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PHILBERT
SURESH
Project Consultant
SCM & Logistics
TransLogistique Services
Toronto, Canada
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Crafting
a Logistics Strategy
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Sept
- Oct 2002 |
Logistics
strategy of companies is created through prolonged deliberations
often born out of trends that shape the future of business. If the
business is local, one would use a limited strategy but it becomes
really complex when companies decide to go global. The complexity of
crafting a global logistics strategy challenges the time and talent
of best of the breed in the logistics profession.
In United Arab Emirates and Dubai in particular several companies
operate as an extended chain of supply but modified to suit the
cultures and needs of the customers in the region. Like any other
craft, logistics strategy evokes traditional skill, dedication, and
perfection through mastery of detail. “What springs to mind is not
so much thinking and reason as involvement, a feeling of intimacy
and harmony with the materials at hand, developed through long
experience and commitment. Formulation and implementation merge into
a fluid process of learning through which creative strategies
evolve.”
Sculptures and paintings that adorn the walls of art gallery
everywhere is simply an exhibition of the commitment of the
sculptors and artists in any country. In a similar manner, companies
dedicated and driven by logistics strategies is the commitment of
all people involved in this transformational
process in business. Profits are made and success is achieved only
through a deliberate strategy of learning that modifies behaviour
and attitude of people to work.
Right
from ancient Greece to the modern business world of today, no single
person or general or business leader knows in advance so as to work
everything out and ignore the learning en route. The case of moving
a cargo from one place to another, across the oceans, above the air,
over the land and even into the desert, the logistics strategy must
be planned and implemented with dedication and control. ‘Effective
strategies can show up in the strangest places and also develop
through unexpected means.’ There is no one best way to make
strategy.
Logistics
strategy that concerns one group of companies is different from
others. The cutting edge of knowledge and wisdom develops through
observation of how strategies are applied. The personal observation
in a confined area of business may twist the perceptions of managers
and leaders. But knowledge of logistics and intimate understanding
of its application in the industry is equivalent to the approach of
the craftsman feel for the clay.
But
wisdom is a word that “has been lost in the bureaucracies that an
organization builds and the systems that distance leaders from
operating details.” Napoleon would have changed the course of
world history, if he had just known this.
Craftsman
or logisticians have to train themselves to see, to pick up things
other people miss. It is those with a kind of peripheral vision who
are best able to detect and take advantage of events as they unfold.
Logistics strategy will shape the future of companies and their
fortunes. Managers will have to live strategy in future, but they
must understand it through the past. So crafting a logistics
strategy is the synthesis of the future, present and past.
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The paradigm of a
world class city: Dubai in the making
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July
- Aug 2002 |
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The
summer break from the humdrum pursuits from Dubai provided the
opportunity for the writer to look at some of the world cities
- Milan, London and Toronto along with the logistics that
makes for creation of commercial centres. It is said that the
confluence of commerce in a world-class city creates
opportunities for trade, employment and entertainment of vast
magnitude. Major events like World Youth Day in Toronto;
Commonwealth Games in Manchester and Industrial Tourism in
Milan provide valuable insight into how world-class cities
take on the logistics challenge of moving people, goods and
services right into the middle of action. Not to be outdone,
Dubai also showcased an event like the ‘Dubai Summer
Surprises’ that would occupy the time of logisticians
involved in it. Dubai has emerged from the renewed initiatives
of the government where surplus wealth, the productivity and
close-grained juxtaposition of talents that permit society
(expatriates world-wide converge to bring in their expertise
of various kinds) to support advances in transportation,
technology and telecommunication.
In a forum on world-class cities organized by University of
Ottawa, some interesting points were raised that could be
easily be applied to Dubai - as a city that has been
experimenting in the laboratory of trial and error, failure
and success in city building and city design.
Commerce essentially sustains the life of a city as evidenced
by the Dubai Shopping Festival and Dubai Summer Surprises -
both annual events that focus on the market place (shopping
malls). The marketplace promotes a sense of community among
its inhabitants and anchors a thriving city.
Commercial
centers are particularly effective in helping a city grow when
cooperation is secured between the private and public sectors.
The architect, the developer, and the various levels of
government must collaborate in order to ensure effective urban
planning and development. This is evident from the Dubai
building cities - like Dubai Internet City, Dubai Media City,
Gold and Diamond Park, Dubai Festival City, and Dubai Cargo
City (on the anvil) just to mention a few that have won the
approval of trading community in UAE and the world at large.
This
is in addition to other free -trade zones that have already
added value for global logistics and the supply chain.
“
As commanding nodes in the world economy, world cities are
defined by dense patterns of interaction between people, goods
and information.” A rapidly expanding and sophisticated
global network of transport services and infrastructure
facilitates this interaction. Therefore the role of air
transport in the evolving world city is both crucial and
fundamental. It has important lessons for local airlines in
Dubai in terms of connectivity, global airline flows and air
networks as preferred mode of intercity movement for the
transnational capitalist class, migrants, tourists and
high-value, low-bulk goods. Airline links are an important
component of the city’s aspirations to world city status and
how the phrase “direct flight to a destination” has become
a metaphor for logistics success.
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Disintermediation
in SCM |
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May
- June 2002 |
Change
in business organization is effected by the concept of
disinter mediation that affect all alliances and partners in a
distribution strategy. Market disinter mediation is much
sought after for reducing cost in the movement of goods,
establishing direct contact with the consumer and thus adding
value to a supply chain. By removing a layer of traditional
channel partners in distribution, the new intermediaries
present both problems and opportunities. The problem is how to
ensure prompt delivery without delay for customers who order
on-line. Efficient customer response (ECR) that pulls the
inventory through the system becomes an obsession with
logisticians around the world. The system supporting the
supply chain must ensure that opportunities for rapid customer
service is not missed out by lethargic responses from a
company which is slow to implement the changes in culture and
business practices. Internet is indeed a major disinter
mediating force in today’s business world although some may
not concede the efficacy of technology after the bubble burst.
Transforming a supply chain into a value chain is a strategic
measure of agile organizations that are responsive to the
pulse of the market. The structure of
the
supply chain determines the posture of the firm vis-à-vis its
environment, competitors, suppliers and customers. However,
firms do recoil after a recession that has led to
restructuring and layoffs. The challenge is to regain consumer
confidence and improve supply chain efficiency although in a
turbulent business environment. These confidence-building
measures add value to the supply chain across the organization
and it is always good to remember that retaining existing
customers is more profitable than establishing new ones.
What gets measured gets done and this is absolutely true in a
chain where performance measurements are implemented under -
• ROI (Return on Investment) and ROA (Return on Assets).
• Sales and costs (total, by region, by brand, or by
account, per square foot, for example).
• Profits and other margin measures such as ROS or return on
sales (often in percentage terms and reported by the same
categories as sales and profits).
• Market share and so on growth or lack of growth in any of
these measures is usually intensely monitored. Certainly, an
unexpected variation in one of these performance measures can
become a compelling source of change motivation.
Additional measures that some firms are starting to use
concern performance across the supply chain such as
Asset Management - inventory turns, obsolete inventory,
carrying costs, number of days supply.
Costs - inbound and out bound freight, warehousing, order
processing, direct labour, ABC ( activity based costing), DPP
( direct product profitability).
Customer Service - fill rate, stockouts, backorders, total
cycle time, sales force feedback, satisfaction surveys.
Productivity - units shipped per employee, units per labour
dirhams, orders per sales representative, productivity
indices.
Quality - total quality, damage frequency and dirham amount,
customer returns and credit claims, cost of returned goods.
All of the above performance measurements can effect changes
in the value added to a supply chain.
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ASCENT OF MAN
AND THE LEARNING
ORGANIZATION IN TRANSPORTATION
AND LOGISTICS
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20th
April 2002 |
BBC2
presented a TV serial on the research done by Prof. Jacob Bronowski
in 1974.
This
has relevance to the topic of our study, as our community progresses
in the technocratic society. For all his praise of genius, from
Galileo to von Neuman, Bronowski remains committed to what he calls
a democracy of the intellect, the responsibility which knowledge
brings, and which cannot be assigned unmonitored into the hands of
the rich and powerful. Such a commitment, and such a faith in the
future, may today ring hollow, especially given Bronowski's
time-bound blindness to the contributions of women and land-based
cultures. Yet it still offers, in the accents of joy and decency, an
inspiration, which a less optimistic and more authoritarian society
needs perhaps more than ever.
If
education is to liberate man or woman from ignorance, then pursuing
a well thought out plan for a specialized program in Transportation
and Logistics should have a great impact on the openness of the UAE
economy. There should not be any discrimination of the type of
program being offered as long it serves the needs of the industry.
The students from this business specialization could enjoy the
fruits of this industry that is running amuck under the impetus of
heavy investment in the infrastructure of transportation. National
women in UAE will be able to participate in the democratizing and
humanizing influences of the education and workplace. As the people
rise up to the challenges of the workplace, then it could be said
that there is ascent of man or woman in the society. It is expressed
as serious wish of educational administrators that “ access to
higher education means nothing unless it is a access to quality.
If we continue to neglect our infrastructure, the quality of
our programs and services will deteriorate rapidly.
A nation’s future depends upon the collective skills of its
workforce and which in turn hinges on a human investment strategy.
Higher education has never been as important to the future of the
UAE as it is right now.. Although it cannot guarantee rapid economic
development, sustained progress is impossible without it.”
Tiny
mutations in the brain cells trigger mankind’s progress from state
of darkness to the state of enlightenment. The biochemist, David
Horrobin argues that the changes, which propelled humanity to its
current global ascendancy, were the same as those, which left us
vulnerable to mental disease.
Now
let us discuss about the learning organization that encourages
empowerment of learners especially in specialized education like
international trade, transportation and logistics. Learning
organizations is one in which people at all levels, individually and
collectively, is continually increasing their capacity to produce
results they really care about.
Why
should organizations in Transportation and Logistics care?
Because, the level of performance and improvement needed
today in ports, customs and free zones operation requires learning,
lots of learning. In
most industries there is no clear path to success, no clear path to
follow.
What’s
in it for trained students in transportation and logistics? Learning
to do is enormously rewarding and personally satisfying.
For those of us working in the field, the possibility of a
win-win is part of the attraction. That is, the possibility of
achieving extraordinary performance together with satisfaction and
fulfillment for the individuals involved.
Marcel
Proust once said that,” the voyage of discovery lies not in
finding new landscapes, but in having new eyes."” So in a
demanding organization where outstanding results are produced, it
does affect the learning styles of people. The students in
transportation and logistics industry will be prepared to learn a
process about personal and organizational transformation with an
experiential visceral engagement with real business issues pivotal
to his/her on-going success. This process includes detection and
correction of errors in different work places where this learning is
encouraged to the benefit of the individual. Thus individual
learning objectives are facilitated or inhibited by an ecological
system of factors that maybe called an organizational learning
system. Peter Senge reminds us here that,” the organization in
which you cannot not learn
because learning is so insinuated into the fabric of life. So the
rate at which organizations learn may become the only sustainable
source of competitive advantage.” The companies in United Arab
Emirates in the T & L sector like the Ports, Customs and Free
Zone Corporation in Dubai has an ingrained philosophy for
anticipating, reacting and responding to change, complexity and
uncertainty. To achieve these capabilities, organizations must
actively engage in four key activities that are integrally linked to
learning:
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Information
and knowledge acquisition
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Information
and knowledge distribution
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Information
interpretation
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Maintenance
and adjustment of organizational memory
Information technology is involved in
every one of these activities and can support or inhibit efficient
and effective learning. We will examine this aspect later in our
discussion on technology in Transportation and Logistics.
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