Global Logistics and Supply Chain Management

1
Global Logistics and Supply Chain Management

• John Mangan
• Chandra Lalwani
• Tim Butcher
• ISBN 978-0-470-06634-8

2
The Contents of the Books (Chapter 11)
Presented by Sean M Hsu Advisor Dr. Jr Jung Lyu
3
Chapter 11

• Measuring and Managing Logistics Performance

4
Learning objectives

• Understand basic forms of performance measurement
  used in a logistics context such as tacho-graphs
  (?????/?????) in road haulage (??) and space
  utili-zation (????) in warehousing
• Illustrate the trend towards measurement of a
  wider array of activities and the eight driving
  forces behind this trend
• Explain why many LSPs (logical signal processor
  ???????) now routinely share key performance data
  with customers
• Understand the role of benchmarking in the
  context of logistics performance management
• Identify ?how many? and ?which KPIs? to track,
  ?how? they are embedded within the organization,
  ?how? they fit with wider company objectives,
  ?where? the requisite-data (
  ) will come from, and ?who? (at what
  levels within the organization) should receive
  the information generated by these KPIs
• Understand in particular warehouse/inventory
  metrics and total landed costs

5
Basic measurement

• LSPs traditionally employed measures that were
  either very basic from an operational viewpoint,
  or imposed on them by law

6
The tacho-graph

• Fitted to a truck to record its speed, distance
  travelled and any breaks taken (?????/???)
• Used by police forces to ensure that laws
  relating to the maximum hours a truck driver can
  work are observed
• The rules are designed to limit continuous
  driving time and detail minimum breaks and rest
  periods

7
Resource utilization measures

• At the broader company level the key inventory
  measure
• Inventory turnover (from a financial perspective)
  ????
• Warehouse utilization measures ?????
• Total number of pallet (??) or carton spaces
  consumed vs. total available
• Total space consumed within the warehouse
• Throughput (??????/???) , e.g. total number of
  shipments received
• Road transport utilization measures
• Total number of deliveries successfully completed
  vs. dropped deliveries (i.e. failed deliveries)

8
A contemporary viewpoint

• Todays 3PLs not only have to display expertise
  in operational management, they must also keep
  track of each transaction and ensure that they
  and their customers and agents can have access to
  information relating to this flow as and when it
  is required
• Such is the importance of monitoring this
  information that many 3PLs now have dedicated
  staff whos job it is to record data that can be
  used in the development of metrics (?????????/??)
  SCOR Model?Metrics(????)
• ???? (metrics) Performance Metrics The
  Measurement of Healthcare Delivery Performance
  within a New Built Hospital
• ????-USCERT??Security Scoring Standards of
  USCERT US-CERT?metric value????????????,metric
  value????0 ?180??????The Metric Value is used to
  score a vulnerability by USCERT, and the range of
  the metric value is from 0 to 180.

9
Key performance indicators

• KPIs are shared with staff at all levels and in
  all functions, with partners and agents, and most
  importantly with customers
• Most large customers now hold formal business
  reviews with their 3PLs where the presentation of
  KPIs is a key part of the meetings focus
• Logistics businesses now see measurement of the
  performance of all operational areas as a common
  requirement from their customers

10
????
????
????
?????????
?? ??
??????
??KPIs
?? (??????)
?? (??????)
??KPI???
?? ??
??????
?????????
?????????
?????????
????????
11
?? KPI ????--SMART

• S Simple (or Specific ????)
• ??????????
• M Measurable (or Money ??????)
• ?????????????
• A Achievable (or Approachable ????)
• ????
• R Realistic (or Result-oriented ????)
• ??????? ??????
• T Timely (Timing ????????????)
• ???????????? (??????)

? ??????KPI ?????????????() - Money????????
12
Fundamentals-?????????

• ??????????????????????????????????????
• ????NPV, ROI, EVA, BET (Break-Even Time ????)
• ???????????????
• ??????/???
• ???????????????
• ??????????????????
• ?????????????
• ??????????????????????,??????????

13
Driving forces for performance measurement

• Increased reliance on ? contract manufacturers
• Strategic importance of LSPs to ? supply chain
  success
• Adoption of ? manufacturing management principles
• Impact on ? customer experience
• Increased ? competition
• ? Information technology improvements
• ? Empowerment practices
• ??? (??????????????????????????????????????)
  
• ? Employee motivation

14
Selecting the best measures

• measure results, not activities
• it is all too easy to focus on simply
  assimilating data (????/??) without necessarily
  understanding how this data may be used ?only
  Focus on KPI?
• When setting KPIs, focus on what benefit one
  hopes to gain as a result of having these
  measures in place ?to be in proportion?
• Dont focus on what data may be easily available

15
Quantitative vs. qualitative KPIs

• The majority of measures should be focused on
  quantitative results (??)
• Measures based on raw data can often be better
  for accurately comparing performance over time,
  and indeed for predicting future results
• Quantitative results are more reliable when
  comparing over time, as long as the data used to
  generate them can be replicated without error
  (Forecasting Predicting)
• Forecasting ????????,????????????,???????????????
  ??,???????,?????????
• Predicting ??????????,?????????(??)?????????????
  ,????????????,????????????,?????????
• Some qualitative measures can also be useful (??)

16
Benchmarking

• Companies should always look to emulate/e/ best
  in class
• This is the role of benchmarking
• Logistics companies rely on referrals /
  / from not just customers, but also from
  competing firms
• The referring company may not have the required
  capacity but wants to fulfil their customers
  requirement
• It is therefore important that some benchmarking
  of performance can first take place

17
Benchmarking

• To benchmark against the industry, the company
  needs to use a similar set of measures in order
  to map performance against the companies being
  benchmarked
• The time to first consider benchmarking is when a
  company is initially putting together a set of
  performance measures
• It should be seen as a continuous process, and
  not as a once off project
• Todays logistics industry is very dynamic and
  benchmark levels of performance can constantly
  change

18
Figure 11.1 Category of metric reporting
Top-down Bottom-up Strategy vs. KPI
? OTD is on-time delivery FTE is full-time
equivalent, i.e. the equivalent of one employee
19
Figure 11.2 Goals and Metrics for use in a
typical balanced scorecard. Source based on
Kaplan, R. Norton, D. (1992) The balanced
scorecard measures that drive performance,
Harvard Business Review, JanuaryFebruary
20
??????????
To succeed financially, how should we appear to
our share-holders?
Measures
Targets
Initiatives
Objectives
??
To satisfy our shareholders and customers, what
business processes must we excel at?
To achieve our vision, how should we appear to
our customers?
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
????
??
To achieve our vision, how will we sustain our
ability to change and improve?
Objectives
Measures
Targets
Initiatives
?????
Source The Balanced Scorecard Collaborative
21
??????
22
??????????????

• ?????????????????????
• (Core-Tech, Top-down, and Strategic Matrix)
  
• ??????? (???????)
• ??????????
• ???????, ?? OLAP Reports
• On-Line Analytical Processing
• ??????????
• ?????????
• ?????????????????
• ????????
• ? ERP, BI (Business intelligence, BI), ISO 9000,
  6s
• ???????BI?????????????????,???????????????????????
  ?????????????????????????BI (????/????)???
• ????????

23
??????????
????? ????
???????
????
????
????????
KPI??????
?????
????????
???????
??????
????????
????????
????
????????
??????
????
???KPI
????????
???? ?????
????????
KPI ??
24
?????
25
Balanced Scorecard Causal Relationships

• Strategy
• Internal Customer
  Financial
• Process T1
  T2
• T0
• Learning
• T3

26
Inventory / warehouserelated metrics - receiving

• Generally the first to be recorded, because
  receipt of product is often the most important
  transaction
• If the receiving process is well thought out and
  implemented, then stock accuracy and product
  in/tegrity should also be well managed
• If product is received into the correct location,
  and in the correct quantity, then the subsequent
  picking process too has a good chance of being
  problem free
• Receiving metrics
• Receiving time
• Receiving On-Time Delivery
• Delivery paperwork detail is correct
• Part numbers, lot numbers and purchase order
  numbers match that on the paperwork and as
  against the ASN
• Product is physically inspected with unit /
  carton or pallet count completed, product
  inspected for any signs of in-transit damage,
  repackaging, etc

27
Inventory / warehouserelated metrics - put-away

• Put-away metric (?...???? )
• Number of pallets, cartons or units put-away
• Compared against the resource available to
  produce a productivity measure
• Percentage of product put-away within a stated
  time
• Many warehouses might have good receiving
  metrics, but have product sitting on the floor
  yet to be put away (?? / ????)

28
Inventory / warehouserelated metrics - inventory
accuracy

• Inventory metrics act as a measure of operational
  performance, and reflect the ad/herence to
  processes, rather than the performance of the
  inventory team who conduct cycle counts
• Cycle-counting of product is an activity that
  customers usually take a keen interest in because
  the material being counted generally sits on
  their balance sheet rather than the 3PLs balance
  sheet
• Cycle-counting measures the length of time that
  inventory is sitting in the warehouse
• An aged stock report, detailing the number of
  weeks product is in stock is easiest to report
• An overall view of stock movements within the
  warehouse can be given with a report outlining
  the number of inventory turns

29
Figure 11.3 Total landed costs
30
Logistics costs performance

• A purchasing decision should consider all related
  costs
• Freight (??)
• Carrying Costs (????)
• Duty (?)
• Packaging (??)
• Warehousing (??)
• Locali/zation (??????)

31
3PL cost models

• Cost plus margin (?? ??)
• Often the preferred model for 3PLs
• Advantages (??)
• It provides complete trans/parency for all
  parties involved
• Risk is reduced for both parties
• Disadvantages (??)
• Often a reluctance for the 3PL to drive
  continuous improvement
• Resources may be fixed at a level that meets the
  peak season demand
• Resources employed may not be adequate to meet
  business requirements
• Little opportunity for 3PLs to make high profits

32
3PL cost models

• Transactional Pricing
• 3PLs will use all their available resources
  across multiple customers and quote a unit rate
  for standard warehouse activities
• Advantages
• Resources are generally not fixed by the customer
• The 3PL will be highly motivated to drive
  efficiency at all stages of their process as any
  savings made will result in higher profits
• Disadvantages
• The customer may not always get the customer
  service that they require
• The 3PL needs to ensure that special requests are
  charged separately
• The customer does not have transparency (?????)

33
Service level agreements

• A mutually agreed and understood agreement put in
  place between both the company buying the service
  and the company providing the service
• To include
• Roll-out and duration of the service or process
  being purchased
• Scope of services
• Areas of responsibility (i.e. who is responsible
  for what) -PIC
• Performance metrics

34
Supplementary Matter (Chapter 11)
Some Additional Remarks
35
(No Transcript)
36
The Cultivating for Quality (??)
Top Down

• Top-Management
• Division Managing
• Dept. Managing

• TQM (Total Quality Management)
• Policy Deployment

TQM

• QMU (Quality Management for Unit)
• SPC/ SQC Training Problem-solving
• Manufacturing Consulting

• Dept. Managing
• Unit Managing
• Engineer Managing

SQC

• Engineer Operating
• Operator Operating

• QCC Training
• Work Training

Bottom Up
QCC
37
??????
38
????????????????
????? --???? ???? (COP-SOP-MOP)
????
????? ????? ???? ? ? ? ???? ??? ????
????? ????? ???? ? ? ? ???? ??? ????
? ? ? ? ?
?????
QMU
39
Matrix Organization TQM
40
????

• BSC Balanced Scorecard ?????
• CPM Corporate Performance Management ??????
• KPI Key Performance Indicator ??????
• ERP Enterprise Resource Planning ??????

41
(No Transcript)
42
????????,??????,????????

• ????????,??????????????

• ????????????????????,?????

• ?????,??????????????????

• ???????????????????,??????????????????????

43
????????/?????????????

• ???????????????
• ???????????????????
• ?????????????????
• ?????????
• ????????????????????????
• ??????????
• ??????????????????KPI

44
?????????????????

• ??.?? (David Norton)???.???(Robert
  Kaplan)?????????????????????????????????,?1992????
  ??????(Balanced Scorecard, BSC)???????????????????
  ??

???? (Deployment Framework)
?????????
??????????
?????????????
??????????????
?????????????????
??????????
??????????????
??????????????
45
?????(Balanced Scorecard)?????
??
???????,?????????????
?????
????
?????
??????????????,???????????????
???????,???????????,????????????
??
??????????????,??????????????
46
???????????
?? (Characters)
?? (Benefit)
47
?????????????(???)(?)
??????,?????????, ???????????????,???????
???
???
?????
??????
????
????
????/??
????
????
????? ????
??????
??????????????
?? EPS
??????? ????????? ????/??
????
??????
?? ?????
??????
???/??? ?????
????
???/??????? ???????????
???????????
??????
??????
??????
????
48
?????????????(?)
KPI
???
???
????
KPI
???
???
??
????
??
??? EPS ???? ???/??? ?? ????? ?????????? ?????
????? ???/??????? ?????? ???????????
KPI
???
???
??
????
KPI
???
???
??
????
?????? ???? ????
?????????? ??????????? ????????? ????/??
49
Gartner Research?CPM/BSC????
50
???????
51
???? (Strategy Map)
52
?????????????
53
Scorecard Builder Architecture
Scorecard Presentation

• Deploy your scorecards
• Customize your views
• Sharepoint Portal Server
• BSC-specific web parts

Source Systems
ETL
54
Next Step?
?? Technology
?? Process
?? Strategy
??
E R P
? ? ? ?
O L A P
??
????
Data Mining
????
55
Managing Supply Chain Information at HBOS The
SRM (Supplier Relationship Management) initiative
(Chapter 11)
The case always generates much debate about the
objectives of the system. Taken at face value,
the system is very successful, but a deeper
analysis will reveal that are potential
difficulties with it. In particular Is the
strategy chosen su/stainable? Is it in the
long term interest of the bank to
institutionalize adversarial relationships
(????????????) with its suppliers via the
system? Is the architecture future-proof?
(???????)
with 3 Questions for the case
56
Question 1
1. Which procurement decisions and activities
(Strategical, Tactical and Operational) and least
well supported by the new system?
?A general way of SRM in Taiwan is having a
series of Establishing Outsourcee Evaluation Item
Systems, including selection, counsel, guidance
and assistance, adopting QSA, QPA, etc. to do
Surveying and Auditing. The approval system, for
Suppliers, Outsourcees, Offshorers, and
Subcontractor is combined with Global Logistics
System and SCM, as one part of an integrated
operation system.?
? ?????????????????????????????
???????????????????????,??????
???,????????????? ? ?????????,??????,????????????,
??????????,????????????????? (???,?91)?
57
Internal Business Process Measures the
Balanced Scorecard (Source Kaplan Norton, 1996)

• Model of Internal Business Process Logistics

Customer Need Identified
Innovation Process
Operations Process
Post-Sale Service Process
Customer Need Satisfied
Service to the Customer
Create Product
Build Product
Deliver Product
Identify Market

• Delivery Cycle Time

• Service Satisfaction

• Development Cycle Time

• Quality Defects
• MCE

Relevant Metrics
58
Strategic level (??) According to
Walters (2002) the logistics strategy of an
organization consists of all the strategic
decisions, policies, plans, culture relating to
the management of its supply chain.
Strategic decisions in purchasing will therefore
be concerned with determining the mission of the
purchasing function, decisions about principles
and decisions about implementation. HBOS
seems to have set out (begun) on a cost reduction
mission. The main strategic benefit of the system
is that it enhances HBOSs power over its
suppliers. Through the system, HBOS has
the ability to realize the combined purchasing
power of the 2 merged banks. Ultimately this
could lead to a cost advantage for HBOS.
Tactical level (??) The system aids analysis by
presenting information to the purchasing team in
a way that aids tactical decisions and explore
opportunities for saving. For instance, buyers
have more information available about suppliers
and their performance, which helps the
negotiation process. Again is can be useful to
add depth to the discussion here by asking
students how supplier performance seems to be
measured by HBOS at the moment. More insightful
answers would will recognize that supplier
performance only seem to be measured through
price at the moment. Tan et al. (2002) have shown
that is increasingly becoming unusual with
Quality levels, Service levels and on-time
delivery (QCD) ranked as the most important
supplier evaluation practices by the companies
they surveyed.
Operational level (????) At an operational
level, the system is of limited use in so far as
(???...????) no information exchange is currently
taking place with suppliers. More insightful
answers argued that other secondary operational
benefits are likely such as enhanced reporting
information.
59
Question 2
2. Explain what is likely to have contributed to
the success of the project.
? DeLone and McLeans model (1992 2003) is
useful to explore system success.
60
Question 3
3. What challenges are facing HBOS on the road
to true Supplier Relationship Management?
Ward and Griffiths (or McFarlans) Grid
show that the system is evolving, and the
objective is to expand its true SRM functionality
beyond the decision support functions that are
currently in use. Some people will have realized
that the system is seemingly designed to improve
HBOSs bargaining power. This is recognized by
Taylor when he argues Unless purchasing is
delivering significant savings, all its other
work is devaluated. There are no features
in the system that seem to support
relationships. The new move into eauctions
seems to confirm this strategy. We know for
instance that little or no electronic information
exchange takes place with suppliers. In moving to
true SRM, HBOS may realize that its suppliers are
demanding more of a win-win situation and they
are unlikely to relish collaborating with a
system designed solely to drive prices down. At
an architecture level, the data-warehousing
solution implemented is unlikely to be well
suited to supporting e-purchasing, and
information exchange with suppliers. It is
therefore likely that the move to true SRM would
require substantial additional investment.
61
xRM defined
(Extended Relationship Management)
1. PRM - Partner Relationship 2. CRM - Customer
Relationship 3. ERM - Employee Relationship
4. SRM - Supplier Relationship 5. ChRM - Channel
Relationship
62
Supplier Relationship Management - Objectives
(SRM)
Source JDEdwards.com
63
System Success
Source DeLone, W. H. McLean, E. R. 2003
64
Recent research opportunities and obstacles to
SRM
Increased customer service Increased
Switching costs Increased Geographical Reach
Be viewed as a technology leader Network and
System instabilities Integration Difficulties
Security Risks