How Can Design for Logistic Concepts Be Used to Control Logistic Cost and Make the Supply Chain More Efficient? - Logistics Essay Example

How can Design for logistic concepts be used to control logistic cost and make the supply chain more efficient? Design for logistics is a series of concepts in the field of supply chain management involving product and design approaches that help to control logistics costs and increase customer service levels - How Can Design for Logistic Concepts Be Used to Control Logistic Cost and Make the Supply Chain More Efficient? introduction. The concepts include the three key components, Economic packaging and transportation, Concurrent and parallel processing, and Standardization. Economic packaging and transportation

EPT is the most obvious involved designing products so that they can be efficiently packed and stored. When transport systems are efficient, they provide economic and social opportunities and benefits that result in positive multipliers effects such as better accessibility to markets, employment and additional investments. When transport systems are deficient in terms of capacity or reliability, they can have an economic cost such as reduced or missed opportunities.

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Efficient transportation reduces costs, while inefficient transportation increases costs. Because the movement of freight has changes in economic systems at the global, regional and local scales, Hewlett Packard (HP) must find a way to make movement of good in their supply chain more efficient and less expensive. HP must adopt the “cube out” method in their transport trucks and when packing international containers.

When their products are loaded into an international container, they may “weight out” – reach the allowed over the road weight when mounted on a chassis or they may “cube out – reached its volumetric capacity before its permitted weight limit especially when they are shipping their products. HP can Cube out all their shipping containers because the HP products are in the same shape and size boxes. They can also concentrate on design but the HP printer are all shaped the same way so design should not be a problem for HP.

Final packing can also be adopted; it will save on transportation cost because bulk items ship more efficiently. Final packing can also be delayed until all their products are sold. This will reduce inventory in the different countries and increase supplies in the other. Another way to DLC can help is to use cross-docking Using design for logistic will reduce shipping and inventory cost because handling cost, space per product usually decrease; revenue per square foot usually increase. In Concurrent and parallel Processing HP must focus on modifying the manufacturing process; in ssence, modification of the product design. It helps to combine stems in a manufacturing process, thus reducing lead time. In Standardization the aggregation of demand information can help them to better forecast the need of the continent instead of the need of a country within that continent. Standardization will reduce required parts inventory due to risk pooling and reduce parts cost due to economies of scales. 2. What is delayed differentiation and how can Hewlett Packard use delayed differentiation to address the problems described in the case?

How can the advantages of delayed differentiation be quantified? Delayed differentiation or Postponement is a concept in supply chain management where the manufacturing process starts by shipping a generic product as far down the supply chain before variety (differentiation) is added. Since aggregated forecast are more accurate, instead of building a complete product based on forecast HP should build based on orders (push-pull strategy) and actual assembly specific product that is ordered.

For example, the company could start making generic parts that they could use for many products. They could make or purchase volumes of these generic parts every quarter based on last year’s aggregate sales. They could then send these generic parts for assembly in the assembly plants in Europe and Asia. They can also build an assembly plant in each of these countries and leave the customization and location of the printers to these plants. The availability would increase while not increasing the inventory level in Canada.

The advantages of this process can be quantified by making costs comparison and sales comparison before and after the differentiation process is implemented When should suppliers be involved in the new product development process? According to the text there is no single appropriate level to integrate suppliers into the new product development process. Instead there is the notion of ‘Spectrum of Supplier Integration” – the timing of supplier integration in the new product development process may vary, and so may the extent of integration.

The spectrum of supplier integration identified a series of steps from the least to the most important responsibility of suppliers: NONE: The supplier is NOT involved at the design stage; materials and sub-assemblies are supplied according to customer stipulations and demands. WHITE BOX: This is an informal level of integration; the buyer consults informally with the supplier during the buyer’s design and specification process. The supplier is still NOT involved at this stage. GREY BOX: This is the stage when suppliers are formally integrated. The buyer forms collaborative teams with the supplier’s and the buyer’s engineers.

BLACK BOX: At this stage in the development process the buyer gives the supplier a set of interface requirements and the supplier independently design and develops the required component. What is mass customization? Does the supply chain management play a role in the development of an effective mass customization strategy? Mass Customization is an operational strategy focus on inducing velocity and flexibility in a made to order production process, with the capability of producing at a minimum, a quantity of one or large quantities, with minimal changeover and interruptions.

In order to build products on-demand and to make mass customization work, mass customizers must be able to build parts on-demand from materials that are always available. This will require a spontaneous supply chain. The key is highly skilled and independent workers, processes and modular units so that managers can coordinate and reconfigure modules to meet specific customer demands and request. To implement mass customization a company must possess the following attributes, instantaneousness, costless, seamless and frictionless.

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