Operation Management-QA388

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Executive Summary
 
With the dynamically changing business scenarios, organizations are essentially calling for increasingly rapid improvements in operations and customers are showing preference for personalization and convenience. Supply chains are becoming the focus of efforts of the organizations to improve operational efficiencies, enhance innovation and achieve cost efficiencies.
 
Global Supply Chain managers and advisors must work on creating and maintaining effective and efficient supply chain strategies to keep the organization and its customers happy. Each and every decision taken with respect to supply chain strategy has an impact on the bottom line, customers service levels, associated costs, risks and relationships. So, it is of vital importance that they are aware of the best tools and strategies for an effective supply chain management.
 
Some of the strategies and practices / tools gaining prominence in today’s business scenario includes logistics management, Total Quality Management, Six Sigma, Lean and Agile Supply Chain, Supply Chain Integration and Collaboration, Supply Chain Risk Management, Usage of Information Systems and Green Supply Chain Management.
 
In the first task, we have analysed these strategies with respect to a global logistics player DHL. Firstly, we worked on identifying the issues and challenges faced by them. This task helped us in laying the current state of affairs for the company and identifying the potential challenges faced by them which they want to resolve through effective and innovative Supply Chain practices.
 
Then, we followed up by critically evaluating the operations of DHL in terms of key performance indicators namely Quality, Delivery Time, Cost efficiency and Greener Supply Chain operations. It involved evaluating how does a global logistics firm define these parameters and what are the current practices followed by the firm in order to achieve their performance levels with respect to the above defined parameters. Additionally, we tried and used the best practices and tools such as TQM, Lean management, Six Sigma, Supply Chain Collaboration etc. to recommend strategies using which DHL can improve its performance on these parameters. We also analysed how these practices are inter-related and a hybrid approach combining these strategies can be built to achieve the various objectives of the organization namely ensuring quality, on-time delivery, cost efficiencies and a sustainable supply chain.
 
In the second task, we reviewed the above defined best practices and tools in a more comprehensive manner. The scope of evaluation expanded from a global logistics provider to include the entire research fraternity and the entire business world. While looking for relevant themes for an Asia-Pacific conference on “Contemporary Issues and Strategies in Global Logistics and Supply Chain Management”, we realized that these best practices are generally the most researched topics and the most relevant strategic tools in the present dynamic business scenario.
 
Overall, these two tasks were highly inter-related with emphasis on hybrid approach involving various supply chain tools and practices and their relevance both as a research topic as well as an implementation strategy for all global organizations.
 
TASK 1: Critical Evaluation of DHL Express Supply Chain
 
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Introduction
 
DHL Express is a division of the German based logistics company Deutsche Post DHL which works in the domain of delivering international couriers, parcels and express mail services. It is the world’s largest logistics company operating around the world with proven expertise in sea and air mail.
 
The rationale behind choosing DHL as the company to be analysed for Task 1 is because of its massive global outreach and the innovativeness it needs to bring in, be it in terms of quality, cost or delivery speed. The operations of DHL have huge global inter
connectedness with operations spread across 220 countries which makes it important for them to have a powerful and innovative global supply chain.The scope of this task has been limited to analysing the operations of DHL with focus on emerging markets.
 

The Current Issues, Challenges and Expected Future of DHL
 
With the importance of emerging markets increasing as future growth avenues with growth potential greater than the developed economies, supply chain logistics becomes essential for delivering these growth promises. This is where DHL aims to capitalize through its global interconnectedness and network capabilities.
 
The major issues and challenges for DHL in emerging markets include high customs cost, slow market liberalization and under-developed distribution channels in these markets. Some of the other challenges identified by DHL Express are fragmented markets, political instability, growing population with limited income and other socio-economic factors.
 
DHL aims to meet the anticipated demands and the logistics requirements, by working on improving its network capabilities along the lines of transport infrastructure and working on slashing costs.
 

Evaluating Key Performance Indicators for DHL

 

1. Quality
 
Implementing quality initiatives within any business leads to improved efficiency and competitiveness thereby leading to an improved business performance (Nabhani&Shokri, 2007). On similar lines, for DHL, delivering quality aimed at achieving high levels of customer satisfaction has always been thecentral theme, be it the developed markets or the emerging markets.
They define quality as having no errors in shipment, lower product damage and on-time order delivery with high productivity and achieving alignment with customer’s requirements (DHL United Kingdom, 2017).Currently, they aim to achieve quality using a quality programme in place which is established to meet pre-defined performance objectives and comply with various regulatory requirements. The quality programme is based upon DMAIC (Define, Measure, Analyse, Implement and Control) methodology.
 
Implementing strategies such as Total Quality Management (TQM) is a necessity for a firm like DHL, especially in emerging markets where processes are still under-developed and customer loyalty is not so high,in order to increase customer satisfaction through continued process improvements (Jens J. Dahlgaard, 2006). Successful implementation would require collaborative efforts with its different partners in these markets and need to be engrained into company’s culture with full employee commitment (Bhat&Rajashekhar, 2009).
Additionally, Six Sigma can be adopted as relevant tools to support the principles of TQM (Dahlgaard&MiDahlgaard-Park 2006). It along with lean management can be adopted as excellent road-maps, which can be collaborated with the values of TQM (Roy Andersson, 2006).
 

2. Delivery Time
 
On-time delivery is the most important KPI for any logistics firm. DHL tries to achieve this in the emerging markets by increasing the levels of supply chain integration with its partners in these markets.
 
Characteristics of the goods shipped, the associated delivery lead times and the criticality associated with the freight are the important factors in determining the service quality (Bengu Sevil Oflac, 2014).
DHL should focus on Supply Chain Collaboration (SCC) to achieve supply chain logistics and ensure on-time delivery commitments. For a firm like DHL, SCC can serve more than a mere source of cost reduction but rather as a source of competitive advantage (R.P. Kampstra, 2006).
 

Enhancement in information sharing through sophisticated Information systems and focussing on Total Quality Management values can also prove beneficial in ensuring high service levels and on-time delivery. Global leaders like DHL and FedEx already have these systems in place but with changing times these systems needs to be updated to ensure market leadership.
 

3. Cost Efficiency
 
Emerging markets consists of price-conscious customers requiring a consistent service level which a firm like DHL aims to cater at the lowest cost of service thereby making it an important performance indicator for these markets (Coltman, 2010).
Comparing the strategies of UPS in terms of cost efficiency, they are trying to achieve cost efficiency using a multi-pronged approach aimed at route optimization, developing a fleet of alternative vehicles and improving efficiency using its proprietary routing software ORION.
 
For logistics firms, fuel is the biggest expense. So, any minimal savings in fuel consumption through capacity utilization or route optimization can lead to huge savings and help in achieving cost efficiencies.
 
A proprietary Enterprise Resource Planning (ERP) system can help DHL on improving their efficiencies using increased capacity utilization and route optimization which can go a long way for DHL in dealing with the various cost related issues not only specific to the emerging markets but also in their developed markets and can help in improving their bottom-line performance.
 

4. Green Operations
 
Climate change is one of the greatest challenges of the present times and its importance is elevated more when we talk about logistics firms. The regulations in various markets and the consumer’s expectations of them to calculate, account for and try and reduce their emissions and Carbon footprints adds on to its relevance.
Currently, DHL showcases their responsibility in this domain by providing two annual reports namely: Carbon Report and Advanced Online Carbon Dashboard (DHL United Kingdom | Green Logistics Solutions, 2017).
 
Talking about the emerging markets, DHL has made sustainable development its priority in these markets and aims to improve carbon efficiency by 30% by 2020. According to Richard Owens, CEO, DHL Global Customer Solutions, Asia Pacific, DHL is taking concrete actions for sustainable development, including but not limited to, using biofuels for hybrid vehicles, optimizing the route efficiency using real time traffic analysis and minimising air-condition usage in their warehouses (Logistics Insight Asia, 2010).
Successful implementation of Lean Supply Chain practices by DHL can help them in pushing their Green Supply Chain initiatives through waste reduction and operations optimization thereby improving environmental and economic performances (Cory Hallam, 2016).
 

TASK 2: Different themes for an Asian-Pacific Conference on “Contemporary Issues and Strategies in Global Logistics and Supply Chain Management (GLSCM)”
 

Introduction
 
Selection of relevant themes for the Asia Pacific conference on GLSCM has been carried out keeping in mind the delegates of this conference which would primarily consist of university academics, post graduate students and executive business leaders of global organizations around Europe. All the five themes are widely researched topics as a strategy in SCM and hold significant business importance in today’s global scenario. The different conference themes are as follows:
 
1. Green Supply Chain Management (GSCM)
 
With the customers becoming more and more aware of the environmental issues, they have started asking questions about the various products they are purchasing. Companies are now expected to answer questions like how green and nature friendly are their operations and supply chain, what is their carbon footprint and how they are working towards achieving an environmentally friendly supply chain.
 
GSCM involves working on this by trying to integrate environmental thinking into supply chain management(Thoo Ai Chin, 2015). It is important in influencing the environmental impacts of the organizations involved in SC activities (Thoo Ai Chin, 2015).
 
Implementation of these practices in SCM is generally complex because of the conflicting goals between achieving ecological, economical and operational efficiency (Benmoussa Rachid, 2017). The argument in favour of GSCM is that such practices leads to improvement in the environmental as well as the economic performance, which positively impacts the operational performance and this finally enhances the organizational performance(Kenneth W.Green Jr, 2012). GSCM practices result in improved performances across the four important aspects for any business namely economic, environmental, operational and social performance(Ruoqi Geng, 2017).
 

2. Supply Chain Integration and Collaboration
 
In today’s business environment, organizations need to work towards Supply Chain Collaboration (SCC) owing to resource scarcity and in order to ensure a sustainable competitive advantage(SY Wee, 2008).They not only need to continually leverage the internal sources for competitive advantage but try and harness it through synergies across various supply chains they are part of.
 
Increasing global competition have caused the organizations to restructure their SC with focus on cooperative and mutually beneficial SC partnerships(Cooper, 2000)and the collective improvement of inter-organizational processes has become a matter of prime importance (Xiande Zhao, 2008).
 
Supply Chain collaboration has gained importance both from researchers as well as business owners owing to the fact that it improves the collaborative advantage and has a direct impact on the bottom line performance of the firm (Mei Cao, 2011). Supply Chain integration and collaboration allows organizations to share risks (Kogut, 1988) and/or reduce costs (Ramanathan& Gunasekaran, 2014) thereby leading to long-term profits (Min et al, 2005). Positive impacts of successful SCI includes improvements to the efficiency, effectiveness and the market position of the firms which is of prime importance in today’s uncertain business environment (Soonhong Min, 2005).
 

3. Supply Chain Risk Management
 
With the companies looking to expand their operations globally, risk management in Supply Chain is a significant topic of interest for both academia and business world. Researches focussed on SCRM are been carried out in defining and mitigating these risks (William Ho, 2015).
 
From a business point of view, with large corporations partnering with small and medium size enterprises (SMEs) as partners in their supply chain, the exposure to risk just increases due to the inter and intra-organization networking(Finch, 2004). Other sources of increased supply chain risks for the firm includes initiatives such as outsourcing the manufacturing and increased product variety aimed at gaining cost advantage and market share (Tang, 2006).Additionally, SCs have a risk of impact caused by natural disasters and other sources like terrorism (Berger, Gerstenfeld& Zeng, 2004, Tang, 2006) which have increased considerably in the past half a decade or so. With so many varied sources of SC risks, it is important for every organization to plan to identify and mitigate their respective SC risks. ‘Alignment, Adaptability and Agility’ have been identified as the core by the business world for managing these supply chain risks(Lee, 2004).
 

4. Lean Supply Chain Management
 
In the modern day, any organization is facing two major types of manufacturing challenges: emerging production philosophies making the existing methods obsolete and secondly the change in customer thinking(Naga Vamsi Krishna Jasti, 2015). Lean SCM as a methodology is considered as a tool for solving these two problems in the long-term perspective (Sanjay Bhasin, 2006). Being one of the emerging philosophies, probably one of the most relevant one in today’s global scenario, it has garnered significant interest from the research world making it an appropriate conference theme.
 
From a business world perspective, it is a strategy based on cost and time reduction aimed at enhancing the effectiveness(Hugo Afonso, 2015) which is a necessity in the modern competitive scenario. It allows organizations to achieve economic benefits by improving their quality, cost and time of operation cycle and through identification and elimination of waste in the production cycle by eliminating the non-value adding activities(Lamming, 1996). A strategy which was a major factor behind the success of Toyota has now become a solution tool for organizations having a goal of reducing cost and improving productivity and hence justifying its selection as a relevant conference theme (Steve Bin Zhou, 2015).
 

5. Managing Relationships for Supply Chain Success
 
Managing relationships and connections has always been an essential part in effective Supply Chain Management, but with the firms globalizing their operations, the importance of these relationships for success has increased considerably.
 
Supply Chain operations involve a greater degree of inter dependency between the companies thereby making the issues of trust(La Londe, 2002)and importance of managing these relationships more important (Ik-Whan G. Kwon, 2005). Commitment and Trust have been identified as essentials for promoting efficiency, productivity and effectiveness (Morgan, 1994). It is their importance in developing what we call a truly Global Supply Chain, that it has garnered significant interest both from the academic fraternity as well as the business world making it a relevant conference theme.
 
Finally, managing relationships in effective SCM as a theme overlaps with other selected conference themes such as Supply Chain Integration and Collaboration and Supply Chain Risk Management and forms an essential part in their discussion as a conference topic and implementation as a business strategy (Ik-Whan G. Kwon, 2005).
 
Product code: Operation Management-QA388

 
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