Logistics of the Truck Company in Uzbekistan

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An integrated logistics system is the key ingredient for a successful business in the 21st century. The necessary criteria for an integrated logistics system are internal and external supply chain management, information systems, inventory management, automation, and efficient transportation. In this paper we will discuss define the criteria and what is required to achieve them. Also we will end it with current state of Uzbekistan regarding the criteria we have described for integrated logistics systems.

Introduction

In the last few decades, it has become clear to businessmen and the government that a well-functioning and integrated logistics system is the key element for having a competitive advantage in a world where globalization is ever increasing. By recent statistics, Uzbekistan has been ranked 99th based on the logistics performance index. This goes to show that Uzbekistan has a long way to go to develop as an economy, especially concerning the logistic sector. By clearly defining the criteria of what is a well-functioning and integrated logistics system and continuously reassessing how well we are doing compared to these criteria, we can discover where we as a business or a government are lacking and what needs to be worked on to compete on the global stage. In the first section we will look at those criteria and in the second compare them to a local business to get a clearer picture on the integration of logistics systems in Uzbekistan.

Internal Supply Chain Management

Companies that lack the ability to coordinate and integrate plans act like a body without a head (Marquis). Before covering all the aspects necessary for an efficient logistics system, the first foremost aspect that a business must complete is integration within the organization itself.

Coordination

Coordination is mostly defined as the way toward building up congruity between various activities, with the goal that certain objectives can be accomplished. Coordination along these lines guarantees that errands can keep running in parallel, without hindering or discouraging each other. The hidden standard is that all pieces of the framework are associated. Coordination ought to be inescapable; however it requires purposeful exertion, and ought to in this way structure some portion of every chief's duty. At the point when progressed admirably, coordination constructs cooperation, provides staff clear guidance and advances the utilization of assets. The majority of this encourages associations to accomplish their targets, and increment productivity (Akrani, 2001).

Communication

Communication is as important as coordination in establishing integration within an organization. A study done in 2012 showed how well employees were informed about their business.2. “Just 9 percent of respondents surveyed in March 2012 by AMA Enterprise, a division of the American Management Association (AMA), said employees know what’s going on “most of the time.” The majority (55 percent) said employees are informed “some of the time.” The 289 survey respondents were drawn from the AMA database.” (R. Hastings, 2012)

External Supply Chain Management

This goes to show how lacking organizations are in having effective communications. The first step in achieving communication is to have the right software. An organization may have its departments in different parts of the country or even different parts of the world. Thus, fast and user friendly communication systems may be necessary. The second step would be concerned with the employees themselves. It is a very important for each worker in different departments to know that they one common goal: satisfy the final customer. This is why it is important to treat employees as internal customers because this will lead to better overall communication between departments which in turn will eventually increase the satisfaction of the actual final customer.

The second step is to integrate without the organizations. This is also called the supply chain. “A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.” the benefits of supply chain integration include staying on top of demand, flexibility, eliminate waste, higher profit margins”(Investopedia,2019). Now that we have defined what supply chain and its benefits of integrating it, we could focus on how achieve it.

Collaboration

Just as in within the organization collaboration is as important with partners outside the organization. The businesses should abandon the mentality that they are isolated island but rather think of the whole supply chain as one big entity that focuses on the benefit for the whole chain rather one business.

Information Transparency

Business among the supply chain must always be willing to give the necessary information to each other in order to achieve integration, i.e. information transparent. To achieve information transparency, first business must determine what information they should share with their partners. This could include such things as, inventory, scheduled production, shipments. The second step is to determine what information systems should be used to efficiently transfer the data. Example of the information system that could be used is Electronic Data Interchange (EDI) or Global Standards 1(GS1).

Leverage Information

With the new range of data available for business, they can know and predict key information that they couldn’t have known individually. Suppliers now know not only real-time when their customers have shortage or not but also they can predict when they should send their products to customers by analyzing the data given to them by their customers. Furthermore, as businesses become more and more integrated this could lead to complete elimination of holding inventory. As the final customer orders a product, the initial product will travel without any interruptions through the supply chain and adding value to itself along the way, until it finally reaches the final customers.

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Information Systems

The developing information system is one of the key factors of building competitive advantage in logistics and supply chain management. Due to information, communication and automation technologies, the speed of identification, data collecting, processing, analysis and transmission has significantly increased with high level of reliability and accuracy. Technology has a big impact on increasing business competitiveness and performance of the company by expanding the overall efficiency and effectiveness. Nowadays technologies are becoming more and more advanced bringing many opportunities for companies, and many companies are not staying behind such innovations. Instead, they are trying to implement such improved technologies in their organizations in order to achieve operational excellence and get competitive advantage over competitors.

Automatic Identification (Auto ID) is the term used to describe the direct entry of data or information in the computer system, programmable logic controllers or any microprocessor-controlled device without operating a keyboard. These technologies include Bar Coding, Radio Frequency Identification (RFID) and Voice Recognition. Auto ID can be used for tracking the containers, packages, cartons or a truck carrying the goods on time bound dispatches to the customers. The benefits of Auto ID include accuracy, cost saving, speed and convenience of data storage and processing of information. (Ref 1) The communication, either oral or written has a very crucial role in business success. The following are the few emerging communications technologies, which are enablers to superior customer service leading to competitiveness through the speed and accuracy in communication. Electronic Data Interchange (EDI) is a technology that is used for transferring business documents from one computer to another computer. The main advantage of EDI over E-mail is that EDI message is structured, and is composed and interpreted by particular software.

Information Technology (IT) encompasses hardware and software that collects, analyses and provide information wherever it is needed. Since the supply chain management is defined as network of organizations, these organizations cannot form a network unless they are connected through IT resulting into transparency in the supply chain and aligning the supply chain activities towards customer. Example – The success of supply chain of DELL was due to IT, where internet was used to collect order from customer directly and shared the information with the suppliers so that they can forecast better, and supply to the requirement. (Ref 1) Impact of IT on logistics Today IT has a huge impact on logistics performance. Before the advent of IT, many activates were done in conventional and outdated way.

Procurement was done manually, production and distribution planning was done based on historical data, there was poor link between the channels of supply chain, the total operating cost was rather high, there was no visibility of the movement of goods, the customer service was reactive rather than proactive. However, with implementation of IT in logistics there was a great positive change in its performance. Now many activities are made online including e-procurement. The planning has become more accurate for even long term run. The relationship between supply chain partners has become stronger. The overall expenses of the firms reduced. Managers are now able to monitor the movement of goods. The customer service has improved due to quick responses to their needs and feedback. It is obvious that the role of IT is crucial for logistics. As well as other components of logistics system, the information system should not be ignored.

Inventory Management

Inventory management is one of the most essential components of logistics system that deals with sales, procurement and other logistic activities. It is responsible for controlling stocks all over the whole supply chain. The aim is to maintain the right level of stock and record its movement. Effective inventory management guarantees the right amount of stock on hand in order to satisfy customer demand. If there is improper inventory management, it can lead to losing money on sales or wasting money. Moreover, inventory management is in charge of managing costs. The objective is to minimize total cost while maximizing the customer service level. (Olumide.et al, 2017) There are several techniques for improving inventory management performance. Here are the most common:

  1. Economic Order Quantity is a technique that is used to determine the least amount of inventory for meeting the customer demand in order to reduce the costs such as holding cost and ordering costs. This model is useful for calculating the optimal level of inventory to hold on hand and identifying when to order more goods to replenish the stock.
  2. Activity Based Costing (ABC) analysis is a method of classifying the goods into 3 categories depending on their value and how well they are sold. This technique is helpful to identify the goods that are frequently purchased by giving them priority over those ones that are less sold.
  3. Just-In-time is a technique, which means purchasing certain amount of goods only as they are needed. Just-In-time facilitates the cash flow helps to reduce the holding cost significantly by keeping the stock level low.

Logistics system cannot thrive without the proper inventory management. Nowadays many company are paying much attention to the inventory management in order to reduce the total cost, enhance the profit, predict the future sales and be ready for an unexpected situations. If one is able to control the inventory management properly, there is a better chance to succeed in a competitive market.

Automation

One of the key criteria is a logistics automation which lead to a well-functioning and integrated logistics system. Then what is a logistics automation? It is the combination of computer software and automated machineries in order to upgrade efficiency of logistics processes. Automated machineries consist of four capabilities. First capability is an automated storage and retrieval systems. It allows cranes to maximize the space utilization than any other alternatives. The way it works is simple. Keep stacking various levels of stock vertically which leads to high storage densities. Second, an automated guided vehicle(AVG) also plays great role in logistics efficiency. AVG guides a great amount of materials in industrial building especially in the warehouses along the marked line or using lasers for navigation. The third capability is a conveyor system. Containers in warehouses are transported by conveyors through hard coded rules. After the consideration they are placed at the selected destination. Fourth one is sortation that is similar to conveyor system. But the differences between them are the higher capacity and diverting speed.

Software for logistics automation also contributes enormous effects on efficiency. We have integration, operational control, and business control software. By using integration software, we will be able to control all the automation machineries which were mentioned ahead. Operational control software is used for low-level decision making : where to store incoming containers and to retrieve when they are required. Business control software, however, plays different role. It is for higher level functionality like stock and scheduling order fulfillment. As we can realize here there are enormous benefits using automation. Among those benefits, organizational control, scalability and speed are mostly highlighted in our views due to automated machineries and software.

Efficient Transportation

Efficient transportation must be considered as an important factor for a well-functioning and integrated logistics system. Transportation allows products to be supplied from production and manufacturing to end users, and we need to make it as efficient as possible to gain lots of benefits. Here arises the question: “How can we make our transportation more efficient?”

The answer is various. We might need to develop the technology of transportation. By enhancing technics, we can get visibility which provides the control and abilities to optimize. Understanding how to handle each transportation in detail also allows to get some more efficiencies. Moreover, as we determine the most appropriate routes which are the shortest and safest, we can save not only time but also money. Benefits we can get by doing them are countless. One of the important advantages is reduced cost which in turn lowers costs to customers and production costs. As the cost in transportation decreases, we can allocate more spending to other fields where the improvements are needed, and it is obvious that we will be able to make well-functioning logistics.

“Angren Logistics Center” closed joint-stock company, resolution of the Cabinet of Ministers of Uzbekistan dated February 13, 2008 in order to ensure uninterrupted transportation of cargo by automobile enterprises and other industries located in the Fergana Valley regions through the Kamchik pass, it is planned to create a specialized motor transport in the city of Angren in the joint-stock company “Uzavtosanoat”. Currently, there are 350 trucks, of which 80 are leased, 20 are being used, and 200 are underutilization. Although it is joint-stock company, it is operated publicly since it cannot make decision over regulations of government.

As for the operational process, there is no co-operation with automatic moving vehicles in warehouses for loading and unloading, first of all. When it comes to communication within organization, software “Auto-Accounting”, which works as an intranet and developed by “Technosoft”, provides with whole information and integrates all departments of organization. Each department has its own access to system and input data, they can see data of other departments even though no access to change. As an instance, accounting can see data of garage and warehouse in order to calculate expenses of trucks and other equipment. However, trucks are not equipped with GPS or RFID system in order to track movement of trucks. If company or owner of cargo wants to know where is the cargo there is only way to get information by phone call. And company uses internet, phone call and face-to-face meetings in order to create contracts and deals. Some facts that was mentioned above says that customer service of company low and company must update its technical base.

Whole trucks of company was purchased from «JV MAN Auto-Uzbekistan» LLC, which manufactures modern and reliable MAN trucks with gross vehicle weight of 15 to 50 tones in Samarkand, Uzbekistan. Durability, efficiency and reliability are the key features of JV MAN Auto-Uzbekistan products. The company provides a 2-year warranty for all engine and transmission components, with unlimited mileage limitation. Based on these information it is fact that company uses efficient transportation in its service.

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