Logistics and Supply Chain Best Practices

Posted on 23. mar, 2011 by in Operational Excellence

(versión en español en los próximos días)

united-kingdom-over13In a recent study* presented in the 8th International Conference in Logistics and Supply Chain Management Research, we summarized the best logistics and SCM best practices collected from a broad review of literature and validated from a panel of experts. Then, we evaluated the current situation and use of these practices in Spain. In this post I would like to introduce some of these findings.

Two of the most reported practices are those that focus on customer orientation and process integration. The aim of logistics processes and supply chains is to respond accurately and timely to customer request. In doing so, companies require a high degree of collaboration between the different partners in order to achieve process integration. Thus, the key enabler of process integration is information technology that allows companies to timely share relevant information about demand and inventory levels. The real value of these practices for businesses originates in cost reduction (cost) and faster processes (time). Examples of key performance indicators for logistics and supply chains are inventory turnover, cost of goods sold, and return on assets. Finally, evidence shows that companies and supply chains have to develop internal capabilities to support process integration. Recruiting and training professionals is fundamental for the implementation and management of these practices.

Best logistics practices extracted from this study include those related to the use of information systems and technology (IS/IT), the use of inventory management practices, transportation and warehousing management, reverse logistics and outsourcing.

With respect to IS/IT, best practices are related to the use of ERP systems, transport management systems (TMS), warehouse management systems (WMS), and more advanced systems that support sales and operation planning and broader collaboration (e.g. CPFR: Collaborative Planning, Forecasting and Replenishment; VMI: vendor managed inventories). Inventory management practices refer to a) coding practices for the control of part proliferation, b) identification and classification practices for the prioritization on critical items, c) modularization for the reduction of stocks through delayed differentiation. Automation of procurement, requisition and reception is other example of an inventory management practice. Finally, it is important to mention the set of more advanced practices such as multi-echelon systems, just-in-time deliveries and vendor-managed inventory.

From the data collected in this study (more than 900 companies), Spanish companies use IS/IT mainly for transactional processes. ERP and WMS are widely used; but e-business, TMS, and forecasting systems are scarcely used. With respect to inventory management, the advanced practices (e.g. coding, classification, multi-echelon and JIT) show low levels of use. In addition, the study argues that there is a lack of familiarity with these practices within the Spanish professionals. Then, there is an imperative need to develop logistics capabilities within companies. This represents a significant opportunity for improvement in the management of logistics processes in the Spanish companies.

I invite you to read more about this interesting study in the following link: Benchmarking Logistics and SC Practices in Spain

*I thank Professor Angel Diaz for allowing me to participate in this interesting study.

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