Integrative Learning Project: Integrated Logistics 2000, LLC
October 23, 2016
Table of Contents
2. Organizational Setting4
2.04 Added Value to Organization5
3. Key Concepts6
3.01 Total Quality Management6
3.02 Six Sigma 8
3.05 Supply Chain Management14
3.06 Customer Relationship Management15
3.07 Enterprise Resource Planning16
4.01 Complete and Accurate Reference List19Abstract
The purpose of this paper is to discuss and analyze the organization, Integrated Logistics 2000, LLC. The overall organizational structure, product line, customer base and market position will be presented in the course of this paper. Key concepts that were discussed during the course of study will be covered in this paper include; supply chain management, logistics, six sigma, innovation, customer relationship management, enterprise resource planning and total quality management. Within this paper these topics will be explored in depth and insight will be provided in how Integrated Logistics 2000, LLC could benefit from the implementation of the key concepts. Comprehensive analysis will be included in this paper to include an action plan, SWOT analysis and an operational plan.
Integrated Logistics 2000, LLC (IL2000) is a third party logistics provider (3PL) that provides full service freight audit and payment services along with a complete transportation management solution for their customers. Integrated Logistics offers their clients a full complement of transportation management solutions from full truck load (FTL), less than truck load (LTL), intermodal services, domestic and international air, and ocean freight operations. Founded in 1999 by Kraig Cesar, IL2000’s goal has been to provide outstanding logistic management services to their clients through their “innovative technology, constant communication and steadfast reliability” (IL2000.com, 2016). Located in Virginia Beach, Virginia, Integrated Logistics 2000, LLC has an additional sales office located in Wisconsin.
The organizational mission of IL2000 is to provide the best in class service in the transportation industry for their clients. The company’s mission statement reads,
We provide exceptional comprehensive logistics management services by tailoring our solutions to fit our clients. We earn our clients’ trust through innovative technology, consistent communication and steadfast reliability. At IL2000, we honor our clients’ profitability as we do our own (IL2000.com, 2016).
The culture at IL2000 reinforces the mission statement of the organization through a flexible and innovative approach to servicing the varying needs of each of their clients.
Freight management services are IL2000’s primary product and service that the organization provides to their clients. Management of carrier mixes, pricing structures and lane optimization to provide cost savings for all modes of transportation is the driving product offered by IL2000. Other services offered by IL2000 included freight audit and payment and full fledge freight analysis through their proprietary business analysis tool. These added services gives IL2000’s clients better visibility of all their freight costs and ensures that freight bills are paid as per the negotiated carrier tariffs, thus reducing inaccurate freight costs.
The target audience for IL2000 is manufacturers, wholesalers, retailers and any other organization that participates in supply chain activities. Client size ranges from small organizations that have regional supply chains, to large multinational organizations that have worldwide supply chain needs. Clients who have complicated supply chains that are diverse and require skilled professionals to help develop least cost carrier matrixes, provide rate optimization tools and need regulatory compliance expertise to find efficiencies and cost savings within the supply chain.
Added Value to Organization
Within these organizations, IL2000 works directly with an organizations sales team, warehouse team, accounting teams and senior management to provide the right tools for each layer of an organization. Each of the varying business units IL2000 typically works with require unique skills and information in order for those internal units to operate smoothly and efficiently. The sales teams of our clients rely on monthly reporting to see routed costs of shipments to their clients in order to ensure they have priced their good competitively. Warehouse teams need reliable transportation matrixes that pick up and move freight in a timely and efficient manner, without any damages or delays. IL2000 provides in depth reporting to clients on all supply chain costs, breaks down the cost in client specific ways through general ledger codes that provide seamless reporting to the organization’s accounting team. The new business intelligence software provides senior management with visibility of all costs, key performance indicators (KPI’s), and provides insightful information that assist in developing long and short term strategic plans.
Total Quality Management
Total Quality Management (TQM) is a management system that focuses an organization on providing continual improvement through the use of strategy data and communication to create a culture of quality within all facets of an organization (Jiménez-Jiménez, et al, 2015). There are three dimensions to Total Quality Management; the customer dimension, shareholders and employees (Padhy, 2013). The goal of implementing a TQM program in any organization is to transform an organization through progressive changes in the attitudes, processes, structures and systems of the organization to bring about a higher degree of quality. Unlike other quality programs, TQM involves all levels of an organization and every person who works within the organization (Jiménez-Jiménez, et al, 2015).
Within the three dimensions of Total Quality Management there are sub components that support the three dimensions. Components of TQM include; profit, customer focus, people centric, human dimension, logic and technology (Padhy, 2013). The human dimension focuses on how TQM is adapted as a personal philosophy and drives the behaviors and thinking of the individual. Employee behaviors that display a belief in TQM and supporting behavior both individually and within a team environment are critical to TQM success. The adoption of the philosophy on a personal level will lead the application of the logic component.
The logic phase of TQM is an important process that drives the critical factors needed to change the mindset of an individual and an organization. Adopting a process of thinking that involves these steps will bring clarity of thinking to all levels of an organization; problem identification, solution and prevention (PISP) (Padhy, 2013). There are 7 steps in the logic process or PISP:
Specify the role
Use rational procedures
Re-engineer the business process
Review (Padhy, 2013, p. 2)
Each step is as important as the next step in order to identify areas that need improvement. The discipline behind creating logical thinking and approaches to identifying and solving problems allows organizations to think critically on focus on the three dimensions of Total Quality Management.
Total Quality Management is more than just a tool for an organization to utilize; it is a management philosophy (Jiménez-Jiménez, et al, 2015). As a philosophy it is way of thinking that permeates all levels and facets of an organization to improve the customer experience and needs from an internal and external perspective. By adopting the TQM philosophy, organizations strive to continuously improve all aspects of the environment and workflow that drive structured control and process improvement activities into all phases of work and planning that drive quality and customer satisfaction as the top priority.
In order for TQM to be a successful strategic tool management needs to create a culture in the organization which involves everybody in quality improvement. Each member of an organization can affect quality in a positive and powerful way. The first steps are to adopt the idea that quality is a factor and then learn to identify areas that fall short of quality practices, then develop the techniques and tools to improve quality.
In order to successfully implement and achieve success in TQM Integrated Logistics 2000, LLC needs to:
1) Adopt TQM as a management philosophy
Create a culture of inclusion to get everyone involved in TQM
Identify areas and processes that need improvement
Provide the training, tools and resources to promote change
Benchmark for successful identification of TQM issues
Monitor for continuous improvement
Always put the customers experience first
Six Sigma is another key concept that Integrated Logistics 2000 could be utilized to reduce error rates and improve the customer experience. As a freight audit and payment company and a transportation provider, error rates need to be as close to zero as possible. There are many critical success factors that freight audit and payment, as well as a transportation management company is benchmarked by in the industry. For the freight audit and payment side of the business, critical success factors include zero duplicate billings, accuracy of tariff pricing, data point accuracy and proof that the goods have been delivered and the freight bill is valid. The transportation management sides of the business critical success factors include on-time delivery, lane optimization, and getting the material to the correct location. Six Sigma would be a powerful tool to utilize to achieve zero defects in IL2000 processes.
Six Sigma is defined as an “improvement program for reducing variation, which focuses on continuous and breakthrough improvement” (Reosekar& Pohekar, 2014, p. 393). Six Sigma was first introduced by the Motorola Corporation and then brought to the forefront through General Electric’s adoption of the program in the late 1990’s. Six Sigma relentlessly focuses on reducing variations and eliminating waste (Reosekar& Pohekar, 2014). Reducing variations can be achieved through process improvements that focus on eliminating variations that cause either non conformity of a product or a service. The benefit of adopting Six Sigma is to increase profitability of an organization as well was improving the effectiveness and efficiency of an organizations overall operation (Reosekar& Pohekar, 2014).
Integrated Logistics 2000 is an operationally based organization that relies on process accuracy and adherence to perform transportation management at a high level. As a service organization, IL2000 is brought in by their clients to be an industry expert. As such, the adoption of Six Sigma practices can provide IL2000 with a strategic advantage to achieve best in class practices and services with their industry. The implementation process for IL2000 to adopt Six Sigma as a strategic practice would include:
Transforming the organizations culture to make Six Sigma an everyday way to do business (Barjaktarovic & Jecmenica, 2011).
Creating teams to transform the processes of the business
Identifying critical success factors
Identifying current defects
Identifying where the organization can achieve cost savings through reduction of waste and variation
Identifying strategic improvement
In this process only one or two key areas of the organization are identified as having the most opportunity for defect or waste reduction (Barjaktarovic & Jecmenica, 2011).
Identify the areas that have the same problem over and over again and have been unsuccessfully resolved through other methodologies (Barjaktarovic & Jecmenica, 2011).
Create improvement teams for problem solving and process improvement
Use of the DMAIC model can provide the structure needed for the Six Sigma teams to work within. DMAIC stands for Define, Measure, Analyze, Improve and Control (Barjaktarovic & Jecmenica, 2011). There is an established life cycle in the DMAIC that include the following phases:
Determining and selecting a project
Formation of a team
Setting the reason for the project
Joint work projects
Implementation of the DMAIC and implementation of solutions
Submit a solution to the originally identified problem to be implemented as a new process (Barjaktarovic & Jecmenica, 2011)
Integrated Logistics 2000 would also benefit as an organization by instituting benchmarking practices. Benchmarking is the practice organizations utilize to “compare their internal operations, processes and data with other firms for the purpose of improving their performance” (Swanson, 2016, p. 1015). Many organizations, in a variety of markets, have discovered the value of benchmarking and utilize this practice as another strategic tool to drive and measure continuous improvement. One of the downfalls of successful benchmarking is that firms to find it difficult to obtain data from firms that are comparable in size and scope to their existing operations (Swanson, 2016). As a result, benchmarking consortiums exist within in existing markets that small to midsized firms that are short on resources and know how can utilize to their advantage.
By utilizing benchmarking, organizations can identify area of their operations that need to be improved from a performance perspective. By analyzing data from other firms within their industry and benchmarking a firms current practices against industry standards and performance, firms are able to identify areas that need adjustment to bring those practices up to a “best practices” industry standard (Min & Joo, 2006). As a result, benchmarking is universally recognized as a tool that firms can employ to achieve continuous and sustained improvement in their business practices. For IL2000 to improve operational efficiency, the establishment of benchmarks against other best in class Third Party Logistics companies is essential for growth and improved performance.
As a continuous improvement technique, benchmarking assess internal strengths and weaknesses, evaluates comparative advantage over best in class firms, seeks to identify best practices standard to the industry and utilizes all this data to develop a strategic action plan that an organization can utilize to gain a superior advantage over like firms (Min & Joo, 2006). The practice of internal benchmarking is the documented best practices that exist within a firm and can be shared as a resource within the organization. When a firm is seeking to evaluate their position within an industry, they would want to perform a competitive benchmark. Competitive benchmarking requires the establishment of an industry leader that a competitive firm would use to compare their practices and market performance against their existing practices and performance (Swanson, 2016).
For Integrated Logistics 2000, LLC to implement benchmarking as a strategic tool the following action items would need to be completed:
Executive management would need to make benchmarking a priority and a common business practice.
Resource allocation would need to be identified and approved.
IL2000 would need to identify gaps in current processes and performance that need benchmarked.
Determine the objectives and scope of the benchmarking procedure and document the objectives.
Internal benchmarking or external benchmarking
Identify a team that will document all current processes that are utilized by the organization.
Identify and document data metrics.
Develop a plan for collection data.
Identify what resources to utilizes
Methodology for gathering information and criteria for data integrity
Apply learning to gaps in existing performance and processes.
Develop a communication plan for executive leadership.
Make recommended process improvements.
Update and analyze on an agreed upon regular basis to ensure conformity.
In order to remain competitive, IL2000 would greatly benefit from innovation as not only a strategy, but as a mindset for the organization. As many organizations move away from products to a more knowledge based business, innovation will become an integral part of that organizations value chain (Krstevski & Mancheski, 2016). Innovation drives new ideas, product development, and new and varying services recommendations for organizations today. Krstevksi and Mancheski (2016) define open innovation as “pulling ideas from myriad sources and understanding that each contributor brings a different perspective to the table” (p. 196).
Not only from a product offering perspective, but also from a internal process perspective innovation provides small to mid-sized businesses with the ability to do more with less (Duran, et al, 2016). Investing in innovation, whether it is technology or other resources, can give any sized organization a competitive advantage over others in the same marketplace. Product life cycles have greatly reduced as technological advancements make current practices or products redundant or obsolete in a much shorter span of time then previously experienced. As a result, organizations that can foster a culture of innovation will be able to react quickly to changes in market demand and pressure or be able to offer new ideas and products that are ahead of current market offerings. Apple is an excellent example of an innovative organization. Until Apple created the Ipod, no one knew they would never have a need for their catalog of CD’s or DVD’s.
For IL2000 to implement innovation as a practice they could look at two keys areas; innovation output and innovation input. Innovation input would be the allocation of resources to invest in exploring and exploiting new ideas or opportunities. This could be investing in a dedicated team that has a primary purpose to go to industry trade shows, talk with competitors to see what kinds of new technologies or ideas they are working on for their organization. This would then lead to the development of innovation output. Innovation output would be finding ways to utilize new ideas or technologies into tangible business practices that would lead to a competitive advantage over competitors in the same industry.
Supply Chain Management
Supply chain management is the industry IL2000 currently provides services to their existing client base. Currently, IL2000 focuses their efforts in the logistics portion of the supply chain management cycle. Supply chain management (SCM) is a coordination and oversight of the network of business entities needed to produce a product or service (Islam, et al, 2012). The totality of the supply chain involves all the activities, resources and processes an organization utilizes to transform raw material to a final product within the timeframe needed to meet market demands (Islam, et al, 2012).
Many organizations view supply chain management as a tactical part of their operation instead of as a strategic portion of their business. For IL2000, the focus of SCM is tactical. IL2000 focuses on providing the least cost carrier options to their clients with the best in class services and high end customer satisfaction. By employing a holistic view of SCM tactics through best in class practices IL2000 could offer a more strategic view and advantage to their clientele.
Implementing a holistic approach to SCM clients by IL2000 would involve the following practices:
Understanding and advising on regulatory issues both foreign and domestic (Lamberti, et al, 2012).
Reducing supply chain complexity to existing clients by leveraging best in class carriers for existing lanes.
Developing strategic planning for just in time inventory practices throughout the supply chain, assisting the client to have the right materials, at the right place, at the right time (Lamerti, et al, 2012).
Development of supplier compliance scorecards.
Development of carrier compliance scorecards.
Optimizing tariff management for internationally traded goods
IL2000 would be in a position to offer advanced strategic management activities that will allow their client to build better vendor- partner relationships with both suppliers and customers. Further, IL2000 would be able to leverage their expertise and technology to the benefit of the client through advanced reporting and highly developed business analysis tools that will provide their client with subject matter expertise.
Customer Relationship Management
Customer relationship management is the optimization of both qualitative and quantitative data an organization has, developed in real-time analysis of strategic information that can assist the executive team of the overall performance of a particular client (Toma, 2016). The use of customer relationship management software and techniques provides an organization with the ability to manage and analyze all their customers’ organizational interactions from cradle to grave. The focus of CRM is to develop customer trends, improve customer relationships and drive solutions and practices that best meet the needs and goals of the client Venugopal & Priya, 2015).
As a client driven service organization, CRM implementation would be a powerful tool senior management could utilize to drive customer retention through deliverable metrics and data. In order to fully utilize the benefits of CRM, IL2000 would want to implement the following processes:
Determine deliverable and metrics that would be viable for customer retention.
This could be done on a case by case basis, which would be determined by customer needs and outcome.
Measure service reliability, response times and client interactions.
React swiftly to issues to create customer loyalty.
Utilize CRM as a tool to develop client need competencies at all levels of the organization.
Enterprise Resource Planning
The final concept this paper will explore as an option for IL2000 to implement is Enterprise Resource Planning (ERP). Enterprise Resource Planning is the automation of the collective operations of an organization (Scurtu & Lupo, 2016). Organizations utilize ERP software and methodologies cover business areas such as, “production planning, purchase management, inventory management, supplier interaction, order monitoring, financial management and human resource management” (Scurtu & Lupo, 2016, p. 145). Employing an ERP system within an organization provides a competitive advantage regarding all areas of business information and function within a single system (Saade & Nijher, 2016).
One of the benefits of employing an ERP system is the ability to solve efficiency issues within business processes that result is streamlining processes that result in the savings of time and money (Nazari, et al, 2014). There are a variety of different ERP software options and packages that an organization can select from that support the organizations ERP strategy and plan.
Integrated Logistics 2000, LLC would be best suited to implement an ERP system by adhering to the following critical success factors (CSF).
Support of top management and allocation of resources
Clear vision of the organizations ERP outputs need to be
Cultural and structural changes to the organization
Project management of the implementation
ERP selection to match strategic goals
Strong communication with all levels of the organization
Adherence to change management principles and practices
Benchmarking (Saade & Nijher, 2016)
The process of implementation of an ERP system will need to be systematic and worked through the varying stages and phases. The phases necessary for a successful ERP implementation; outside of the critical success factors, include:
Software pre-evaluation screening
End-user training (Saade & Nijher, 2016)
As business face a more competitive and dynamic market, the ability to adapt and overcome challenges will separate those organizations that will thrive and those that will decline. Techniques and key concepts that have been discussed in this paper will provide a competitive advantage to Integrated Logistics 2000, LLC to continue to thrive in an ever tightening logistics market. While there is a balance between the daily needs of an organization and the long-term goals and strategies one should utilize to remain competitive, an organization must know their strengths and weaknesses first before deciding on implementing any of the key concepts discussed within this paper. In Proverbs 24:6 (MSG) the bible tells us this, “it is better to be wise than strong; intelligence outranks muscle any day. Strategic planning is the key to warfare; to win, you need a lot of good counsel”. Christian business leaders need to take heed on this passage. We will not always have all the right answers at the right times. The need for research, collaboration and counsel should be employed before recommending any of the key concepts suggested in this paper.
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