Logistics
Integral logistics is the set of techniques and means destined to manage the flows of materials and information, its fundamental objective being the satisfaction of the needs in goods and services of a client and / or market, in quality, quantity, place and time; maximizing customer satisfaction and response flexibility, and minimizing response times and costs.
Logistics groups the activities that order the flow of materials, coordinating resources and demand to ensure a certain level of service at the lowest possible cost.
It was to a large extent, the lack of coordination between sales and production, which led to the emergence of logistics in companies, as a means of resolving the conflict between these activities, serving as a necessary link between the demand for the market and the company's production activities.
Two of the most cost-absorbing in logistics activities are inventory and transportation. Experience and the studies developed clearly indicate that each one of them represents, approximately, from half to two thirds of the total logistics cost. While storage adds “time value” to the product, transportation adds “situation value”.
Today transport as a logistics activity is an essential factor for any company, since none could operate without anticipating the displacement of its raw materials and / or its final products.
The other crucial issue is given by inventory control, since it is generally not feasible or practical to produce and sell instantly or immediately. This intermediate step between the point of production and demand, aims to maintain the availability of goods for the user, while providing the necessary flexibility to the production and logistics areas in their search for manufacturing and distribution methods. more efficient.
The last key activity is order processing. Compared to transport and storage costs, order processing constitutes a significant part of the total time for receipt by the customer of the ordered products or services.
Within business management, logistics is vital for almost all areas that cover it, be it cost control, the level of employment or the fulfillment of the general objectives of the company. Only in the last few years have logistics activities become important functional areas.
Increased international competition, shortages of key raw materials, and productivity problems have led to a greater emphasis on logistics.
It is within this framework where the competitive pressures of an increasingly globalized economy move in the sense of incorporating logistics as a strategic component within the organization; The best way to achieve excellence in logistics at the service of the company is by implementing kaizen in companies.
Kaizen
Kaizen as a system aimed at continuous improvement in quality levels, productivity, costs, satisfaction, cycle times, and reaction times, through the combined management of TQC, Just in Time, Total Productive Maintenance, activity of small groups, the suggestion systems and the deployment of policies, allows to achieve the elimination of waste, standardize operations and achieve an optimal labor discipline.
Kaizen must be focused on the effects of reducing logistics costs and improving its services from two points of view:
- Through the application of kaizen in all areas of the company and its effects on logistics, and through the application of kaizen in logistics operations.
Regarding the application of kaizen in the company and its effects on logistics we have:
The application of TQM and its effects in reducing the levels of failures and defects generates, on the one hand, a lesser need to have reserve or security inventories to deal with quality problems in production. And on the other hand, the lower level of waste implies a lower acquisition of supplies for reserves and / or reprocesses. This means lower transportation and storage costs, as well as lower administrative costs to order and manage supplies.
The implementation of the Just in Time production system brings with it lower inventory costs, a reduction in the total cost of inputs, significant improvements in relationships with suppliers, a reduction in the number of suppliers and parts, a drop in the levels of inventories of raw materials, products in process and finished products, and reduction in order costs and inventory control.
Total Productive Maintenance leads to lower levels of machine stoppages, as well as significantly reducing failures due to malfunctions in machines, equipment and facilities. This generates fewer needs for safety inventories, as well as radically reducing the need for supplies for reprocessing activities.
In the same way, the aforementioned aspects can and should be applied specifically to logistics processes and activities. For this, the best way to control and improve, both the cost and satisfaction levels, is by applying Statistical Process Control (SPC), which allows a much better perspective or vision of the evolution of the different indicators of the company, allowing to know both the capacity of the processes to generate logistics services at low cost and with an excellent level of internal and external satisfaction, as well as knowing the average cost and the average level of satisfaction, detecting in time deviations and effects on the management changes.
The implementation and full use of Kanban (system for the replenishment of inputs or components by dragging) has achieved significant reductions in inventories, transportation, and a drop in all costs related to excess inventories.
The objectives of the Just in Time approach applied to procurement are:
- The delivery of components and parts just in time to the user, for manufacturing or assembly. Elimination of all waste generated by activities that do not add value to the product in the process. Ensuring that transactions are made with a minimum of complexity.
Just in Time and provisioning
The Just in Time concept is a company-wide philosophy or culture focused on the systematic elimination of waste through logistics and manufacturing functions. Characterized by operating with low levels of inventories and with the highest levels of quality and customer service.
All the basic functions of a company are affected by Just in Time. In the logistics area, Just in Time generates totally new relationships with suppliers and carriers, requiring new approaches to the location of distribution centers and inventory management.
The Just in Time (JIT) approach has affected activities related to both internal and external material flows. Just in Time should begin by first applying it in the plant itself, with a single control of the system by the user, and then extending it abroad.
The essential reasons why it is recommended in the first place to acquire an internal experience in the use of the JIT is given by:
- The training of suppliers is one of the fundamental activities for the successful application of external JIT, which can hardly be achieved without first having internal knowledge and experience. JIT planning is triggered starting from the needs of the end customers. The need for frequent deliveries of products and supplies with guaranteed quality is only possible to exploit when the internal processes of the company guarantee a high level of quality. Based on the pull, the activation of the production and supply processes, it is necessary to be waiting for the signal given by customers and consumers.
The preparation of logistics functions for the implementation of the Just in Time concept must address aspects related to strategy, organization, operations and systems.
Kaizen Logistics
Kaizen Logistics focuses, according to the philosophy and methodology described above, on the aspects concerning:
- Reduction in the number of suppliers Shorten delivery times or times Reduce costs related to supply Achieve a "just-in-time" supply. Improve transport quality. And, achieve a level of excellence in terms of information networks.
Regarding the number of providers, it is assumed, according to the Just in Time system, the existence of a limited number of providers that must be integrated into the operating systems. Similarly, the TQM provides for the union with the most important suppliers of the company and the limitation of their number. Both strategies are based on guided supplier growth. Very often, this requires assistance, proper training and consulting, all of which would be totally impossible to do with a very large number of providers.
For this reason, it is necessary to significantly reduce the number of active suppliers by selecting those that, due to their capabilities and characteristics, best suit the structure of the company, assessing the total cost, their potential for improvement, and their desire to follow the long path of collaboration.
Regarding the supply period, it notably affects the level of supplies stock in the same way as the planning horizon. Reducing the supply period is vital, conforming this period by:
- The time to define the order. Time to issue the documents. The response time of the supplier. Transportation time. Time of receipt and inspection. Time to send the merchandise again (to departments, chains, etc.).
All these times can be reduced by adopting Kaizen / Just in Time. Thus, the stage for defining the order is practically eliminated thanks to the application of Kanban and teleinformatics (IT - EDI). Document issuance is reduced by adopting blanket orders, which cover long periods (example: six months, one year or more).
Order confirmation is replaced by information mechanisms that automatically confirm the order. The physical response of a supplier is guaranteed by automatic steps (physical steps, not procedures) such as the kanban system or synchronized supplies.
In terms of transportation time, it is reduced thanks to the use of various methods, such as collection centers, customer or supplier circuits, or sequential supply. Coordinated or combined transport (truck-train; ship-truck; airplane-truck, etc.) constitutes an important system to reduce times when dealing with long distances. The proximity of the supplier always assumes a primary importance within the just in time work scheme.
Receipt and inspection times, as well as re-delivery times, are notably reduced and even eliminated because a supplier that guarantees the quality of its product can send it directly to the customer's production lines.
The expenses related to supplies are made up of:
- Negotiation costs Cost of issuing documents Dispatch costs Transport costs Management costs of received goods Costs of inspection of incoming goods Shipping costs to departments
Through the implementation of just in time and TQM, the aforementioned costs are modified inasmuch as:
- The frequency of negotiations is drastically reduced thanks to the open order concept. The need for negotiation comes only in the case of new products or substantial changes that affect pre-existing products (requiring the revision of materials, production systems, or equipment). The issuance of orders can be considered canceled because only the orders are used In the JIT delivery system for small batches and frequent automatic deliveries (weekly, daily, or more than once a day) the delivery requests are made automatically through kanban or other means). The term dispatch loses its meaning. The cost of transport is the one that, perhaps, suffers the least change, but it is possible that it is subject to some reduction.The accounting costs related to the receipt of goods and supplies is reduced by adopting an automatic billing system at the end of each month, while the costs of inspection at the reception and shipping disappear completely if the supplier delivers directly to the lines of production.
Conclusions
Kaizen has become in the current era of globalization and constant acceleration of competitiveness, a fundamental need for companies that intend to ensure their permanence on the scene in the medium and long term.
No sector, function, activity or process of the company can, nor should it be left out of continuous improvement. This implies that a function that has become transcendental in companies, such as logistics, cannot be left out of the continuous improvement of its own processes and performance levels.
A company that is forced, whether it wants to or not, to compete with global suppliers has no choice but to radically change its management paradigms, quickly adapting to changes in the environment.
Bibliography
- Kaizen Strategy - Mauricio Lefcovich - www.gestiopolis.com - 2003 Kaizen Explained - Mauricio Lefcovich - www.sht.com.ar - 2003 Kaizen and Six Sigma. Two sides of the same coin - Mauricio Lefcovich - www.degerencia.com - 2004 Supply logistics - Prida Romero and Gutiérrez Casas - Editorial McGraw Hill - 1996 The Just in Time System and the flexibility of production - Tomás M. Bañegil - Editorial Pirámide - 1993
