This article does not intend to establish methods for the administration of the supply chain, much less impose structures for the management of logistics, it simply seeks to share some experiences and points of view with the aim that tomorrow they help in decision-making. This article also exemplifies how information technology supports the management of said chain. In addition, definitions of logistics and its objectives, supply chain management and its elements, graphics and bibliographic sources are presented that complement the topics discussed.
1. Introduction
Year after year the administration of the supply chain has become more important in the globalized world. Day by day the competition becomes more arduous and only companies that achieve significant differences against their competitors aspire to increase their share in the market or simply to survive in it. Good management of the supply chain and the use of information technology help to achieve this purpose, but it is not an easy task, since this chain encompasses many and diverse activities.
Supply chain management is the main topic in many industries with a strong understanding of the importance of an integrated relationship between customers and suppliers. This stewardship has become the path to improving competitiveness by reducing uncertainty and improving customer service.
One of the main actors in supply chain management is the logistics department. But what is logistics? Logistics is officially defined as the process of planning, implementing, and controlling the efficient and cost-effective movement and storage of raw materials, work in progress, and finished goods and related information, from the point of origin to the place of consumption, in order to act according to customer needs. It is quite simply the science (and art) of getting the right products to the right place in the right quantity at the right time to meet customer demands."The United Kingdom Institute of Logistics" defines it more simply as "the placement of resources in relation to time." It has also been defined as "moving and stationary inventory management." The discipline of marketing includes, storage, distribution and management of information. It also includes international supply chain management and value-added / pre-retail services.
Therefore, the logistics department is in charge of carrying out these activities. This department can be structured as large or small as defined by the administration or as the department itself wants to be.
Interdepartmental boundaries are defined by the capabilities of its members. The capacities of the members of the departments translate into solutions for a greater number of problems and / or in the development of new working methods. Consequently these departments become efficient and effective. This efficiency / effectiveness allows the Management to assign more tasks to these departments and, therefore, give them greater importance and participation in the structure of the company. These efficient / effective departments generate added value and competitive advantages, thus going from being operational departments to strategic departments.
There will be companies where the logistics department is simply the shipping manager. At the other extreme, the logistics department may be responsible for the entire supply chain, being in charge of estimating demand to customer service through supplier selection processes, quotes, purchases, expediting, transportation, etc. reception, costs, warehouses, production, shipments, quality, etc.
Studies, techniques and software have been developed for many years to facilitate these tasks, plus the infinite range of existing clients, products and services do not contribute to creating a “kitchen recipe” applicable to all possible scenarios. However, four concepts are fundamental for the good performance of the supply chain: good administration, common sense, attitude and commitment to customer service.
2. Purpose of the Supply Chain
Regardless of the definition, how big or small the logistics department, the market type, the type of company and the computational packages created or to be created, there is a simple but concise objective for that department and the supply chain: supply the necessary materials in the quantity, quality and time required at the lowest possible cost in order to provide better customer service.
Sometimes I am asked which of these four requirements is the most important, and my answer is always the same “All four are equally important. The absence of any of them will affect the performance of the supply chain and therefore affect customer service. The four requirements should be defined as must's and not as should's. In the correct definition and understanding of this chain by all the members of the company, it will ensure the good performance of the supply chain of the companies that aspire to differentiate themselves and remain "
From the point of view of administrative systems, customer service is what? and the quantity, quality, time and costs are the How's? Certainly some companies will be able to survive with the absence of any of these requirements but they will have a disadvantage against those who do not have them and will have to assume the possible consequences.
Let's compare these four requirements with respect to customer service, costs, and competence:
- Quantity: For example, if the client occupies 500 kg of steel and we only have 200 kg and it is a client with whom I have a commitment, I will be affecting its supply, and / or I will give the opportunity to my competition that my client know it. If my client occupies 500 Kg. And I have 1,000 Kg. Then I have surplus inventories which will increase my financial cost, my expenses in inventory administration and, in addition, I will have capital invested in a material that I do not occupy and that this capital may need it to buy another material that I do use. Quality: If the material has a lower quality than what I am offering and to whom I am selling it is a client with whom I have a commitment, then I will be affecting their supply, and / or in a short term I will give my competition the opportunity to let my client know about it. If the material has a higher quality than what the market is willing to pay, surely I will not displace the material or my utility will be low. Weather: If the material arrives after what is required by the client with whom I have a commitment, I will be affecting its supply, and / or I will give the opportunity to my competition for my client to know it. If the material arrives earlier than required, I will have excess inventory which increases my financial cost, my expenses in inventory management and I will have capital invested in a material that I do not use and that I may need this capital to buy other material that I do use. cost: We will call cost the total integrated cost of the materials or finished products at the point of sale. Having a high cost automatically eliminates me from the market and more in a globalized world where we all have access to suppliers from all over the world. If the cost is low, it will be necessary to consider the other three requirements since it is useless to have a low cost if I do not have the product in time and quantity (On some occasion a supplier asked me why I did not buy if he had the lowest price low of the market? And I replied "you can give me the material but if I don't have it here it won't work for me"). With quality it is the same, the fact that the product does not have the required quality is like not having it.
With the previous examples we want to show that when a particular supply chain is analyzed, the four requirements mentioned above will have to be evaluated since all are essential and the absence of any affects the good performance of the company.
The quantity, quality, time and cost are dynamic requirements as demand is not constant, the quality requirements are increasing, delivery times are variable and costs vary by internal and external factors. This dynamic process makes administration difficult, so the use of information technology is essential to speed up decision-making, reduce response times and uncertainty. The Internet has been and will be a basic tool in this process since it shortens distances and times, offers the reach of more suppliers and customers and helps in reducing costs.
Companies must learn to integrate information technology and technological tools in our decision-making processes, both operational and strategic. Tools are instruments designed to make our work easier. Their performance depends both on the capacity of the tool and the user's ability to use it. An example is the Excel application. I take the world has used it more not all of us take advantage of all the virtues of this package. The correct use of the tool is both an obligation of the user by showing interest and commitment in its use, and of the company by training the user in said application.
3. Elements of the Supply Chain
In a very general way, the supply chain is made up of five elements: Suppliers, Transport, the Company, the Clients and the Communication between them (figure 1). The rapid interaction between these elements is essential and generates a competitive advantage for the company that knows how to use it to its advantage.
Figure 1. Elements of the Supply Chain
4. Internet, Information Technology applied to the Supply Chain
The fast interaction mentioned in the previous section can be obtained through the use of the Internet, Intranet and Extranet. Figure 2 graphically shows the supply chain process and support activities from an Internet perspective. Work that pays special attention to the time factor since it is a key element in decision-making, deliveries and responses.
The application of information technologies in concepts such as electronic funds transfer (EFT), the electronic data interchange (EDI) system, electronic cards for customers, electronic mail, e-bids, electronic catalogs, shared inventories, electronic communication with suppliers etc. They have helped to achieve competitive advantages in different organizations. These systems help reduce costs and establish technological barriers for potential competitors.
It should be noted that the complexity of the systems implemented for the administration of the supply chain DOES NOT guarantee its efficiency. In my opinion, these systems should be as simple as possible in order to increase the number of potential users, facilitate their integration into other systems and minimize their maintenance. They must also be flexible since in an environment as dynamic as the supply chain, it is necessary to evolve and modify the systems along with it.
These systems are classified as Decision Support Systems (DSS) and may be designed in-house with the aim of considering all the characteristics that the members of the logistics department and other areas consider relevant. The members of these departments must also be multifunctional and never lose sight of the objectives of the company since in many cases the departmental interests contradict each other and lose sight of the final objective of the business.
Resistance to change for the use of state-of-the-art systems such as the Internet will be an important factor to take into account in which the human resources department, the management and the management staff should apply since the success of the systems is closely linked to the attitude of the staff for its implementation and proper use.
Figure 2. View of the business supply chain under the context of the Internet Charu Chandra; Sameer Kumar. "Supply Chain Management in Theory and Practice: A Passing Fad or a Fundamental Change?" Industrial Management & Data Systems, Volume: 100 Number: 3 Page: 100 - 114, 2000
It is unquestionable that the growth of the Internet is a significant phenomenon. Not only is there an exponential growth in the exchange of goods and services over the Internet, but the Internet has also changed the way in which information can be accessed and used.
The Internet has made a fundamental change in the nature of supply chain information within organizations. Internet technology has also changed the visibility of processes in the supply chain, understanding visibility as information about processes and the ability to interact with these processes, being able to affirm that all partners in the supply chain have to be taken into account. account to reap the business benefits offered by new technology.
5. Conclusions
We can conclude that the proper administration of the supply chain and the use of information technology will give competitive advantages to companies seeking their development in globalized markets. The use of the Internet, Intranet and Extranet is an example of the use of this technology, however it requires a continuous and dynamic process of renewal since the requirements and elements of the supply chain are changing over time and the firm commitment of the company. Management and its staff must present themselves to achieve this end.
We insist that the elements and concepts that make up this supply chain are many and diverse, which complicates its administration. Therefore, companies must rely on information systems and information technology to manage said chain.
6 Bibliography
Charu Chandra; Sameer Kumar. "Supply Chain Management in Theory and Practice: A Passing Fad or a Fundamental Change?" Industrial Management & Data Systems, Volume: 100 Number: 3 Page: 100 - 114, 2000
"What is Logistics?" University Association of Logistics, 2004
Daniel Cohen and Enrique Asin; "Information Systems for Business" McGraw Hill. 2: 43-53 (2003)
Sarmad Alshawi. "Logistics in the Internet Age: Towards a Holistic Information and Processes Picture". Logistics Information Management, Volume: 14 Number: 4 Page: 235 - 242, 2001
