Global Challenges and Current Issues in Logistics and Supply Chain Management

This report discusses the global challenges and current issues faced by DB Schenker in logistics and supply chain management. It covers topics such as supplier development, green logistics, lean management, and quality management.

Logistics and Supply Chain Management

Executive summary
Logistics management deals movement of goods from one to another location to support
the supply chain where the Supply Chain Management (SCM) is associated with the
management of goods from manufacturers to final consumers. Here, DB Schenker faces the
global issues in the context of the cost and efficiency because the current business environment
is based on the digitalization where suppliers need to think innovatively otherwise the global
business transactions adversely get affected. Furthermore, DB Schenker is dealing with the
global issues in logistics by using lean management because it focuses on organizational
sustainability in the supply chain. Also, company faces the challenges related to skilled staff and
the company was unable to find the IT professionals to operate logistics in Saudi Arabia. The
common phenomena such as QM is one of the contemporary issues in the sustainability of SC
because it requires the management and integration of SC and quality to improve the
performance. Integrating the environmental and social sustainability are the major pillar for the
lean and agile management in SCM because lean management focuses on the quality, waste-free
supplies whereas agile is related to the quick and flexibility as per the demand of the market.
Moreover, the performance measurement is not merely constrained to carbon discharges and
environmental sustainability; however, it is also associated with enhancement of profitability,
sales turnover, customer satisfaction etc. it shows that maintenance of a sustainable supply chain
is a contemporary issue because it requires extra cost and efforts to manage the unused
inventory, least CO2 emissions, the wellbeing of the society etc. For this purpose, recycling and
reverse logistics can be useful to promote the sustainable operation of the business. Owing to
this, the use of advanced technologies is vital in logistics to improve the warehouse capacities,
efficiencies and availability of inventory. In this regard, it has been recommended that the firm
should employ the IT professional personnel just after the implementation of digitalization to
perform the operations carefully. Also, use the green processes by using JIT technology in
logistics without reducing the number of ships because it helps to enhance the loading capacity
in one time to save the time and cost.

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Global challenges for DB Schenker............................................................................................1
Current issues in SCM of DB Schenker......................................................................................3
Recommendations........................................................................................................................4
TASK 2............................................................................................................................................5
Contemporary issues in global SC...............................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Logistics management deals movement of goods from one to another location to support
the supply chain where the Supply Chain Management (SCM) is associated with the
management of goods from manufacturers to final consumers (Hugos, 2018; Christopher, 2016;
Carter & Liane Easton, 2011). In this context, the current report is based on the critical
evaluation of global and current challenges in Supply Chain (SC) and the logistics network of
DB Schenker. Furthermore, contemporary issues have been critically evaluated in the context of
Global Logistics and Supply Chain (GLSCM) such as Total Quality Management (TQM), lean
and agile SC, performance measurement, sustainability in Global supply chain etc.
TASK 1
Global challenges for DB Schenker
According to several studies, supplier development is essential for the sustainability of
the business because actions taken by one member of SC influence the effectiveness of entire SC
in context of responsiveness, profitability and efficiency (Govindan, Kannan & Noorul Haq,
2010; Abbasi & Nilsson, 2012; Arzu Akyuz & Erman Erkan, 2010). In this context, DB
Schenker is dealing with the issue of supplier’s development because the suppliers are not the
real technological innovations; therefore, demand for the more significant changes from the
suppliers (Smith, 2016). Here, DB Schenker faces the global issues in the context of the cost and
efficiency because the current business environment is based on the digitalization where
suppliers need to think innovatively otherwise the global business transactions adversely get
affected. In this regard, Awad (2010) asserted that supplier’s development and maintenance of
supplier’s relationships is an essential component which determines the competitiveness of the
company. Here, DB Schenker is required to restructure the procurement procedure with different
units to consolidate the production gap and management of SC otherwise it creates a global
challenge for the company in the context of supplier’s performance.
Green logistics is one of the global challenges for logistics companies; however, it helps
in the conservation of resources and improves environmental sustainability. Nonetheless, the
application of green logistics demands for huge cost to set the entire SCM system to operate the
logistic activities (Toke, Gupta & Dandekar, 2010; Guang Shi, Lenny Koh, Baldwin &
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Cucchiella, 2012; Dekker, Bloemhof & Mallidis, 2012). Here, DB Schenker is using the Eco
solution for every mode of transportation as it is focusing on the reduction of CO2 emissions and
emphasizing on the enhancement of fleet renewals to improve the efficiency (DB Schenker,
2019). However, Patricksson, Fagerholt & Rakke (2015) asserted that the fleet renewals require
to reduce the number of transports and remove or add the ships in the current fleet which affects
the delivery time in the logistics. Although, DB Schenker is focusing on the reduction of
transport miles by consolidation and shifted to eco-friendly transport modes for sustainable
logistic operations (DB Schenker, 2019). However, Lai & Wong (2012) argued that reduction in
a number of ships due to greener operations affects the quality and quantity of transactions in
SCM because it carries limited vessels which reduce the amount of loaded ships. On the
contrary, several studies delineated that a lack of green operations enhances the entire cost of the
organizations and reduces the environmental efficiencies because of excessive discharge of CO2
in the environment (Kim & Rhee, 2012; Muduli, Govindan, Barve & Geng, 2013; Wolf, 2011).
Lean management and Just-In-Time (JIT) improves the efficiency of SC because it
emphasizes on the delivery of the right amount of supplies, quality products within a minimum
period (Myerson, 2012; Aksoy & Öztürk, 2011; Chen, Cheng & Huang, 2013). Owing to this,
DB Schenker is using the JIT in logistics to manage the production and flow of goods which
further helps to reduce the logistics cost and streamlined the procurement (DB Schenker, 2019).
However, Danese, Romano & Bortolotti (2012) argued that in the absence of JIT in SC, reduces
the quality of products and incurs extra cost in logistics which reduces the efficiency of business
at an international level because of higher competition. Further, Ozalp, Suvaci & Tonus (2010)
asserted that technical support and adequate infrastructure are imperative to maintain the quality,
customer services, order processing, inventory management in the entire SC. Apart from this, JIT
enables to receive one-time delivery of material from suppliers. In this regard, DB Schenker is
dealing with the global issues in logistics by using lean management because it focuses on
organizational sustainability in the supply chain (DB Schenker, 2019). In this context, Kawa &
Maryniak (2018) pointed out that lack of lean management reduces the quality of the entire SC
and creates an impact on the sustainability of the logistics process which affects the overall
transactions at the global level. However, Konecka (2010) argued that merely lean management
is not supportive for logistics; nonetheless, the companies need to be agile also to manage the
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quality of goods and total lead time in the SC which helps to reduce the risk in comparison to
rivalries.
Current issues in SCM of DB Schenker
 Issues in internal operations- According to De Maillard & Smith (2012), internal
operations of the organizations include the different aspects such as production,
manufacturing, people management, technical department etc. which has a major
contribution in success and failure of the business. In this context, DB Schenker uses the
latest technologies in the inventory and warehouse management but it demands the
skilled staff members. For example, DB Schenker operating the business in Saudi Arabia
because it has a substantial logistic market; however, DB Schenker face the challenges
related to skilled staff and the company was unable to find the IT professionals to operate
logistics in Saudi Arabia (Attwood, 2009). In this context, Altman, Nagle & Tushman
(2015) asserted that engagement of a skilled workforce is essential for the organizations
to use the technical infrastructure to reduce the lead time and effectually manage the
operation. Apart from this, DB Schenker uses the Production Vendor Management
Inventory (PVMI) model to gain the benefits of comprehensive SC control and helps to
reduce inventory ownership (Cone, 2014). However, Sana (2011) notified that the PVMI
model was explicitly designed merely for inbound material in manufacturing supply
chains and limited the supplier’s willingness towards the traditional Vendor Management
Inventory (VMI) model.
 Several studies mentioned that the PVMI model demands the standardization business
processes as well as IT solutions along with IT structure which requires for the
tremendous financial resources (Yu & Huang, 2010; Yu, Wang & Liang, 2012; Battini,
Gunasekaran, Faccio, Persona & Sgarbossa, 2010). Further, DB Schenker is a third-party
logistics provider which provides the supplier real-time visibility physical inventory
control in PVMI warehouse globally (Cone, 2014). In this context, Tomlin & Wang
(2011) argued that disruption in the technical department reduces the collaboration
between manufacturing sites and imbalances the alignment of materials which further
affects the availability of optimum suppliers.
 Issues in logistics operations and supply chain- DB Schenker use the online tracking
technologies to track the logistics and get the shipment data without login by using the
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tracking number. Furthermore, it supports receiving the detailed overview as well as
information for each shipment in SC (DB Schenker, 2019). In this context, Fernie &
Sparks (2018) stated that allocation of tracking number might be risky for the entire SC
and logistics management because there might be a possibility to hack the tracking
number and misuse the data against the organization. However, DB Schenker has
upgraded the tracking technology to deal with the tracking issues and easy access to the
information. Besides this, DB Schenker is using the internet technologies to maintain the
digital warehouse to keep eyes on each transaction in SC.
 Furthermore, DB Schenker is engaged with the displaying a digital dashboard to monitor
warehouse operations, transportation processing and entire SC (DB Schenker, 2019).
However, the competitors like Cisco is using the joint innovation lab to set up the real-
life environment, sensor board solutions, robotics and automation, smart devices in the
supply chain which is creating competition in the world (CISCO, 2017). In this context,
Lee, Lv, Ng, Ho & Choy (2018) stated that the use of advanced technologies is vital in
logistics to improve the warehouse capacities, efficiencies and availability of inventory.
Nonetheless, digitalization is not a natural activity because it demands the restructuring
of the entire warehouse system and hiring of skilled as well as professional employees to
operate the systems.
Recommendations
 The hiring of IT professionals for digitalization in warehousing- As per the analysis,
it has been found that DB Schenker operates with the digitalization in storage to manage
the inventory and entire supply chain. However, the organization is dealing with the
issues of the requirement of technical experts to operate the digital systems. In this
context, it has been recommended that the firm should employ the IT professional
personnel just after the implementation of digitalization to perform the operations
carefully.
 Supplier development- Based on the above discussion, it has been identified that DB
Schenker is facing the issue related to supplier’s innovativeness which is incurring the
considerable cost for the company in the context of supplier’s performance. In this
context, it has been suggested that supplier’s development is the significant aspect for the
logistics to improve the SC as well as improve the supplier’s performance.
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 Green logistics- Based on the analysis, it has been found that green logistics is essential
for the sustainability of SC and environmental sustainability. DB Schenker is already
using green logistics by applying the fleet renewals; however, the firm has to remove the
number of ships to operate green operation in logistics. Hence, it has been recommended
to use the green processes by using JIT technology in logistics without reducing the
number of ships because it helps to enhance the loading capacity in one time to save the
time and cost.
TASK 2
Contemporary issues in global SC
 Quality management (QM) in the supply chain- According to few studies, QM is one
of the contemporary issues in the sustainability of SC because it requires the management
and integration of SC and quality to improve the performance (Awad, 2010; Closs, Speier
& Meacham, 2011). In this context, Epstein (2018) asserted that quality issues affect the
customers' preferences and ruin the brand image in the competitive market which affects
the overall profitability. In the current business era, most of the companies are dealing
with quality issues in products and SC. For example, Sainsbury and Asda had planned for
a merger to enhance the business and supplying of products in an effective manner, but
the consolidation had reduced the quality of products, augmented the prices and choice
for customers; however, it enhances the competition in UK grocery products (Kollewe
and Jolly, 2019). In this context, Qamar & Hall (2018) revealed that QM affects the
overall business transactions including the products quality deterioration, supply chain,
reduction in share price etc. For example, current food quality issues reduce the share
price of the Sainsbury by 15% in groceries of the quarter of Feb (Kollewe and Jolly,
2019). Hence, quality management is a major contemporary issue in the current
competitive environment.
 Total Quality Management (TQM)- TQM is a tool which is used to maintain the
quality of products and services in the entire SC; however, it is difficult in a current
competitive environment because most of the organizations focus on the quantity, size
rather the quality of products. In this context, Kiprono & Genga (2018) stated that the
TQM approach demands the skilled teams to manage the condition which reduces the
5

extra cost for the firm. However, Fernie & Sparks (2018) argued that the application of
TQM in SC is not an easy task because it needs to implement the latest techniques in SC
technology adoption. On the contrary, Kim & Rhee (2012) mentioned that green SC is
helpful to maintain total quality in SCM because it reduces the hazardous elements.
Further, Kiprono & Genga (2018) argued that green SC demands the restructuring of the
entire SCM which increases the total cost of SC. Thus, it indicates that management of
TQM is SC needs to be more efficient so that cost and harmful elements can be reduced.
 Lean and Agile supply chain- Integrating the environmental and social sustainability are
the major pillar for the lean and agile management in SCM because lean management
focuses on the quality, waste-free supplies whereas agile is related to the quick and
flexibility as per the demand of the market (Kawa & Maryniak, 2018). In this context,
Qamar & Hall (2018) asserted that only lean SC is not beneficial; however, it also
demands agile SC because the current market demands to reduce the lead time. However,
Saini, Arif & Kulonda (2018) argued that the use of lean and agile practices in SC on an
individual basis is not advantageous; however, integration of both methods creates
sustainability. In this regard, Kawa & Maryniak (2018) stated that the use of the lean and
agile process is much considered to improve the efficiency of SC. Moreover, Fernie &
Sparks (2018) mentioned that the use of lean and agile SC together demands the purpose
of new practices and techniques which incur the higher cost of entire SC. Thus, it shows
that lean and agile SC is essential but uses on an individual basis is not more effective
however integrative use is suitable for SC to manage the sustainability issues.
 Performance measurement – Performance measurement is essential for the efficiency
of GSCML because it helps to improve the bottlenecks which are occurring into SC. In
this context, Penz & Polsa (2018) asserted that performance measurement includes the
contribution of greenhouse gases, reduction of carbon emissions, encourage investments
in carbon performance without reducing the abilities to compete etc. However, Hong,
Zhang & Ding (2018) argued that the performance measurement is not merely
constrained to carbon discharges and environmental sustainability; however, it is also
associated with enhancement of profitability, sales turnover, customer satisfaction etc. by
using the practical GSCML approach. Further, Penz & Polsa (2018) explained that
performance measurement is difficult in complex logistics because it is associated with
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different locations, various warehouses, inventory of different countries etc. Nonetheless,
Hong, Zhang & Ding (2018) stated that complexities of logistics and SC could be
reduced by using the advanced technologies like digitalization in warehousing,
dashboards by using important KPIs with the focus on warehouse operations and overall
SC management. For example, DB Schenker is using the digital warehouses to keep eyes
on the warehouse operations, transportation processes an entire chain to improve the
efficiency of supply chain and logistics (DB Schenker, 2019).
 Sustainability in Global Supply Chain (GSC)- Sustainability in a current competitive
environment is a crucial issue because it is challenging to maintain sustainability in all
aspects such as economic, environmental and social (Ivanov, 2018). In this context,
Thorlakson, de Zegher & Lambin (2018) argued that it is not necessary that the
organizations focus on the sustainability of all aspects together; however, the emphasis is
on individual factors also. However, Hong, Zhang & Ding (2018) stated that viability in
GSC gets affected by the excessive inclusion of carbons and harmful gases, emissions
which create challenges for the organizations to stay in the environment. Besides this,
Ivanov (2018) notified that sustainability issues arise in the logistics and supply chain
because most of the companies fail to reduce and manage the wastes. On the contrary,
Thorlakson, de Zegher & Lambin (2018) stated that GSC is affected by the significant
issues like hazardous waste disposal and solid waste disposal from the products which
create the economic challenges in logistics. Hence, it shows that maintenance of a
sustainable supply chain is a contemporary issue because it requires extra cost and efforts
to manage the unused inventory, least CO2 emissions, the wellbeing of the society etc.
For this purpose, recycling and reverse logistics can be useful to promote the sustainable
operation of the business.
CONCLUSION
Based on the report, it has been concluded that a supplier’s development is the major
challenge for SCM because it enhances the overall cost of SC. However, green logistics helps to
maintain the sustainability of SC, but it requires to restructure the entire SC system which again
incurs the enormous cost. Apart from this, it has also been summarized that use of digitalization
is a current challenge for logistics because it demands the hiring of skilled personals to operate
the systems which lead to higher cost of training and recruitment but improves the SC
7

efficiencies. It can also be concluded that reverse logistics, recycling practices and integrated
supply chain facilitate to promote the sustainable operation.
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