Currently, the most desired by any company or chain of these is to achieve a high NSC to attract and / or keep them, which is achieved only with high levels of efficiency and effectiveness. For an organization to be able to achieve an economy of an adequate level, it must achieve a good management of its activities in all its areas, among which the areas of logistics, quality, maintenance, production, among others, stand out. The markets are national and international while production can be concentrated in specific areas; good coordination, management and function of these is what can provide a bridge between these areas and the markets. In the areas mentioned there are tools which would be of great help to achieve a high NSC if they were used in SCM.
Customer Service Level
Several authors such as Blanding, Perrault & Russ to whom Ballou makes reference in addition to agreeing with them in his book “Business Logistics. Planification and control"; together with Gómez Acosta and Acevedo Suárez, Cespón Castro & Amador Orellana, Conejero González et al. (2004), agree in one way or another that customer service is the result of the integration of logistics activities, this being the activity that regulates the remaining activities, depending on the final result.
To be able to constantly serve the market, you must operate under an approach directed towards customer service. The establishment of these levels will always affect the cost of logistics (better and higher service, higher cost), being able to reach the situation that if the required level is very high or the services are very particular, the alternatives to provide Such services are so restricted that costs become excessively high.
To successfully develop a customer service strategy, it is first necessary for the company to recognize that customer service is one of the main pillars on which its objectives and policies should be based. This recognition must permeate all functional activities, in order to eliminate the effects of conflicts that may arise. To achieve this, it is essential to define a global customer service philosophy for the company, in terms of attitude, organization and responsibilities. This process implies that the only one who can initiate a program that benefits both the company and the customer is the service provider. However, there are two other important elements when implementing the designed strategy.The first of these is the customer, since it cannot be assumed that the customer is prepared to automatically accept what is being offered, even though it seems very good to the person offering it. The second element to take into account is related to the competition. In the business environment, an essential feature in most strategies is the ability to do better than the competition, and in many markets, customer service has become the key factor in marketing strategy.An essential feature of most strategies is the ability to do better than the competition, and in many markets, customer service has become the key driver of marketing strategy.An essential feature of most strategies is the ability to do better than the competition, and in many markets, customer service has become the key driver of marketing strategy.
This fact has been more clearly evidenced in those areas where there are hardly any differences in traditional competitive aspects, such as: product range, price and quality. Many people believe that customer service can provide the ultimate competitive advantage. Therefore, the logistics manager has to be able to identify:
- The impact of providing a certain level of service The actual needs of the customer The requirements necessary to achieve and maintain a competitive advantage.
For a company to be successful in implementing a customer service policy, it is necessary, first of all, to establish its key components. In doing so, it must be taken into account that there may be significant differences between those defined by the client and those identified by the company. Among the key components that can be considered are the following:
- Characteristics, quality and reliability of the product. After-sales service. Cost. Availability of the product. Response to orders. Delivery of the product on time. Seller attitude.
The next stage in the process of defining the customer service policy is to identify the relative importance of each key component. According to the Spanish Center for Logistics and Cespón Castro & Amador Orellana, an evaluation method has been developed that considers the exchanges that appear when the client is offered a range of alternative options. In this case, the customer is asked to express his preference for a certain range of combinations.
The final stage of the process of defining the customer service policy refers to the competition. When establishing the level of service, it is also necessary to establish a plan to improve it so that it functions as a feedback element based on the level of customer service in order to achieve continuous improvement in it.
Since productivity is one of the main drivers of any customer service strategy, a proper procedure must be used to recognize all opportunities that may exist to improve it in terms of logistics. Customer service can be closely related to productivity improvements, whereby you can achieve the same service at a lower cost, or a better service at the same cost, or a better service at a lower cost.
In today's competitive environment, customer service is extremely important, and companies that believe in this philosophy and put its principles into practice can reap huge benefits. It is necessary to have a structured approach that allows strategies focused towards this end. To satisfy this need, the Spanish Logistics Center (CEL) proposes a procedure that allows putting into practice all the aspects dealt with in this section, which is set out below.
Procedure to establish strategies focused on customer service
- Identify the key components of the service relative to the customer's needs Establish the relative importance of these components Analyze the market in order to segment it according to the service elements Identify and evaluate the company's position on the key components of the service in relation to the competition Define the customer service offer by: a) an analysis of the customer service offer b) the evaluation of competitor offers Establish realistic goals and objectives Control the company's performance in relationship with customer service Review the service offering on an ongoing basis.
Logistics
The term logistics over time has evolved due to its development as a tool for development and progress, allowing a better operation of companies or chains of these in their daily work. A group of authors such as Conejero González, Gómez Acosta & Acevedo Suárez, Cespón Castro & Amador Orellana, the Council of Supply Chain Management Professionals (CSCMP) coincide in one way or another that logistics does not it is more than the system that guarantees the optimal movement of loads and information from the source to a customer.
Within all the definitions that have emerged in recent times that try to cover what logistics is, and seen for this epigraph essentially from the perspective of the authors cited, it is the one raised and explained in detail in Gómez Acosta & Acevedo Suárez, this being the most progressive of all when proposing, that certain elements must be considered in terms of modernizing the concept of logistics that, such as the preservation of the environment and constant increases in competitiveness, show superiority or one more step in this conceptualization with the purpose of getting products and services to the customer in the quantity, quality, deadlines and place demanded.
Supply chain management
Before addressing the issue of SCM, we must refer to the fact that it is a supply chain, on which authors such as Cespón Castro & Amador Orellana Pérez Campaña, and Sasson Rodés argue in one way or another that this is a coordinated system of organizations, people, activities, information and resources involved in the movement of products and / or services either physically or virtually from suppliers to customers.
At present there are several increasingly precise and modern definitions of SCM, approaches and even philosophies, they have been contributed or disclosed by different institutions and authors. In one way or another, authors such as Ballou, Acevedo Suárez, Urquiaga Rodríguez & Gómez Acosta and Cespón Castro & Amador Orellana argue that SCM is the process by which chains try to better coordinate and optimize business processes in each and every one of the areas of the chain seeking to achieve a high NSC.
After having separately analyzed each of the terms of: Logistics, Supply or Supply Chain and SCM, it can be concluded that these terms are totally different although they are closely related to each other, since through SCM it is to manage as well as possible the movement of cargo and information from suppliers to customers (logistics) within the coordinated system of organizations, people, activities, information and resources involved in the movement of products and / or services either physically or virtually from suppliers to customers (Supply Chain).
Client Relationship Management
Good customer relationships are a desirable goal for any organization; Authors such as Tort, López Blanco and sites such as Microsoft and Salesforce suggest that Customer Relationship Management (CRM) is nothing more than a customer-focused business strategy that seeks to satisfy the needs of customers. this, also coinciding in the way in which this tool is applied.
Based on the aforementioned authors and sites, it can be said that CRM as a strategy implies not only having the appropriate software to manage relationships with customers, but also involves a change in the company's processes including the opinion of all employees of the same to achieve the success of the proposed strategy. They consider that the value of the client, together with good service, is what makes them happy and faithful; And the happier and loyal you are, the longer you will stay as a customer. CRM focuses its objectives on providing a series of customer-oriented processes and increasing profitability, since profitability and keeping customers satisfied are two sides of the same coin.
For CRM success, a customer-based company philosophy must be in place that ensures the activity of the entire company and responds to customer needs. On the positive side, customers with successful CRM systems have higher benefits, lower customer acquisition and maintenance costs; increased customer loyalty and simpler, more reliable workflows. Specific benefits include:
- Faster and more accurate customer services Higher revenue per customer Increased cross-selling or suggestive success Shortened sales cycles More efficient call center operations Improved sales forecasting
SCM as management and CRM as strategy are increasingly focused on customers taking into account what they represent for a chain. This strategy, together with an adequate CRM technology, plays an important role in the efforts for a good NSC, especially in the first phases and / or stages, although it is present in the entire production process, whether of a good and / or service.
Material Requirement Planning
Today one of the main aspects that companies or companies must take into account is to use raw material as efficiently as possible due to its cost; To achieve these, the Materials Requirements Planning (MRP) systems are used, which were initially associated only with large computers, central computers and mini computers. This perspective has been changing because today there is a wide range of software that includes several operating systems, networks with all their topologies and architectural platforms, which initially did not allow small manufacturers to acquire this type of system because they were too much complex to implement and its costs were too high.
More and more modern and precise definitions of MRP systems provided by authors such as Chase, Aquilano & Jacobs, Schroeder and Ramos Gómez agree that an original MRP system essentially consists of a calculation of the net needs of the articles (finished products, subsets, components, raw materials) by introducing the manufacturing or purchase term factor for each of the items.
After several years, the integration of the original MRP systems was achieved with the Capacity Planning and Workshop Management techniques, giving rise to what are called Closed Loop (BC) MRP Systems, which are carried out in an integrated and coordinated way. the activities mentioned, also allowing feedback from execution to planning.
Despite the fact that BC's MRP systems represented a great advance towards the integration of business management, important business areas are still left out. Successive developments have been integrating other fields such as Finance and Marketing in a process that is still evolving, giving rise to the so-called Manufacturing Resource Planning Systems (MRP II for its acronym in English).
Several definitions given by authors such as Rocio Alfaro & Durán Ordoñez, Zornora and the Association for Operations Management define the MRP II system as a system or method for the effective planning of the company's resources, although Zornora also includes their control in his definition of these systems.
The production systems are generally identified in two large groups, the systems where production is dragged (pull systems) and the systems where it is pushed (push systems). In the first of these, the final demand drives the production process, that is, manufacturing is authorized only when there is a customer. In the second, the purchase orders accumulate, without knowing if the customer will buy the product or not. That is the basic difference with pull systems that only authorize production when the customer buys.
MRP and MRP II systems are more effective in assembly companies where they work with a large number of parts or components, allowing these as push systems:
- Plan and control all the company's resources Reduce inventories Since everyone works based on the same information, it allows coordinating all the company's resources, not just materials and capacity, among others.
Achieving with this:
- Reduce inventories Reduce sales prices Reduce set-up and dismantling costs Reduce downtime Among others
For a good SCM, it is necessary to use MPR in search of planning and effectively controlling production resources, taking into account, in addition to the products to be manufactured and sold, the capabilities of labor and machines.
Company Resource Planning System
Today MRP systems have been combined and changed to accommodate new business requirements. This new generation of MRP has been given the name of Enterprise Resource Planning (ERP).
Several written articles coincide in the definition given to the ERP system, since Schroeder, Morea, ESPACIOPYME, and the Education, Training and Consulting (ETC) organization, define it as a system or software through which information is managed of the entire company or chain of these, to streamline tasks, improve production processes and reduce costs.
Essentially on the basis of the authors and sites already cited in this section, it can be said that ERP systems are basically characterized by their ability to model and automate most of the basic processes of an organization, from the sales order to distribution. of the product; The range of functions that ERP covers are: accounting, finance, sales order management, logistics, production, human resources, among others.
There are three fundamental reasons why a company or chain of these is interested in implementing an ERP system, increasing its competitiveness, better controlling its operations and integrating all its information.
- Competitiveness: companies require continuous optimization of their costs, whether in production, marketing or administration; on the other hand, they must constantly increase their productivity. Control: several companies have an isolated management of the information generated in the different departments and require a global solution that integrates and organizes the data so that it supports decision-making in an accessible way.: It is important to integrate information in vital areas of the company such as finance, distribution and manufacturing.
Reducing uncertainty about the veracity of information, improving communication between areas, reducing duplication of information and making the integration of processes more efficient are other reasons to carry out the implementation of an ERP system.
It is essential to consider the benefits that the implementation of an ERP system will bring:
- Integration of information processes between the different areas Available and immediate information for decision-making Increased productivity Improved response times Quick adaptation to changes System scalability Data integrity User-defined security Cost reduction
For an SCM, it is essential to use ERP as an integrating system for all the information in the supply chain, taking into account that these cover all areas of the supply chain, including its means and information.
System of constant work in process
CONWIP was created by Spearman, Hopp, and Woodruff in 1990. Several authors such as Ignizio, Blanco Rivero, Romero Motta & Páez Rodríguez and Ruiz et al. coincide with the concept of Constant Work in Process System (CONWIP) given by its creators, in that this is a group of cards dispersed throughout the entire production line in order to achieve a balanced line which is equivalent to one (1) product in process on each machine or workstation. Once the system is filled, materials are only allowed into the system when there is a finished product exit from the system.
These authors also argue that the work discipline of this pulling system in the last operation of the production system, that is, where the product is finished, once one of these is delivered, the entry of materials is authorized to the first operation of the system performing the material input control here in this operation. From then on, discipline is push, that is, orders are pushed throughout the process until they reach the final operation. To prevent the production line from running out of materials, a reserve of products is allowed in the first operation.
These system, because they are pulled close to a push system, bring with it a group of advantages such as those shown below:
- Levels Work in Process (WIP) (serves as a trigger for introducing products into a push production line) Requires less WIP, on average, to achieve the same level of turnover (throuhput) It is more resistant to errors in the control parameters. It facilitates the advancement of the work schedule, as long as the circumstances allow it. As a consequence, with an appropriate CONWIP design, it is possible to be able to:
- Reduce cycle time Reduce cycle time variability Reduce inventory costs Reduce stress on factory personnel Effectively promote defect to discovery Increase flexibility for service changes Substantially decrease the likelihood of loss in market share.
This system plays an important role within the chain and in the SCM, seeking to achieve a constant work rhythm, in order to avoid unnecessary loss of time and make better use of the working day.
Distribution Resource Planning System
As it is known, not all production units distribute their products directly to final consumers, there are cases in which the distribution is carried out through a network of warehouses located at different levels, through which items are passed to reach end customers. In this type of company, the application of the classic methods of stock management is not ideal, appearing the Distribution Resource Planning System (DRP) as an alternative method for planning and controlling inventories in said case.
Several authors such as Domínguez Machuca, Cespón Castro & Amador Orellana, Knudsen González refer to this system as a management system which is based on the calculation of future demands at the lowest level of the distribution network, where the necessary inventory is obtained. for higher levels, using the order in phase with time as the basic calculation method.
Taking as a basis what was stated by the aforementioned authors, it can be said that to make the DRP work it is necessary to establish a sensible planning horizon that must be, at least, as long as the total accumulated supply period from manufacture or purchase to the level. highest, until the receipt of items at the lowest level.
To make such a system work in an integrated way, four factors must be present:
- Accurate forecasts at the lowest levels of the chain Open lines of communication Flexible manufacturing and distribution systems Improved communications with suppliers and customers.
This management system can reduce the amount of inventory in the system, translating into greater flexibility to increase the customer's choice. That is, since there is little inventory accumulation at various stages of the chain, new products and adaptations of existing ones can be brought to market more quickly.
Improvements with such a strategy can be achieved in three main areas: inventory, storage, and transportation. If inventory levels are reduced, warehousing needs will also be reduced. Transportation utilization will improve, reducing transportation times and unnecessary movements
If to this, the possibility of establishing a balance between the load per shipment and the capacities of the means of transport is added, that is, obtaining the interaction of DRP with the Transportation capacity planning (SCP for its acronym in English).) the so-called DRP II is achieved, named after Domínguez Machuca.
This system allows generating transportation plans that stabilize the design of the logistics network, the design of customer satisfaction and the requirements of the design of the transportation system.
It plays an important role for the SCM as it helps the SCM obtaining future demands at all levels of and thus ensuring that all customers obtain the good and / or the service.
Optimized Production Technology
Optimized Production Technology (OPT) was created in the late 1970s by Eliyahu Goldratt. Several authors such as Domínguez Machuca, Ibarra Mirón, Escalona Moreno, have agreed with the concept given by its creator; Defining this as the system that is based on the balance of the production flow and management based on limited resources or bottlenecks. This is also known as simple logic programs where the principle of its structure is based on the separation of bottleneck and non-bottleneck operations.
This technology is very important for SCM as it helps to locate and separate bottleneck operations and thus know where to pay more attention in the supply chain.
Theory of Constraints
Perhaps due to the relative success of the OPT planning and programming system, in the Productive Subsystem of manufacturing companies, Goldratt began to expand his studies with the purpose of forming a new theoretical body that would serve to improve the management of all subsystems of any type of organization, whether industrial or service. For this study, he followed the same basic analysis scheme that OPT was already using, that is, discovering the system's limitations and spinning the entire management process based on them. He called the theory that little by little, he called: Theory of Constraints (TOC for its acronym in English).
Several authors have more or less the same point of view according to the meaning of OCD. In table 1.1. the same are shown:
Table 1.1. Some definitions about OCD by some authors
| Author, | Approach |
| Ibarra Mirón | It is a systemic production model. |
| Duty | It is a systemic methodology for managing and improving a company |
| Escalona Moreno | It is a management methodology seeing the company as a whole |
Source: Own elaboration, after consulting the cited authors.
For a continuous improvement process to be achieved in the pursuit of global goals through TOC, the following steps should be followed:
- Identify system limitations: Locate those resources that, due to their limited availability of capacity, limit the overall performance of the production system. Once identified, they must be exploited to the maximum taking advantage of all their potential capacity. Decide how to exploit the limitations: It means obtaining the maximum performance from the limitation or limiting resource, be it a position, a work center or the market itself; This would imply eliminating any cause of unproductive time in the system Subordinate everything to the decisions taken in the previous step: In the previous phase, it was established to exploit the system's limitations to the maximum, now it is necessary to subordinate the rest of the system to these resources that limit the overall performance of the organization,since these are the ones that indicate the rhythm or rate of production and the final billing. The production of the non-bottlenecks must be synchronized according to the main limitation. Raise the limitations: The limitations marked by its lack of capacity must be overcome in order to disappear it or to transfer it in the last case to another place in the system. It is advisable not to rush and carry out this procedure at the right moment. If any limitation has been broken in previous steps, you must start the process again; Go back to the first step: It means that once the limitation (s) have been overcome and resolved, the new system limitations must be re-identified and the continuous improvement cycle restarted.The production of the non-bottlenecks must be synchronized according to the main limitation. Raise the limitations: The limitations marked by its lack of capacity must be overcome in order to disappear it or to transfer it in the last case to another place in the system. It is advisable not to rush and carry out this procedure at the right moment. If any limitation has been broken in previous steps, you must start the process again; Go back to the first step: It means that once the limitation (s) have been overcome and resolved, the new system limitations must be re-identified and the continuous improvement cycle restarted.The production of the non-bottlenecks must be synchronized according to the main limitation. Raise the limitations: The limitations marked by its lack of capacity must be overcome in order to disappear it or to transfer it in the last case to another place in the system. It is advisable not to rush and carry out this procedure at the right moment. If any limitation has been broken in previous steps, you must start the process again; Go back to the first step: It means that once the limitation (s) have been overcome and resolved, the new system limitations must be re-identified and the continuous improvement cycle restarted.It is advisable not to rush and carry out this procedure at the right moment. If any limitation has been broken in previous steps, you must start the process again; Go back to the first step: It means that once the limitation (s) have been overcome and resolved, the new system limitations must be re-identified and the continuous improvement cycle restarted.It is advisable not to rush and carry out this procedure at the right moment. If any limitation has been broken in previous steps, you must start the process again; Go back to the first step: It means that once the limitation (s) have been overcome and resolved, the new system limitations must be re-identified and the continuous improvement cycle restarted.
Let it be known that these steps have been approached by different authors, who in some cases have wanted to make new contributions based on the change in their wording.
The TOC aims to achieve optimal system operability, increasing its rate of value generation. For this, the improvement of the response time is also sought. In terms of cost, it achieves reductions in the real unit cost by increasing the rate of value generation, that is, sales, and reducing inventories that leads to improved response time.
The TOC as a methodology would be of great help for the SCM, since, seeing the chain as a whole, it gives a better overview of the situation, and mainly that it contributes to discover the limitations of the system, allowing the entire management process to rotate in terms these.
Drum - Damper - Rope System
At present in any company, whether it is production or service, there are resources with restricted capacity, known in some cases as bottlenecks, widely known in the literature as drums, by which the production of the entire company is governed. Due to the restricted capacity of these, the companies place the also known shock absorbers, which, both in terms of time and raw materials and materials, fulfill the function of protecting the demand attended from daily interruptions, thus ensuring that the drum never runs out. material. The setup and execution time required for all pre-drum operations, plus the damper time, is called the string length. The union of these three elements in its simplest conception has given rise to the Tambor system,Damper and Rope (DBR for its acronym in English.
Several authors such as Acero Navarro, Barragán Moreno, Santiago Santiago, Escalona Moreno have agreed with the definition given by Goldratt of DBR; defining this as the form or technology of application of the TOC to the companies or chain of these.
This system can bring substantial benefits to the supply chain, ensuring that the plant is operating at maximum speed with the minimum of inventories, meeting and meeting unexpectedly high demands.
Acevedo Suárez addresses this issue although without mentioning the term DBR, stating that in the companies or chains of these, in addition to determining the capacity, the possible production is determined through the bottleneck or resource with limitation, defining in this way for each product which one is this.
This system as an integrating system of OPT and TOC plays an important role for the SCM ensuring that the plant is operating at maximum speed with minimum inventories.
Just in Time System
The just-in-time (JIT) philosophy is definitely oriented towards continuous improvement, through efficiency in each of the elements that make up the company system, (suppliers, production process, staff and clients) considering This is a very helpful tool for all types of companies.
Several authors such as Chase, Aquilano & Jacobs, Schroeder, Ibarra Mirón, Lefcovich, Ramos Gómez, among others, have agreed in one way or another that this philosophy is the production system that provides the right part in the right place and in the right place. opportune moment.
The JIT system as a pulling system focuses its philosophy on the elimination of activities of all kinds that do not add value to the product and / or the service, and to the achievement of an agile and sufficiently flexible production system that accommodates fluctuations in the customer orders seeking to achieve their main objectives, which are:
- Attack the causes of major problems Eliminate waste Seek simplicity Design systems to identify problems.
The JIT system uses a system of cards called "instruction label" whose main function is to act as an automatic steering device that gives information about what is going to be produced, in what quantity, by what means and how to transport it; all of this is in search of better performance in production.
In table 1.2. Some of the advantages that the JIT implementation brings are shown, which are similar in almost all their points.
Table 1.2. Advantages of the JIT system
| According to Chase, et al | According to Schroeder |
| Utilize the full capacity of the worker | Maximum effort by workers |
| Minimize setup times | Reduction of preparation times |
| Uniform load on floor | Achieve a better balance between different processes |
| Inventory reduction | Inventory reduction |
Source: Own elaboration, after consulting the cited authors.
Supply Chain Operations Reference Model
For several years leading companies have focused on the management and improvement of the supply chain. These have demonstrated their success through the profits they have obtained and the reduction of the costs of their products and / or services. One of the primary tools they use to enable these successes is the Supply Chain Operations Reference (SCOR) model.
The SCOR model has been studied by authors such as Calderón Lama & Lario Esteban, Pérez Campaña, Wondergem. All these suggest that this model is a management tool to seek a better functioning of the Supply Chain by directing, improving and communicating its activities or processes better and better based on the rapprochement between supplier, producer and supplier-producer-distributor and considering in details as well as considering all activities from a supplier of a supplier to a customer of a customer.
SCOR, as a management tool, describes the business activities associated with all phases of meeting a customer's demand, and can be used to describe simple or complex supply chains using a common table of definitions.
This model provides a framework that unites business processes, management indicators, best practices and technologies in a framework to support communication between chain partners and improve the effectiveness of SCM and supply chain improvement activities. In addition to helping companies to detect problems in the chain, identifying, according to their objectives, improvements in their performance, and promoting the development of SCM software. This model includes the entire supply chain in its entirety and seeks to improve it using the best practices and associated technology as a reference.
For all the aforementioned, it is necessary to use the SCOR model for a better SCM, seeking an improvement in the effectiveness and efficiency of the chain and thus in the NSC, in addition to contributing to a better operation in all its dimensions.
Electronic procurement (eProcurement)
In any company or chain of these where either a product and / or service is produced, the material resources necessary for these are needed. Taking into account the above, most of them use electronic procurement for fast and effective provisioning. Authors and sites such as Ochoa, smedia and eProcurement agree that this is the automation of internal and external processes related to the request, purchase, supply, payment and control of products through the use of the Internet as the main means of customer-supplier communication.
The projects of this technology aim to save on supply costs, save time and transaction savings for companies, and also contribute to making the total purchasing process more efficient, establishing a Web application that solves defects or existing barriers, or add value to the purchasing means already established in the company.
It is a technology related to SCM. Among its main characteristics we can mention the use of information on requirements, inventories, material in transit, among others, displayed through an Internet page. The information flow is carried out in real time, and allows the data to be known instantly when any change in the variables occurs.
Among the advantages of eProcurement are:
- Access from any point where there is Internet service regardless of geographical distances, or being outside the company's facilities. Access is restricted to personnel who have previously been authorized by the client and provider to exchange information; This is very important to maintain the protection of strategic business information and complies with the parameters established in business-to-business relationships. It generates a significant reduction in costs in a short period of time after its implementation.
This cost reduction is a consequence of the following factors:
- Decrease in raw material inventory levels based on real client needs Elimination of excesses Compliance with production plans Reduction of expenses caused by air transportation of the material.
This technology could be integrated into ERP since both are technologies and ERP as software integrating all the information in the chain would help the decision-making process when making use of electronic procurement, either to buy or to inform customers about the products and / or services that are made in the company or chain of these.
Efficient Customer Response System
For most companies or chains of these, today the main objective is to satisfy the needs of existing customers and try to attract new ones since these mean in terms of finances for the companies, their own income. In order to achieve a high NSC, the Efficient Consumer Response (ECR) system is used.
Articles published by some organizations such as ILO, GS1Chile define an Efficient Customer Response system as a system where, firstly, the price of the product or service is set (the price necessary to achieve a good NSC) and in accordance with this, the planning and the necessary strategies are taken to obtain the greatest possible benefit by reducing the costs of the system.
With the implementation of ECR, the aim is to increase the efficiency of the supply chain as a whole, instead of punctually enhancing some of its components. The final objective of ECR is to integrate logistics and commercial processes, moving from a push scheme - where industrialists force the entry of products into commercial channels - to a pull scheme, which responds to the real demand of the consumer, thus achieving a maximization of their satisfaction and a reduction of the total operating costs.
To achieve its objectives, according to the authors consulted and previously cited, ECR is based on four strategies:
- Efficient replenishment or replenishment, by which the correct product is supplied, in the correct place, at the correct time, in the correct quantity and in the most efficient way possible. Efficient assortment by means of which the sales room is assured the assortment necessary to maximize consumer satisfaction, efficiently using the available space to increase the profitability of suppliers and retailers Efficient promotions, by which the flow of products through the system is adjusted to consumer demand, producing improvements substantial efficiency in production, warehousing and transportation, with a much lower level of promotions inventories.Efficient product introduction through which it seeks to develop and introduce new products that better satisfy the needs and desires of consumers, retailers and suppliers working together. The development of new products and / or services is one of the most important value creation processes in any industry.
The implementation of ECR brings some benefits, among which are: higher flow vs. lower inventory
- Higher level of supplier service Trust and collaboration between trading partners Optimization of buyer and seller time Reduction of operational costs (working capital, administration, distribution, warehousing, etc.) Higher sales Optimization of sellers time More efficient promotions Greater profitability of the sales space Greater profitability Availability and better product assortment Lower prices Fresher products in better condition Sales according to consumer demand
ECR as a system would be of great help to SCM since it would give a general view of what is to be done in the chain, helping to better understand the product and / or what is going to be produced in addition to supporting the process of taking decisions.
Key goal and performance indicators
Whenever a task is carried out, it is about looking for a way to measure the results to know how it is working and to improve in the future; and the companies or chains of these are not exempt from this. In this case, the key indicators of goals and performance are. After defining the products and / or services to be produced, the goals or objectives should be set according to the good and / or service that customers want. To define these, the key indicators of goals are applied and to measure performance, the key performance indicators are applied.
According to Van Grembergen & De Haes (2005), Cueto (2008) and the Business Process Management (BPM) site, key goal indicators (KGI) are nothing more than tools. or process by which the goals and metrics for these are defined.
Taking into account the aforementioned authors and sites, it can be said that these easy-to-measure and understand indicators are recommended in order to detect deviations or to confirm significant results with respect to the control objective. These indicators play a fundamental role for the direction of the chain in the decision-making process, taking into account the information that can be interpreted through them.
Several sites such as 12manage, SKF and Reh define the key performance indicators (KPI for its acronym in English) as the tool by which the performance of the critical success factor is measured, coinciding with the concept given by its creators.
Based on the aforementioned sites, it can be said that these indicators can be financial or non-financial, covering a wide range of factors that include: time and cost of planned and unplanned stops, availability and efficiency of the plant, maintenance costs and productivity.. It is important to review the KPIs periodically to determine if they are really driving the business, and if they are driving it in the desired direction. Table 1.3 shows some performance indicators.
It is useful to understand that at least 3 levels can be distinguished to express the plans of any organization:
- Vision / Mission. It expresses the basic reason why an organization is founded and continues its existence. Strategic goals. It expresses what the organization's focus should be so that it can successfully follow its vision. Strategic goals are, by their very nature, high-level expressions and big ideas. These goals must be unfolded into more concrete and specific ones, that is, into objectives.
It is important to note that these indicators would contribute a lot to the SCM since by periodically reviewing them, a vision and situation in which the chain is at the time these indicators are applied would be obtained, being of great help in making decisions. decisions. Also
Process management
In many companies today, technicality and a false sense of individual specialization, together with internal competition and feudal hierarchy, have led their members to be oriented to their personal task since each one feels proud of their work since the technical point of view and, the rest, does not matter. Traditional management has been oriented to effect, profit, forgetting its main immediate cause: Having satisfied and loyal customers. Each person concentrates his effort on the task assigned to him, trying to do it according to the instructions and specifications received, but with little information regarding the final result of his work.
Table 1.3. Examples of Key Performance Indicators
| Indicator | Calculation expression | |||||
| External customer satisfaction index | ISCE = SPej * Vaej
Pej: Weight conferred on the essential attribute (e) by the client (j). Vaej: essential value that the attribute (e) takes for the client (j) |
|||||
| Internal customer satisfaction index | ISCI = SPej * Vaej
Pej: Weight conferred on the essential attribute (e). Vaej: value taken by the attribute. |
|||||
| Sales per link | Vt = (Sales of the Period / days of the period) / Average of links | |||||
| Indicators of exploitation of means of transport | Ej = Edj / tc = (SE ji * ti) / S ti
Edj: Teams - days j tc: Time of the total period analyzed Eji: Number of teams j during period i. ti: time covered by period i. |
Where j = e, t, i, r
e: Existing t: working i: inactive r: repair |
||||
| Purchase Index | Ic = Cost of Sales / Purchases | |||||
| Inventory turnover (RI) | RI = Cost of Sale / Average Inventories | |||||
| Inventory Turnover Cycle (CRI) | CRI (days) = (360 days / year) / RI | |||||
| Cycle time | TC = Ta + Tp + Td | Where
a: provisioning p: production d: distribution |
||||
| Profitability (RN) | % RN = G / (FBP * MRN) | Where
G: profit from commodity production FBP: the basic productive fund MRN: Standardized Means of Rotation |
||||
| Economic Efficiency (E) | E = Average profit / Investment value | |||||
| Gain (G) | G = Income - investment | |||||
| Production Cost (Cp) | Cp = V + F | Where
V: variable cost F: fixed cost |
||||
| Effectiveness (Efc) | Efc = Do the right thing + Do the best things possible
(effectiveness efficiency) |
|||||
| Life Cycle Cost (CCVU) | CCVU = P + Cd + Ct + Cm ± Cr | Where:
Q: Product price Cd: Cost of returns Ct: Transportation cost Cm: Maintenance Cost Cr: Cost of recycling |
||||
Source: Own elaboration based on the cited authors
Several articles published, such as the Kaizen group, Rey Reteiro and the Spanish Center for Quality Management and Control suggest that process management is the way to manage the entire organization based on processes.
Process Management is based on the modeling of systems as a set of interrelated processes through cause-effect links. The final purpose of Process Management is to ensure that all the processes of an organization are developed in a coordinated manner, improving the effectiveness and satisfaction of all interested parties, seeking to make a better compatibility of customer satisfaction with better business results.
In addition to the aforementioned, process management focuses attention on the result of the processes, not on the tasks or activities, since there is information on the final result and everyone knows how individual work contributes to the global process; which translates into a responsibility with the total process and not with their personal task (duty).
The main objective of process management as a quality management system is to increase the results of the Company through the achievement of high levels of customer satisfaction, achieving increased productivity through:
In addition to increasing productivity through:
- Reduce unnecessary internal costs (non-value-added activities) Shorten delivery times (reduce cycle times) Improve quality and value perceived by customers so that it is pleasant for them to work with the supplier Incorporate additional activities service, low cost, whose value is easy for the customer to perceive.
The differences between organizations by process and the traditional functional organization are shown in table 1.1.
Table 1.1. Differences between the organization by processes and the traditional functional.
| Aspect to compare | Management by functions | Process management |
| How are they organized? | By specialized departments | By natural processes |
| What is measured? | Productivity and performance compliance | Competitiveness and commitment to results |
| What do they ask for work? | How to improve homework? | What tasks to do and for what? |
| What do you see? | Bureaucracy - formalism | Flexibility - change - innovation |
| Bosses | Functional bosses | Process managers |
| Decision making is? | Centralized | Part of everyone's job |
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Know that when the term organization is quoted, it is referring to the supply chain, in addition to using it in the case of a company as well.
the key performance indicators were created by D. Ronald Daniel and Jack F. Rockart
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