CHOSEN PROBLEMS OF EFFECTIVE SUPPLY CHAIN MANAGEMENT OF COMPANIES

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1 Journal of KONES Powertrain and Tranport, Vol. 22, No CHOSEN PROBLEMS OF EFFECTIVE SUPPLY CHAIN MANAGEMENT OF COMPANIES Ilona Jacyna-Gołda Waraw Univerity of Technology Faculty of Production Engineering Narbutta Street 86, Waraw, Poland tel.: jacyna.golda@gmail.com Abtract The article preent certain apect of deciion of effective management of upply chain organized for companie. Companie ervice iue have been identified both in the upply and ditribution area. Were defined factor affecting the organization of operating in variou phere of companie. It wa pointed out that the baic function directly related to the core buine of companie reulting from the indutry, the ize and the condition of competition, e.g. for the production facility, it could be manufacturing proce itelf, while for the commercial company implementation of marketing trategie and building brand image. The paper alo preent the factor affecting the cot and benefit companie intereted in outourcing their logitic provider of comprehenive ervice. Inter alia the eence of the upply chain functioning, integrated management model of upply chain network including flow of tream of good and flow of tream of information, objective of upply chain management, deciion of effective upply chain management concerning on minimizing cot of logitic ervice and high level of quality of delivery ervice, performance evaluation meaure of procee in the upply chain are preented in the paper. Keyword: effective management, upply chain management, upply chain efficiency, upporting management deciion 1. Introduction ISSN: e-issn: DOI: / A market economy require enterprie many different form of organization of the ditribution network of good related to the operation of both mall and medium-ized town and economic and indutrial large urban area with complex need in the field of logitic ervice [10, 17, 18, 28, 31, 34]. Proper election of the organizational tructure i dictated on the one hand patial, technical and technological apect and on the other hand, legal and economic apect. Companie operating in condition of multi-takeholder competitive market, able to identify correctly their trength and weaknee are trying to focu on developing thoe apect of it operation that bring them immediate profit and influence on competitivene. At the ame time, they eek to iolate thoe area of it operation that are not eential and can be implemented by other operator with better reult. Thee activitie are aimed at more-effective adaptation to market need. Efficiency i defined a the ratio of the effect of the pecific action to the expenditure for it implementation. It i a meaure of the effectivene of pecific action. Greater efficiency mean that when incurring the ame cot can be achieved better reult of operation. Efficiency can be meaured wherever there i a need to chooe the method of a pecific operation to ae the quality and rationality, or take a pecific deciion of all concerned. Therefore, effective action i one that allow you to chooe a olution, which bring the greatet benefit of all the poibilitie. A the author write [20], efficiency i a meaure of implementation of principle of rational management and it i an interactive relationhip involving phenomena within the organization and between it and the environment.

2 I. Jacyna-Gołda Companie outide the cope of their activitie alway implement a buine proce coniting of a pecific et of action aimed at atifying cutomer need while enuring the company a profit. At the ame time hould be ditinguihed baic function that perform and other function. Baic function are function directly related to the core buine of the company reulting from the indutry, ize or condition of competition. For example for the production company it i, in general, the manufacturing proce itelf, while for the trading company i the implementation of marketing trategie and building brand image. Other function are effort to upport the achievement of the baic objective, facilitate and ometime even enable the implementation of baic function. In mot cae, they concentrated on auxiliary function. For example, it may be tranportation ervice, warehouing, pedition, courier, etc. Correct eparation the fragment of the buine proce reponible for the baic function i a key element, a it allow pecializing in thi fragment and the continuou improvement of the offer of the company. One area of uch activity concern the choice of an appropriate upply chain, including proper functional tructure. Entitie uch a hipper, torage facilitie, other that deal with the implementation of other function, eparated and commiioned by variou companie, pecialize only in thi phere of ervice. Aggregation of demand for implementation of a pecific ervice allow thoe operator to take advantage of o-called economie of cale. Thi effect aume acceptance for implementation high number of order of a imilar nature, o that it become profitable to ue more expenive pecialized technology handling thee order and yet more efficient on a large cale. In thi cae, the implementation of a large number of order with mall profit per unit, will tranlate into ubtantial profit overall. Tranportation ervice, a well a logitic ervice of companie in upply chain made ue tandard technology characteritic of the whole market. Entitie operating in the upply chain compete againt each other in the area of quality of ervice, including the time of the ervice, price of ervice or other item added, uch a: monitoring, imultaneou tream of information ervice and financial ettlement. 2. The eence of the upply chain functioning The term upply chain exit in the literature in term of ubject, logitic and intitutional a well a in term of functional and management organization. In the firt cae, the flow of material between upplier and production companie and finihed good between producer and endconumer [30]. In the econd, a a et of cooperating with each other entitie (firm, companie or intitution) [4, 29, 36]. However, in functional term a chain of ucceive link (companie, intitution) which are involved in the movement of product [1] and in term of the management organization a an integrated proce management of material flow from upplier to endcutomer [1]. The upply network include all activitie aociated with the flow of material, from the ourcing of baic raw material and ending with the ale to the final purchaer the final product and dipoing of thi, what will be of the product after ue [5, 7, 9, 25]. At each tage of the movement may appear return, meaning material rejected by the next company in the chain or wate that require dipoal. Today upply chain are becoming more complex, thereby increae their expoure to diruption and danger. Grow importance of rik management in thi type of logitic tructure [5, 11, 12, 13, 17, 22]. The upply chain i cooperating in variou functional area mining, manufacturing, trade and ervice companie and their client, among which flow of tream of product, information and fund. In the tructural and ubjective interpretation, the upply chain can be (Fig. 1): ingle company (internal upply chain), team or chain of companie in relationhip: upplier receiver, network, that i a group of co-operating, and/or competing with each other companie. 90

3 Choen Problem of Effective Supply Chain Management of Companie Fig. 1. Integrated management model of upply chain network [11] A the analyi hown in Fig. 2, an integrated management model of upply chain network, the company may be a link of everal upply chain imultaneouly. The entity that i reponible, generally, for the efficient and timely organization of the upply chain from upplier to cutomer according to the cutomer requirement, i logitic operator. Can ay that he i reponible for comprehenive upply chain management, in term of both organization, a well a technical and financial. 3. Objective of upply chain management The term upply chain management firt appeared in the 80 of the twentieth century. Initially wa aociated with a reduction in inventory within the company and cooperating with it companie. Then it began to define upply chain management in term of logitic. It wa conditioned by the need for cloe cooperation between companie in puruit of implementation it trategic objective. A write [31] upply chain management tem from the trategy of integration, cooperation and hortening cycle. Thi i done through variou form of cooperation. A a conequence, thi entail the integration of logitic ytem of companie and integration of logitic procee, a well a eeking way to increae trut and commitment of companie in the relation upplier cutomer, including compatibility and linking computer ytem [31]. In the upply, chain deciion regarding the development of the individual companie hould take into account link with other entitie operating on the market. For example, the author of the paper [36] write that the concept of the upply chain ha become an alternative to the traditional perception of the relationhip upplier cutomer, which i baed on competition, uing their own bargaining power and thu flipping the obligation to bear the increaed cot [37]. Supply chain management in companie i poible if [2]: the upply chain i een a a whole organization, delivery i a common objective of all participant in the chain, and trategic deciion regarding upply have an impact on cot and market hare, 91

4 I. Jacyna-Gołda problem are olved in a comprehenive manner, are conidered economically jutified tock, reducing them to the mot neceary ize, integration of chain participant i baed on the ue of modern information technology and widely undertood cooperation. Thu, the baic objective of upply chain management are primarily [25]: minimizing the total cot of the flow of product and information while maintaining the required level of quality of delivery ervice by cutomer, enure the hortet lead-time and highet poible reliability, frequency and flexibility of upply at a given level of flow cot, optimization of tock level in the cale of upply chain with it flexible adaptation to preference concerning delivery ervice of individual market egment. A write [5], upply chain management i to manage relationhip with upplier and cutomer and with cutomer to deliver the highet value to the cutomer at lower cot for the entire chain (Fig. 2). MINIMIZING COST OF LOGISTICS SERVICES SUPPLY CHAIN DECISIONS MANAGEMENT HIGH LEVEL OF QUALITY OF DELIVERY SERVICES IMPLEMENTATION RELIABILITY SAFETY DELIVERY TIME SAFE STOCK MAINTENANCE ACCURACY OF SUPPLIES ACCURACY OF SUPPLIES PUNCTUALITY OF SUPPLIES RISK MINIMIZING Fig. 2. Deciion of effective upply chain management The concept of upply chain management i poible if collaborator of the company are it partner and not hotile competitor and if a company pecializing in key area for themelve and other, ervice are contracted to external partner [25]. Thi mean that thee phere of activitie that go beyond baic competence hall be delegated to buine partner who pecialize in pecific ervice. 4. Performance evaluation meaure of procee in the upply chain Effective upply chain management i the action that will improve cutomer ervice and reduction of logitic cot. Participant of uch cooperation hare the benefit from it, and thu etablihed cooperative ytem, upplier cutomer become therefore more competitive. Engineering approach to aeing the quality of companie logitic ervice involve the formulation of a et of meaurable indicator and parameter, with which i poible to unambiguouly decribe the variou apect of the ervice provided by external actor, i.e. operating in the upply chain. In practice, it appear that the determination of value defined by analyt meter i difficult to perform and often impoible. In general, meaure are aggregated value, and the acquiition of their individual component i difficult to obtain due to the number of ource of information and amount of information to be proceed. In addition, they can decribe hard-meaurable or non-meaurable value, i.e. qualitative. For the comparative analyi and judgement, it i adviable that collected data were covering 92

5 Choen Problem of Effective Supply Chain Management of Companie a longer ettlement period. It hould alo be mentioned that quite many data i o-called commercial data, therefore there i a eriou barrier to haring operational information of entitie that are participant in upply chain [1, 7, 14, 23], and warehoue procee [15]. There are many factor, which have a direct impact on the election of evaluation criteria and election of the ervice provider-operator to complete the order and at the ame time i ought compromie olution becaue of the price and quality of logitic ervice [20, 22, 26]. Author of the tudy [15] define logitic performance meaure developed for the aement of logitic ervice in mot companie. They have identified four main group of meaure enabling a comprehenive view of the company operation, performing aement, and monitoring of logitic function. They defined o called financial, quality, procee and reource meaure. Among the financial meaure, author draw attention to thoe, which allow aeing the hort- and long-term gain enuring an adequate poition of the company. From a qualitative group were ditinguihed meaure, which allow ae the quality of implementation of logitic ervice particularly in repect to atifying cutomer requirement. An important group of meaure are the proce meaure that are ued to ae the dynamic and conitency of the proce. In contrat, the group of reource meaure include meaure decribing the ize of the tock of different type to be utilize to achieve the required efficiency of the proce. What i important when meauring the performance of procee in the upply chain, a indicated by the author of publication [31], random value hould not be meaured. Selection of appropriate value mut be proper to the type of the aement, the cutomer and buine ituation. Among the meaure are ditinguihed: delivery accuracy a the key meaure of aeing the quality of logitic ervice, expreed a the time elaped between the date (time) of delivery, and the date et earlier, timely deliverie defined a the hare of upplie that have been implemented before or after the deadline et by the cutomer. forecat accuracy defined a the ratio of the value of ale reulting from the forecat to the actual value of ale, time of delivery; the time meaured from the point of view of the cutomer that elape on average from the time of order ubmiion until receiving the order, the degree of execution of order; determine what percentage of order can be implemented of material which are currently in the tock within 24 hour, α-level; level of logitic ervice defined a the probability that incoming order can be fully realized of material which are currently in the tock, β-level of logitic ervice defined a the percentage of incoming order, which can be realized of material which are currently in the tock, γ-level of logitic ervice take into account the number of order that can be realized of material in the tock and the time of atifying the entire demand, addictivene of the upply chain decribe the upply chain ability to repond to change in the market (a meaure very difficult to quantify) planning horizon the longer the planning horizon, the le likely uceptibility to hort-term market fluctuation, return on capital defined a the ratio of income to total capital decribe the ability of the company to good management of owned reource, rotation of the material defined a the quotient of the um of recycled material ued for the complete tock of material during given period (increaing the value of thi meaure mot often i done by minimizing inventorie), tandard tock defined a the average time that the material pend in warehoue, added value of employee productivity defined a the quotient of the difference of income and the value of reource ued to develop that income and number of employee. Allow you to pecify the value that each employee ha added to the final product of companie. 93

6 I. Jacyna-Gołda Conidering the above, the aement of the effective functioning of the entire upply chain can be a criterion of the degree of utilization of both it component and the whole chain. The utilization rate of the entire upply chain can be aeed a the ratio of the total time required to tranition of ordered raw material for production through the upply chain in relation uppliercompany to a maximum total period of tay of thee raw material in thi chain. Auming that i known the maximum time τ max, om'( ( ld) of movement of a unit of -th raw material between ld) and om (ld) link of ld-th upply chain, then total maximum time ld, ΤΡ maxd, p of movement of -th raw material for production through ld-th upply chain in relation ld(d,p), i.e. d-th upplier p-th producer can be written a: ld, SM ld LD, ΤΡmaxd, p = τ max ( ld). (1),, om'( (, om'( Ζ( ld ( d, p)) Auming that are known momentτρ ( ld) : τρ ( ld) T : of appearance of -th raw material ( SM, SM-et of raw material ubmitted for the production, ld-th upply chain ld : ld LD, LD = { ld : ld = 1,2,..., N} ) in the node ld) : ld) OM ( ld) of the upply chain and moment τκ ( ld) : τκ ( ld) T of exit from that chain, then total time neceary for the tranition of ordered raw material to the production and delivered through the upply chain in upplier-company relation can be written a an expreion: OM ( SM ( τκ ( ld) τρ OM ( om'( : (, om'( ) LL(ld) SM ( τκ ( ld)) + om'( ( ld) τρ ( ld)). Other important characteritic of aeing the performance of upply chain can be the reliability of the procee implementation in order to erve cutomer at the required level and the rik of not carrying out the tak in accordance with the order. According to technical tandard [15, 19], ytem or technical object reliability, i defined a a et of characteritic that decribe the readine of the facility and it impact on it reliability, maintainability and maintenance upport. From the point of view of aeing the effective upply chain functioning both characteritic hould be conidered together. Determinant of the reliability of the upply chain are it weak link. Therefore, in general, i carried out the identification of uch cell and they are ubjected to detailed analyi [11, 24, 30]. 5. Summary Conidering the expectation of a market economy, it hould be noted that all element of the upply chain mut comply with it own ditinct performance expectation. In addition, the element in the chain can be regarded a a comprehenive ytem reliably working. Unreliability of one or more element tranlate into unreliable of the whole chain. Converely reliability of individual element of the upply chain, make it can meet performance expectation in all market in their environment. Reearch on the proce logitic in the upply chain, enable the aement of the tranition time through the upply chain at predefined boundary condition and limitation determined by chain equipment and different tak i.e. different tream of notification of order into the ytem. Effective upply chain management are action aimed at improvement of cutomer ervice and reduction of total logitic cot. To make thi poible cooperation i neceary between the participant of implemented procee in the upply chain. For meauring the effective evaluation of upply, chain management i required election of appropriate evaluation meaure. The choice of meaure mut be proper to the nature of the (2) 94

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