IT assignment essay on: Operational excellence of organization

Introduction

Operation excellence is of paramount importance in most of the organizations. Organizations which have high cost operations and long time to market cycle would become uncompetitive in the market place and would face numerous quality issues arising out of operational inefficiencies (Andel, T.,1997).

The advancement in the field of information technology coupled with globalization has led to an unstable and highly competitive business environment. The key forces that influence competitive landscape are price-quality positioning, competitive advantage and knowledge base. In the context of rapidly changing business environment, agility is extremely important in order to counter the challenges posed by the competitors. Agility is the capability of a firm to react to changes in the external environment. Agility at the operational level is extremely important as it determines the level to which a firm can achieve speed and accuracy. In manufacturing industry, agility is estimated in term of how lean a company is and how flexible the operational processes are.  The agility of firms would decide who effectively a firm is able to exploit the fast changing market conditions and create competitive advantage for itself.

Today, Corporations look at ways in which they can differentiate themselves from their competition (Battaglia, A., 1994).  In order to sustain growth organizations must create competitive advantage for themselves. The focus on supply chains has increased to a great extent in the recent years. Companies are aggressively investing on their existing supply chains in order to improve its efficiency. Today’s corporations are consciously expanding the scope of the management of the company’s operations in order to better manage the upstream and the downstream channels. Investing in IT in order to improve the efficiency of the supply chains is a good way to have competitive advantage.

Example of IT leveraging business advantage

In this report, we’ll look at the case of an American manufacturing firm which used information technology to increase the efficiency of its external downstream supply chain operations. One of the key elements of improving the supply chain operations is to optimize physical distribution. This leads to creation of value. In this report, we’ll look at how the company made use of latest technology to implement very complex transportation planning and also made efforts to optimize it. This report analyses how Information Technology can be used for the management of complex carrier services as well as the rate structures. We’ll also look at the various outbound shipping scenarios. There are numerous business process re-engineering and optimizing tools available in the market that is used for freight management. In this report, we’ll look at how the solution that the company implemented has the versatility to manage various tasks like shipping locations, financial tracking, and rating, load building etc.( Balseimer, P. and Wendell J.V. , 1996) The way the technology was applied shows how the company is indirectly serving all its shareholders by focusing on improving its operational efficiency which leads to higher throughput, lower inventory levels, reduction in the operating expenses, proactive planning and focusing on improving its customer satisfaction. Lower freight cost, higher inventory turns, reduction in the leased space, decrease in the detention fees and lesser of trailer leases would translate to reduction in the costs. The tool that is discussed would help in giving order visibility through the delivery as well as the distribution process. In addition to this, other information like database of tariff rates would help in determining the carrier selection and negotiation of new contracts.

Due to this the deliveries would be timely. It would also lead to a higher degree of consolidation of shipments. The consolidation would happen among the main companies and all its subsidiaries. This in turn would lead to better efficiency. In this research report, we’ll look at how organizations can benefit from implementation of a freight optimization solution. By the integration and optimization of the back end processes, the company can reduce transportation costs, reduce the inventory levels and also increase customer satisfaction to a great extent.

Company Profile

The company is an American company which employs around 8000 people and has annual revenues in excess of 1.3 billion dollars. There are seven manufacturing sites and five distribution centers of the company. The company uses these centers to handle around 500 customer shipments every day which are then sent to the dealer and hundreds of end users. A major part of the American and Canadian shipments travel through road and only a small part of it goes through airfreight.

The company employs three different shipping methods which are:

• In the first method, the company consolidates the inventory at a distribution site and ships it to the customer.
• In the second method, there is a single manufacturing site from where the goods are directly shipped to the customers.
• In the third method, there is multi-site merge and transit for the customers.

The cost of freight for most of the shipments can treated as “pre-paid” as this cost is built into the product price. In the current scenario, the company operates under the model “build to order” and operates principles like lean manufacturing and JIT(Just in Time). Use of such technologies enables the business to integrate the various activities of the supply chain. A major part of company’s sales comes from project work and demands the coordination of manufacturing as well as distribution from multiple sites. In order to achieve this, the company makes use of a manufacturing planning tool which helps in the synchronization of raw material procurement as well as manufacturing. The strategy that the company is employing conforms to the SCOR (Supply Chain Operations Reference) framework which is used for the management of supply chains. The interaction between the supplier, customers and the distributors is crucial and can be effectively managed by supply chain management. The tool for manufacturing planning is the starting point for scheduling of orders and for timely shipment of orders. The transportation project supplements the manufacturing planning tool in order to solve the supply chain problems. Effective implementation of the project would help the company to ensure customer deliveries are made on time. It would also helps in bringing about a high level of integration which would result in a scenario in which all the members of the supply chain have equal access to information in real time.

Role of IT in SCM

IT can be incorporated in the following stages:

• System investigation/analysis
• System analysis/design
• System design/implementation
• Implementation/maintenance

System Investigation/Analysis phase

The older version of the transportation planning involved a highly trained staff to plan the week’s order schedule for the outbound shipments. The orders were initially reviewed by the direct ship coordinators. They had to identify the shipments which could bypass the conventional handling of shipments at the distribution shipments and could ship directly to the customers. The specialists for order entry used to use paper reports and other electronic displays to perform the identification process. The lists for warehouse picking helped the local traffic coordinators to convert shipments to loads whenever the inventory reached the distribution center.  After that a large sorting effort had to be carried out to group shipments within close distance to one another.

The assignation of carrier to load was based on a list of approved carriers for each region. Mostly the selection of carrier was on personal knowledge of how well a carrier performed and whether equipment was available or not.  All the previous attempts at implementing a transportation planning engine didn’t succeed as there used to frequent changes to the shipment destinations and delivery dates.

System Analysis/Design phase

In order to analyze the existing system and create a new system by using IT, a project team consisting of traffic coordinator, warehouse supervisor, system analyst, fleet manager, transportation director, logistics director and a shipping coordinator was created. The team identified the problems with the current problems and listed it down. The problems that were identified by the team were:

• Too much of paper handling
• Direct Shipment Determination
• Fast rising freight costs
• Frequent changes in address and delivery dates
• Manual intervention in grouping/arranging of shipments

System design/implementation phase

The new system would aim to overcome the problems that were inherent with the old planning system. The project team made use of phasing approach in order to implement IT for minimization of the operational risk and reduce the dependency on external consulting expertise and maximize the returns on investment. The entire transportation strategy would be implemented in modules.

The focus would be to implement the planning and optimization tool before implementing the functionality of execution. At the same time, focus should be to plan the outbound logistics before the inbound logistics is planned. The implementation would start off with the core company first, moving from one region to another and then would gradually progress to the subsidiary shipments. The American shipments had to be brought on line before other international shipments. In the end, the planning of the transportation would happen in a reactive mode when there is inventory and would then shift to proactive mode during the later stages.  The integration of the existing legacy system with the new tool would have to be done before the integration with multiple ERP systems. The implementation stages would consist of stages like configuration, traffic entry/validation, application interface development, testing of functionality and the interface, optimization of the strategy and implementation in the production environment in the end.

The first step was the configuration of the system based on the distribution strategy of the company. This step involved tasks like mapping out divisions, shipping zones, manufacturing sites and distribution center hubs. This step involved rethinking and getting a clear picture of the logistics strategy of the company. In this stage, the strategy was converted into business rules and was configured into the system. The next step involved loading and validation of the tariff information.  The contracts for the carriers were entered manually. The carriers which had poor performance were placed on “hold” status which would  mean that the carrier would be allowed for the ratings but load assignation couldn’t done to the carrier. Then a reliable interface was built which would interact with the legacy system and help import the transactional data. The inventory of the finished goods was created on the legacy system. The transport orders as well as the shipments were created on the transportation system. This was created for planning purpose. Then the system was tested in order to test that the data was accurate, the processing speed was high, data transfer time was low, and the problem tracking was robust.  Then the transport data was verified manually by making use of legacy system in order to ensure that the calculations are proper.  Post that the transport orders and shipments would be processed. All the shipments would be then aligned to a plan and then would be optimized based on destination region, dates and optimization strategies.  At the same time, the original shipment data was flowing into the test system. Next is the stage for optimizing the strategy followed by implementation stage. The aim of the optimizer was to go through multiple load scenarios and create the best cost effective plan. Few of the strategies that were used were:

• Consolidation of picks and drops
• Incorporating multiple picks and drops based on a pre-defined radius
• Making the stops swap in order to improve the cost plan
• Making a comparison between the various shipping scenarios

Implementation/maintenance phase

As optimizations were performed, many discoveries were made. Each route was analyzed to realize that multiple cost breakpoints existed in between the service levels based on the weight of the shipments. By using information technology, the analysis of the breakpoints became simple as the breakpoints could be analyzed based on parcel shipments, header rates and also truckload shipments. The addition of charges like stop charges disclosed that the impact of the increasing surcharge on the service decision.

By making the pickup and the delivery dates broad, more load combinations could be done. The consignee address needed to be accurate in order to receive multiple shipments on a single load. The team also standardized the tariff rates to efficiently rate the carriers and manage the rates as well as the contracts more efficiently.

Challenges

There were multiple challenges that were overcome during the course of implementation of the system. One of the biggest challenges that were faced was to have a change in mindset. It was difficult to adapt from a conventional focus of a shipper to a external logistics provider. The traffic coordinators and the handlers of the materials were able to adjust loads for weight by knowing what products were being shipped. But the planning of the transportation solution was from the perspective of the external logistic provider.  The users who used this system had to adapt to shipping a given quantity of products instead of products.

One of the other challenges cropped up because of the delivery and the address of the consignee that were received from the network of dealers. These addresses which mostly represented the address of the dealer warehouses or sometimes the user addresses were often found to be invalid. Due to inaccurate addresses the loads and shipment consolidation was difficult.

Majority of the challenges were on the quality of the data that was fed into the system. In order to maximize the effectiveness of the tool, all such issues had to be addressed. To solve this problem, quality testing was required before data was transferred to the system.

Benefits

Because of the implementation of information technology in the legacy systems, the excessive paper handling in the original process was reduced. There were improvements even in the consolidation of loads that were done by the optimizer.  Another benefit that was obtained was in the mode of selection of carrier and service was improved. The team was able to find out the benefits by comparing the carriers which were most likely to be chosen by traffic coordinator.

The members of the team also influenced the changes in policy to reduce the charges on order. The changes in policy encouraged the customers to ensure that the delivery dates were accurate and also the addresses were correct while taking the orders. The surcharge was added for the last minute changes in orders.

The implementation of the project led to decrease in cost of freight, the carrier rates dropped and also the decision making improved to a great extent.

Conclusion

If we look closely at the most successful companies around the world, most of the success stories revolve around how effectively IT was implemented in their supply chain management. In today’s fiercely competitive world, all the companies have to embrace information technology. Today, Corporations look at ways in which they can differentiate themselves from their competition.  In order to sustain growth organizations must create competitive advantage for themselves. The focus on supply chains has increased to a great extent in the recent years (Dickey, J. 1997). Companies are aggressively investing on their existing supply chains in order to improve its efficiency. Today’s corporations are consciously expanding the scope of the management of the company’s operations in order to better manage the upstream and the downstream channels. Investing in IT in order to improve the efficiency of the supply chains is a good way to have competitive advantage. Operation excellence is of paramount importance in most of the organizations. Organizations which have high cost operations and long time to market cycle would become uncompetitive in the market place and would face numerous quality issues arising out of operational inefficiencies (Ellram, L., 1990). The advancement in the field of information technology coupled with globalization has led to an unstable and highly competitive business environment.

One of the possible future enhancements would be to have the ability to find out the cost effectiveness of the shipments from the manufacturing sites. This type of enhancements would be extremely helpful for the direct shipment determination by making use of the rating technology as well as the load optimization. This would help to eliminate the manual intervention completely. Other enhancements could be the change in the timings of the transportation planning which would help to have a proactive mode instead of the current reactive mode. It would be useful to link the tools for planning as it would promote the flow of raw materials and other finished goods from the suppliers to the manufacturing lines of the customers.

If you want It management Assignment Help study samples to help you write professional custom essay’s and essay writing help.

Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.

To get more information, please contact us or visit www.myassignmenthelp.Com