Agile Supply Chains -Reverse Supply Chain. Agricultural Supply Chains

Agile Supply Chains -Reverse Supply chain. Agricultural Supply Chains.

Supply Chain Management Approaches

•Agile Approaches or Adaptive methods

•Plan Driven Approaches Or Predictive methods

•Traditional Methods

There are a number of approaches in Supply chain management activities which can be broadly classified as

• Plan Driven Approaches Or Predictive methods

PERT Model (Program Evaluation and Review Technique)

CPM Model (Critical Path Method)

PRINCE Methodology

• Agile Approaches or Adaptive methods

Scrum Model.

Extreme Programming models.

Crystal Clear,

Lean Development,

Feature Driven Development,

Dynamic Systems Development Method

• Traditional Methods

Waterfall Model

Regardless of the methodology employed, careful consideration must be given to the overall project objectives, timeline, and cost, as well as the roles and responsibilities of all participants and stakeholders.

Plan Driven Approaches:

Effective management and technical support are required for the success of large-scale projects. PERT packaged programs provide scheduling capability. However, many tasks must still be performed by a human being, including activity plan generation, construction of activity networks, modification of a schedule produced by PERT program, and project monitoring. To support these tasks, we believe that the application of artificial intelligence techniques to this area has great potential. Accordingly, we are developing an experimental project management expert system named EPM (Electronic Project Management).

The main tasks that EPM supports are

Activity plan generation,

Activity scheduling,

Project monitoring.

Agile software development:

Agile software development refers to a group of software development methodologies based on iterative development, where requirements and solutions evolve through collaboration between self-organizing cross-functional teams.

Agile methods generally promote a disciplined project management process that encourages frequent inspection and adaptation, a leadership philosophy that encourages teamwork, self-organization and accountability, a set of engineering best practices intended to allow for rapid delivery of high-quality software, and a business approach that aligns development with customer needs and company goals.

Conceptual foundations of this framework are found in modern approaches to operations management and analysis, such as lean manufacturing, soft systems methodology, speech act theory (network of conversations approach), and Six Sigma.

Agile Supply Chains :

Objective:

The objectives of agility may put higher emphasis on the flexibility and quick delivery to the customers. Therefore, the agile manufacturer needs to maintain a certain degree of buffer capacity to cope with the volatile demand and high variety of products.

•Market Sensitive:Supply chain is capable of reading and responding to real demand.

•Virtual:Information-based supply chain, rather than inventory-based.

•
Network based:EDI and internet enable partners in the supply chain to act upon the real demand.

•Process Integration:Collaborative working between buyers and suppliers, joint product development, common systems and shared information.

Seven steps to agility:

• Substitute information for inventory

• Work smarter, not harder (eliminate or reduce non-value addingactivities)

• Partner with suppliers to reduce in-bound lead-times

• Seek to reduce complexity (not necessarily variety)

• Postpone final configuration/assembly of products

• Manage processes not just functions

• Utilize appropriate performance metrics, e.g. end-to-end pipeline

Concept of agility:

Agricultural Supply Chains:

Reverse Logistics in scm

The Increasing Necessity for Reverse Logistics

About Reverse Logistics®

"Forward Logistics" describes the conventional manufacturer-to-customer supply chain.

"Reverse Logistics" is the process of returning goods from consumers back to suppliers.

Due to environmental regulations and consumer pressures to increase customer service, companies are focusing on Reverse SCM or reverse logistics. Reverse logistics can lead to improved relationships with supply chain partners, improved profits through reduced costs, and improved efficiencies and higher recovery rates for returns .

In “An Examination of Reverse Logistics Practices,” Rogers and Tibben-Lenbke define reverse logistics as:

“The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing or creating value or proper disposal .”

The concept of reverse logistics is very important in the European business environment and is slowly gaining importance to American businesses (3). In both regions, the cost of land filling and increased restrictions on what can be placed into a landfill are causing companies to invest in reverse logistics processes (1). In Europe for example, environmental regulations require tire manufactures to recover and recycle one old tire for every tire produced (4). Manufacturers must have an efficient system to recover the tires to comply with this regulation.
Some statistics
Reverse logistics accounts for 3 percent to 4 percent of a company’s total logistics costs. Companies can save 10 percent from their annual logistics bill by implementing an efficient reverse logistics system. Twenty percent of this amount is saved in labor costs and the remaining 80 percent is saved in lowered freight costs and reduced pipeline inventory (5).
Process to implement reverse logistics system
Reverse logistics includes handling, storage, transportation, inspection, repair, repackaging, refunds, and customer service. Retrieving the product is the first step in the process. The quality and quantity of products retrieved must be coordinated with other distributors and customers. Then the product must be efficiently transported to a central location, where it is inspected and sorted. In this step, processes must be in place to determine what products can be saved, reworked, remanufactured, resold or disposed. Automated tracking and testing systems can be used for parts of the sorting process.
Then, the appropriate products can be reconditioned. Design for disassembly (DFD) is a method of designing products, such as electrical devices, so they can be easily pulled apart, reconditioned, and reused (5). The products that are not reconditioned are recycled, resold for parts, or disposed. The final step is distribution and sales of the reconditioned products. Companies must create a market for the refurbished products, which can be sold to the general public at cost or at a discounted price, or sold to foreign markets.
Companies with successful reverse logistics processes
Bosch, an automotive and industrial technology company, builds sensors into its power tools that indicate if the motor is worth reconditioning. The sensors reduce inspection and disposition costs, allowing the company to realize profits on the remanufactured power tools (4).
General Motors (GM) simplified its process for returning automotive parts by allowing parts to be returned to a single facility using GM’s pre-printed shipping labels. This less costly process enhanced GM’s relationships with its customers and supply chain partners (2).
Volvo, a Swedish car manufacturer, anticipated the Swedish government passing a resolution holding auto manufactures accountable for disposal of vehicles. Volvo implemented a reverse logistics process of salvaging and dismantling cars. The company generated revenues by selling the used metal, plastics and car parts (2).
Reverse logistics is a growing area of emphasis by many companies. Each company, regardless of industry, can implement a reverse logistics process that saves money or even generates new profits. A company can also recycle products or packaging to improve its environmentally friendly practices.

Reverse logistics in Supply Chain Management

Reverse logistics is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics."

Introduction

The evolution of reverse logistics for manufactured products is developing in direct proportion to the rapid advancements in technology and the subsequent price erosion of products as new and improved products enter the supply chain at a faster pace. With such thin margins and so much competition, mismanagement of the supply chain can be devastating.

Those organisations with the infrastructure to capture and compare the composite value of components with real time intelligent analysis and disposition based on changes in refurbishment cost, resale value, spare parts, repair and overall demand will not only become more profitable, but such flexibility and scalability will allow them to outmaneuver and eliminate the competition.

Early days

The early days of Reverse Logistics were measured by convenience and customer accommodations. The focus was on the front end of the return process, the ability for consumers to be able to return unwanted or defective merchandise. The ability to facilitate a consumer return was a courtesy that turned into a compelling competitive differentiator in retail.

The companies that did not support consumer returns found themselves at a strategic disadvantage to those that did, and were eventually forced to adopt the same consumer conveniences or lose those customers to the competition.

It did not take long for retail merchants to seek the same concessions from manufacturers and distribution channels. Stock rotation became a normal condition of business, and processes for returning defective merchandise became standard practice. Although this is accepted as commonplace today, it has not always been this way. Even today there are cultural differences with regards to consumer returns, especially for product that is not defective and returned because of 'customer remorse'.

The next step

As the cost of Reverse Logistics continued to increase, and as the methods of transportation became more sophisticated, manufacturers and distributors began to look for alternatives in transportation for savings. Planning and consolidating freight for return products was identified as a way to reduce expenses related to fuel and labor. This also led to detailed analysis of transportation options, like truck, air and railway. In Supply Chain Logistics business you are either the one driving the truck, the one pumping the gas, or the one paying the other two.

The next step in the evolution of Reverse Logistics was the experimentation and cost comparison between multiple local hubs and single consolidated returns centers. The simple analysis for savings contrasted the costs of warehouse space and manpower to the amount of freight and transportation fees for handling the back end of the Supply Chain. Other factors also played a significant role in the financial analysis, including volume, material costs and inventory controls.

As the costs of Reverse Logistics continued to rise, the importance of returning refurbished merchandise to market also became more significant. Organisations began to place financial significance on the devaluation of product for every day lost in transportation, handling, processing or warehousing.

As technology and features improved, price and demand for aging product diminished, as did the ability to recoup costs from returns. Speed to return to market could be measured in resale value.

Awakening

In the next step of Reverse Logistics evolution, there was an awakening and realization that reverse logistics is only a portion of the entire back-end services solution. Consolidation meant more than merely consolidating returns, it meant consolidation of activities related to back-end support operations.

Manufacturers began to consolidate spare parts and materials in the same warehouse as the returned merchandise, discovering that it is less expensive to move parts and packing materials across an aisle than across state lines. Spare parts used to refurbish returns were placed in the same building.

Taking this concept one step further, manufacturers began to consolidate depot warranty repair operations inside the same facility to maximize the utilization of parts, labor, warehouse and materials. This activity often required collaboration between previously diverse management and operational groups within large organizations. The collaborative effort reduced expenses for all participating departments and groups within the organizations.

Collaboration

The next major step in the evolution of Reverse Logistics is collaboration with partners and external resources. It is a greater awakening and realization of integration with the entire Supply Chain by leveraging data exchange.

It begins with an understanding of the value of the components that comprise a completed manufactured product, the Bill of Materials (BOM). The Bill of Materials is also used by manufacturers to forecast, procure and manage an inventory of spare parts that are used for repair. Frequently, the combined cost of the individual components exceeds the cost of the original retail product. Furthermore, due to price erosion, the cost to repair some products exceeds the cost of replacing the entire unit.

Manufacturers must make quick financial decisions regarding the return on investment to refurbish returned products, repair or replace defective warranty products, and the potential resale value for refurbished products returned to market. Manufacturers must also weigh the potential cost if inventory for procuring spare parts to support warranty, extended warranty and out of warranty regulations. To be truly effective, manufacturers must make these decisions before the returned product enters the reverse logistics supply chain, not after it is in it.

Manufacturers have the ability to gather data on activities that drive demand. Contributors to demand planning include failure rate or rate of repairs that require spare parts. At the very front end, potential return trends and potential repair trends can be identified by customer technical support or customer care phone calls. Quality analysis of returns and defective products can also be used to identify demands for spare parts planning.

Resale value trends for refurbished products and seasonal sales cycles can be used to predict demand and resale value for refurbished products, and if the product is cost effective to refurbish or repair. In some cases the parts can actually be sold for more greater margin than the whole product. At the very least, parts can be harvested from return products to mix and match repair of other defective return products, avoiding expensive spare parts procurement when applicable. All of these factors contribute to planning the demand for a refurbished product or the component parts.

Once you know the demand and resale value for component parts and whole units, then it is only a matter of maintaining an intelligent planning engine that uses the input to analyze the Bill of Materials for returned products. Before the merchandise enters the Reverse Logistics Supply Chain, make an immediate and intelligent decision regarding the value and intended disposition of the whole unit or the component parts.

In some cases the product will be scheduled for de-configuration to feed refurbishing activities or develop a spare parts inventory for warranty repairs. In other cases, the units may be expedited for refurbishing and resale. Some products may be scheduled to be environmentally scrapped for materials. Product may even be de-configured at the retail location to support local customer demands and thereby avoid freight entirely.

Whatever the final result may be, the decision can be made before the product enters the Reverse Logistics Supply Chain cycle, as long as the intelligent engine is provided with continuously updated and accurate information. The new problem and the new solution is knowing what you sold, who wants to return it and what it is really worth, before you own it again.

Compliance

It's hard to believe that there are still companies that invest millions of dollars each year in tools to forecast procurement and inventory management of spare parts, without accurately forecasting and managing the largest single source of surplus components that results from return merchandise. There are still organisations that struggle to achieve freight savings purely by negotiation or consolidation, without a achieving a balanced approach to freight avoidance, localisation and intelligent de-configuration disposition.

In the competitive landscape of rapidly evolving technology, mass production and eroding profit margins, managing the total cost of the supply chain and the composite value of the components is essential to cost reduction and financial survival. To ignore this aspect of reverse logistics can not only be costly, it can be fatal for an organization.

For Consumer Electronics and Computer products, the Reverse Logistics handling requirements are further complicated by compliance and regulations like RoHS, WEEE, controls on Lead based and Mercury materials, just to name a few. Recognising these component parts is absolutely essential to the proper management of the intelligent engine that directs the disposition of returns immediately upon notification that merchandise may enter the returns cycle. Proper management is not only financially rewarding, but in the case of hazardous materials, it is the law.

Conclusion

In service, to be competitive is to be the first to provide the services that would otherwise put you out of business. If you can do this, you will place your competitors out of business, or at least have them working for you. Gathering the data that pertains to customer call centers, extended warranty services, spare parts, resale value, parts procurement costs and impending returns often requires extensive collaboration, integration and data exchange.

To be successful, it is often necessary to partner with multiple organisations and experts to leverage best practices in a collaborative environment. The companies that collaborate, integrate and optimize data exchange will enjoy the competitive advantages of improved profit margins and precision management. The organizations that do not participate will be remembered as fabulous fossils.