Logistics

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Analysis of the Marketability of the Current Logistics Chain

The following diagram is an approximate illustration of a consumer electronics source-to-UK-customer supply chain.

Mapping a supply chain allows managers to understand the durations, directions, costs, complexities, and constraints of its flows. The principle underlying logistics management is competitive advantage through logistical efficiency. Management of the logistical activities within a supply chain typically begins with a mapping of the major flows. Mapping can thus be considered the first step toward achieving/increasing competitive advantage through improvement/simplification of logistical activities.

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The SWOT is a useful - if sometimes not fully understood - tool for identifying a company's current and relative (not long-term or absolute) strengths and weaknesses. Done competently, a SWOT analysis can help develop strategy. However, the efficacy of a SWOT is often degraded by the biases of the author or the quality of the data available to the author. The following example is based on a Japanese company's UK operations division and concentrates on logistical considerations.

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In electronics, Porter’s “Five Forces” are powerful. Logistics represents a means by which economies can be achieved through specific efficiency improvements. Such improvements can translate into better service, which provides differentiation. Resultant cost savings can benefit the customer, who can pay lower prices.

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Balancing Supply and Demand: The MCC Pull System

MCC uses a pull-based supply chain, in so far as production is driven by orders. MCC’s inventory consists of pre-assembled modules that MCCs requests from suppliers only when an order pulling a car is received. Hence, the system is based on present demand information, which allows MCC to supply from manufacturing rather than inventory whenever possible (Harrison and van Hoek, 2002).

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Why MCC Assembles the Smart Car[1: Efficiency

The centrality of MCC and the Smartville information system means the manufacturing process resembles a closed loop/MRP[2] system. The closed loop MRP system operates in a cycle and includes planning, execution, feedback, and corrective action (Shim and Siegel, 1999). Constant feedback and monitoring is an essential element, allowing any changes in demand to be known, ensuring sufficient capacity is available (Filipini et al, 1998; Capkun et al, 2009). MCC needs to retain real-time control of the internal supply chain/manufacturing process, and does so through a combination of the information system and direct involvement viz. the final assembly process.

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Measuring and Assuring Partners’ Performance: Structuring-in Quality

Integrated suppliers provide their finished products to the main assembly line via conveyor. We assume this process requires suppliers to register order receipt and subsequent dispatch, as this would allow downstream work centres foreknowledge. This data would also be used to chart progress, calculate the mean processing times of the various work centres, and ultimately provide estimations of entire lead time (Taylor, 2001). The information system will also record supplier inventory, and depletion levels should trigger outward calls for replenishment, which will come directly from Tier 2 suppliers.

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