Time compression refers to ways of ‘taking time’ out of operations. Longer lead times and process times create inefficiencies, require higher inventory levels, greater handling, storage, transportation and monitoring, incur a greater chance for error, and thus decrease the efficiency of the supply chain
You used to be able to spot one person taking one crate of Heineken from a pallet next to you, and you’d say: ‘Hey, better leave that crate alone!’ Well, now you sit in a control room in Rotterdam and if one crate disappears in Hong Kong, you know and alert your colleagues overseas.
(2008: 29)
However, there are serious criticisms about aspects of IoT. Greenpeace’s Gary Cook, cited in Boztas (2016), consider the Dash buttons:
a wasteful use of technology and a surprising step backwards for a company that prides itself on its innovative abilities… adding to the massive global e-waste problem with an electronic device that has such limited functionality is certainly not innovative.
Amazon spokesman Tarek El-Hawary countered that Dash buttons ‘are fully recyclable and Amazon will cover the cost of recycling [and]… orders placed via Dash buttons are grouped together where possible, as with any order we fulfil’.
Van Kranenburg has focused on issues of security and privacy as regards a greater online interconnectedness and believes RFID technology is at a crucial point in terms of standards and policies, regulations and deployment and services. He considers that the increasing use of RFID and related technologies, such as near-field communications (NFC) to provide personal and business solutions also sees human beings ‘distributing’
themselves as data as such technology is being embedded in passports, bank/credit cards, employee access cards and other kinds of identification that identifies human beings by unique numbers. He concludes by noting that location-based, real-time services and applications are all possibilities within a wired or WiFi connected environment that need serious
exploration and research.
SOuRCES Belkin (2016); Boztas (2016); Honeywell (2016); Van Kranenburg (2008).
Logistics and Supply Chain Management 17 as a whole. Advanced logistics and supply chain activities and technology as discussed above help compress a firm’s time by developing better rela- tionships with suppliers and customers to share more real-time information and improve its accuracy. Thus, many firms have initiated time compression strategies to significantly reduce manufacturing time and inventory.
Retailers, particularly in the grocery sector where perishability is an issue, have been leaders in time compression, relying heavily on advanced computer systems involving bar coding, electronic point-of-sale (EPOS) scanning, and EDI to develop quicker responses for order processing. In fact, the grocery sector across the globe established efficient consumer response (ECR) in the 1990s to do just that (Fernie and Grant, 2008).
As a result of a need to be more efficient in production and manufactur- ing at an operational level and reduce times at a logistical and supply chain level, two different logistics and supply chain paradigms, ‘lean’ and ‘agile’, emerged during the 1990s (Purvis et al, 2014). The lean paradigm is based on the principles of lean production in the automotive sector where a ‘value stream’ is developed to eliminate all waste, including time, and ensure a level production system. Firms make to order and therefore speculate on the number of products that will be demanded by forecasting such demand.
Thus, a firm assumes inventory risk rather than shifting it through develop- ing economies from large-scale production, placing large orders that reduce the costs of order processing and transportation, and reducing stock-outs and uncertainty and their associated costs. Speculation very much fits a lean strategy.
The agile paradigm has its origins in principles of channel postponement.
Under postponement, costs can be reduced by postponing changes in the form and identity of a product to the last possible point in the process, ie manufacturing postponement, and by postponing inventory locations to the last possible point in time since risk and uncertainty costs increase as the product becomes more differentiated from generic form, ie logistical post- ponement. Being agile means using market knowledge and information in what is known as a virtual corporation to exploit profitable opportunities in a volatile marketplace inventory.
The lean approach seeks to minimize inventory of components and work in progress and to move towards a ‘just-in-time’ (JIT) environment wherever possible. Conversely, firms using an agile approach are meant to respond in shorter time-frames to changes in both volume and variety demanded by customers. Thus, lean works best in predictable high-volume, low-variety environments while agility is needed in less predictable environments where the demand for variety is high.
While the paradigms appear dichotomous, in reality, most firms likely have a need for both lean and agile logistics and supply chain solutions, suggest- ing a hybrid strategy. Such a strategy has also been called ‘leagile’ (Naylor et al, 1999) and Figure 1.2 illustrates this hybrid solution. The ‘material decoupling point’ represents a change from a lean or ‘push’ strategy to an agile or ‘pull’ strategy. The ‘information decoupling point’ represents the point where market sales or actual order information can assist forecasting efforts within the lean approach of this hybrid solution.
The impact of time compression on sustainability includes increased transportation or ‘Go’ and storage or ‘Stop’ activities in an agile supply chain, along with their associated environmental effects, in order to achieve levels of responsiveness and flexibility. Further, the location selec- tion of transportation hubs and ports or storage and production sites may also be detrimental to the environment. For example, ports and surrounding areas will have to develop a strong environmental outlook and a public and ecological health approach. It has been estimated that 70 per cent of shipping emissions occur within 400 kilometres of land; thus, ships contribute significant pollution in coastal communities. Shipping- related particulate matter (PM) emissions have been estimated to cause 60,000 cardiopulmonary and lung cancer deaths annually, with most deaths occurring near coastlines in Europe, East Asia and South Asia (Corbett et al, 2007).
Lean Push
• Forecast-driven at a
generic level • Demand-driven / actual order based
• Local product configuration
• Economic batch quantity production
•Maximize efficiency • Maximize effectiveness Agile
Material Decoupling Point (strategic inventory)
Information Decoupling Point (market sales information)
Pull
Figure 1.2 A hybrid lean and agile supply chain
SOuRCE Authors.
Logistics and Supply Chain Management 19