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 [分享]5PL, A Solution to Address Logistics Concerns & Problems |
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[分享]5PL, A Solution to Address Logistics Concerns & Problems -- 二悟村 - (9067 Byte) 2007-3-05 周一, 22:18 (4541 reads) |
二悟村
头衔: 海归少尉
加入时间: 2006/08/19
文章: 9
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作者：二悟村 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Things get more complicated when the enterprise culture delved into a much more complex, mixed with controversial business philosophies and conflicting theories of business management, tumbled across the different business operation routines, all were gloried with sensitive histories…
Imagine a 100 year old company with a market reputation acquired by a 30 year old company of with more cash, following its earlier acquisition of a 5 year old business with a niche technology…the big picture is perhaps to upgrade the technologies and hopefully widens the market category coverage in an established market, under a new corporate vision coupled with a new set of competitive strategies formed with newly acquired strengths…all to be integrated for its coordinated strategic and tactic moves in the market as one entity!
Presume that all sub-entities of this hypothetic enterprise share the same established notion over the same logistics management problems, presume the logistics operation procedures between the sub entities are now uniformed, and their infrastructures are identical, presume that all logistics staff at the different sub entities shared the same competence to execute the same corporate programs to achieve their initiatives under metrics, presume that all hands at all functional departments of all the sub entities are equally eager to abandon their different old routines to adapt the new schools of logistics management theories and lending equally supportive helping hands…with all the above listed presumptions and beyond which only exist in the ideal world, we contend that in such a case, in addition to the product management concerns over the marketing staff across the formerly three separate entities, there lies the need, to initiate and sustain competitive and true cost controls, for a seamlessly integrated SCM system across the purchase departments, the inventory management/operation sub-entities, the master scheduling and material management departments…and the shipping departments between the new corporate and the new divisions. For a now uniformed corporate structure supported with different SCM infrastructure in such case, the intra-enterprise resource sharing capability seems to be at question. The integration programs of enterprise mergers and acquisitions would often highlight such cultural differences by revealing the problems caused by the contradicting philosophical differences and routine practices between the divisions.
Presume that the company forecasted the demand with assistance of a great BI product, in which the inputs to the optimization models were all collected from the company’s own archived historical data. The perfect balance between the logistics service frequencies, transit times and the corresponding freight service grades and associated costs, in correlation to the inventory costs and the purchasing costs…was all reflected in stimulations of various scenarios.
The intra enterprise resource sharing infrastructure theoretically ought to be a great tool, when it comes to the enterprise-wide planning for SCM activities. How about inter-enterprise resource sharing (conditional) in the triangles between enterprises and their suppliers, as well as with their customers?
In parallel to the organizational change based vertical cultural changes in the commercial entities, there have been more recent waves that produce equally significant impacts on the enterprises that call for horizontal cultural changes: the globalization of economies have extended the scope of competitive arena and therefore have introduced much more tough competitions to the otherwise separate market segments. The commercial entities are facing ever growing pressure to look into alternatives of global sourcing as to stay competitive at home market to counter the impacts worldwide. What does that mean in terms of cost accounting, when the enterprises have dominantly been sourcing domestically are now dealing with business cultures so different? How significant are the bearings of the transit time and frequencies from and/or to the corners of this global under certain negotiated freight rates to a commercial entity in terms purchasing, master scheduling that contribute to the cost control? What if any changes incurred to the perfect production or distribution schedules based on certain arrangements of the service transit time and frequencies of inbound shipments, and therefore the on-time delivery of outbound shipments?
Let’s set another hypothetic case and imagine a company elects to move 50% of its material and component sourcing to vendors overseas, the justification is to reduce the unit costs and increase its competitiveness, knowing the competitions already sourced overseas for the same purpose.
Presume by such overseas sourcing, the labor cost element is reduced by 65%, adding logistics cost by 15% based on the known freight costs. It seems after the off set on the freight costs against the labor saving, it would be likely that a roughly 50% saving could be realized right on the target as an initiative. This is to presume the inbound shipments will arrive on time as scheduled without any interruptions.
Now, let’s add the complications to the situations: Vendor A had a production schedule interruption and delayed its delivery schedule, the company is now in a dilemma between rushing the shipment in at a premium freight cost or change its own production or distribution schedule so as to stay on-time for outbound shipments as scheduled.
Since interruption of the original schedule will impact on the full utilization of the company’s own production/distribution capacity which was the optimized conditions the unit cost accounting was based upon, the decision is to pay for the premium freight.
Unfortunately, the inbound shipments were rushed in at extra freight costs and still arrived behind the originally scheduled time slot, only to find that the company production schedule is now moved behind at the request of the customer, so the inbound shipment is now on stock in warehouse, the carrying costs on the unit just got increased. In the meantime, the domino effect of the now open time slot created by the outbound delivery schedule delay also created domino side effects which changed the unit costs not only on this specific order, but also contributing to the unit costs of other orders.
Presuming, again, the ERP captured all these changes and contributed to the newly calculated unit costs, the sales contracts/order placements already set firm on the stipulated selling prices, and the sales department refuses to change it just because the purchase department, or the logistics department, or the production scheduling/material planning department, or all above combined, just messed up…
In this hypothetic but very realistically practical case, how much exactly was missed in each item from the projected profits based on the otherwise accurate cost accounting?
In this hypothetic case, the author is tempted to contend that the impacts initiated by external changes in the typical inter-enterprise correlations are not covered by the intra enterprise resource sharing products as of today.
Not all enterprises, from retail industry to manufacturing industries, recognize the same logistics problems and recon with same solutions in their corporate visions; while each individual enterprise, has its own history and its unique corporate culture that may resort to same problems with different solutions. The variations ranging from various schools of logistics managements in theories and in practices reflect the different enterprise recognitions of logistics problems and their solutions (or at least the priorities in allocating the enterprise resources to resort to such solutions) derived from different cultural roots. One can “get by just fine” for a while, simply by relying on the same old routine established for decades, until the competitions drive to change or to go under, go away… The swift developments of market complicates both side of the supply/demand equation, while the growing competitions between rivalry suppliers sophisticate the logistics related problems in all dimensions. While logistic operation managements are perceived and practiced quite differently from one enterprise to another, there is at least one thing in common between their practices: logistics interfaces, correlates and remains inter-dependent with three prime contributing elements: procurement, inventory and shipping.
Publicly traded businesses of significant sizes are increasingly metrics driven of their performances, where the managements are held accountable. More and more enterprises find themselves where successes are being qualified and quantified, measured by pre-set criteria against bench mark as part of the corporate visions, Six Sigma and/or Lean management systems are being implemented to introduce metrics based operation procedures. Are the similar KPI based operational procedures being designated and implemented enterprise-wide in the logistics operations as in all other departs/divisions? If not, how could an enterprise accomplish its overall objectives? If yes, are the enterprise CM/Logistics operations effectively contained for the systematically gauged robotic performances?
Certain topnotch enterprises already have the concepts and the organization structure to follow through with “Operational Excellence”. However, while the metrics seemed to be well designed, the tools and the methodologies are not quite there, while the operational managements trained quite some energies in filling up the statistics and the analysis all manually by spread sheets, independent from all the implemented ERP/MRP and WMS, TMS, BI…the legacy of six sigma before the times of online database supported portal technologies for knowledge based automated operation process platform.
Amid to the strong performances of the various market facilitating mechanisms, the widespread corporate merger and acquisition campaigns brought the ongoing and sweeping global scale corporate organization changes. The re-organizations expanded the enterprise economy scales and may offer the advantages of resource utilization leverages, if the enterprise resource sharing infrastructures are well integrated. Regardless the actual outcomes, all such strategically orchestrated changes drive tactical solutions to address significant challenges in vertical cultural differences in corporate structures with massive integration measures: the vertical integrations within corporate structures are more about cultural changes than about the organizational adjustments and key personnel changes therefore requires implementations of change management for a new corporate culture to share a new corporate vision. The new corporate vision, once formed appropriate to the new strategic structure, is to be synchronized to the full entirety of the recognized new values at core, of a specific school of business thinking and the way of conducting business. These phenomena produce further managerial challenges: the state migration of an enterprise following acquisitions must first go through a cultural integration. Increased organizational complexities added by the mergers and acquisitions represent true challenges in corporate culture integrations, before the ERP/WMS/TMS system integrations.
Presume all parties have their own ERP/WMS/TMS/BI designated to suit their own corporate culture based business routines, who and how to integrate between these system islands isolated by the corporate cultures? The change management programs are to pull all the old sub-corporate cultures of various divisions (post acquisitions) out of their comfort zones where established routine are well preserved.
A new knowledge body of logistics operation and planning management of 21st century is therefore needed, in respond to the call for metrics based logistics management seamlessly integrated into the SCM system at enterprises, whereas the intra and inter enterprise resource sharing capabilities and capacities are implemented as part of the infrastructure. It is further integrated into the principle enterprise’s operations both technically and culturally with wider ranged interfaces and deeper penetrations. This new knowledge body of logistics management is logically referred to as “5PL” or “5th party logistics”, in the outstanding XPL sequence.
With the information technologies available today, 5PL is a collection of new solutions now viable to address the new logistics problems. However, the technical problems are comparatively much easier to overcome. Those who are experienced in software implementations may share the often stressed yet underestimated fact: more often than not, the real challenges in designing and implementing enterprise application software program come dominantly from the very people that the programs are supposed to help.
Let’s look at hypothetical cases for where and how a 5PL could help an enterprise to take their logistics management to the next level. Many may identify the problem patterns described in these hypothetical cases as similar or even identical to the ones at their own organizations:
In hypothetical case 1, we depict a global metal trading firm of billion dollar annual revenue, as a division of a publicly traded company. The division has deployed Oracle, but as part of infrastructure integration, it is now required of a corporate wide uniform the ERP system into SAP between all divisions. Unfortunately, as much as such conversion implementation cost, the logistics/traffic policies and practices at division level are still independent from each other, with different trade routines in the same market. It is considered entrepreneurial dynamics to stay operational at division level with such autonomies, while the division yields on the average about 3% for net profit. At the massive capital volume base, a net profit of just 3% translates into an impressive number, whereas the logistics operation of such trades can be a key revenue determination between profit and loss. Think about the logistics service operation funds required for the economy scale of this division!
What is the reference of market going rate and trends for cost determination? How do we know when and in what trade lane at what volume one should opt for FOB type of purchasing term as versus CIF type of purchase and the price gap in between?
The answers to these questions impacts on the profit margins of the trading operations. Should one rely on their traders and to dictates the logistics practice for the division? This division did just that. Actually, such info is available from subscription resources where many chartering brokers tapping into as their hidden book. It can be integrated into enterprise’s infrastructure to work with the ERP, Oracle or SAP. But the ERP conversion implementation can not change this problematic practice, just as an incompetent driver cannot win a race by given a great racing car, the ERP systems output are the results whatever the inputs supplied, otherwise known as “garbage in and garbage out”.
Among many international vendors, one Chinese company supplied the most commodities to the division in recent trade activities. The vendor had its own logistics service company to handle all their shipments proactively, which operates as an independent profit center. In all trades with this vendor, the division management let a trader dictating the logistics/traffic policies, as well as specific practices of the division. The division has quite a tactical task force for its chartering operations on the post fixture part. But the pre-fixture process is nominated by traders who rely on brokers for freight market info that can be subscribed to for 2500 dollars annual fee, at costs of no less than half a million dollar chartering brokerage. As a result, in its pre-fixture chartering practice, instead of pooling the significant volume of their break bulk cargo together and to enter direct dialogues (off market) with carriers, the division stays comfortable relying on a chartering broker to pursue piece by piece in the spot charter market.
Break bulk chartering is comparatively a small circle in the United States, the necessity of keeping the broker in the loop at its current chartering/logistics structure ought to be appropriated. It is not about at least half of a cool mil to be saved by cutting off the broker; it is the multi million dollars can be saved by engaging direct a dialogue with a carrier who came from a historical cargo/tonnage balance planning system! With the overall traded volumes (which we know is at very significant sizes) and its allocations across the trade lanes, the categories (in this case we do know it is all break bulk of normal gear capacity requirement) and to take it directly to a large fleet carrier who has break bulk tonnages of global presence, pursue COA on speculated volumes within certain range.
It is hard to believe that no one at such a multi billion dollar trade enterprise had heard of the consolidated power over freight bargains. A corporate vision and corresponding programs to synchronize all logistics/SCM operations in operation metric based logistics procedure should help this enterprise improving its profitability. The implementation of their ERP uniform conversion in this case seemed to have proceeded before the divisions were ready for the state migration.
While the east bound of trans-Pacific trade is not entirely the charterers’ market at this point, having an alliance with the east bound charterers/shippers would make sense to both the steamship lines and the charterers/shippers. In fact, the carriers already have their tonnages pooled in such arrangement with a front running operator acting in their behalf collectively in Europe, the charterers/ shippers could follow the example to consolidate their bargaining power by pooling the cargoes.
Instead of going through the rate indication pooling process in the open market, the enterprise could lock into a fixed range with certain tonnage commitments from pre-qualified carriers for carriages in standardized terms, in exchange for certain volume commitments. This is a mutual benefiting arrangement between carriers and charterers with sizeable freight volumes. The reduced range of freight fluctuations and diminished needs for speculations would strengthen the traders’ positions in their daily trading activities, while it can be easily facilitated with total online transparency in between the infrastructures of two parties on the same COA arrangements, of absolute conveniences needed by all operating hands in such global operation around the clock in real time. Of course spot charter market is not to be completely ruled out as carriers may probably have uncovered spots from time to time. As a contingency means, enterprises should maintain its marginal channels for tonnages from spot charter markets. But this is still within the chartering practice norm for all chartering professionals.
Is the logistics operational management at the division competent? If yes, why allow interferences by non logistics parties of its operational policy and professional practice? If not, why not to introduce competent hands to its operations? A 5PL in this specific case would first look into the enterprise (at division level if the corporate entity is not a contracted client) objectives and the capacities of the function roles, to assist the enterprise to establish bench marks and a metric system, then to process appropriation and re-standardization, before proceed to infrastructure designation and implementations.
Furthermore, where a ERP system is available, the critical logistics costs can be analyzed via an optimization model with inputs from subscribed sources, (which statistically report all trading activities in spot freight markets, as well as termed future freight markets…) in lieu of intuitive human experiences and speculations by individual chartering brokers. The marginal profitability from each trade transaction can be thus much more realistically projected, much better planned and logistically engineered. A client enterprise in this case should specifically require the 5PL in a outsourcing contract to perform and satisfy certain metrics, and to improve the overall operational and financial performance of the division, to migrate from its current state to the future state of next level measured by a set of periodical subjective criteria agreed upon between the client and the 5PL.
At the given economy scale of this metal trading division, just to project and to fulfill an objective of 0.1% saving from its current logistics service costs would be significant: much more than paying off for a qualified 5PL deployment. However, 5PL would never get into any arguments with senior management of an enterprise in definitions of good logistics management, or chartering practice for that matter. 5PL could only provide value added services to the enterprises already embarking on courses towards metrics based procedures in their business practices. It MUST be metrics in context at discussions on the table as the subject of logistics service outsourcing contracts. If an enterprise is not talking in specified expectations in terms of particular set of KPI to measure the performances and the results within certain spans in clearly defined categories, then the cultural background of the enterprise is not ready for a 5PL, who would takes change management tasks only as the senior management of its client is truly motivated for a state migration.
In hypothetical case 2, this is an oil and gas upstream engineering service firm of multi hundred million dollar annual freight expenditure, a very respectable neighborhood of enterprise economy scale: at such a economy scale, projected and engineered logistics cost saving initiatives are significant in dollar amount even at seemingly insignificant proportions.
The enterprise already has its logistics policies and programs established at corporate level, with MRP implemented. Its logistics management was structured as part of its SCM organization. Initially the logistics management works with 3rd party logistics service providers to handle arrangements of shipments and customs clearances.
A great plan is undergoing to establish a break bulk traffic hub of distributions at a major European port, where a forwarding base is to perform a “cross dock” type of operations. The rationale behind the plan is that break bulk services to regions like West Africa originated from the U.S. ports are not popular trade lanes. It would be a great planning tool, with supports in data collections, compilations and analysis on service modes of pre and on carriage services for optimizations…if a matrix is to be designated to reflect the categories and volumes of cargoes across the trade lanes correlating with corresponding viable services in terms of frequencies and transit time, coupled with a model analysis tool on historical data from archives for a trend, against the concurrent freight market and freight future market trend…
However, which party would be the party to integrate the infrastructure between service legs with the seamless interfaces for total transparencies? This is not a simple problem requires pure technical IT solutions, nor is it a mere ISO procedure designation and implementation matter. It is a combination of both and more. If the in-house party is not capable of such task, would any of the 3PL and/or 4PL working separately on their own in allocated areas of responsibilities have the total vision, even if they are technically competent?
The above question leads to others: if no online transparency can be initiated and sustained throughout a project between the carriages, how could one effectively plan and coordinate on optimization basis? How would the logistics management deal to satisfy the delivery terms stipulated in sales contracts based on “regular and normal” shipping procedures?
Without the planning based on historical data and fresh inputs into the model, backed up with contingency plans, one can hardly predicate the available break bulk tramp tonnage within the expected span, and yet to meet certain freight budget. The hub may increase availabilities of trade lanes, but the voyage cost accounting dictates the port calls at the time of consolidated freight volume for a specific voyage. The problem is always that break bulk tramps do not sail on fixed schedules between fixed ports in fixed transit time with fixed frequencies…unless a “base cargo” is secured to pay for an inducement port call, a shipper has no option but to wait, except for pay a premium to motivate the carrier. Many logistics professionals feel nervous whenever there is new change in hands during the project shipment delivery process, would we feel confident about a deferred shipment laying over overseas, adding a new layer to the problem complex (more service legs involved) without the total transparency in real time or close enough to that? In the upstream industry, the daily E & P operational costs are very high, so delays in deliveries directly result in significant financial losses. Any losses or damage of such delivered shipments are beyond just the question of insurance covered risks! Therefore on-time deliveries of quality services in term of safety and entirety remain crucial in this industry.
A good 4PL is competent in service sourcing and performance monitoring, as well as routing the shipments. A 4PL, if brought in to address the problems, would or should first appropriate the viable logistics service providers to compile a pre-qualified service provider list, to set criteria on service performance requirements of different grade for monitoring. Where a 5PL differs from a 4PL in such case would be establishing and sustaining an inter enterprise online transparency capacity and capability integrated into the outstanding infrastructure of the client enterprise, and to interface with the logistics service providers’ infrastructures as part of the requirement criteria for the service provider candidates. A 5PL would stay actively engaged in interfacing between the enterprises and their suppliers, customers alike… Only with such online transparency across the entire spectrum, the enterprise can truly succeed in regulating a range of expected variations based on the historical data analysis on the enterprise’ export patterns, and to establish a matrix of service selection scenarios contingent upon various alternations to the originally designated plans, inserting a compliance program specifying the requirements of a mandate while offering interface service assistance…before ready to proceed to implement the online automated logistics planning and expedition platform…
What a 5PL would recommend to add to this specific enterprise’ outstanding SCM/Logistics operational management structure, is a Center of Operational Excellence, which provide a clearly defined vision and strategic and tactic objectives, metrics for measurements of the operational performances, and programs to implement the processes, the tool set to facilitate the fulfilling tactics…in a matrix. The re-designation and implementation of a further integrated infrastructure as above described shall be part of the matrix on tactical level, whereas the inter and intra enterprise SCM/logistics culture transformation must be dealt with at strategic level before the physical state migrations.
Again, a 5PL of multi clients shall be better positioned to engage the service carriers with consolidated freights, while perform the logistics management of great complexity with optimization based planning and highly efficient expeditions. Customization in form of business consulting service including change management led to infrastructure integrations and upgrades, where all predeceasing XPLs would be incapable, shall easily off set the hiring costs to the enterprise should it elected to outsource to such a 5PL.
In hypothetical case 3, an energy production manufacturing company, or a unit of it, with tens of millions of annual freight expenditures at peak, implemented both ERP and six sigma, had struggled on daily basis to have its SCM operational performances up to the standards where a 4PL was deployed to meet the metric requirements. The company had all the metrics for freight spending and had very good program on performance management programs monitoring logistics service providers. There was a Center of Excellence on top of all units for their logistics related operations outsourced to the 4PL(s). But none of these prevented the practical problems:
作者：二悟村 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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