Radical change in distribution system<\/p>\n
Robert Sanjaya, Contributor, Jakarta<\/p>\n
With the emergence of a global marketplace, businessmen
\neverywhere are seeing a radical change in distribution systems,
\nincreasing the need for timely information management and higher
\nconsumer expectations.<\/p>\n
Meanwhile, unprecedented levels of competition are shortening
\nthe time-to-market and heralding an age of product and service
\ncustomization. And finally, globalization of productions and
\nmarkets has led to growing complexity in Supply Chain Management
\n(SCM).<\/p>\n
Logistics is that part of the supply chain process that plans,
\nimplements, and controls the efficient, effective flow and
\nstorage of goods, services, and related information between the
\npoint of origin and the point of consumption in order to meet
\ncustomers' requirements.<\/p>\n
Part art and part science, logistics is a natural extension to
\nthe transportation industry, whether by sea, land or air. As a
\nresult, manufacturers look to air express companies and third-
\nparty logistics (3PL) providers for time-critical deliveries and
\nfulfillment through innovative solutions that will optimize their
\nsupply chains.<\/p>\n
Not surprisingly, companies traditionally involved in
\ntransportation have evolved into full service organizations that
\ncomplement their core transportation business with logistics.
\nMajor courier companies such as DHL, TNT, UPS and FedEx have been
\nactively involved in providing integrated logistics solution
\nservices.<\/p>\n
Most of the companies have transformed themselves from being
\nair express companies delivering documents into integrated
\nlogistics solutions providers that can handle anything from a
\nletter through to a shipment of containers and providing all the
\nnecessary services in between.<\/p>\n
Early in March, I met with Dr. John Gattorna, the world's
\nundisputed thought leader in the science of supply chain
\nmanagement who is also a professorial fellow in supply chain
\nmanagement, and co-director of the Supply Chain Research Center
\nat the University of Wollongong in Australia.<\/p>\n
He gave me a very an interesting insight into the supply chain
\nmanagement trend. According to him, enterprises can no longer
\ngrow and prosper just by continually cutting costs. Instead, they
\nhave to grow by investing in supply chains that can enhance their
\nperformances.<\/p>\n
"Every organization -- product manufacturer, service provider,
\nprivate or public -- has supply chains of some type or the other
\nrunning through the enterprises. The challenge for enterprises is
\nhow to build these supply chains in a way that responds to their
\ncustomers' needs with the appropriate value propositions and
\nstrategies," he said.<\/p>\n
I'm not an expert in supply chain management, yet all those
\ncomments sounds reasonable to me.<\/p>\n
Compared to the Philippines, China, Thailand, Malaysia and
\nTaiwan, the SCM concept in Indonesia, and several other countries
\nlike Laos, Cambodia, Vietnam and India, is still relatively new.<\/p>\n
However, as an archipelagic country with abundant natural
\nresources and a large population, SCM practices could flourish in
\nIndonesia.<\/p>\n
A company implements SCM because it has a significant impact
\non both short-term and long-term goals such as profit, market
\nshare and customer satisfaction.<\/p>\n
Companies have different approaches in adopting the SCM
\nconcept. But most experts advise that the first thing to do
\nbefore applying SCM effectively is that a company must know the
\nactual expectation of customers. Knowing the customers' real
\nexpectation is, therefore, a key factor that must be considered
\nbefore introducing supply chain practices in a company.<\/p>\n
The second step that must be considered is to realize that no
\none supply chain management approach is better than the others.
\nCompanies which produce similar products might have different
\napproaches in their supply chain practices, depending on their
\nrespective business strategy and business norms.<\/p>\n
The most important thing is how each company assesses the
\neffectivity of their respective approaches in fulfilling their
\ncustomers' expectations.<\/p>\n
Once the decision to implement has been made, a company should
\nlay the necessary groundwork so that supply chain management can
\noperate properly. The concept should also be taught to all the
\ntiers of the management so that all the related workers
\nunderstand their respective tasks, including if the company
\ndecides to outsource the supply management chain to third party.<\/p>\n
Outsourcing to a 3PL<\/p>\n
Nowadays, many manufacturers rely on a 3PL company to manage
\ntheir supply chain and logistics solutions. By outsourcing their
\nlogistics needs to specialized companies who can provide
\nstrategic inventory management, distribution, inventory
\nmanagement, production support, spare parts\/repair exchange
\nservice and goods samples service, businesses will be able to
\nincrease their competitive edge in their own market place<\/p>\n
In many cases, these express logistics distribution solutions
\nare carried out at express logistics centers and logistics
\ncompanies typically have an international network of such
\nfacilities to cater to their international customer base.<\/p>\n
But, why else should a company outsource its warehousing and
\ndistribution if they have their own warehouse?<\/p>\n
These days, companies don't see warehouses as just a place to
\nstore goods, but as a component of the integrated flow processes
\nwithin their internal supply chains. Indeed, there are very few
\nlarge companies who want to build, own, and operate their own
\nnetwork of warehouses since this is no longer cost-effective.
\nInstead, they prefer to move their products through a
\ndistribution system belonging to a 3PL firm.<\/p>\n
One example on this is Ford Motor Indonesia. The company
\nrecently appointed a 3PL company to manage the auto
\nmanufacturer's nationwide warehousing and distribution of
\nautomotive spare parts and accessories.<\/p>\n
Will Angove, President Director of Ford Motors Indonesia
\nstated that in their business, being able to provide the best
\nlevel of after-sales customer service is as important as having
\nthe best products. Every day, thousands of their customers who
\nuse Ford vehicles rely on them to ensure that replacement parts
\nare there for them no matter where they are in Indonesia. And
\nsince Ford has four extremely popular models like the Ranger,
\nLynx, Escape and Everest, the challenge of maintaining and
\ndelivering the thousands of spare parts needed becomes very
\ncomplex.<\/p>\n
"The benefits of having DHL manage our entire warehousing,
\ntransportation and distribution operations were far too
\nattractive to pass up. By outsourcing the supply chain component
\nof our business to the expert, our management resources can be
\nfreed up and deployed in our areas of core competency, which is
\nin automotive marketing," he said.<\/p>\n
In addition, according to Montgomery Research Inc, companies
\nwho subscribe to professionally outsourced logistics services can
\nexpect to see an overall reduction in their supply chain costs of
\nbetween 10 percent and 20 percent.<\/p>\n
These savings come from operations, transportation and
\nmaterials management. At the same time, inventory levels can be
\nreduced by between 20 percent and 40 percent in many cases, while
\nmaintaining or improving customer service.<\/p>\n
And, because the service is outsourced, companies are able to
\nbenefit from lower fixed assets, improved asset turnover, and
\nultimately, greater cash flow.<\/p>\n
So hopefully in the future, more and more enterprises in
\nIndonesia will understand the benefits of SCM and implementing
\nSCM effectively in their company. -- The writer is a public
\nrelations consultant of an international courier company.<\/p>",
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