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Best of Gaw Lean Management Articles

Today companies are entering the 21st century facing ever-growing competition and market challenge. Customer service levels must be sustained at an all-time high. Businesses must deliver superior value in terms of quality, cost, innovation, and service in a global marketplace. The enterprise must utilize technological advances to meet and satisfy these customer requirements. Dealing with international law and regu­latory requirements can be extremely challenging for the enterprise. Electronic digital communications allows the global marketplace to operate at a high velocity. Simply duplicating your competitors' tech­nology or strategy is not a good plan for survival. You need to plan well beyond the horizon to reduce cycle times, cut cost, improve pro­cesses, and add greater value to the customer. This presentation will discuss some of the approaches to be considered for optimizing the enterprise for a logistics solution.


One of the key priorities is to develop a logistics strategy model with a holistic approach for the enterprise. This strategy should support the long-term objectives of the firm. The solution model should project a seamless flow of information to integrate into the supply chain. Often these solutions are fragmented and pieced together, causing subopti-mization. Let us look at some of the key elements that will need to be identified for the model.

      Sales offices of a global organization may saturate the continents.
For this model we will use Europe, Southeast Asia, Japan, Mexico,
and the U.S. as base areas for the sales office operation. These of­
fices must be equipped to offer instantaneous product information
to the customer. Promotions, available to promise, accurate deliv­
ery schedules, sample shipments, and return material functions are
examples of task that will challenge the global sales organizations.

      Distribution centers will be located in San Jose, California; Dal­
las, Texas; Memphis, Tennessee; Reading, U.K.; Singapore; and
Hong Kong. The Hong Kong distribution center will service Tai­
wan, Japan, and S. Korea. These centers will receive demand for
the order management system. The order management system will
direct these orders based on customer rules and priorities estab­
lished in the distribution network to optimize customer delivery.

      Fabrication plants are located in the eastern United States and the
northwestern United States. Fabrication plants supply internal as­
sembly plant operations, and they service external assembly plants
and subcontractors.

      Assembly plants are located in the Philippines and Malaysia. All
the assembly plants have warehouses that stock finished goods in­
ventory. Product is assembled and tested prior to being placed into
finished goods inventory. Demand may be received from a distri­
bution center or directly from a customer order. Demand is down­
loaded at specified intervals to an auto storage and retrieval system
(ASRS). Age control and lot traceability must be in compliance
with each customer's unique specifications. Priority for the ship­
ment is based on delivery date. As products are delivered from the
ASRS system, item quantities and lot numbers are scanned to vali­
date the picking plan and to complete picking confirmation. Orders
are combined and placed into outer cartoons where the customer-
specific labels are placed. These outer carton labels are scanned to
set shipping status and enter a validation process from the export
compliance software. Once the shipment has cleared the export
validation procedures, the order information is passed to a desig­
nated carrier. A tracking number is assigned and passed back to the order management system. These plants run on a 7-day, 24-hour operation. From these warehouses, 10 to 12 million units a day are snipped to customers worldwide. Some customers require a 24-hour delivery.

Demand is received through forecast and actual sales orders. Distri­bution networks are designed so that orders can be prioritized and the optimal distribution point utilized. The distribution centers then pull re­quirements from the assembly plant warehouses. Sales order informa­tion can be tracked from the freight forwarder tracking number.

We now have a high-level definition of the logistics model. Let us examine some approaches that will lead to enterprise optimization.


The described business scenario will require a robust ERP package as well as additional bolt-on software functionality. High-speed commu­nication data links must be utilized. Redundant communication carri­ers need to be in place in case there is a major issue with your current communications provider. Remember the communications blackout during the summer of 1998. This caused major system downtime across the globe. Redundant communication carriers are one method utilized to mitigate this risk. Application servers will use a three-tier client server environment. The server will typically be centrally located supporting the global wide area network. This allows for the utilization of the thin client. The thin client is merely a mirror of the data from the server. Processing is done at the server level. Connectivity at all locations must be thoroughly tested for transactional performance.

To Be Continued


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