1 ASEAN-CHINA SME CONFERENCE 2011 LOGISTICS AND THE VALUE-CHAIN SYSTEM: OPPORTUNITIES FOR SMEs 08 th JUNE – 09 th JUNE 2011 KUALA LUMPUR CONVENTION CENTRE.
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ASEAN-CHINA SME CONFERENCE 2011
LOGISTICS AND THE VALUE-CHAIN SYSTEM:OPPORTUNITIES FOR SMEs
08th JUNE – 09th JUNE 2011KUALA LUMPUR CONVENTION CENTRE
KUALA LUMPUR
MOHD YUNUS IDRISSVP GLOBAL SALES
MASkargo
DEFINITION
1.LOGISTICS Logistics is to get the right materials to the right place at the right time, while optimizing a given performance measure and satisfying a given set of constraint. Gianpaolo Ghiani, Gilbert Laporte, Roberto Musmanno (2004), Introduction to Logistics Systems Planning and Control.
2.SUPPLY CHAIN MANAGEMENT Supply chain management is an approach to manage the people physical and information flows, from raw material through all the stages until it reaches the end user. Aoige O’Riordan and Edward Sweeney (2006). Outsourcing in Ireland: A literature Review and Survey Perspective to Construct Outsourcing Roadmap.
3.3PL Third-Party Logistics Services, 3PL is the activity which passes a part or all of the logistics functions to the external logistics organizations. Loretta Parashkevova (2007), Logistics Outsourcing – A Means of Assuring the Competitive Advantage for an Organization.
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4. OUTSOURCING
Certain business processes of the client are transferred over to the vendor, and the vendor’s office then becomes the “back office” for the client outsourced business processes. Subrata Chakrabarty (2009), Strategies for Business Process Outsourcing: An Analysis of Alternatives, Opportunities and Risks.
Decline in one’s own business process that is not the core to the company and pass it to a company which is specialized in the field. Loretta Parashkevova (2007), Logistics Outsourcing – A Means of Assuring the Competitive Advantage for an Organization.
It means finding a partner to establish a bilateral relationship and having the partner undertake relationship-specific investments so that it becomes able to produce goods or services that fit the firm’s particular needs. Gene M. Grossman and Elhanan Helpman (2002), Outsourcing in a Global Economy.
5. LOGISTIC OUTSOURCINGThe fact of entrusting all or part of the logistic chain, whose activities were previously performed in-house, to an external supplier on the long run, with a potential transfer of resources and with an objective of performance. Vera Ivanaj and Yvette Masson Franzil (2006), Outsourcing logistics activities: a transaction cost economics Perspective.
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BASIC LOGISTICS ACTIVITY
LOGISTICS CAPABILITY REQUIRED:
RESOURCE SUPPLIER
MANUFACTURER CONSUMER
RESOURCES MOVEMENTS FINISHED PRODUCTS MOVEMENTS
1. LAND – Truck, Lorry, Van, Train
2. SEA - Sea freight
3. AIR – Air freight
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LOGISTICS PROCESS
PRODUCTS & RESOURCES FLOW
MANUFACTURERMANUFACTURER CONSUMER OR CLIENTCONSUMER OR CLIENT
GOAL: 7R - RIGHT1.PRODUCT2.QUALITY3.QUANTITY4.TIME5.PLACE6.CUSTOMER7.COST
PLANTAIRPORT
OR HARBOUR
AIRPORT OR
HARBOUR
CLIENT
TRUCKINGOR
RAIL
TRUCKINGOR
RAIL
AIR OR SEA
FREIGHT
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AIRFREIGHT LOGISTICS ACTIVITIES
MANUFACTURERMANUFACTURER CLIENTCLIENTAIRPORT
OR HARBOUR
AIRPORT OR
HARBOUR
AIRPORT OR
HARBOUR
AIRPORT OR
HARBOUR
TRUCKINGAIRFREIGHT
TRUCKING
- PACKAGING- STORAGE- BOOKING- SECURITY- COMMUNICATION
- BREAKDOWN- SECURITY- DELIVERY- REGULATORY
REQUIREMENTS
-BUILD UP AIRLINE PALLET-SECURITY-COMMUNICATION-STORAGE-FINANCE & BILLINGS-RESERVATION-RAMP ACTIVITIES-PACKAGING-LOADING & TRANSFER
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INVEST TO PERFORM
INTERNALLY
OUTSOURCE
OUTSOURCE
OUTSOURCE
PERFORM INTERNALLY
& DEVELOP
OUTSOURCE
KEEP INTERNAL
OR
OR
OR
Critical ToCompetitive Advantage
Not Critical ToCompetitive Advantage
LessCritical
MoreCapable
Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
Contribution toCompetitiveAdvantage
RelativeCapabilityPosition
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INVEST TO PERFORM
INTERNALLY
OUTSOURCE
OUTSOURCE
OUTSOURCE
PERFORM INTERNALLY
& DEVELOP
OUTSOURCE
KEEP INTERNAL
OR
OR
OR
Critical ToCompetitive Advantage
Not Critical ToCompetitive Advantage
LessCritical
MoreCapable
Most appropriate when:Relative capability – possible to replicate and advance upon the superior performance position of competitors/suppliersin the process;Contribution to competitive advantage – Superior performance in the process has a major impact upon competitive advantage; opportunism potential – high potential for opportunism associated with outsourcing.
Most appropriate when:Relative capability - not possible to replicate The superior performance position of competitors/suppliers in the process;Contribution to competitive advantage – Process likely to diminish in importance in the future; and Opportunism potential - possible to manage the potential for opportunism associated with outsourcing by adopting an appropriate relationship strategy.
QUADRANT ONE
Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
Contribution toCompetitiveAdvantage
RelativeCapabilityPosition
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INVEST TO PERFORM
INTERNALLY
OUTSOURCE
OUTSOURCE
OUTSOURCE
PERFORM INTERNALLY
& DEVELOP
OUTSOURCE
KEEP INTERNAL
OR
OR
OR
Critical ToCompetitive Advantage
Not Critical ToCompetitive Advantage
LessCritical
MoreCapable
Most appropriate when:Relative capability - sourcing organisation possesses a significant performance advantage over competitors/suppliers which is difficult to replicate;Contribution to competitive advantage – superior performance in the process has a major impact upon competitive advantage; andOpportunism potential - high potential for opportunism associated with outsourcing the process.
Most appropriate when:Relative capability - possible to replicate and advance upon the superior performance position of competitors/suppliers in the process;Contribution to competitive advantage – Superior performance in the process has a major impact upon competitive advantage; andOpportunism potential – high potential for opportunism associated with outsourcing.
QUADRANT TWO
Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
RelativeCapabilityPosition
Contribution toCompetitiveAdvantage
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INVEST TO PERFORM
INTERNALLY
OUTSOURCE
OUTSOURCE
OUTSOURCE
PERFORM INTERNALLY
& DEVELOP
OUTSOURCE
KEEP INTERNAL
OR
OR
OR
Critical ToCompetitive Advantage
Not Critical ToCompetitive Advantage
LessCritical
MoreCapable
Most appropriate when:Relative capability - not possible to replicate the superior performance position of competitors/suppliers in the process;Contribution to competitive advantage – process not a source of competitive advantage; andOpportunism potential - possible to manage the potential for opportunism by adopting an appropriate relationship strategy.
QUADRANT THREE
Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
Contribution toCompetitiveAdvantage
RelativeCapabilityPosition
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INVEST TO PERFORM
INTERNALLY
OUTSOURCE
OUTSOURCE
OUTSOURCE
PERFORM INTERNALLY
& DEVELOP
OUTSOURCE
KEEP INTERNAL
OR
OR
OR
Critical ToCompetitive Advantage
Not Critical ToCompetitive Advantage
LessCritical
MoreCapable
Most appropriate when:Relative capability – sourcing organisation possesses a performance advantage over competitors/ suppliers in the process;Contribution to competitive advantage – process not a source of competitive advantage; andOpportunism potential – possible to manage the potential for opportunism by adopting an appropriate Relationship strategy with a supplier or spinning it off as a separate business.
Most appropriate when:Relative capability – sourcing organisation possesses a significant performance advantage over competitors/suppliers which is difficult to replicate;Contribution to competitive advantage – process not a source of competitive advantage; andOpportunism potential – outsourcing not possible due tothe lack of capable suppliers and spin-off not feasible.
QUADRANT FOUR
Resources : Ronan Mclvor, European Management Journal (2008)
The Sourcing Strategies
RelativeCapabilityPosition
Contribution toCompetitiveAdvantage
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OPPORTUNITIES OF OUTSOURCING IN AIR FREIGHT LOGISTICS
1.WAREHOUSE •Build-Up•Breakdown
2.RAMP AIRSIDE•towing
2.MAINTENANCE & SUPPLY OF MOVABLE EQUIPMENT•Folk lift, tow trucks, of movable equipment
2.OPERATION•Document Sorting
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