How to Get into Supply Chain Management in Business for ROI

(Last Updated On: April 22, 2023)

How to get into supply chain management? In the manufacturing and service industries, sustainability, operations, and supply chain management are all important. Tourism is a massive and dynamic sector made up of a diverse range of service firms that share the same dynamics and goals as a manufacturer’s operations planning (OP) and supply chain management (SCM). The cruise ship industry is one such service company, in which holidaymakers go to numerous places on these sorts of vessels. Let’s learn more about how to get into supply chain management.

Service firms make trash, but their goods are ethereal, whereas manufacturers produce tangible things and garbage. A healthier client, for example, is a product that a personal trainer may produce. Both sectors have Operations Managers (OM) who are interested in reducing waste and providing high-quality goods.

Pleasure and relaxation – the total experience that allows vacationers to “suspend” their everyday reality for a period of time and immerse themselves in pleasurable experiences – are the two main intangible products that the vacationer (end-user) buys, and a cruise ship company “manufactures” and delivers. The cruise ship industry’s aim is to provide this experience in a way that exceeds its customers’ expectations, and this is made possible in large part by the manufacturing industry.

How to get into supply chain management

Manufacturing and service industries have similar dynamics and priorities.

The supply chain refers to the flow and connectivity of products and services from the place of origin, or the original source, to the ultimate user. Supply Chain Administration is a subset of Operations Management that entails the efficient management of a variety of inter-firm operations, including:

Supplier/Vendor relationship management
Order Processing
Information Systems management
Sourcing and Procurement
Production Scheduling
Inventory Management
Warehousing and Distribution
Customer Services
Environmentally sustainable practices

To achieve organizational goals, the cruise ship business, like the manufacturing sector, requires the coordination of a range of resources – financial, material, and human – working together to manage these operations.

The administration of all actions that result in output is referred to as operations management (a product). In order to manufacture and deliver products and services, a variety of processes must be handled in operations management. Policies must be developed; everyday operations, as well as the usage of people and material resources, must be managed. OM also necessitates the efficient use of technology and communications systems in order to ensure timely purchasing and delivery of materials and products, as well as customer and stakeholder service.

Social and environmental effect issues such as resource utilization and waste disposal may be included in policies in both the manufacturing and service industries. Human rights, the usage of child labor, wage and hour concerns, as well as human resource impact issues such as age, gender, and other types of discrimination, must all be taken into account.

These concerns would have an influence on the items and services that the cruise industry may utilize in a manufacturing setting. Foods, linens, toiletries, furniture, packaging, electronics, and gasoline are just a few examples of these items. All of these items are byproducts of a manufacturing process that a cruise ship may employ, and they all have an environmental impact from the point of origin to the point of usage.

Both industries must adopt a sustainability mindset and identify where waste is generated in their organizations and along their supply chains, as well as why it is produced and when it is produced.

So, for example, the OM of a socially and environmentally conscious cruise line that wants to improve their SCM and incorporate a closed-loop method of operation in their organization might think about the inputs that a manufacturing company uses in its production process and in the processes that it uses to convert raw materials into products; the timely delivery of those products; and the quality of customer service after the product is delivered.

Similarly, manufacturing businesses (whose goods are used by cruise lines) that want to do the same should think about the inputs that their suppliers use in their operations. As previously stated, these inputs include – but are not limited to – the previously specified effect factors.

This backward perspective of the supply chain connects the cruise ship’s end-user to the beginning of the chain – and that includes all the firms that could make up the chain back to the original source. Cotton producers and the rules they put in place might be an original source, affecting the techniques they employ to cultivate, harvest, and provide cotton converters.

The following are some examples of questions that an Operations Manager could ask:

Did cotton producers use dangerous, earth-polluting chemicals in their cotton production?
Is harvesting done with child labor?
Is it safe to work, and are the wages and hours lawful and fair?
Are materials arriving on time, and if not, what are the reasons behind this?

These questions have an impact on supply chain management, and organizations can gain or lose a competitive advantage if they do not consider them. For example, an enlightened vacationer on a cruise ship might not be impressed that the soft cotton sheets she uses on the ship were picked by children who live in slums and earn pennies a day for back-breaking labor – and are denied an education because of it.

These sorts of judgments and considerations confronting a cruise line Operations Manager will have an impact on his or her own company’s financial bottom line, as well as the operations management of their down-line suppliers, as they would in manufacturing. The thoughts and activities of Operations Managers in service sectors have a direct impact on supply chain management in their firms, as can be shown.

Keeping Your Competitive Advantage

Consumers today are more intelligent and aware of the worldwide impact of their actions on the environment, and many are already taking steps to decrease their “carbon footprint,” or the contribution of human people and their activities to the planet’s environmental impact.

For example, the higher one’s carbon footprint is, the more garbage one generates in daily activities. The term “going green” has been used to express this concept. Consumers are not only changing their personal behaviors to decrease waste and hence their carbon footprints, but they are also holding businesses accountable for their environmental implications. Many firms have been pressured to go green by adopting more ecologically friendly practices in their operations.

Each day, cruise ships may create up to “30,000 gallons of sewage, 250,000 gallons of the kitchen, bath, and laundry wastewater, and 10 tons of rubbish.” Effective supply chain management is the first step in effectively managing the inputs that result in this level of waste. Competent supply chain management starts with effective operations management.

Organizations that adopt a vision and purpose that clearly articulates a clear aim to take responsibility for the sustainability of all inputs that go into their goods will have a competitive edge over those who do not. So, for example, a cruise line that integrates a culture of “world-class supply chain management” into its operational processes can gain a significant competitive advantage over competitors because “supply management directly affects the two factors that control the bottom line: total costs and sales”. (Burt, Dobler, and Starling, p. 10 in Burt, Dobler, and Starling, 2003).

For example, a cruise line that is an early adopter of World Class Supply Management principles will almost certainly emerge as a leader in the field, with “40-60% of the market once competition enters the picture” as a result (p. 11). As it makes use of sustainable commodities made by manufacturers, the quality of its offers will increase as well. Because quality generally comes at a higher price, this might help businesses acquire market share. A more educated and enlightened public now demands higher-quality commodities and, as a result, supports organizations that provide them.

Furthermore, customers are increasingly demanding that businesses go green as much as feasible. Improving the supply chain’s sustainability will boost quality and customer happiness. Organizations who do not include sustainability in their operations will discover that it costs them more in the long run (in terms of lost market share). Manufacturing and service firms may expect to earn and retain a competitive edge by incorporating sustainability into their procedures early on.

In the supply chain, asset management is important

Whether it’s pallets, crate/tote bins, steel stillage, cages, or even wooden crates, more and more organizations have deployed returnable and reusable transit packaging (RTP) fleets and pools during the last decade. What is certain is that these fleets will necessitate a capital investment (whether directly or through a fleet/pool provider) and should be safeguarded as any other firm asset.

The RTP fleet specs vary greatly based on the sector, application, and budget. However, a number of aspects were not addressed, and frequently still aren’t, when many of the current RTP fleets or pools were first planned, cost, and installed.

Repair and maintenance expenses from regular wear and tear, as well as abuse, equipment loss, stockpiling, longer dwell and cycle durations, equipment longevity, and the flexibility of the chosen design to respond to new and changing supply chain demands are all factors to consider. All of these factors have a financial impact, which may be significant, and many businesses are either uninformed of the true cost of their packaging pools or simply accept it as a high expense and budget accordingly.

The original equipment design and specification, the processes related to the fleet within the supply chain, and having an efficient monitoring and control system that can be readily integrated into the existing supply chain operation are all critical to controlling the expenses of an RTP fleet.

As a result, the first step is to define the RTP fleet’s objectives as well as the supply chain criteria that you want to meet. It is necessary to do an analysis of the operation and supply chain requirements for the next five years, and after the objectives and requirements have been identified, the methods of handling and type of packaging required may be developed and specified. A simple, cost-effective process design that adds value to the current business by producing -self-funding- fleets, as well as cost control methods that decrease the cost of damage, loss, and abuse, will help to ensure success.

Whether it’s a basic hub and spoke operation or a sophisticated multi-tiered supply chain, process designs are tailored to the specific demands of each customer. An effective solution requires understanding the minor distinctions between the demands of an incoming and outgoing RTP pool.

The physical requirements of the RTP unit, as well as the lifetime under real working circumstances, ease of maintenance and repair, ease of handling, and, of course, the original capital expenditure, must all be considered in the equipment design. When calculating the cost of an RTP fleet, keep in mind that it will likely have a higher initial capital cost than disposable one-trip packing, but it is also an asset that may be depreciated over time. The yearly cost of operating the fleet may be budgeted, but it will vary based on the specific supply chain requirements. These expenses, on the other hand, may be tracked and reduced with the right management system.

A variety of asset management systems are used to manage fleets or pools, and experience has shown that a basic system based on well-established technology may provide the ideal tool for successfully administering your fleet.

The following are the goals of a fully integrated proactive fleet management system:

To lower the total cost of the packaging fleet
To improve fleet visibility and cost control – To maximize the use of the packaging fleet and reduce cycle times – To establish proof of liability for damage and loss
Overseeing a maintenance and repair program
To manage and reduce packaging waste in accordance with environmental laws.

An appropriate system should be modular, allowing it to cope with a simple hub and spoke operation at first, then evolving into a more intricate multi-tiered supply chain over the course of three to five years.

Actual loss and imagined loss are the two types of equipment losses. When no one can account for the equipment’s physical whereabouts, it is considered that it has been lost. In actuality, the equipment is unaccounted for and disregarded in a warehouse or yard area. The equipment has been permanently misplaced or destroyed, and the actual loss is just that. The actual loss will be identified by audit tracing facilities, and perceived loss should be avoided.

In the Supply Chain, packing equipment will always be damaged. However, based on past experience, an estimated 70% of harm may be avoided. Effective management will enable you to determine who is causing damage to supply chain equipment, and the handling practices of repeat offenders may be inspected, altered, or enhanced to ensure that damage is minimized. Damage data can also be used to pinpoint any design flaws.

Because cycle time management is critical to the size and cost of the RTP fleet, all attempts to lower or maintain a minimal cycle time are critical. This is accomplished by integrating synchronous container flows with lean manufacturing or production processes. A slight reduction in a cycle time of a day or two can save the fleet 15 to 20% of its expenditures.

In practice, cycle durations should not be averaged over the whole fleet, and a good solution should allow you to define customized cycle time constraints for specific user needs. Minimizing and shortening cycle durations might result in an excess of equipment in an RTP fleet or pool. However, this should not be viewed as a waste of money, but rather as a way to save money on future RTP requirements as your company grows.

To guarantee that your aims and criteria are accomplished, the system definition process must be rigorous and practical, as well as suited to the unique demands of each RTP user and supply chain.

Your present management systems and processes will be assessed, and an appropriate RTP management system will be built and deployed in their place.
Data about the packaging fleet may be collected via RFID or bar code scanners, or manually entered bulk movements.
Data entry should be kept to a bare minimum (while still being effective) in order to reduce on-costs and the danger of human mistakes.
A high level of control and a broad range of reporting capabilities must be provided via a local network or the internet, with user-level secure password access.
The system must oversee the entire performance of the packing fleet, as well as other activities such as repair and maintenance, cleaning, damage inspection processes, and KPIs.
There should be no restrictions on the types of RTPs or the number of locations where the fleet may be utilized so that it can adapt to the needs of a developing company.
Data synchronization with other systems in your company can help you prepare ahead for future or seasonal equipment needs.

Prior to deployment, the impact of RTP on total supply chain costs, as well as the impact on RTP costs caused by changes elsewhere in the supply chain, may be examined hypothetically using different cost modeling software.

Organizations can quickly realize significant cost savings by reducing RTP trip cycle times, losses, and damage, and increasing trips per RTP unit, by working with specialist Supply Chain Consultants or Materials Consultants with the ability to design, develop, and implement transit packaging equipment pooling processes, facilitate improved equipment maintenance operations, and overall RTP fleet cost control.

Supply Chain Consultants or Materials Handling Consultants will seek to hand ownership of the strategy over to the client as soon as possible after developing and implementing a strategic solution that can save 15% to 20% on annual RTP costs in some cases, minimizing costs and delivering the fastest possible payback period. This normally happens within a few days of implementation, according to the authors’ experience.