Transport Management - Essay Example

OVERVIEW: Logistics outsourcing has become a significant growing issue in Supply chain management systems to meet its satisfaction at the rate of a ‘click’. As the outsourced logistic providers (3PL/4PL) are coming out with new capabilities of ITES (IT Enabled services) like optimization, customer order tracking, Help desks, customer contact centers, Order management, global warehouse suppliers with global track opportunities, the owner company is getting low cost service with minimal technology up gradation (Richard Armstrong (800) 525-3915.2005). With this the maturity of the supply chain management transforms from network formation to value chain formation, leading to the managed outsource of 3PL/4PL services. 3PLs are the logistic providing services with customized offerings, broader service functions with long term and mutually beneficial relationship (Murphy and Poist in 2000 (pp.121) cited in Dr. Shams 2004 p.2). 4PLs are the emerged services after 3PL with better services for Supply chain logistics with integrated design and functional operation of IT systems (José Mexia 2005). Sometimes the 3PLs and 4PLs take the full control of the company (W. Lemoine 2005.p.23), which seeks these outsourcing services. In this context the owner company has to deal in some aspects with its in-house and new employees to adapt to sustain through the impact created by integration with Lead Logistics provider. Purpose of the Study: Though contracts of outsourcing are administered and managed by structured processes, some of the past experiences are showing their fatal demolition. And one such reason of failure in those systems was revealed as incompatibility of people with the organizational change. Some times it is forbidden to consider the structure of Human resource abilities and aptitude, which make the whole system lethargic to work in congruent. Hence the present study aims to identify reasons of this impact of integration with Lead logistics provider upon the ‘Human Factor’, when it is outsourced. And the focus is further made on to identify a solution to bring the human resources into the flow by clearing the ambiguity in the relationships between systems. Hindrances to success: The main reasons, many supply chain systems could not make the people to adapt (Tagliapietra et al., 1999 cited in Dr. Shams 2004 p.7) to the new integration with 3PL/4PL outsourcing are summarized as below: Lack of transparency (Damon Schechter 2003) in the newly outsourced system for the management People in general are subtle to change; Fear of failure stops them to involve in new systems. The poorly developed integration strategies leave the staff to gather inaccurate, irrelevant information Unexpected structural integration arises confronted relations between departments, (Kulkarni, 2001: 96.cited in W. Lemoine (2005.p.48) Blind Area in Management’s perspective ( Koch 2001b:357 cited in W.Lemoine (2005.p.50) While integrating with 3PL/4PL, Management only takes the decision and, tries to implement it without assessing the human capabilities. Lack of prior intimation to departments makes them haste to adapt to the new system with less relevancy. Poor recognition of need of training and cuts in training budgets make the system suffer with inefficiency, (W. Lemoine 2005.p.48). Different risk benefit measures between original and logistics services suffer from common standard and it drives different behaviors (Bowersox and Closs, 1996; Ackerman, 1996 cited in Dr. Shams 2004 p.9). Only a few individuals understand the whole supply chain, so decision become monopoly sometimes, and become restricted with high burdens of responsibility and could not make much efficient execution due to much skepticism. The framework of Information: The much of the information is been regulated by the 3PL/4PL providers and is not in the hands of the owners ( Earl, 1996 cited in Dr. Shams 2004 p.7 ). Hence, Information accuracy is not measured (Bowersox and Closs, 1996; Ackerman, 1996 cited in Dr. Shams 2004 p.9), between departments, so integrity always becomes a question when outputs are deemed incorrect, and people are made responsible for the out put. Overloading of information makes the people busy, with understanding the information, than with working on the exact process. Check on Integration: As the departments are poorly integrated with inefficient and less structured strategies, lack of joint responsibility results in poor performance (Bowersox and Closs, 1996; Ackerman, 1996 cited in Dr. Shams 2004 p.9) of the organization. Isolation of departments with differed goals work on different priorities. Due to these differed work goals, people understand the customer needs in different parameters. Upon limiting instructions, supplier performance criteria is also not much focused. People in Process: The heavy structures are often not understood by middle level or sometimes by senior management (Tagliapietra et al., 1999 cited in Dr. Shams 2004 p.7). People are much habituated to follow the built-in technology or process. Often the overall supply chain process is not known to any one individual, with specialists in each discipline. This creates conflict and does not support the culture change of integration. HOW TO MITITGATE THE PROBLEM: If one takes a closer look at this integration with 3PL/4PL or even 5PL, the list of human factor to failure is not ending unless there is a top-down change in strategy and implementation. To achieve this the key ingredient to work upon is ‘Mind set’. Trust (Tate, 1996 cited in Dr. Shams 2004 p.10) is the main factor which the changing organization has to built in all its members whether in-house, out-house, suppliers or customers; upon the benefits of 3PL/4PL collaboration. This trust can only be proves with the continuous keeping of the promises. Once the trust is built, the logistics company gains a chance to improve its service level and develops the long-term relationship and commitment to the company with its partners. Sharing Information and Communication (Murphy and Poist, 2000; Whipple and Frankel, 2000 cited in Dr. Shams 2004 p.10) leverages the efficiency and effectiveness in logistics outsourcing because both partners know what they want and exchange the relevant information down to their departments. According to Damon Scheshter, in “Delivering the Goods”, visibility should be given to the people to their operations even if it is controlled. Due to this visibility technology, practiced by Sun Microsystems, the average time to get parts has reduced to 3 days, which was originally taking in 40 days (Damon Schechter 2003.Transcription of chat). Top Management (Whipple and Frankel, 2000; Murphy and Poist, 2000, van Laarhoven et al, 2000 cited in Dr. Shams 2004 p.10) should constantly support the staff to motivate them to shred off its reluctance towards the changed performance goals. Clear Goal, Vision and Roles (van Laarhoven et al, 2000; Whipple and Frankel,2000; Murphy and Poist, 2000 cited in Dr. Shams 2004 p.10) should be clarified at the early stage and updated from time to time to prevent the risks that people may work in the different directions. The BIG issue of setting standards (Trunick, 2004 cited in Dr. Shams 2004 p.11). A thorough analysis of impact has to be prepared in before and just after the initiation of integration to forecast weak entities or modules in the systems, which are supposed to hinder the success after implementation. For this, Practice ‘stop & think’ before assessing the combined impact of the change Consider all disciplines that would be affected and ensure they have a voice. Gain the acceptance from management and the department staff to prepare itself to compete with the change. Give proper education on the key component areas. Implement the required steps to improve the maturity of the weakest entity. Ensure the right focus is in place on right individuals Introduce metrics to the performance Make appraisal of the departments after achieving the metrics to encourage them to adapt the change (Trunick, 2004 cited in Dr. Shams 2004 p.11). Once the anticipated maturity level has attained, consider them to evaluate the need to be integrated with the 3PL/4PL and make them involve in the decision-making process concerned with outsourcing of 3PL/4PL. Conclusion: The benefits of the above approach ensures that all aspects of the supply chain are capable of implementing the change and that the organization as a whole is mature enough to understand where the targets and benefits are to be gained. With this perspective the Transport management will become more sophisticated and more useful to serve the exact need. References: 1. Dr. Shams Rahman, Outsourcing Logistics Services including 4PL, May 2004, http://www.itls.usyd.edu.au/past_assignments/tptm6155_jing_et_al_2004.pdf, viewed 30 May 2005. 2. José Mexia Crespo de Carvalho, ‘when the virtual Meets the Road’, e-Logistics, University of Lisbon, http://logeengineering.org/logistics-200-versailles-net/site/txtvar/ml-en/anhcarvalho.htm#1, viewed 30 May 2005. 3. Shane Coates, ‘3PL, 4PL, or No PL’s?’ February 2002, http://www.transreports.com.au/index.html, viewed 30 May 2005 4. A.,’ Just What Is a 4PL Anyway?’, Global Logistics & Supply Chain Strategies, August, 2000, http://www.supplychainbrain.com/archives/8.00.4pl.htm?adcode75, viewed 30 May 2005. 5. Richard Armstrong, ‘Key 3PL Information Now Online’, Armstrong & Associates, Inc, http://3plogistics.com/news.htm, viewed 30 May 2005 6. Damon Schechter, ‘Delivering the Goods’ Transcript of Chat, February 18th, 2003, http://logistics.about.com/library/bldeliveringthegoodschat.htm, viewed 30 May 2005. 7. A. ‘Characteristics, strategies and trends for 3PL/4PL in Australia’, Alpha Research consortium, A graduate school of the University of Wollongong, 30 March, 2004, http://www.laa.asn.au/__data/page/252/3PL4PL_Report.PDF, viewed 30 May 2005 Read More