Type: Management
Pages: 8 | Words: 2254
Reading Time: 10 Minutes

The competitive advantage of any company depends not on how wide the company is, but on how effective and efficient its supply chain is designed and developed. Most companies dealing on Logistics business have come to focus on modern technologies in their supply chains. Some of these technologies include the Radio Frequency Identification (RFID) that has the ability to revolutionize the whole procurement processes, thereby eliminating inefficiencies that face the supply chain management. Some companies including DHL have adopted business outsourcing services from external partners to help reduce on costs of chain flow. According to Sunil & Meindl, a supply chain is an important and a critical part of a company, which if not carefully observed often leads to revenue loss and inefficiencies. This report is a case design channeled to help establish some of the best ways in effective supply chain management approaches.

1. The Supply Chain

Whereas logistics involves a serial process of acquiring raw materials (inputs), outsourcing external services, managing processed stocks (inventory), efficient management of storage facilities (warehouses) and planning for the transportation and distribution of the ordered goods to the intended customers, supply chain management is a collective term that encompasses, logistics and involves all the logistic activities, of resources movement, information management and finances receipt and flow. The supply chain is thus a broader part of management that coordinates controls and integrates these flows within the distribution channels, with a sole purpose of reaching the final user of the product.

As observed in the supply chain structure of Deutsche Post/ DHL, a clearly outlined supply chain should be cost effective, focusing on the target customer but with a sustained long-term revenue generation. In any case, the company’s supply chain structure ought to be short. The supply chain structure of DHL is rather smoothly drawn but however seems to be longer than a normal profitable supply chain. The company outsources most of its communication services from another company, which has a long term benefit in reducing costs and charges (Anonymous).

The diagram presented below shows DHL supply chain management structure. There are relationships that exist between the company (DHL) and other external business partners; suppliers and the sourcing service provider. The chain is longer and would affect the distribution of information and products from the processing departments, to target the warehouses. The information is handled by another company, which specializes in communication, while the finances are handled by the company itself. The dotted arrows reflect the flow of information, while full lines represent company’s product flow and management chains.

Hypothetical Representation of Deutsche Post supply chain management structure

2. The supply chain issues

There are current issues that are emerging in this field of supply chain management. With respect to DHL company structure (Anonymous), the company has adopted integration strategies to help reduce on the dominance in the supply chain; procurement outsourcing remains to be a core emerging issue in DHL Company. Other issues in the supply chain include; adoption of the RFID technologies, mergers and acquisition strategies and personnel development as well as establishment of carbon rated supply chains.

Enarsson (32) inferred that developing a carbon compliant and efficient supply chain has potential benefits, which facilitate cost reduction and revenue maximization. Having a longer supply chain will have be cost inefficient and would cause environment degradation. As companies strive towards green technologies, they are developing supply chains that can help them work on their corporate social responsibility initiative. DHL has stepped up the race in procurement outsourcing and purchasing of some of its services. For instance in its information flow, the company outsources from Williamson Lea company which ventures in communication. Evidently, this is an emerging issue that will help create green supply chains which are cost effective and efficient in customer satisfaction.

Due to rising trends in technological trends, companies have designed supply chain structures that will be composed of Radio Frequency Identification (RFID) technologies. This being an emerging product in supply chain management, will help ease the process of procurement, eliminate inefficiencies and improve on customer support as well as collaborator relationships with the supply chain. Despite being the market leader, DHL Company is yet to adopt RFID technology, which has so far proved to be reliable in revenue generation, stock (inventory) management and customer support. Other issues in the supply chain management are integration of the various members of that composes the supply chain (Sunil & Meindl 45), to help cut on costs, eliminate inefficiencies and improve on the performance of the company in competitive perspectives. Merging and acquisition has also helped major companies including DHL to remain market leaders in logistics industry.

3. Partner relationships

An effective supply chain usually comprises of an effective procurement process, which is serially integrating and collaborating with all the users of, and with partners to the supply chain. Using an analogy of the DHL Company, the market leader in logistics industry, it is important to ensure that a stable relationship is established between the suppliers and distributors so as to ensure faster customer satisfaction. DHL has developed management service center with its collaborators, to help track the flow of the customers’ products. The most critical factor in supply chain management success is having a good relationship with the distributors (Myerson 26). Certainly DHL ensures that its suppliers are treated as business partners and with that capacity, remit their payments in time. This often has long term loyal inclination in the whole process of logistic business. Customers also are given strong consideration and this has an effect of creating a green supply chain management structure that is cost effective. The environmental concerns also have had another impact on the performance of DHL. Thus in order to ensure that other partners are protected from pollution, the company has adopted the sun strategy with outsourced data centers from Williamson Lea sourcing company. Sunil & Meindl (24) asserted that supply chain is a process that involves collaboration with multiple external partners, and with good company relationship, greater revenues are guaranteed as losses are minimized.

4. Partner Relationship Evaluation

There is a need to evaluate the relationship that a company develops with its partners to avoid cases of switching over to competitors. Myerson (50) notes that while a company’s revenue would remain to be a prime goal; good relationship also ought to be observed between itself and the suppliers of raw materials, distributors of its finished products as well as other key players in its supply chain. Thus DHL has recently developed customer management service center that seeks to monitor and establish all the negative concerns raised by collaborating partners in its supply chain. In order to boost its supplier relationship, DHL works towards ensuring that customer demand information is availed and in this case the supplier will have an added advantage with respect to cost cutting. Every company has to ensure that its partners are loyal and acceptable to its services (Michael & McCathie 46). This loyalty often increases competitive advantage, which DHL as a global leader in logistics has attained. Overall as the products move across the supply of the company, DHL ensures that all the partners in the chain are treated fairly and equally. This signifies that there is a strong relationship between the company and its partners

5. Integration solutions

Supply chain management of any company can be improved with respect to its performance and cost reduction, when various tiers that constitute it are integrated. This has a benefit of ensuring full sharing and acquisition of information among the companies in the chain (Michael & McCathie, 2006). Integration remains to be a core initiative in trading partners, sharing a particular supply chain. In order to ensure that efficient and effective Supply chain management are adopted, companies have to embrace new technologies like the use of Enterprise Resource Planning (ERP) software and the Collaborative Planning, Forecasting and Replenishment (CPFR). Enterprise Resource Planning is a holistic integral software, that can facilitate the whole supply chain to be monitored, with less cost and more revenues to partners. Certainly, companies specializing in Logistics, such as the DHL, can achieve a competitive advantage in integration and faster access to their collaborating partners. The benefits of an ERP are coined around cost saving, supply chain management performance and functionability. This ensures faster execution of services which the logistic chain as information is immediate (Enarsson, 2006).

Another integration technology is related to CPFR, which is an initiative that involves trading partners establishing mechanisms of reinventing and reengineering their supply chain on the basis of collaboration, planning, forecasting and product replenishment, so as to ensure that effectiveness and greater transaction benefits are reaped. Good collaboration means good planning to stimulate demand, which often will rely on the partners’ forecasts on how customers demand to use supplied good/services. This often then leads to replenishment of customer demands. The benefits of CPFR is that partners share a common planning and information distribution which has a direct effect on demand and customer management within the supply chain management making it effective, efficient and self reliant to collaborating partners (Myerson (2006).

As supply chain management moves towards becoming global, there is need to ensure that appropriate and modern technologies are planted with the chains, to help create good integration structures. Therefore, companies will adopt technologies that can ensure proper connection between the company, suppliers and the customers. Due to rising trends in technological trends, companies have to develop supply chain management systems which are operated on Radio Frequency Identification (RFID) technologies (Michael & McCathie, 2006). This being an emerging product in supply chain management, will help ease the process of procurement, eliminate inefficiencies and improve on customer support as well as collaborator relationships with the supply chain.

According to Myerson (2006), RFID software has the ability to establish and handle a vendor managed inventory (VMI) which the supplier or the distributor decides on how quantity requirements that the customer needs to replace. In this case, the supplier has the ability to influence the demand of the customer and can control the costs which are likely to be incurred while handling excess goods in the stores. The benefit of the Vendor managed inventory is that the goods are efficiently stored and no paper work is executed between the supplier and the customer. This is often replaced with automated information which relates to sales planning, and market forecasts. Therefore the above technology should be adopted to boost a company’s market share, increase its competitive strategies leading to higher sales revenues with low costs.

6. Collaboration strategies

Collaboration strategies in business refers to the planed process between companies sharing a common supply chain, to have a common execution of their management practices, objective execution and performance evaluation of their disseminated information. For instance DHL Company has focused on procurement outsourcing from William Lea Company to handle all its information data centers (Michael & McCathie 35). This has an effect of reducing costs and increasing revenues for both companies. There are two strategies that can help foster good collaboration relationship between partners. These strategies include; customer- demand strategy and low cost supply chain strategy.

Customer-demand strategy is where the collaborating companies goes beyond focusing on the production and customer requirement, to having a common planning and production process, which is in line with the supply chain. The information between the partners is consolidated into one unit, which can then help establish the customer stock replenishment level (Enarsson 15). This strategy has benefits of ensuring that parties understand each other, no sabotage exists within the supply chain and the logistics service providers is able to get full control of the lowest chains in the flow.

Low-cost supply chain strategy is another strategy where partners can enhance their relationship without incurring high costs. This strategy ensures that partners do not only share in data access, but also cooperate in establishing common order levels, verifying manufacturing flows, establishing inventory quotas and levels, and monitoring the procuring activities within the supply chain (Myerson 20). This is a strategy that involves full commitment and dedication.

In this ever changing technological world, companies cannot afford to maintain an old traditional transaction processes and ways of execution business distribution and supplies, because of the rising stiff competition in the global market environments. The traditional supply chain system involves too much paper work approach that has resulted into slow processing and delivery of ordered goods to the target consumers. This has been accompanied by unending inefficiencies within the key sections of the supply chains, comprising of; flow of information and goods, the procurement processes and securing of logistics service providers. Companies are thus required to adopt modern technologies and innovations such as the Radio Frequency Identification and Vendor Managed Inventory (VMI) that can help ease congestion in their supply chain management systems. Supply chain management automation has the ability to revolutionize the performance and competitive advantage of any company. One of the quite promising advantages is its ability to automate the business operations, without human involvement, or with limited involvement if any, by availing the decision support systems with real-time, up-to-date and high quality accurate data and information. In order to establish effective performance and total quality management in any supply chain, an analogy has been drawn using DHL supply chain as a case study, with intent to present amicable solutions to eliminating inefficiencies in its supply chain management. In order to foster good collaboration and integration, partners have to employ both the customer-demand and low-cost supply chain strategies. These strategies will result into effective and efficient supply chains. They should be able to work on their informational and technological flow as well as their relationships.

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