DMAP
Membership Last September, DMAP's roster of members
reached for the first time ever, the 'magic number'
of 100
DMAP Membership Last September, DMAP's
roster of members reached for the first time ever, the
'magic number' of 100. That goal had been the target
of the more recent past Presidents, including Ana Rose
Ochoa, Arlene Azul, Cora Curay. Company no. 100 is Atlantic
Globe Movers, a logistics service provider. Last month,
also for the first time, new members were inducted at
the Annual Logistics Conference. There were five new
members inducted. There would have been six, but one
was not able to attend the conference. The inductees
at the Conference were: Atlantic Globe Movers GlaxoSmithKline
Megavia Corporation Omni Logistics Corp. Trans-Asia
Wood At the October GMM, Lite Xpress International and
Handling Innovation (no. 101) were inducted. DMAP continues
to allow the limited entry of logistics service providers.
The profile of members now reads as follows: PLS INSERT
TABLE HERE Historically, DMAP started in 1989 with 10
founding members. Although not required to be so, the
first ten were manufacturers. These were: C. C. Unson
Coca-Cola Bottlers Phils. Colgate Palmolive Eveready
Battery Johnson & Johnson La Tondena Distillers,
Inc. Nestle Phils. Procter & Gamble San Miguel Corp.
Unilever In the beginning, members had to be cargo owners,
manufacturers or distributors. During the past 16 years,
membership rose slowly, because DMAP chose a deliberate
pace. There was no rush to recruit members; instead
DMAP processed applications as they came, without any
campaign. It wanted to be sure of its stance. Many service
provider applicants were rejected in earlier years.
DMAP also saw some effects of globalization, whereby
some companies closed, or were acquired by others. There
was even an instance when a service provider had been
admitted to membership, and it was even in a cartelized
environment. When DMAP realized its mistake, DMAP terminated
the membership of said company. In 2000, the by-laws
were revised to allow the entry of logistics service
providers, up to 20% of the membership. The main argument
for finally allowing service providers was that they
are in the logistics industry, have a lot to contribute
to the development of the industry, and there are many
of them. After the initial rush of applications from
service providers, the submission of applications has
settled to a more normal rate. Currently the service
providers represent less than 16% of the total. Last
Activities for the Year General Membership Meeting.
DMAP will hold its last GMM for the year on November
17. DMAP will also hold the election of the Directors
for year 2006 and the Committee Chairpersons. Christmas
Celebration. DMAP will hold its Christmas fellowship
on Friday December 2. DMAP's inner circle is apprehensive
because, for several years now, something has been happening
at about the time of the celebration and catches DMAP
by surprise right after its Christmas fellowship. Maybe
this year it will be different. Advanced Warehouse Management
Seminar. This seminar will not take place because its
format and content are being reviewed for improvements.
Year-end Issues The following issues remain unresolved
or unclear. Sea Transport Freight Rate Issues. The 6.99%
AFRA and the Bunker Surcharge. For some unknown reason,
MARINA Administrator Vic Suazo has remained silent on
these issues raised by DMAP for clarification. Also
the two-tiered increase in 2004-2005. Administrator
Suazo, what do we have to do to get a reply? Domestic
Cargo Handling Rate Issues. The North Harbor hearing
is at a standstill. For the other ports, said to be
subject to a 15% increase, we are not quite sure of
the status. Toll Fees. At the SLEX I read a sign that
starting Nov. 1, VAT will be imposed on the toll fees.
A news report, however, mentioned that Sen. Recto, one
of the authors of the EVAT law, as saying that there
will not be VAT added to the toll fees on Nov. 1 because
toll fees had already been subject to VAT. Alabang Viaduct
Repair. The start of the Alabang viaduct repair remains
a mystery. Address inquiries and comments to Ed Sanchez
at tel. 671-8670, fax 671-4793, cell 0918-914-1689,
or email dmap@i-manila.com.ph. Those interested in DMAP
training and other activities are requested to send
their e-mail addresses.
Transport
Matters Sea Transport At the Agrilink/Foodlink 2005
conference less than two weeks ago
Transport Matters Sea Transport At
the Agrilink/Foodlink 2005 conference less than two
weeks ago, Cora Curay and I spoke in one of the seminars.
Our topic, a long-time concern of DMAP, was 'Why Shipping
Costs Are High'. The idea for this topic came from the
time-honored statement that it is more expensive to
ship corn from GenSan to Manila than from GenSan to
Hongkong. This statement is more than 15 years old,
yet it remains true to this day. Cora talked about Freight
Rate Setting Policies, and I talked about Additional
Reasons Why Shipping Costs Are High. I only wish to
reprint here my last slide, which is about rate increases
in the last six years. I called it the "Double
Your Money Game". Actually sea freight rates more
than doubled in the last six years. October 1999 +10.88%
November 2000 +20% November 2002 + 6% March 2003 + 5.98%
AFRA October 2003 + 7.5% November 2004 + 9% January
2005 + 5.5% May 2005 + 6.99% AFRA October 2005 +10%?
Bunker Surcharge Combined Increase in 6 Years +118%
I am not quite sure about the Bunker Surcharge % increase;
I put in 10% DMAP has now written MARINA Administrator
Vic Suazo twice on the two-tiered increase in 2004-2005
and the 6.99% AFRA. So far no reply has been received.
DMAP's query on the AFRA is why there is an AFRA based
on MC67 regulation during a deregulated environment.
In its second letter, DMAP also questioned the Bunker
Surcharge, why the shipping lines are trying to implement
a fuel adjustment when MC 67 is no longer in effect.
Also why the shipping lines are trying to implement
it as a cartel when we are deregulated and market forces
are supposed to prevail. On cargo handling, the North
Harbor hearing is at a standstill right now as far as
we know. We are not quite sure about the other ports,
said to be subject to a 15% increase, as announced by
PPA GM Oscar Sevilla last month. Air Transport Earlier
this year DMAP conducted a survey among its members
on the use of air transport. Air Transport Committee
Co-Chairperson Joey Castro from Accord Logistics presented
the survey results during a general membership meeting.
The survey showed very few users of air transport. Although
the membership population was over 90 companies, the
response rate was low. Highlights of his presentation
included the following: ¥ Survey Results o Volume
of airfreight users among the respondents totaled only
19 tons a month o Around 28% of the respondents have
at least 1 ton a month volume; the rest have negligible
volume o Cargo consisted mostly of perishable food and
equipment spares/consumables o Carriers used are PAL,
Cebu Pacific and Aboitiz 2GO ¥ Issues o Service
Reliability. Some cargoes are unexpectedly bumped off
at some ports o Service Reliability. No insulated containers
for frozen or chilled cargo o Customer Service. No timely
feedback on delayed flights / deliveries o Rates. Very
expensive o Network Coverage. Not enough flights, or
no flights, to some destinations Among the moves being
considered is to invite representatives from the carriers
-PAL, Cebu Pacific and 2GO. Land Transport We are still
trying to get used to the huge toll free increases earlier
this year. Truckers are now asking for increases because
of the rise in fuel prices. Also on land transport,
we note that the scheduled start of the Alabang viaduct
repair has not started as "promised" by the
PNCC at the meeting with the PNP a few months ago. Address
inquiries and comments to Ed Sanchez at tel. 671-8670,
fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph.
Those interested in DMAP training and other activities
are requested to send their e-mail addresses.
back to
top
Logistics
Cost Performance
THE rise in importance of logistics
in business has highlighted the need for keeping track
of how well we do logistics in our companies. Measuring
how well we do logistics first requires that we examine
the objective of logistics. Per the CLM definition,
Logistics is that part of the supply chain process that
plans, implements and controls the efficient, effective
flow and storage of goods, services and related info
from the point of origin to the point of consumption
in order to meet customers' requirements. The objective
is therefore to satisfy customers' requirements. Typically,
and historically, customer's requirements have been
expressed as fast delivery of orders and complete delivery
of orders. Therefore the typical measures used have
been. The order delivery cycle - the time it takes from
the time of customer's order to the time of receipt
by the customer ¥ Order fill rate - the percentage
of customer orders that are delivered complete.
Line fill rate - the percentage of
lines ordered by the customers that are delivered complete
The first is a measure of responsiveness (time) while
the next two are measures of reliability. More recently,
order fill rate and line fill rate are being replaced
by Perfect Order Fulfillment Rate - the percentage of
orders delivered per schedule, complete, in good product
condition, and with no errors in documentation. It is,
of course, incomplete to just look at these measures.
One may achieve very fast deliveries and high fill rates,
but these might be achieved at very high cost and high
usage of resources. Hence it is also necessary to look
at cost, inventory levels, and use of other resources.
In the US, distribution measures have been monitored
for many years, particularly cost. For comparability
across companies and industries, cost has been monitored
as a percentage of sales. The earliest estimates of
distribution cost were in the 1960s.
In 1962, Peter Drucker suggested that
companies direct their attention to costs incurred after
the manufacturing was completed. A 1962 survey put distribution
cost at 10% of sales. By 1971, costs had declined to
just over 5% of sales revenue. This was a tremendous
improvement, following corporate reorganizations, which
allowed companies to focus on distribution cost. Moves
included the removal of warehousing from manufacturing,
transportation from purchasing, inventory management
and order entry from finance and sales, etc. In the
early 1970s, the oil crisis pushed back distribution
cost to the 9% level and up to 10% by 1980. In the 1980s,
cost declined to the 7% level, only to move up again
in the early 1990s. In the last 10 years, distribution
cost in the US has been relatively stable at the 8 to
9% level. Likewise, order delivery cycle performance
and fill rates have also been flat. INSERT TABLE HERE
PLS On first look, the order delivery cycle figures
of 8 to 9 days appear slow; however, one must appreciate
that these are average figures for the US, including
the large continental land mass.
However, even our data source Herbert
Davis says that 8 working days is too long, and 94%
line fill rate is unsatisfactory for many customers.
He also says that requirements of 5 days and fill rates
of not lower than 98% are now standard for many distribution
channels. Thus it can be said that the best efforts
of logisticians have not made much improvement in the
last ten years. Here in the Philippines, it is sad to
note that we do not have available data on cost and
service as in the US. Something sorely needed, as costs
rise and technology is brought in to stem the rise in
costs. Speaking of rising costs, local logisticians
are again faced with cost increases from all directions.
As we try to get used to huge toll free increases this
year, the 6.99% AFRA for shipping rates hit us last
May, an application of an MC from the regulated era
in a so-called deregulated regime. The MARINA has not
even answered our query about this out-of-place AFRA,
and we get hit with another bolt, a BSC (Bunker Sur
Charge).
I wonder why it was abbreviated to
BSC. As surcharge is one word, the appropriate abbreviation
is BS. As we try to fight the cargo handling increase
at North Harbor, the PPA proudly announced that it has
approved a 15% cargo handling rate increase in domestic
ports (except North Harbor). Obviously truckers are
also asking for rate increases, because of the continuing
rise in fuel prices. All the talk about bringing down
the cost of transport in the Philippines is just a lot
of hogwash, coming all the way from the President to
all the transport executives in the executive branch.
We started this column talking about watching costs.
Help! Address inquiries and comments to Ed Sanchez at
tel. 671-8670, fax 671-4793, cell 0918-914-1689, or
email dmap@i-manila.com.ph. Those interested in DMAP
training and other activities are requested to send
their e-mail addresses.
| |
Cost
% of sales
|
Order
Delivery Cycle, Days
|
Order
Fill RAte %
|
Line
Fill Rate %
|
1995 |
7.94
|
6 |
87 |
92 |
1996 |
8.01
|
9 |
87 |
94 |
1997 |
9.02
|
8 |
87 |
94 |
1998 |
8.95
|
7 |
85 |
93 |
1999 |
7.34
|
8 |
85 |
90 |
2000 |
9.44
|
8 |
86 |
92 |
2001 |
9.17
|
7 |
87 |
92 |
2002 |
7.65
|
8 |
88 |
95 |
2003 |
7.52
|
7 |
85 |
91 |
2004 |
8.37
|
8 |
91 |
94 |
back to
top
News
from the Academe
TIP Last week I gave a talk at the
Technological Institute of the Philippines (TIP) on
DMAP and Logistics. When the student group TIP-JLOP
(Junior Logistics Organization of the Philippines) invited
me, I automatically expected that they would be from
the Industrial Engineering school, or the Business school;
however I was surprised to learn that the Logistics
Management Major is in the BS Commerce curriculum. It
was refreshing to see so many young people in an institution
of learning. More refreshing, especially since the students
are students of logistics management.
What struck me even more was the enthusiasm of these
students in 'LM' (for Logistics Management), now a part
of their lingo. I gathered that many activities had
been lined up for the semester, including more seminars
and symposia, and a field trip to a logistics service
provider (Omni Logistics). The student group, JLOP,
looks well-organized, led by its energetic student President
Melvin Duenas. I couldn't count the number of attendees
at my talk. I am sure there were more than 100. There
might have been 150, or even more.
How has this enthusiasm in logistics been built up at
TIP? It can be attributed, as far as I can tell, to
the efforts of Charlie Villasenor, formerly from Caltex,
formerly President of PMMAP (now PISM), and now President
& CEO of Transprocure. I do not know exactly what
his role is at TIP, besides being adviser/consultant.
Charlie was once a speaker at DMAP's annual logistics
conference. After my talk at TIP, they showed a video
clip with Charlie explaining the looming large demand
for logistics professionals in the country. The clip
also showed Transprocure VP Dino Limjap.
I was also pleasantly surprised to learn that some friends
are also involved in TIP. Rullen Liwanag of AFC Logistics
(a DMAP member) is an instructor in logistics and would
have awarded the certificate of appreciation to me,
but he could not make it. I also saw the name of Julius
Bambico as an adviser of JLOP. Julius was formerly with
Omni Logistics (which is now a DMAP member), later with
AFC Logistics, and now VP-CEO and owner of Log Consult
Corp. Julius teaches at TIP. Lastly, TIP Vice President
for Academic Affairs Ging Flora is a long-time friend
from Mapua.
DLSU
At DMAP's Logistics Conference last week, former DMAP
President Ike Castillo gave an update on the DMAP-DLSU
Supply Chain Management Program. In a couple of months
the program will turn out its first batch of 'graduates',
those who will have completed all seven modules.
UPLB. Lastly, we have had brief communications with
UP Los Ba–os. Prof. Ari Halos of the School of
Industrial Engineering asked us a few questions earlier
this year on the SCOR Model of the Supply Chain Council.
My long-delayed reply to him later led to a suggestion
for him to give a talk at Agrilink/Foodlink 2005, wherein
DMAP is a co-organizer. This year's theme is "Efficient
Supply Chain: Key to Competitiveness".
Agrilink approved Prof. Halos's proposed talk, which
is entitled "Understanding Supply Chains with the
Supply Chain Operations Reference". Agrilink also
approved another talk to be given by DMAP, entitled
"Other Reasons Why Shipping Costs Are High".
This talk will be given by a DMAP representative. Address
inquiries and comments to Ed Sanchez at tel. 671-8670,
fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph.
Those interested in DMAP training and other activities
are requested to send their e-mail addresses.
Strange
MOA North Harbor PPA Hearing
The second hearing on the 25.7% increase in arrastre and stevedoring rates being petitioned by the North Harbor cargo handlers was held on Sept. 1. No less than Cong. Ed Zialcita of Para–aque attended to express his opposition to rate increases which ultimately get passed on to the consumers. The hearing did not last long because the petitioners were not prepared to make their presentation justifying the increase. Tet Gambito, representing DMAP, questioned the ANCHOR presentor. Hearing officer Atty. Ba–as ordered another hearing to be scheduled. MOA A draft MOA is being circulated apparently for comments.
The draft MOA is among 15 parties, 7 government agencies and 8 private groups, and is supposedly pushing for the reduction of inter-island transportation cost of agricultural products through RORO transport. The parties included are : DOTC, DTI, DA, NEDA, PPA, CPA, MARINA, PNCC, CCAP (Cold Chain Association), DMAP, PISA, APPOOP, PCASO, COLTOP, CTAP. The curious thing is that DMAP is one of the parties included in the MOA, yet DMAP was not officially furnished a copy and not asked for comments. As far as we can determine, the MOA was drafted by PPA and is being pushed by them.
I wonder how they will get us to sign the MOA without giving us a copy. Maybe they think that DMAP is a "second class" party and does not have to be asked. We will wait. Meanwhile, we wonder why they mention the implementation of "preferential cargo handling tariff rates prescribed by PPA" for agricultural products. There is no cargo handling for true RORO transport, which I prefer to call DODO, for "Drive On Drive Off". This literally describes how it is done, and makes it obvious that there is no cargo handling. It appears that PPA is trying hard to set fees where there should be none.
Is this an agency that is trying to reduce cost of transport? DMAP Conference The annual Logistics Conference is on for Sept. 15-16 at the EDSA Shangri-La Hotel, with the theme "Seamless Supply Chain in an Archipelagic Environment: A Continuing Challenge". Participant fees are: Participant from DMAP member company, P8,690 Non-member, P10,865 The fee covers lunches and meriendas for two days, conference binder, giveaways and certificate of completion. There will also be raffle prizes during the conference and cocktails at the end of the conference. The lineup of speakers has been finalized.
Key Note Speakers are: From the Government: DTI Sec. Peter B. Favila From the Private Sector: Dr. Rolando V. Hortaleza - CEO Splash Corp. Speakers in the technical sessions are the following: Henry Basilio, UA&P, Director Transport & Logistics Center Logistics Infrastructure Support & Efficiency ¥ Road Network - public investments in road construction and maintenance, impact of poor roads on transport cost, gaps in road investment requirements, recommended policy action/s. ¥ Cold Storage Facilities - existing capacity of the cold storage facilities in the country, regional distribution of cold storage facilities, NDC-PIC cold storage projects.
¥ Ports and Shipping - flaws in the regulatory framework, cargo handling rate increases, proposed amendments to the RORO Policy (EO 170-B) Antonio Domingo, BayanTrade, Dir. Strategic Sourcing & SCM Extending the Enterprise Supply Chain & Supply Chain Mgt. to Your Vendors as Business Partners ¥ Business Realities ¥ SCM In A Business Enterprise System ¥ Critical Vendor Partnership Value-Added Areas ¥ Vendor Partnering Process ¥ Supply Chain Effectiveness Robert Nacianceno, MMDA General Manager Update On MMDA Projects Atty. Rene Ba–ez, PLDT, Chief Governance Officer Corporate Governance Brett Marshall, Zuellig Pharma Corp., VP-Distribution Meeting the Challenges in Delivery Excellence for Healthcare Products ¥ The diverse nature of an archipelago provides plenty of challenges to the supply chain, but the health & welfare of the people depends heavily upon the timely, efficient and quality-safe delivery of healthcare products.
¥ Review the supply chain strategies employed by local and multinational healthcare companies to balance global sourcing while most effectively ensuring that their products have time, place and quality utility throughout the islands of the Philippines. ¥ Overcoming the challenges posed by geography, climate & infrastructure availability, capacity & reliability. Laurence Go, President, Auto ID Philippines, Inc. Improving Supply Chain Efficiency Through Electronic Data Interchange ¥ What is EDI? Why email is not EDI?
EDI Messages & Benefits of EDI ¥ EDI Standards: External and Internal ¥ The GS-1 EDI Standards for the Philippines - The importance of the GS-1 EDI standards - Moving away from private externals standards - Encouraging trading partners to adhere to standards ¥ Value Added Network supporting GS-1 Standards ¥ Case Study: EDI in action, Cost of EDI, Getting started in EDI Roberto Cabaero, Julie's Franchising Corp., Consultant Supply Chain Management: A Franchisor's Core Competency ¥ Supply Chain Principles ¥ Expansion Through Collaboration ¥ Customer Service from a Franchisees / Operator's Point of View ¥ Case Study: The Julie's Bakeshop Experience Martin Cary Q. Tiglao, IBM Solutions Delivery, Business Solutions Services Streamlining Manufacturing & Distribution While Preparing For A More Complex Future ¥ RFID Overview ¥ Meeting Changing Industry Dynamics Heads-on ¥ Achieving Manufacturing & Distribution Goals with Technology.
¥ Leveraging RFID for success. ¥ Using RFID to Transform the Supply Chain. ¥ Optimizing Opportunities for Cost Savings & Process improvements ¥ Extending Existing Technology with RFID Robert Vallender, Nestle Philippines, Head of Supply Chain Operations Complexity - Can We Manage It? ¥ The details will highlight the need to understand what adds complexity and costs and how Supply Chain Professionals can Streamline the entire process. In addition, Ayala Systems is sponsoring lunch, with a technical presentation by J. Ross Williams, GLOG Sales Director for Asia Pacific. As usual, the exhibits are open to the public for free. Over 35 exhibit booths are expected to be put up, all of them focused on logistics and supply chain services.
DMAP's invitation to sponsors and advertisers for this year's Annual Logistics Conference remains open; however, the slots for principal sponsors have all been taken. A small number of slots for regular sponsors and break sponsors remain. Contributions for exhibitors have been maintained at the same amounts over the years at P60,000 for principal sponsors, P30,000 for regular sponsors (5 slots left), P150,000 for cocktails sponsor (1 slot available), P100,000 for luncheon sponsor (1 slot available), and P50,000 for break sponsor (4 slots available). Principal sponsors are: Ayala Systems Technology Inc. (luncheon sponsor) Boeing Material Handling IDS Logistics Edward Keller SSI Schaefer TNT Express Maxima Equipment Exel Logistics Phil Forklift Center inc. Smart Communications Loscam Phils. PLDT Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph. Those interested in DMAP training and other activities are requested to send their e-mail addresses.
Highway and Other Robberies
Highway Robberies
At the PNP Headquarters last week, the PNP presented
hijacking figures at a meeting sponsored by the Japanese
Chamber of Commerce and Industry of the Philippines
(JCCIPI). Meeting participants included PNP officials,
JCCIPI officials, CTAP Chairman Col. Rudy de Ocampo,
PNCC spokesperson Engr. Sales, a representative of SEIPI
(Semiconductors and Electronics Industry in the Phils.)
and DMAP representatives, namely President Jun Gabrino,
Director and PRO John Guillermo and myself.
The meeting was presided over by PC
Supt. Juan Urani, Jr., Executive Officer of the Directorate
for Operations.
From my notes during the meeting, I
captured the following figures.
PLACE EXCEL TABLE HERE
Comments on these figures are:
¥ There was a marked decrease in the incidence of
hijacks this year
¥ There is a discrepancy of 1 in the 2005 number
of hijacks (I miscopied the figures)
¥ The rate of apprehension (called 'intercepted')
declined markedly from 29% (12 / 41) to 7% (1 / 15).
The rate of apprehension in Metro Manila last year and
this year was a sad zero.
¥ These are incidents reported to the PNP, therefore
incomplete.
The last comment makes one wonder -
what is the true magnitude of the hijacking problem?
When I asked Supt. Urani if he could venture a guess,
he was silent on this and, instead, remarked - just
like other crimes, many of them are unreported. However,
Col. De Ocampo of CTAP said as high as 50% of hijacks
may be unreported, meaning that the true incidence is
double the PNP figures.
We think that the high incidence in
Region 3 (Central Luzon) and 4A (Southern Luzon) is
due to the many possible escape routes in these areas,
and, perhaps more important, the presence of fences.
The PNP also released figures on 'robberies',
distinguished from hijacks in that the victims are bus
passengers. The PNP said the incidence in first half
2004 was 17, with 1 interception, while it was 19 in
2005, also with 1 interception.
The other significant agenda in last
week's meeting was a discussion by PNCC's Engr. Sales
about the reconstruction in Alabang. Highlights are
the following:
¥ Plans are not yet final
¥ Alabang bridge will be widened from 6 lanes to
8 lanes. The additional lanes will be on the west side
¥ The 27 km stretch of the expressway from Alabang
to Sta. Rosa will be widened from 4 lanes to 8 lanes
¥ The stretch from Sta. Rosa to Calamba will be
widened from 4 lanes to 6 lanes
¥ The connection from Calamba to Sto. Tomas will
be a new 4 lane highway
¥ The total schedule will be 18 months, but the
Alabang bridge only will be 12 months
¥ Construction will start in August or September
¥ First step is widening of the ground level under
the bridge.
¥ During construction, 4 lanes of the bridge will
always be open
¥ There will be no re-routing, except maybe class
1 vehicles
North Harbor PPA Hearing
After being done with the subject of highway robberies,
it seems logical to deal with another form of robbery.
The PPA has just called for a hearing on a petition
of the North Harbor cargo handlers called ANCHOR. The
hearing is set for July 29, 2005. ANCHOR has amended
its petition to +25.74%. The statements attached by
the PPA to the petition are not audited, without certification,
incomplete or not legible.
'Basic' Warehousing Seminar
This year's edition of this seminar will be on August
25 to 26 at the Astoria Plaza. As usual, the seminar
will include a visit to a live warehouse and a workshop.
Far from being just "basic",
seminar topics also include: Intro to SCM, logistics
and warehousing, update on bar coding, warehousing trends
and developments. The basic aspects covered are: nature
and characteristics of a warehouse, warehouse procedures,
GMP, safety, warehouse layout guidelines, performance
measures, and materials handling principles.
Target participants are warehousing
staff requiring basic training, trainees, new staff,
or older staff requiring a refresher. Also targeted
are non-warehousing staff in related and interface functions,
such as distribution, transport, shipping, inventory
management, purchasing, production, accounting, engineering,
QC, etc. Likewise, managers requiring a basic understanding
of warehousing and trends may attend the seminar.
Speakers will be Malou Santos, formerly
from J&J and now an independent consultant, Norman
Adriano from WG&A, Larry Go from Auto ID Phils.,
and myself.
Fees for the two-day seminar inclusive
of meriendas, lunches, seminar materials and the warehouse
visit are P9,800 for non-DMAP members and P7,840 for
DMAP members. Payment deadline is August 19.
DMAP Conference
DMAP's invitation to sponsors and advertisers for this
year's Annual Logistics Conference remains open. The
Logistics Conference is scheduled for Sept. 15-16 at
the EDSA Shangri-La Hotel. Contributions for exhibitors
have been maintained at the same amounts over the years
at P60,000 for principal sponsors (6 slots left), P30,000
for regular sponsors (10 slots left), P150,000 for cocktails
sponsor (1 slot available), P100,000 for luncheon sponsor
(1 slot available), and P50,000 for break sponsor (4
slots available).
This year's theme is "Seamless
Supply Chain in an Archipelagic Environment: A Continuing
Challenge".
Address inquiries and comments to Ed
Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689,
or email dmap@i-manila.com.ph. Those interested in DMAP
training and other activities are requested to send
their e-mail addresses.
January
to June
SCM Performance
SCM and Logistics
In recent years, the term Supply Chain Management has
become very popular in local business, now 'invading'
organization charts in names of units and positions,
sometimes replacing the term Logistics. Yet, probably,
usage of the term Supply Chain Management has gone ahead
of real understanding of the term.
In the way that Logistics is different from Supply
Chain, performance measurement in these two areas are
quite different. SCM performance is much more complex.
First let us examine the definitions.
According to the CLM (Council of Logistics Management,
and now the Council of Supply Chain Management Professionals),
Logistics is:
"That part of the supply chain process that plans,
implements and controls the efficient, effective flow
and storage of goods, services and related information
from the point of origin to the point of consumption
in order to conform to customers' requirements."
Obviously, in order to measure Logistics performance,
we need to look at how well the objective is achieved
- how well are customers' requirements conformed to?.
Of course, the attainment of customer requirements
cannot be looked at by itself, without considering how
much resources are used to achieve the satisfaction
of customers. To give a complete picture of Logistics
performance, we also need to measure the effectiveness
of goods flow and efficiency in terms of cost and use
of assets.
Let us now look at the definition of Supply Chain Management.
I like the definition proposed by John Mentzer of the
University of Tennessee, with his colleagues, compared
to the CSCMP definition; but here they are both.
John Mentzer:.
"The systemic, strategic coordination of the traditional
business functions and the tactics across these business
functions within a particular company and across businesses
within the supply chain, for the purpose of improving
the long-term performance of the individual companies
and the supply chain as a whole"
CSCMP:
"Supply Chain Management encompasses the planning
and management of all activities involved in sourcing
and procurement, conversion, and all Logistics Management
activities.
Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries,
third-party service providers, and customers.
In essence, Supply Chain Management integrates supply
and demand management within and across companies."
Per John Mentzer, the objective is to improve the long-term
performance of the companies in the supply chain and
the supply chain as a whole. For the company, this means
measuring its long term performance - growth, volume,
profits, etc. Then the same for the other companies
in the supply chain. This suggests that each company
does its own measurement. And then, finally, the supply
chain as a whole. This last item is as vague as can
be.
The CSCMP definition and Mentzer's definition suggest
that measuring SC performance includes:
¥ Measuring logistics performance of the company
¥ Measuring how well the traditional business functions
are coordinated in the company
¥ Measuring how well the traditional business functions
are coordinated across businesses
¥ Measuring how well supply and demand management
are integrated
Thus, in comparison, Logistics performance measurement
looks relatively simple, involving the usual categories
of
¥ Cost, such as total cost as % of sales, functional
cost components
¥ Responsiveness (time), such as order delivery
cycle, customer complaint response time
¥ Reliability (customer satisfaction/service quality),
such as perfect order fulfillment, % complaints handled,
line fill rate, % on time deliveries, error rate
¥ Resources management/productivity, such as inventory
level, velocity, return on assets
When it comes to Supply Chain performance measurement,
apart from Logistics, the metrics are not standardized,
or even categorized in a neat way, and are just evolving
now.
We are beginning to encounter metrics such as the following:
¥ Total supply chain cost
¥ Supply chain response time
¥ Production flexibility
¥ Cash to cash cycle time
¥ Number of data sets shared
¥ Number of customer contact points
¥ Relative customer order response time
¥ Product finalization point
¥ Product category commitment ratio
Someday, supply chain performance measures will get
categorized into meaningful groups, and the issue of
measuring total supply chain performance will become
clearer, and better measures for degree of collaboration
and cooperation will emerge.
'Basic' Warehousing Seminar
This year's edition of this seminar has been postponed
to August 25 to 26, still at the Astoria Plaza. As usual,
the seminar will include a visit to a live warehouse
and a workshop.
Far from being just "basic", seminar topics
also include: Intro to SCM, logistics and warehousing,
update on bar coding, warehousing trends and developments.
The basic aspects covered are: nature and characteristics
of a warehouse, warehouse procedures, GMP, safety, warehouse
layout guidelines, performance measures, and materials
handling principles.
Target participants are warehousing staff requiring
basic training, trainees, new staff, or older staff
requiring a refresher. Also targeted are non-warehousing
staff in related and interface functions, such as distribution,
transport, shipping, inventory management, purchasing,
production, accounting, engineering, QC, etc. Likewise,
managers requiring a basic understanding of warehousing
and trends may attend the seminar.
Speakers will be Malou Santos, formerly from J&J,
now an independent consultant, Norman Adriano, from
WG&A, Larry Go, from Auto ID Phils., and myself.
Fees for the two-day seminar inclusive of meriendas,
lunches, seminar materials and the warehouse visit are
P9,800 for non-DMAP members and P7,840 for DMAP members.
Payment deadline is August 19.
DMAP-DLSU SCM Program
Meanwhile, at De La Salle University, the DMAP-DLSU
SCM Program continues, with Module 4 on Warehousing
and Module 2 on Transport (re-run) running at this time.
Both modules will be completed on July 16. Module 6
on Procurement is expected to start on July 23.
DMAP Conference
DMAP's invitation to sponsors and advertisers for this
year's Annual Logistics Conference remains open. The
Logistics Conference is scheduled for Sept. 15-16 at
the EDSA Shangri-La Hotel. Contributions for exhibitors
have been maintained at the same amounts over the years
at P60,000 for principal sponsors (7 slots left), P30,000
for regular sponsors (over 10 slots left), P150,000
for cocktails sponsor (1 slot available), P100,000 for
luncheon sponsor (2 slots available), and P50,000 for
break sponsor (4 slots available).
This year's theme is "Seamless Supply Chain in
an Archipelagic Envurinment: A Continuing Challenge".
Address inquiries and comments to Ed Sanchez at tel.
671-8670, fax 671-4793, cell 0918-914-1689, or email
dmap@i-manila.com.ph. Those interested in DMAP training
and other activities are requested to send their e-mail
addresses.
back to top
Logistics Software
The Council of Logistics Management
(CLM) published every year for 18 years, up to year
2000, a Logistics Software Directory. Then it stopped
when the annual publications appeared to be repetitions.
Since 2000, however, the landscape of the software industry
changed dramatically, and the CLM decided to compile
a new edition of the directory, with an objective of
focusing on functionality.
The 2003 Directory contained 200 vendors and over 325
packages. The packages were categorized into nine areas
of functionality, with each area identified by up to
a dozen functions. The categories are listed below,
with descriptions of contents.
• Warehouse Management. 96 vendors. Area includes
Planning and execution of physical receiving, storage,
picking, and shipping
• Transportation Management. 104 vendors. Area
includes management of freight manifesting, load planning
and optimization, freight payment, carrier management,
routing
• Inventory Planning / Management. 78 vendors.
Area includes net requirements, DRP, MRP, Master Production
Scheduling, vendor and/or customer inventory info sharing,
VMI, collaborative planning
• Advanced Planning. 94 vendors. Area includes
Available to Promise, supply chain visibility, supply
chain decision support, business planning and analysis
tools, supply chain strategy, simulation, and modeling.
• Order Processing. 75 vendors. Area includes
capture or entry of customer order info and data through
keystroke, voice, EDI, internet, or other means
• Customer Relationship Management. 34 vendors.
Area includes Sales Force Automation, field service,
call center management, broker / agent / distributor
interfaces, retail storefront and e-commerce, customer
self-service, marketing automation, content and business
rules management, customer and sales business intelligence.
• Forecasting. 42 vendors. Area includes future
demand forecast generation.
• Manufacturing. 38 vendors. Area includes production
planning, production scheduling, shop floor management,
manufacturing execution, and reporting.
• Procurement. 60 vendors. Area includes suppler
management, purchasing execution, contract management,
MRP, sourcing, marketplaces.
We note that Advanced Planning and
CRM are not traditional functions from ten years ago.
I must admit that I am not familiar with one or two
terms in the descriptions above.
The 2003 Directory also contains some
ancillary information about each software product:
• Vertical / Industry Focus
• Well-Known Users
• Technical Environments
• Pricing Models
• User Groups
• Implementation
Establish-Davis, the company selected
by CLM to compile the new directory, also reported some
interesting observations and comments.
• ‘Wish list’ top topics are RFID
and Internet connectivity / visibility. Also mentioned
are security and collaboration capabilities
• Software investment deciding factors. Number
one is money. Lack of resources is also a key obstacle.
Also mentioned is the company’s ability to change
business processes
• Implementation difficulties. Vendors mention
lack of user resources, inability to build consensus,
and lack of commitment to training. Users mention too
much training, and lack of strong and capable internal
project management.
• Software capabilities not used. Vendors cite
metrics and management reporting
• Implementation cost. Users believe that implementation
costs run higher than the ‘rules of thumb’
used by software vendors.
• Implementation time. Software vendors believe
that their software can be implemented in a few months,
while users feel it takes 6 to 24 months.
• Financial justification. Vendors’ ‘rules
of thumb’ are that payback is one year or less,
while most users expect payback of up to two years.
Basic Warehousing Seminar
This year’s edition of this seminar will be held
on July 14 to 15, at the Astoria Plaza. As usual, the
seminar will include a visit to a live warehouse and
a workshop. Seminar topics include: Intro to SCM, logistics
and warehousing, nature and characteristics of a warehouse,
warehouse procedures, GMP, safety, warehouse layout
guidelines, performance measures, materials handling
principles, basics of bar coding, warehousing trends
and developments.
Target participants are warehousing
staff requiring basic training, trainees, new staff,
or older staff requiring a refresher. Also targeted
are non-warehousing staff in related and interface functions,
such as distribution, transport, shipping, inventory
management, purchasing, production, accounting, engineering,
QC, etc. Likewise, managers requiring a basic understanding
of warehousing and trends may attend the seminar.
Speakers will be Malou Santos, formerly
from J&J, now an independent consultant, Norman
Adriano, from WG&A, Larry Go, from Auto ID Phils.,
and myself.
Fees for the two-day seminar inclusive
of meriendas, lunches, seminar materials and the warehouse
visit are P9,800 for non-DMAP members and P7,840 for
DMAP members. Payment deadline is July 8.
DMAP-DLSU SCM PROGRAM
Meanwhile, at De La Salle University, the DMAP-DLSU
SCM Program continues, with Module 4 on Warehousing
and Module 2 on Transport (re-run) running at this time.
Both modules started on June 4.
DMAP CONFERENCE
DMAP’s invitation to sponsors and advertisers
for this year’s Annual Logistics Conference remains
open. The Logistics Conference is scheduled for Sept.
15-16.
Address inquiries and comments to Ed Sanchez at tel.
671-8670, fax 671-4793, cell 0918-914-1689, or email
dmap@i-manila.com.ph. Those interested in DMAP training
and other activities are requested to send their e-mail
addresses.
back to top
Supply
Chain Management
TWO columns ago, we started to discuss the move towards
Supply Chain thinking from Logistics thinking, not only
here in the Philippines, but elsewhere. We noted that
the Council of Logistics Management (CLM) changed its
name last January to Council of Supply Chain Management
Professionals (CSCMP).
We devoted the last issue to sea transport matters and
we promised to return to the subject of Supply Chain
Management in a future issue. We now return to this
subject.
First of all, we note that "supply chain"
is different from "supply chain management".
On "supply chain" first, the literature gives
varying definitions, but they tend to agree with each
other.
Here are some definitions of "supply chain":
¥ A set of firms that pass materials forward (LaLonde
and Masters)
¥ The alignment of firms that brings products or
services to market (Lambert, Stock, and Ellram)
¥ The network of organizations that are involved,
through upstream and downstream linkages, in the different
processes and activities that produce value in the form
of products and services delivered to the ultimate consumer
(Christopher)
¥ A set of three or more entities (organizations
or individuals) directly involved in the upstream and
downstream flows of products, services, finances and/or
information from a source to a customer (Mentzer and
others).
As to the classification of supply chains, we have
seen the following in the literature:
¥ Mentzer and others identify three degrees of
supply chain complexity, namely, a "direct supply
chain", an "extended supply chain", and
an "ultimate supply chain"
¥ Hughes, Ralf, and Michels have identified nine
models of supply chains
Mentzer and others explain further:
An "extended supply chain" includes suppliers
of the immediate supplier and customers of the immediate
customer.
An "ultimate supply chain" includes all the
organizations involved in all the upstream and downstream
flow of products, services, finances and information
from the ultimate supplier to the ultimate customer.
For example, a third party financial provider may provide
financing, bearing some of the risk and giving financial
advice. A TPL provider may perform the logistics activities
between two of the companies, and a market research
firm may provide info about the ultimate customer to
a company well back up the supply chain.
Supply chains exist whether they are managed or not.
Mentzer therefore emphasizes that there is "a definite
distinction between supply chains as phenomena that
exist in business and the management of these supply
chains.
An organization can be part of numerous supply chains,
for example, a supermarket can be part of the supply
chain for canned food products, for toiletries, for
meats, and for many other products.
On "supply chain management", there is a
wide variety of definitions.
Some example definitions are:
¥ SCM traditionally requires separate materials
functions to report to an executive responsible for
coordinating the entire materials process, and also
requires joint relationships with suppliers across multiple
tiers. SCM is a concept, "whose primary objective
is to integrate and manage the sourcing, flow and control
of materials using a total systems perspective across
multiple functions and multiple tiers of suppliers"
(Monczka, Trent & Handfield)
¥ Supply chain strategy includes "...two or
more firms in a supply chain entering into a long term
agreement: É the development of trust and commitment
to the relationship; É the integration of logistics
activities involving the sharing of demand and sales
data; É the potential for a shift in the locus
of control of the logistics process." (LaLonde
and Masters)
¥ "SCM deals with the total flow of materials
from suppliersthrough end usersÉ" (Jones
and Riley)
¥ SCM is "É an integrative philosophy
to manage the total flow of a distribution channel from
supplier to the ultimate user." (Cooper et al)
Although there is a wide variety of definitions, Mentzer
classifies them into three kinds.
¥ A management philosophy
¥ Implementation of a management philosophy
¥ A set of management processes
Mentzer continues: As a management philosophy, SCM
has the following characteristics:
¥ A systems approach to viewing the SC as a whole
and to managing the flow of goods
¥ A strategic orientation toward cooperative efforts
to synchronize and converge intrafirm and interfirm
operational and strategic capabilities into a unified
whole
¥ A customer focus to create unique and individualized
sources of customer value, leading to customer satisfaction
As a set of management activities to implement a philosophy,
the following activities are mentioned:
¥ Integrated behavior
¥ Mutually sharing info
¥ Mutually sharing risks and rewards
¥ Cooperation
¥ The same goal and same focus onserving customers
¥ Integration of processes
¥ Partners to build and maintain long term relationships
As a set of management processes, Lambert, Stock, and
Ellram suggest the following key processes: customer
relationship management, customer service management,
customer service management, demand management, order
fulfillment, manufacturing flow management, procurement,
and product development and commercialization.
We will continue in the next issue.
Address inquiries and comments to Ed Sanchez at tel.
671-8670, fax 671-4793, cell 0918-914-1689, or email
dmap@i-manila.com.ph. Those interested in DMAP training
and other activities are requested to send their e-mail
addresses.
No
Competition
THE joke of the day is something said
by a Dept. Secretary in a cabinet meeting. This is the
version of the story that we heard. A proposed EO allowing
the conversion of private non-commercial ports into
commercial ports was being discussed.
After the proponent said that the
EO would foster competition, the President said that
that was good. To which the secretary said, Ma'm, hindi
pwede sa amin 'yan; here in my department, we have no
competition. Talking about the President, she is expected
to be the keynote speaker at the Western Mindanao Roro
Shipping Conference slated on April 27 in Zamboanga
City.
DMAP is also invited to provide a speaker
on 'Success Stories in RORO Shipping'. Most likely it
will be DMAP past President Cora Curay who would go
there. Key government transport officials are also expected,
including DOTC Sec. Leandro Mendoza, MARINA Administrator
Vic Suazo, PSB Executive Director Pete Mendoza and PPA
GM Oscar Sevilla.
The Zamboanga conference will nearly
coincide with the 3rd Philippine Shipping and Ports
Conference, to be held at the Manila Peninsula on April
28-29. We also heard that the Oversight Committee held
a hearing about Cong. Ed Zialcita's speech "Where
there's smoke, there's fire". This concerns the
stance of the PPA with respect to ATI, ICTSI and Harbour
Centre.
A second hearing is to be held next
Wednesday. Meanwhile, dismissed PPA official Leopoldo
Bungubung is still sitting in his office. In domestic
shipping, everything is quiet at this time about shipping
rates. At the MARINA, Ric Romero has now been designated
Deputy Administrator for Operations. Forum on Measuring
Supply Chain Performance Last chance to join this half-day
forum on April 22 at the Astoria Plaza.
It features a panel of speakers who will share their
wide experience on:
What measures are important?
* Overall logistics and supply chain measures
* Warehousing, transportation, inventory management,
customer service, etc.
* How do you measure service providers
What do top Philippine companies do? The panel of
speakers includes:
* Ike Castillo (James Hardie, formerly
Zuellig Pharma, Nestle)
* Cora Curay (XVC Logistics, formerly Coca-Cola)
* Jun Gabrino (Splash)
* Boy Arceo (Smart)
I will do the intro and summary. Next in the lineup
of DMAP training activities is the Shipping Immersion
Course, scheduled for May 6 to 8. It is a seminar on
board the Mary Queen of Peace, a Negros Navigation vessel,
while en route to Boracay.
Speakers will include maritime industry experts, Ric
Romero (designated MARINA Deputy Administrator), Hector
Miole (PPA), Atty. Pete Mendoza (PSB), Prof. Henry Basilio
(UA&P) and Cora Curay (DMAP).
Still on training, the DMAP-DLSU program on Logistics
Management is ongoing at the DLSU Greenhills campus.
Ongoing are Modules 1 (Evolution of SCM) and 3 (Inventory
Management).
DMAP's contest for this year's conference theme was
selected at DMAP's last Board meeting on April 5. The
winning theme is "Seamless Supply Chain in an Archipelagic
Environment: A Continuing Challenge".
back to top
From
Logistics to Supply Chain AGRILINK/Foodlink 2005 held
its first co-organizers meeting last week
DMAP is a co-organizer for the second
year in a row. After last year's theme on Transport,
this year's theme is "Supply Chain Efficiency:
Key to Competitiveness". What a theme! Right down
DMAP's alley. Supply chain efficiency is something sorely
needed, not only by agriculture, but by all industry.
In industry, logistics cost is in the region of 8 to
12% of sales value.
In agriculture it is probably in excess
of 25%, higher for highly perishable products. In general,
the % tends to be higher for products that use refrigeration
(fresh meats, fruits, ice cream) or have returnables
(beverages), or use air transport (highly perishable,
high value, small items), while the % tends to be lower
for very high-value products (pharmaceuticals).
For its own annual conference to be
held in September, DMAP's theme also mentions Supply
Chain. Its theme is "Seamless Supply Chain in an
Archipelagic Environment: A Continuing Challenge".
See below for more details on the conference. We can
now see clear moves towards Supply Chain thinking from
Logistics thinking, not only here in the Philippines,
but elsewhere.
It is interesting to note that the
Council of Logistics Management (CLM), the largest organization
of logistics professionals in the world (perhaps with
over 12,000 members), has, starting Jan. 1, 2005, changed
its name to Council of Supply Chain Management Professionals
(CSCMP).
A few years back it had deliberated
on the correctness of such a move, but decided otherwise.
It seems that the reason for deciding against the change
then was that Supply Chain was seen then as too big
an area for the CLM to cover.
What is the significance of this shift
from Logistics thinking to Supply Chain thinking? For
now, we will quote the definitions of Logistics and
Supply Chain Management given by the CLM/CSCMP, and
also a group of US professors. We will examine the definitions
and the concepts in a future issue.
According to the CLM, Logistics is
that part of the supply chain process that plans, implements
and controls the efficient, effective flow and storage
of goods, services and related information from the
point of origin to the point of consumption in order
to conform to customers' requirements.
According to the CSCMP, Supply Chain
Management encompasses the planning and management of
all activities involved in sourcing and procurement,
conversion, and all Logistics Management activities.
Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries,
third-party service providers, and customers.
In essence, Supply Chain Management
integrates supply and demand management within and across
companies. A research team led by University of Tennessee
professor John Mentzer has developed the following definition
of Supply Chain Management.
The systemic, strategic coordination
of the traditional business functions and the tactics
across these business functions within a particular
company and across businesses within the supply chain,
for the purpose of improving the long-term performance
of the individual companies and the supply chain as
a whole. Shipping Immersion Course. Last chance to join
this seminar on board a vessel. scheduled for May 6
to 8.
It will be on board the Mary Queen
of Peace, a Negros Navigation vessel, while en route
to Boracay. Speakers will include maritime industry
experts, Ric Romero (designated MARINA Deputy Administrator),
Hector Miole (PPA), Atty. Pete Mendoza (PSB), Prof.
Henry Basilio (UA&P) and Cora Curay (DMAP). Still
on training, the DMAP-DLSU program on Logistics Management
(we have also begun to call this Supply Chain Management)
is ongoing at the DLSU Greenhills campus. Ongoing are
Modules 1 (Evolution of SCM) and 3 (Inventory Management).
Module 4 on Warehousing will follow Module 3. DMAP's
contest for this year's conference theme ended with
its selection at DMAP's last Board meeting on April
5.
The winning theme, as mentioned above,
is "Seamless Supply Chain in an Archipelagic Environment:
A Continuing Challenge". It was submitted by Avel
Acedo of Smart Communications.
DMAP very recently released its invitations
for conference sponsors and advertisers. Donations and
advertising rates are the same as in past years. Principal
sponsor P60,000 Regular sponsor 30,000 Cocktails sponsor
150,000 Luncheon sponsor (2 slots available) 100,000
Break sponsor (4 slots available) 50,000 Principal,
Luncheon and Cocktails sponsors are entitled to a 3
meter x 3 meter exhibit booth.
Regular and Break sponsors are entitled
to a 3 meter x 2 meter exhibit booth. All sponsors are
entitled to one page space in the souvenir program.
Advertising rates for non-sponsors (VAT included) are:
One whole page P6,600 One-half page 3,300 One-fourth
page 1,650.
Address inquiries and comments to Ed Sanchez at tel.
671-8670, fax 671-4793, cell 0918-914-1689, or email
dmap@i-manila.com.ph.
Those interested in DMAP training and other activities
are requested to send their e-mail addresses.
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