highest quality, with information, not only has an idea of ​​a product, but also the quality of capital, human and technical with which it will establish a business relationship.

Transport logistics.

Transport is par excellence one of the fundamental processes of the logistics strategy of an organization, this component is of priority attention in the design and management of the logistics system of a company, since it is usually the individual element with the highest weight in the consolidated of the logistics costs of most companies.

International logistics is included within the international trade area and its terms of transport, insurance and risks are set by the Incoterms, International Commercial Terms or International Trade Terms.

Incoterms are divided into general (land and air) and maritime transport. Logistics and maritime transport is the most used since it allows higher volumes of cargo. The Incoterm most used in this regard are FOB (free on board) and CIF (cost, insurance, freight).

Currently, Transportation has a strong impact on the economy. The energy consumption of this sector is a factor that undoubtedly conditions its economic importance and, as we have already commented, it is a key factor in determining the price of the different goods and services that are marketed in an increasingly market. demanding.

A transportation system is a set of elements that, acting together, allow transportation within a Supply Chain. These elements, even when they are often not perceived in their entirety because they do not all belong to the same link in a certain Distribution Channel, in practice they must always be present. However, the fact that some of these components appear or not in a certain link, makes the functions that each of the links of a Supply Chain have with respect to them, be different.

Process management as a tool for improving logistics management.

Logistics management appears differentiated within the organizational structure of the company and is subordinated to the highest level of management.

The logistics management to exercise its integrative function uses advanced forms of work, such as: teams or work groups (with the participation of the rest of the departments), search for inter-functional consensus, task teams, matrix management, etc.

The modern business world requires that organizations, regardless of their size, sphere of action and type of property, carry out their activities efficiently and effectively; as conditions, not sufficient, but necessary to manage to stay in the business in which they participate. However, to achieve this at present, it is required, as a new paradigm, that entities be managed following the process approach or more commonly known as process management.

It is worth noting that Process Management is the philosophy on which modern approaches to Quality Management are based, that is, ISO 9000: 2000 and Total Quality. For this reason, it can be affirmed that Process Management, more than a cognitive curiosity, is an imperative need for organizations that seek success and competitiveness through quality.

  • Process definition.

Of the process definitions, collected in the specialized literature, one of the most logical, simple and current is what conceptualizes it as "a sequence of activities that aim to achieve some result, generally creating added value for the client" (Evans and Lindsay, 2000: 341).

Figure 1: Processes in the company.

Processes in the Logistics Company

Source: Guide to process-based management. Institute of Andalusia. Year 2000.

Another interesting definition of process is the one that refers to “a process involves the use of an organization's resources to obtain something of value. Thus, no product can be manufactured and no service can be supplied without a process, and no process can exist without a product or service ”(Krajewski and Ritzman, 2000: 89).

CLASSIFICATION OF PROCESSES.

The first thing worth noting is the fact that there is no single way to classify the processes, however Drs Zoe and Manuel Pozo accept and share as valid those indicated here.

By the scope in the organization:

  • Business. It is all that process that in its execution involves several organizational units of the entity. In itself or as a decomposition of a business process, it develops or has its beginning and end within a single organizational area. Unitary: It is an elementary activity carried out at a lower organizational level than the functional one.

Due to the impact on the final customer:

  • Keys, basic or fundamental: They are those that express the corporate purpose and reason for the organization. They are the ones that identify and distinguish the entity. They concern various areas of the company and have a direct impact on the external client, creating value for them. They are those who directly contribute to make the product or provide the service. From them the client perceives and values ​​the quality of support or support: They are in charge of providing the organization with all the resources (material, human and financial) and creating the conditions to guarantee the successful performance of key, basic or fundamental of the entity.Critical processes: Are those processes that, being relevant to the organization, that is, key, show poor performance in relation to the quality with which they are provided to customers.

Business diagnostic tools. There are many ways to diagnose the main difficulties of the different processes of a company. In this research, a methodology for the analysis and improvement of the processes will be developed, which is supported by the use of business diagnostic tools such as: the opinion of the experts through interviews, checklists and statistical analysis of the same as well as the economic, financial and logistical costs analysis of the entity.

Methodology to develop the analysis and improvement of processes.

The methodology presented here constitutes the result of the practical experience of applying it in a group of selected companies and shown in the work carried out by Dr. José Manuel Pozo Rodríguez and Dr. Zoe Rodríguez Cotilla. of the Department of Business Sciences in the event of the 42 Anniversary of the Studies of Economics. Which presents in the following aspects to develop:

  1. Identification of the key processes of the organization. Elaboration of the Entity Process Map. Preparation of the process graphs. Analysis of the processes. Improvement proposals. Preparation of the control graphs. Proposal of indicators to measure the performance of the improved process.

Identification of the key processes of the organization.

The identification of the key processes of the organization has the purpose of defining or specifying which are the processes that determine the entity's reason for being, that is, to point out those processes that support the mission of the organization. To comply with this first step, the participation of the board of directors, specialists of the entity and some employees who know the organization in depth is essential.

Preparation of the Process Map of the entity.

Process Maps are the simplest way to represent processes in an organization. Through them, the raison d'être of the company is represented graphically. They are an integrated vision of the activities that the company needs to carry out to fulfill its objectives and satisfy the customer. They also make it easier to identify difficulties and plan new strategies.

Figure 4: Process map.

Source: Guide Book for process-based management. Institute of Andalusia. Year 2000.

As you can see, the Map begins with clients, those who have expectations regarding the organization and ends with clients, since they hope to satisfy their needs once they receive the entity's product or service.

Preparation of process charts.

To describe the activities of a process, the so-called Process Diagram is used. This facilitates the interpretation of the activities as a whole through the visual perception of their flow and sequence, from their entrances to the exits. To describe them, it is recommended to analyze the following aspects:

  1. Name of the process Responsible for the process Scope of the process Inputs of the process Outputs of the process Operations for carrying out the process Responsible for carrying out the operations Records associated with each operation Responsible for approval Operations to be carried out on the operations of the process Responsible for carrying out the inspection Criteria for acceptance or rejection Records associated with carrying out the inspections

To elaborate the representation of the flow diagram or processes, there are various conventions such as the so-called analytical course, called by some authors, a graph of the process flow.

The information that results from developing the process charts is usually summarized in a table whose typical format is as shown below:

ACTIVITY NUMBER

TIME MINUTES

DISTANCE (FEET)

OPERATION

TRANSPORT

INSPECTION

DELAY

WAREHOUSE

DESCRIPTION OF THE STEP OR ACTIVITY

Process analysis and improvement proposal.

Once the process charts of each of the sub-processes that make up the key processes of the organization have been drawn up, their analysis is carried out in order to identify possible areas for improvement

Preparation of control charts.

To nourish the information offered by this graph, the Process Sheet is included, which can be defined as the information medium that aims to describe the relevant characteristics for the control and management of the process activities. The information to be included in a process sheet can be diverse and must be decided by the organization itself. Some elements that must be included are:

. Mission or Objective.

. Responsible for the process.

. Scope of the process.

. Process indicators.

. Documentation

. Means.

Proposal of indicators to measure the performance of the improved process.

The indicators to measure the performance of the improved process will be defined depending on the type of process and the characteristics of the good or service obtained as a result of said process; thus, for example, indicators can be defined according to the saving of time or the decrease in the units or the defective production volume.

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Universidad de Oriente "The relevance of logistics in the current Cuban context". 2010 CubaThompson, I, Comment by Willy Alejandro Ruiz Vilchez - From: Peru Sent on 06 / August / 2014,14: 18: 04 pm (access date February 7, 2016) https://www.significados.com/logistica / Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012com / ¨Means and transport management¨.2010 (access date February 7, 2016) Ortiz Torres, Maritza Doctoral Thesis Chapter I Procedures for inventory management with independent demand in commercial and service companies. pages 18-20.2004 CubaPozo Rodríguez, JMy Rodríguez Cotilla, Z Considerations and experiences about the management by Processes in the event of the 42 Anniversary of the Studies of Economy. CubaValdés Ferrer, D (CV), Hernández Rodríguez, N, R. 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Universidad de Oriente "The relevance of logistics in the current Cuban context". 2010 CubaThompson, I, Comment by Willy Alejandro Ruiz Vilchez - From: Peru Sent on 06 / August / 2014,14: 18: 04 pm (access date February 7, 2016) https://www.significados.com/logistica / Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012Maritza Doctoral Thesis Chapter I Procedures for inventory management with independent demand in commercial and service companies. pages 18-20.2004 CubaPozo Rodríguez, JMy Rodríguez Cotilla, Z Considerations and experiences about the management by Processes in the event of the 42 Anniversary of the Studies of Economy. CubaValdés Ferrer, D (CV), Hernández Rodríguez, N, R. 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Universidad de Oriente "The relevance of logistics in the current Cuban context". 2010 CubaThompson, I, Comment by Willy Alejandro Ruiz Vilchez - From: Peru Sent on 06 / August / 2014,14: 18: 04 pm (access date February 7, 2016) https://www.significados.com/logistica / Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012Z Considerations and experiences about the management by Processes in the event of the 42 Anniversary of the Studies of Economy. CubaValdés Ferrer, D (CV), Hernández Rodríguez, N, R. Universidad de Oriente "The relevance of logistics in the current Cuban context". 2010 CubaThompson, I, Comment by Willy Alejandro Ruiz Vilchez - From: Peru Sent on 06 / August / 2014,14: 18: 04 pm (access date February 7, 2016) https://www.significados.com/logistica / Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012Peru Sent on 06 / August / 2014,14: 18: 04 pm (access date February 7, 2016) https://www.significados.com/logistica/Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012Peru Sent on 06 / August / 2014,14: 18: 04 pm (access date February 7, 2016) https://www.significados.com/logistica/Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012

Annexes

Appendix 1

The definitions that have been found of the term Logistics in the literature have been dissimilar and that precisely in one way or another constitute the basis of current approaches.

Logistics concepts have varied over time. The first logistics concepts referred to the fact that when a merchandise is stored, transported and distributed, logistics is formed, later on, other more comprehensive definitions begin to be handled.

Table 1: Logistics concepts.

Author (year)

Concept
Spanish Logistics Center (1993) It is an activity that includes two basic functions: materials management, responsible for material flows in the supply of raw materials and components and in manufacturing operations, to the packaging of the finished product; and distribution management, which considers packaging, inventory control of finished products, through the handling, storage and transport processes until the product is delivered to the customer.
Council of Supply Chain Management Professionals (1998) It is that part of supply chain management that plans, implements and controls the flow and efficient storage of goods, services and information, from the point of origin to the point of consumption, to satisfy customer requirements.
Council of Logistics Management, (2000) Logistics is the process of planning, implementing, controlling the flow and storage of raw materials, semi-finished or finished products, and managing related information from the place of origin to the place of consumption, in order to satisfy the requirements of the clients.
Gómez Acosta & Acevedo Suárez (2001) It is the action of the labor collective aimed at guaranteeing the design and management activities of the material, informative and financial flows from their sources of origin to their final destinations, which must be carried out in a rational and coordinated manner with the aim of supplying the client with products. and services in the quantity, quality, terms and place demanded with high competitiveness and guaranteeing the preservation of the environment.
Ferrel et al. (2002) Important operational function that includes all the activities necessary for obtaining and managing raw materials and components, as well as the handling of finished products, their packaging and their distribution to customers.
Cespson Castro & Auxiliadora (2003) Process of managing the material and informative flows of raw materials, inventory in process, finished products, services and residuals from the supplier to the client, passing through the stages of supply management, production, physical distribution and residuals.
Torres Gemeil et al. (2003) Logistics is a set of techniques that in themselves have their own body, not being part of any specific one and using elements from different areas such as: mathematics, economic computing, business administration and others.
Franklin (2004) Moving the right goods in the right amount to the right place at the right time.
Lamb, Hair and McDaniel (2004) Process of strategically managing the flow and efficient storage of raw materials, inventories in process and finished goods from the point of origin to the point of consumption.

Source: Own elaboration from Betancour, O 2012.

Thompson, I, Comment by Willy Alejandro Ruiz Vilchez - From: Peru Sent on: 06 / August / 2014, 14:18:04 pm http://www.significados.com/logistica (access date 8-02-2016)

Betancour, O.: «Logistics. Conceptualization and current trends »in Observatory of the Latin American Economy, No. 161, 2012. Full text at

Acevedo Suárez JA, Diagnosis of the state of logistics in Cuba Industrial / Vol. XXV / No. 2/2004

Valdés Ferrer, D (CV), Hernández Rodríguez, N, R. Universidad de Oriente "The relevance of logistics in the current Cuban context". Cuba

http://www.historiade.jimdo.com/ ¨ Transportation means and management¨.2010

Ortiz Torres, Maritza Doctoral Thesis Chapter I Procedures for inventory management with independent demand in commercial and service companies. pages 18-20.2004 Cuba

Cespón Castro, R et al Volume III LOGISTICS Selected topics Chapter I Customer service pages. 12-38 2004 Cuba

Fernández Hatre, Alfonso, Quality in Service Companies. Center for quality in Asturias. 2000.

Calderon Neyra, Presentation Lima - Peru The importance of customer service Year 2002

Editorial Bruño: Economy for all - Peru ESAN: MARKETING COURSE - Perum access date 8-2-2016.

Alba Betancour, Osbel http://www.significados.com/logistica/2013-2016 Academic journal of economics Observatory of the Latin American economy with the International Standard Number.

Cespón Castro, Roberto ADMINISTRATION OF THE SUPPLY CHAIN. Manual for students of the specialty of Industrial Engineering. Cuba

Dr. José Manuel Pozo Rodríguez and Dr. Zoe Rodríguez Cotilla. Considerations and experiences about the management by Processes in the event of the 42 Anniversary of the Studies of Economy. 2004

Dr. José Manuel Pozo Rodríguez and Dr. Zoe Rodríguez Cotilla. Considerations and experiences about process management in the event of the 42 Anniversary of Economics Studies. 2004 Cuba

Thompson, I ISSN Serial Publications 1696-8352 Logistics Definition: 2012

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Process management and business logistics improvement