APEC e-Trade and Supply Chain Management Training Course(Phase III: Logistics Management)
Case Study of Supply Chain Integration
2010 November 10
Shinichi Ishii, Dr. of Eng.
Strategy Group Member in GS1/T&L IUG
Expert in ISO/TC8, ISO/TC104, ISO/TC122 and ISO/TC204
Expert in UN/CEFACT/TBG3
Senior Manager for Business Strategy Consulting department
Nomura Research Institute, Ltd.
CONTENTS
1. Issue in Supply Chain Logistics
2. SCM Theory based on real life
3. Case Study
4. New Initiatives
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
1
1. Issue in Supply Chain Logistics
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Logistics Chain
End to end (door to door) transportation system
trader
supplier
retail
trader
Flow of Products ( Goods)
Depo
Logistics
center
Container
Yard
Container
Yard
Vender
Logistics
center
Depo
Retail
Flow of information
3
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Parties on Logistics Chain – Many and Diverse
- Shippers (Consignor), exporters, importers, Consignee
- Cargo Agents
- Forwarders
- Shipping agents, shipping lines
- Terminal operators
- Customs brokers
- Drayage companies, land transport
- Warehouses
- Insurance
- Bank: International Bank for L/C, B/L
- Authorities ( CIQ)
4
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Problem in Each Logistics Party
 Lack of Sharing information
 Discontinuity of information flow because of behind computerization for small and medium
sizes business, Re-entry system of Data on cargo
Declining Papa
overstock
Parts
Supplier
overstoc
k
Assembler
DEAD STOCK
&
OVERSTOCK
Logistics Center
Distribution Center
Data Re-entry
Mis-match for Demand
Different formats of invoice, packing list
Multiples barcodes must be attached
ama Stores
Congested Mega
Stores
Environment,
Road Traffic
Congestion
NOx
CO2
Truck Companies
Wrong
Delivery!
Retailers
Individual Home
Low Occupancy Rate of Fleets
Many Frequent Delivery
absence at home
A Parcel A Home
Delivery service
Re-delivery
Individual Home
Ordering from same individual causes
different deliveries with internet
shopping
Re-delivery is usual because of absence
at home when delivery
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Individual Home
5
Requirements for Supply Chain
Management
・Changes happen every day from demand side
・Quick Response for Demand
・Minimizing both opportunity loss and inventory volume
(trade-off)
・Management not based on intuition and experience but on
scientific and logical analysis
6
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Logistics Exploiting IT
Delivery system for Electronic Commerce
Inventory reduction through whole supply chain
Enhancing Logistics Management
Increasing security for cargo delivery
Improving environment and cost reduction based on
improving fleets management
Increasing efficiency for interfaces with governmental
regulatory requirement for approval
Parts Factories
Assemble
Factories
Forwarder
Truck
Forwarder
Maritime Transport
End User
Wharehouses
Truck
12345 78910
7
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
One more issue for Global Logistics
○Impact of the Event of September 11


Enhancing Security
Counter measurements for security in the US(CSI:Container Security
Initiative,C-TPAT:the Customs and Trade Partnership Against
Terrorism,SST:Smart&Secure Tradelane)
○Cargo Movement Transparency for Security



Visibility
Tracking and Tracing
Device →RFID(Radio Frequency Identification, IC Tag etc)
8
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Multi-Organizational Approach to Standards
Development
INTERNATIONAL ORGANIZATIONS
World Customs
Organization
(WCO)
Facilitation
Directorate
International
Electrotechnical
Commission (IEC)
e-Business MOU
TC 9 RAIL
JTC 1
SC 31
International
Standards
Organization (ISO)
Trade Facilitation
MOU
e-Business MOU
TC 8
United Nations
Economic Commission
for Europe (UNECE)
UN/CEFACT
SC 10
PTC
e-Business MOU
TBG
International
Telecommunications
Union (ITU)
International Maritime
Organization (IMO)
MSWG
ITU-T
BEST
SG 16
RFID MOU
SC 11
TBG 3
IMSC
SC 32
LIAISON
TC 104
DMWG
SC 4
Technical Committee 104 - Freight Containers
Subcommittee 4 - Identification and Communication
Working Group 2 - RFID
TC 154
Technical Committee 154 - Processes, Data Elements and
Documents in Commerce, Industry and Administration
Technical Committee 8 - Ships and Marine Technology
Subcommittee 10 - Computer Applications
Subcommittee 11 - Intermodal and Short-Sea Shipping
JMA
Technical Committee 204 - Intelligent Transport Systems
Working Group 1 - System Architecture
Working Group 4 - Automatic Vehicle and Equipment Identification (AVI/AEI)
Working Group 7 - General Fleet Management and Commercial/Freight
TC 204
WG 1
WG 4
Working Group 7.2 - Road Transport Interfaces/ Freight and Fleet Systems
WG 7
REGIONAL/COUNTRY SPECIFIC ORGANIZATIONS
American Association
of Port Authorities
(AAPA)
Terminal Operators
& Port Authority
(TOPAS)
American National
Standards Institute
(ANSI)
ASC X12
EDI
Institute of
Electrical
and Electronic
DISA
SCC 32
(ITS)
ebXML MOU
Category A
Liason
Organization for the
Advancement of
Structured Information
Standards (OASIS)
Comite Europeen
de
Normalisation (CEN)
CEN 278
UBL TC
CEN/BT/WG/41
ASC X12I
Acronyms KEYCopyright(C)
and Summarized2010
Descriptions
Freight Standards
Organizations
follows.
NomuraforResearch
Institute,
Ltd. All rights
reserved.
IEEE 1512
HAZMAT
9
2. SCM Theory based on real life
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Transport vs Logistics
(Transport Business)
・Facility based industory, Network Industry ( For instance:
Logistics center and delivery network)
・Scale of Economy, Load Factor, Improved efficiency with avoiding
demand concentration to the facilities
・High Rate of Operation is achieved by Efficient use of Land,
Facilities, Equipment, Buildings, Time, Human Resources
(Logistics)
・Delivery of Appropriate commodities for appropriate place, timing
within the constraints of cost and fleet management depending on
market demand.
・Timing for market Demand is Appropriate
・Mathematical Planning and Optimization Theory, Mot manual
but computer!
11
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Logistics is infrastructure for Supply
Chain Management
Important elements for Supply Chain management
・Timing( Appropriate time for delivery)
・Quick response with Speed
・Control for logistics
・Traceability
12
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Bull Whip Effect
Gaps between Plan and Actual Sales with Bull Whip Effect
The case of sales with Personal Computer
Quantity
60
50
Plan for Purchasing Order
40
30
20
Actual Sales
43
41
39
37
35
33
31
29
27
25
23
21
19
17
15
13
11
9
7
5
3
0
1
10
Time
13
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Example of information sharing between
companies to meet customer demands
② Planned short-cycle rolling
Purchasing order /
Purchasing plan
information
Procurement
Plan
Production
Plan
① Improved forecasting accuracy
Sales Plan
Customer needs
information /
Plan information
Supplier
④ Planning
information
shared with
supplier
③ Plan readjustments by each order
Emergency orders /
order changes, others
Customer
⑥ Understand and warn gaps between plan and actual operations
⑤ Provide instructions for carrying out the ever-changing plan
Materials
Procurement
Purchasing
Activities
Production
Activities
Sales
Activities
Delivery
commitment
(ATP)
14
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
3. Case Study
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Tracking and Tracing System with Global
Logistics
Providing inventory information through intermodal transport
between Asia and North America
Customs
Consignor
Logistics Center
Consignee
Asian
Countries
Land Transport 1
Land Transport 2
Asia
U.S.
Inventory status for Item No.69A7(Meg Hard Drive) are as follows;
Waiting Dispatch Advice 25,551/ Just Completed loading 20,000/ On board 875/
Processing Customs Clearance 1,000/ Land Transport for Distribution Center(L.T.1)
125/ Distribution Center 500/ Land Transport for Customers(L.T.2) 1,000
Item No.69A7,Description;400 Meg Hard Drive
Dispatch
25,551
Loading
20,000
On Board
875
C.P
1,000
L.T.1
125
D.C.
L.T.2
500
1,000
16
Source) Professor
Stanford
University
Copyright(C)
2010 Nomura S.J.Won
Research Institute,
Ltd. All
rights reserved.
No Inventory – Assembling and Delivery
system based upon Orders
 Extreme Reduction of Lead time with Direct logistics model
Large Lead time reduction
リードタイムの大幅な縮小
Minimum case
only 4 days for delivery
4 日で納品可能に
最短 is
Customs
Clearance
Xiamen Factory
Airlines
中国東方航空
Xiamen Airport
l provided the Government with one year production plan and
AirFedE x
Transport
佐川急便
Transportation plan. Dell requested to increase frequency of direct air
transport
 Service to Japan. Since March 2001, 6 flights( to 3 kansai and
3 Chubu )a week transport the cargoes To Japan.
Customs
Clearance
Order Status System
厦門工場から日本の物流拠点まで
Tracking
and Tracing with 29 Checkのpoints
チェックポイントで製品をトレーシング
between Xiamen Factory and Distribution
= 「オーダーステータス」システム
Center in Japan
29
Chubu
Airport
or
Kansai
Airport
Kansai Distribution
Center
Customers
 Realizing low cost and short lead time logistics operation with direct flight between Xiamen and Japan
17
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Extremely high performance of inventory turnover
Major Electronics Manufactures performance Comparison in
2005
Dell established advanced Global Supply Chain system
Inventory Turnover
= Cost of Sales/Inventory
per Year
Operating Profit
Annual Turnover
100
Gross Profit (Gross Profit Ratio:粗利率)
Annual Turnover
ROA
Dell
Return on Asset
90
Annual Turnover
Total Asset
80
Annual Turnover
Inventory
(Inventory Turnover
Cost
Inventory Ratio:在庫回転率)
70
60
50
Pana Sony
Sharp CANON DELL NOKIA
40
Average
Inventory
(Day)
30
20
57
48
69
115
-37 -32
-143
4
26
45
-26
10
0
0%
10%
20%
30%
40%
50%
Gross Profit
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Cash cycle
( Day)
-63
60% = Deferred Payment Duty – Accounts Receivable – Average Inventory
Global Supply Chain Management of
Automotive Industry
Fiscal Business Plan for manufacturing
On Every October, review and create next three years business plan
By December, Detail business plan by categories, regions, markets (individual product for regions)
Review every six month
Monthly Business Plan for manufacturing
The first week of every month, purchase orders from local dealers to local sales companies
Dealer’s Order is for next three months
On 15th every month, Local sales companies decide an order to headquarter ( Regarding this
order, sales companies have to buy from headquarter) and new order for next three month
Confirming suppliers’ Capacities and Inventory, 14 days prior to next month manufacturing
Final product allocation to domestic and foregin(export), 11 days prior to next month manufacturing
Decide detail specification for individual car excluding coloring
It is possible for domestic market user to decide and change coloring
Source) World Business Review
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Buyer’s Consolidation
 Enhancing apparel department in China for mega-retailers
 Starting Buyers Consolidation Business with use of licenses with total logistics business in China
Apparel Factory
Port
China
中国
在庫
Inventory
流通加工
Vanning
(検針、検査、アソート)
Customs
clearance
バンニング
通関など
Logistics
Center
Japan
日本
Customer’s Distribution
Center
Consolidation
Service
Containerizing
by Shippers
荷主ごとにコンテナ化
Maximum
Cost
40% の by 30%最大 30%
~Reduction
40%
大幅な物流コストの削減
Processing and Distribution Center
Qingdao, Shanghai
Consolidation
Service
Customs 通関
Clearance
Inventory在庫
Dividing仕分け
Processing
流通加工など
Port
B港
【 青島・上海センターの拡充】
Capacity Expansion
with Qintao and Shanhai Distribution Centers
? Qingdao Center
?青島センター
300 万枚→
600 万枚
3million→6million
?上海センター
?
180
400 万枚
万枚→
Shanghai Center 1.8million→4million
EDI Platform
EDI ほかシステムプラットフォーム
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
【Requirement from Customer】
【アパレル業者のニーズ】
? ?リードタイムの短縮化
Reduction of lead time
?ロジスティクスコスト低減
? Reduction of cost
? ?良品のみの決済
Payment for only inspected items
? Tracking for cargo
20
VMI Logistics
 Expanding its logistics system by using specialty with logistics for only electronic part, that request
specific knowledge and know-how
 Providing High Quality of Vender Managed Inventory depending customer requirement enable their
customers to decide to continue using Alpus
Parts suppliers
China
中国
Japan
日本
Out sourcing
China
在庫
Inventory
通関
Customs clearance
ピッキング
Picking
払出
Packaging
Assemblers
Lead time reduction
VMI Warehouse
China
(Tianjin、Dalian、Shanghai etc.)
System Platform
システムプラットフォーム
Developed system by herself, providing customers with both system itself and logistics operation
?
It is not easy for Customers to change Alpus logistics to other logistics provider
?
【Requirement of Electronic parts suppliers】
Cost reduction of investment for logistics center
?
Cost reduction for logistics operation
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Function of VMI warehouse
【 VMI
倉庫の機能】
- controls inventory and delivery of parts for
?
部品ベンダーに代わって部品在庫を管理し、組立て
designated places by assemblersJIT
on
behalf of suppliers
メーカーから指定された場所に
で配送
48
hours
delivery
system
to
customers
with instruction
?
ユーザーである組み立てメーカーから出荷指示を受
ofけた後、
assemblers
48
時間以内に中国各地の生産拠点に納品
21
Just In Time logistics with end to end
 Just In Time(JIT) Transport to Total Logistics service provider through Intermodal Transport
 Diversifying customer with obtaining management ability of Total Value Chain
Alliance with
COSCO
Other
Ocean Carrier
の持つ経営資源
Land
内陸
Transport
輸配送
Terminal
Operation
ング
3: 3-4 Small vessels
外航海運(定期航路、小型船
International
Shipping line( liner service)~4隻)
1隻)
内航海運(対日本・タイ、小型船
Domestic Shipping line : 1 Small vessel
Terminal
Operation
内陸
Land
輸配送
Transport
郵船航空サービス
Air Transport
for air cargo
(航空貨物サービス)
New Profit Source
Previous profit generator but now
facing heavy competition
New Profit Source
Realizing
total value for customers
トータルな顧客価値の実現
High Value added
Logistics Service
Collecting and providing
日本郵船の強みの集大成
competitiveness
Customer
involvement
- Just in Time delivery service for automotive manufacturers in Guangzhou and Shanghai
- New profit sources with Customs clearance service and terminal operating
- Providing Modal diversity with International, Domestic, Air etc… for consumers
- Promoting as a Provider of total logistics solution for automotive manufacturers
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
22
4. New Initiatives
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
The main issue is enhancing Global Supply Chain Visibility



Manufacturers are trying to reduce lead time and inventory.
Manufacturing automation ( Transparent) + Logistics to delivery (Black box)
If in case of recall, VISIBILITY into supply chains is necessary
Recycling
Sorting by Store
Aggregation
Re-sorting
Sorting
Consumer
In order to have VISIBILITY, it is essential to have……
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Shipper (manufacture) ’s / Consignee (Retail) ’s expectations are
more advanced and sophisticated than we thought
■SPEED
: Wishing to reduce processing lead-time while complying requirements.
■QUALITY : Wishing to have logistics information systems which enable us to take agile actions by means of
capturing exceptions precisely and timely within entire supply chain for better asset management.
① Reduce man-hours and lead-time related to the entire business processes
② Manage inventory uniformly regardless of the transportation company.
③ Quickly understand inventory situations, not only for on hands but also in transit, thus
attain an uniform global grasp
④ Evaluate transportation results and use them for further transportation planning.
.
⑤ Flexibly change delivery point,
quantity, or mode of transportation.
⑥ An alarm sounds when the inventory level becomes too low or too high against standard.
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Concept : Pipeline Inventory Control
( Manufacturing + Logistics = One Controlled Process)
Short Sea : Intra Asia within a week , But what happen in Deep Sea for North America and Europe
1 day
Manufacturing
Land
transport
2~4 day
Store
5~8 day
loading &
unloading
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
9~14 day
15~21 day
・・・
Shipment
Customs
clearance
Delivery
Sales
GS1 EPCglobal/TLS Global Pilot Tests supported by METI, JP
Phase 3
Phase 1
Tokyo → Amsterdam
Electronic Goods
Ocean
February 2009
Hong Kong → Tokyo
Footwear
Ocean
February 2007
Fully automated reading
of tags (fixed readers)
Use of electronic seals
on container (proof of closure)
Parties involved are AEO
(Authorised Economic Operator)
Involvement of Customs
(use of UCR; draft of “green lane”)
Handheld readers
Connect EPCIS’s
in several countries
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Phase 2
Shanghai → LA
Electronic Goods
Agricultural Machinery
Air, Ocean, Overland
February 2008
Handheld readers
Hibernating active tags
in plane
Connect EPCIS’s in
several countries
between different
industries
Review and new Direction
Did we develop useful standards for user
(Industries)?
The pilots told us about potential benefits but
difficulties for implementation
 Synchronization is need with not only RFID
products but applications combined with RFID,
Middleware and database for sharing real time data.
METI, Japan organized a committee for discussing and
developing a standardized platform for cargo visibility
in cooperation with MLIT
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Not only Hardware but Software much more important
Benefit over Investment Cost, Who will invest?

Visibility is just an infrastructure for efficient SCM.

Reduce Inventory, improve productivity of logistics operation,

reduce lead time, decrease opportunity loss, User must develop benefits if they
believe in the robustness of RFID.
Prices for IC-tags are already coming down. However hardware
can not be activate without software!! Software is still very
expensive because of non-standard.
Standard development is very slow
There are some international standard development organizations related to global
supply chain. Trade, Transport , Customs,
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Communication architecture among RF,
Database and User
User
Internet
Accessing Application
Data Base
Database
Capturing Application
ALE
Middleware
Reader
IC-Tag
Products with RF-tag
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Next Target is Interoperability of Global ID Code and
Database
Japanese Government(METI)’s Approach
From APEC to the worldwide
accounting
management
Shipper
Production
management
Information
to be shared
Accounting
management
Operation
management
Logistics
trader
DB
Database
Standard interface
Systemized code
Sales
management
DB
Internet
Shipper
repository
Terminal
repository
Customs
repository
Shipping
company
repository
Terminal
repository
Customs
repository
Logistics
provider
repository
Production system
RFID
Customs system
AIS
TOS
Customs system
RFID
Plant
Container
terminal
Customs
of the
exporting
side
Ocean-going
vessels
Container
terminal
Customs
of the
importing
side
Warehouse
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
Contact Information
Thank you very much for your attention
Shinichi Ishii
Senior Manager
Nomura Research Institute, ltd.
[email protected]
Copyright(C) 2010 Nomura Research Institute, Ltd. All rights reserved.
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