“Optimally configuring a supply chain requires warehousing and/or transportation to be considered as an integral part of the supply chain design process.”Discuss this statement with particular references to DHL or UPS.
With increasing globalization, demand for goods and services are becoming global, and the supply chain for goods and services are becoming longer covering a large area. Therefore, business requires an efficient combination of contract logistics and freight management that requires a well-organized supply chain management. Business managers believe that the success of their company depends on having an efficient, effective and all-inclusive supply chain management plans (CHRISTOPHER, 2012). Firms are investing more on managing logistics, proper warehousing and transportation of goods from production plant to consumers to ensure that demand is met and hence the creation of time utility. A Supply chain is defined as an integrated process where different business entities such as manufacturers, distributors, suppliers and retailers combine effort in production, distribution of goods and services within the economy (HUGOS, 2011).
However, this paper provides insights into the notion that configuring a supply chain requires warehousing and transportation to be considered as an integral part of the supply chain design process using DHL as an example.
Typically, a supply chain is characterized by forward flow of both goods and services and a backward flow of information from customers to the producer (WISNER et al., 2015). Supply chain design process focuses on performance, design, and analysis of the entire supply chain. By and large, this is as a result of the changes in the manufacturing environment such as globalization of market economies, the rising cost of manufacturing, shortened product life circle, and depletion of production resources. A supply chain encompasses two important integrated processes. First is the production, forecasting and inventory management process. Secondly is that a supply chain helps in the distribution and logistics process in the supply chain design (MELNYk et al., 2011) .
Diagrammatic representation of a supply chain
DHL Company Background Information
DHL Company is one of the largest logistic companies with branches over 220 countries across the globe. The company has more than 325, 000 employees who are dedicated to providing solutions for many logistic needs. DHL is a subsidiary of Deutsche post which is one of the largest logistics and postal group (COSIMATO & TROISI, 2015). The company provides services in DHL express, freight, DHL supply chain, and Global forwarding.
DHL provides world-class supply chain process encompassing production distribution and logistics process. Hence provide the basic framework in conversion and movement raw materials into final products. The success of the company is due to its ability to adapt to fast changes in the economy especially the fluctuating consumer demand (DHL, 2009). The company boasts of human resources as well as capital resources that provide efficient warehousing, distribution and management of the supply chain.
Warehousing and its significance in the supply chain
Warehousing is an integral part of a logistics management system in the supply chain process. Warehouses play an important role in providing a central location for receiving, storing and distributing goods. When the demand for a company’s products is high, the company needs to move the goods in order to capitalize on the sale of such goods. On the other hand, when the demand drops, the organization need to devise ways of keeping the costs down whilst providing flexibility to help pursue new ventures (Chahal & Singh, 2012). The ability to maintain an efficient supply chain depends on warehouse management systems. These networks interconnecting stores, warehouses, factories and transport facilities such as trucks requires a database that is centralized, to provide vital information regarding the movement of goods in the supply chain (SCOTT et al., 2011).
DHL supply chain integrates inbound logistics, with turnkey production of hardware and software which enables the company to integrate the supply chain design process. By incorporating warehousing, managed transport and commissioning of tasks to help in deploying solutions in the ever changing business environment. The company provides global warehouses placed in strategic positions with forward stocking location to determine the success of each market. DHL provides inbound functions that help in preparing goods as well as outbound functions whose core activities include consolidating, packing and shipping orders (COSIMATO& TROISI, 2015). As inbound batch arrives, products are sorted before they are being dispatched to warehouses for temporary storage.
On the same note, the organization supply chain design process incorporates repair, return, advanced replacement, product exchanges and on-site repair. The consolidation of operations reduces the delivery cost of items for both firms as well as customers. Accumulation operations in DHL warehouses operate as a buffer to help in balancing demand and supply of goods for seasonal and long term storage.
The use of Radio Frequency Identification (RFID) technology has revolutionized warehousing management system by enhancing accuracy, productivity and efficiency in the supply chain design. DHL uses RFID technology to track inventory in the warehouse. Radio Frequency Identification technology enables DHL Company to automatically scan and register cargo leaving or entering the warehouse in a speedy and professional manner. On the same note, DHL have invested in new technologies such as automated supply chain software to create a faster and more flexible work environment competent enough to delivering goods to consumers quickly more than anticipated.
Importance of transportation in the supply chain process
Transportation is quite imperative in the manipulation of logistics. The operation of transportation is one of the determinants of the efficiency of transfer of goods from one place to another. Revolution of management principles and techniques required has helped in improving the process of moving a load, the service quality, operation costs, delivery speed and the usage of facilities such as warehouses and trucks. In the production sector, transportation logistics is crucial in optimizing the existing production and distribution processes using the same resources to help in promoting efficiency and competitiveness of firms (SCOTT et al., 2011). DHL provides freight services to customers over Europe, Middle East and North Africa using road, rail, air and inter-modal transport. The company offers multi user transport solution putting a lot of emphasis in integrating logistics operation. The company offers delivery on appointment, transport of hazardous goods, chemicals as well as third party logistics.
According to Stadtler (2015) the key element in a supply chain is a transportation system as it provides a link between the separated activities intertwined in between production distribution and consumption. Transportation system acts as an intermediary among the several steps that helps in conversion of raw materials into finished products that has value to the consumers. A good transport system avails goods and products by making them movable from one region to another. Consequently, transportation provides timely and regional effectiveness hence promoting value addition at a least cost principle. Transport has an impact on logistic activities and it influences production and sale activities. Therefore, transportation is very important in designing the supply chain process as it impacts directly on the overall supply chain activities.
DHL incorporates a state-of-the-art IT in addition to track-and-trace, a system which enables the company to provide high performance standards in providing services to the public (MOCKER et al., 2014). The company freight trucks are fitted with these systems in order to be able to offer visibility of shipments via the World Wide Web.
With the increasing globalization rate, many organization and customers are creating business connection around the world. Companies are constantly looking for new markets to sell their goods. To achieve this, companies need to have a good transport network system that enable the organization move their goods to the new market. Transportation is, therefore an important concept when developing an effective and efficient supply chain design process.
The supply chain is therefore a multifaceted process encompassing production of goods by firms, storage of goods in warehouses, transportation of goods, distribution of goods through retailers (SCOTT et al., 2011). And finally management of these complicated processes to achieve efficiency in production and distribution of goods and services within different regions for easy access of such goods and services by the consumers.
To sum up, the creation of an effective and efficient supply chain design process require careful and well thought out plans achieved through the integration of warehousing and transportation. To help a company in storing of goods, on the same note, transportation helps a company to move goods from the production site to the regions where such goods and services are of high demand. Warehouses helps in the supply chain by ensuring that demands are met during high season and at the same time goods are well stored during the low season until the goods are demanded (STADTLER, 2015). Consequently, transportation plays an important role in optimizing the existing production and distribution processes in order to provide a link between activities relating to production, distribution and consumption of goods (HUGOS, 2011). Therefore, it is true that in order to optimally configure a supply chain, warehousing and transportation must be considered as an integral part of the supply chain design process.
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