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Posted by manivannan manivannan on April 27, 2010

• THE ROLE & RESPONSE OF INTERNATIONAL FREIGHT FORWARDING

  IN SUPPLY CHAIN MANAGEMENT

  Freight forwarders Definition

  Freight forwarders are commercial entities that arrange for the transportation of freight in exchange for compensation.

  Supply Chain Definition

  Moving the goods from manufacturing place to reaching it safely & timely with economic mode.

  INTRODUCTION

  Managing the chain of events in this process is what is known as supply chain management. Effective management must take into account coordinating all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction, while still keeping costs down..

  Structuring the supply chain requires an understanding of the demand patterns, service level requirements, distance considerations, cost elements and other related factors. It is easy to see that these factors are highly variable in nature and this variability needs to be considered during the supply chain analysis process. Moreover, the interplay of these complex considerations could have a significant bearing on the outcome of the supply chain analysis process.

  There are Six Key Elements to a Supply Chain

  v Production

  v Supply

  v Inventory

  v Location

  v Transportation, and

  v Information
  

  The Following Describes Each of the Elements

  1. Production

  The Production department will be taking response for management expectation & Customer expectation

  With the available machinery & Tools,

  2. Supply

  Next, an organization must determine what their facility or facilities are able to produce, both economically and efficiently, while keeping the quality high. But most companies cannot provide excellent performance with the manufacture of all components select suppliers for raw materials. When choosing a supplier, focus should be on developing velocity, quality and flexibility while at the same time reducing costs or maintaining low cost levels.

  3. Inventory

  Further strategic decisions focus on inventory and how much product should be in-house. A delicate balance exists between too much inventory, which can cost anywhere between 20 and 40 percent of their value, and not enough inventory to meet market demands..

  4. Location

  Location decisions depend on market demands and determination of customer satisfaction. Strategic decisions must focus on the placement of production plants, distribution and stocking facilities, and placing them in prime locations to the market served. should also take into consideration tax and tariff issues, especially in inter-state and worldwide distribution.
  

  5. Transportation

  Strategic transportation decisions are closely related to inventory decisions as well as meeting customer demands. Yet using sea or rail often time’s means having higher levels of inventory in-house to meet quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a product is encompassed by transportation, using the correct transport mode is a critical strategic decision.

  6. Information

  Effective supply chain management requires obtaining information from the point of end-use, and linking information resources throughout the chain for speed of exchange. Overwhelming paper flow and disparate computer systems are unacceptable in today’s competitive world.

  COMPONENTS OF SUPPLY CHAIN MANAGEMENT INTEGRATION

  Lambert and Cooper (2000) identified the following components which are:

  v Planning and control

  v Work structure

  v Organization structure

  v Product flow facility structure

  v Information flow facility structure

  v Management methods

  v Power and leadership structure

  v Risk and reward structure

  v Culture and attitude

  However, a more careful examination of the existing literature will lead us to a more comprehensive structure of what should be the key critical supply chain components , the “branches” of the previous identified supply chain business processes, that is, what kind of relationship the components may have that are related with suppliers and customers accordingly. Bowersox and Closs states that the emphasis that are relate with supplier and customer.

  Developments in Supply Chain Management

  Six major movements can be observed in the evolution of supply chain management studies: Creation, Integration, and Globalization.

  1. Creation Era

  The term supply chain management was first coined by an American industry consultant in the early 1980s. However the concept of supply chain in management, was of great importance long before in the early 20th Century, especially by the creation of the assembly line. The characteristics of this era of supply chain management include the need for large scale changes, reengineering, downsizing driven by cost reduction programs, and widespread attention to the Japanese practice of management.

  2. Integration Era

  This era of supply chain management studies was highlighted with the development of Electronic Data Interchange (EDI) systems in the 1960s and developed through the 1990s by the introduction of Enterprise Resource Planning (ERP) systems. This era has continued to develop into the 21st century with the expansion of internet-based collaborative systems. This era of SC evolution is characteristic by both increasing value-added and cost reduction through integration.

  3. Globalization Era The third movement of supply chain management development, globalization era, can be characterized by the attention towards global systems of supplier relations and the expansion of supply chain over national boundaries and into other continents. Although the use of global sources in the supply chain of organizations can be traced back to several decades ago (e.g. the oil industry), it was not until the late 1980s that a considerable number of organizations started to integrate global sources into their core business. This era is characterized by the globalization of supply chain management in organizations with the goal of increasing competitive advantage, creating more value-added, and reducing costs through global sourcing.

  4. Specialization Era – Phase One – Outsourced Manufacturing and Distribution In the 1990s industries began to focus on “Core Competencies” and adopted a specialization model. Companies abandoned vertical integration, sold off non-core operations, and outsourced those functions to other companies. This changed management requirements by extending the supply chain well beyond the four walls and distributing management across specialized supply chain partnerships.

  5. Specialization Era – Phase Two – Supply Chain Management as a Service

  Specialization within the supply chain began in the began in the 1980s with the inception of transportationrokerages, warehouse management, and non asset based carriers and has matured beyond transportation and logistics into aspects of supply planning, collaboration, execution and performance management.Outsourced technology hosting for supply chain solutions debuted in the late 1990s and has taken root in transportation and collaboration categories most dominantly.

  TRANSPORTATION

  Introduction to the Transportation & Logistics Industry

  Transportation is one of the world’s largest industries. Its sectors range from taxis to trucks to airplanes, trains, ships, barges, pipelines, warehouses and logistics services.

  In the U.S alone, total freight shipment volumes are expected to increase by 70% between 1998 and 2020, according to a U.S Department of Transportation Estimate. The amount of freight moved through ports of entry (foreign goods into the U.S.) wills more than double in the same period.

  Globalization has had an extremely positive effect on the transportation and supply chain business. For example, United Parcel Service (UPS) delivered 3.97 billion packages during 2007, an average of 15.8 million per business day. While the firm’s U.S. package volume increased only 1.4% during 2007, its international volume was up an impressive 12.2% meanwhile, its revenue from supply chain and freight operations grew about 8% to $2.2 billion and profits soared in this sector.

  China had only about 200 kilometers of expressways in 1989. By the beginning of 2008, it had more than 50,000 kilometers of expressways, second in terms of length to America’s famous Interstate Highway system (roughly 43,000 miles or 69,000 kilometers). China’s investment in new infrastructure of all types, including highways and airports, equals 9% of annual GDP according of a study of 2005 budges.

  The goal of SCM is to link the market place, the distribution network, the manufacturing process & the procurement activity in such away that customers are serviced at higher levels & yet at a lower total cost.