Business Administration & Technology Supply Chain and Logistics

Cross-Docking Insights from a Third-Party Logistics Firm in Turkey……………………………………………………………………..141 GURDAL ERTEK 9 Balance of Power between er and Supplier: The Case of Chinese and Western Companies…………………………………………… 157 OLIVER SCHNEIDER ROBERT ALARD AND JOSEF OEHMEN 10 Outsourcing Design to Asia: ODM Practices………………………….. 169 QI FENG AND LAUREN XIAOYUAN LU 11 Milk Collection at Nestle Pakistan Ltd. …………………………………. 185 ARIF IQBAL RANA AND MOHAMMAD KAMRAN MUMTAZ 12 Role of Hungarian Railway on the New Silk Road…………………… 205 PAUL LACOURBE What is the Origins of the Silk Road? The participants along the Silk Road changed over time. “Chinese YuezhiBactrians Indians and Sogdians” created the historical Silk Road in Central Asiain the first century BC.

Different groups rose and fell through the ages. Groupsthat gained political and military power controlled the trade along the Silk Road. Inthe medieval times when paddle trade—merchants traveling along their goods—was common along the Silk Road merchants and agents were the main players.During the eleventh to fourteenth centuries Silk Road trade on the Western front(from Persia to İstanbul) was mainly controlled by the Great Seljuk Empire. Tradediasporas were formed such as Sogdians in Tang China Armenians in SafavidIran and Jews in West Europe. Despite being open since the ninth century maritime routes became more significant in the sixteenth century due to technological improvements in the naval architecture.

The long-distance maritime trade wasmonopolized by the Iberians. After the seventeenth century West European chartercompanies such as the English East India Company (EIC) and Dutch East IndiaCompany (VOC) operated as single connected distribution chains from producerto consumer (Curtin 1998). Today similar integrated distribution functions areprovided by global supply chain service providers such as UPS Fedex and DHL Describe Products and Services: Cost Variety and Volume: Merchants sought significant profits so that it would be worth making thejourney along the ancient Silk Road.

Thus goods traded overland had highvalue with respect to their bulk volume. The main good traded was silk fromChina. Other luxury goods included glass red coral furs finely craftedceramics elegant bronze jade lacquer iron satin musk rubies diamondspearls and rhubarbs. The goods traded along the Silk Road varied depending on who was controlling the routes at that particular time. In the fourthcentury letters written by Sogdians were deciphered in Chinese Central Asiareferring to commodities such as gold wheat pepper musk camphor andflax cloth. The Sogdians managed a trade triangle between China Indiaand Sogdiana* which is located in modern day Uzbekistan and Tajikistan(Wood 2004). Trade along the Silk Road was at its zenith during the Tang dynasty due tothe stability of the government.

The most demanded foreign good on the farend of the Silk Road were horses during the Tang dynasty since horses providedmobility and military advantage. The Chinese agricultural society was dependent on the Western regions for the supply of animals. The Uyghur nomadicsociety producing livestock demanded silk. The motivation of the Uyghurs fortrade with the Chinese was not only the high demand for silk but also theopportunity of horse trade in return (Liu 2001). In some sources it is stated thatthe trade of silk for horses was a forced one namely the Uyghurs benefitted fromthe economic advantage in return for their military assistance to Tang China(MacKerras 2000).

Explain and Elaborate in Detail the Supply Chain Processes: FromProcurement to Sales In the past silk production was very labor-intensive and required importantmanual skills. The production process consisted of sericulture reeling andthrowing. Sericulture is rearing of silkworms for the production of raw silk. In history few people traveled the full length of the Silk Road. The goodswere transported by a series of routes and agents. This structure reminds one oftoday’s multiagent multimodal global supply chains. The routes used by themerchants were selected according to the political stability and the topography.

The Silk Road lies on the most challenging geography of the world in termsof vast deserts and high and rugged mountain ranges. The extreme continental climate great distances between human settlements lack of governmentaladministrations and banditry were the main problems travelers had to face.Travelers joined caravans to benefit from safety in numbers and experience ofthe caravaneers gathered from their previous trips. Travelers transported theirgoods and personal belongings mainly on horses donkeys and mules. Yet theyhad to adjust the type of animal according to the stage of the journey.

If thecaravan was passing the desert camels were used. In the colder and higher elevations dromedaries and yaks were used. The amount of goods carried and thepace set by different types of animals varied (Foltz 1999). For example theBactrian camels traveled at about 2.5 miles an hour. In the seventeenth century the transportation and distribution along theSilk Road drastically changed. In the medieval times commodities were tradedvia multiple agents in city-states and maritime republics. In the early modernera trade did not take part in stages unlike the medieval times. In contrastconsumers and producers were directly linked by single agents.

Commissionagents and salaried employees of chartered companies operated along the SilkRoad without any involvement of middleman which increased cost-efficiency(Matthee 1999). Merchants did not need to travel with their goods anymore.The goods were sent via different jurisdictions by employing a variety of transfermodes (Curtin 1998).It is interesting to note that supply chain contracts were designed and used14 centuries ago. The documents excavated from Turfan located in modern dayXinjiang Uyghur Autonomous Region which was once of the largest trade centers on the Silk Road around 640 show that the locals and Silk Road traders hadused contracts for goods purchased and money borrowed.

Prices were clearly documented and the contracts included 6%–10% penalty charge/interest for eachmonth of delay in shipment/payment. In addition to long-distance exchange contracts travel passes were issued since Tang law stipulated that a caravan ownerhad to provide documentary proof that he owned the slaves and animals travelingwith him. Furthermore labor contracts such as contracts to hire someone totransport goods to a given destination were also used (Hansen 2007).In the battle of Talas between Uyghurs-Tibetan allied army against Chinesein 751 AD Chinese paper makers were captured. This led to paper manufacturing in the city of Samarkand where raw materials (such as hemp flax water)existed abundantly. Later via Samarkand paper manufacturing moved westward along the Silk Road.In the early days a barter economy existed along the Silk Road.

Around 580AD silver coins were introduced to the Silk Road economy. Silk Road tradersborrowed silver coins at the interest rate of 10% per month from the moneylenders. In the eighth century silver coins were replaced by bronze coins (Hansen2007). Later in the eleventh century both Muslim and Christian merchantsemployed banking instruments for making payments remotely from which wecan draw a parallel with the modern bill of exchange (Curtin 1998). In the seventeenth century Mughal India money was transferred through money changers merchants and government officials.

The service charge was about 1%–2%.The interest rates charged on bills of exchange were approximately 0.75%(Curtin 1998). In the eighteenth century Indian money changers demanded amuch higher that is 12% commission (Haudrère 1999).18  ◾  Managing Supply Chains on the Silk Road1.4 Lead Times along the Silk Road Supply ChainsDuring the Tang dynasty one bolt of silk about 30 ft took 1 day’s work by oneperson (Whitfield 1999). In the nineteenth century in Central China reelingplants employed 600 workers on an average and produced 20 ton of raw silkannually (Federico 1997).In the fifteenth century traversing from Herat in Afghanistan to Pekingin China took about a year. The journey from Peking to Samarkand also tookabout a year. The travel time from İstanbul to Central Asia was 9–10 months.The travel time of full length of the Silk Road was roughly 270 days whendelays due to weather conditions or other inconveniences and rest periods wereexcluded (Rossabi 1990).

In the seventeenth century it took caravans 5–6months to traverse the route between Isfahan and Agra passing through LahoreQandahar Farah and Yazd (Steensgaard 1999).On the Western front of the Silk Road it took camel caravans 45–75 days totraverse the overland route from Mediterranean to the Persian Gulf. There weretwo alternative routes from Ghilan to West Europe in the eighteenth centuryone leading through Astrakhan Moskow and Saint Petersburg taking 95 daysand the other one destined to İzmir and Turkey taking 70 and 60 days respectively (Curtin 1998). The duration of caravan travel from Qazvin to İstanbul/İzmir was 110 days from Qazvin to Aleppo 110 days from Qazvin to Archangel105–135 days and from Isfahan to Aleppo 70 days (Matthee 1999). In sumlead times for transportation and distribution of goods were long and variable;the journeys had to overcome many perils.

What were Some of the Careers on the Silk Road Supply Chains? Some merchants served as agents while other merchants practiced paddlingtrade. Namely they traveled with their goods along the Silk Road. A secondgroup of merchants settled down abroad and learned the language and tradecustoms of the hosts and acted as cross-cultural brokers between the merchants of the host society and the merchants of their homeland (Curtin 1998).Today global supply chain service providers do operate as brokers and agentsin many continents. Li and Fung is one successful example that orchestrates amultitude of global retailers and suppliers for fashion furnishings and household products.* Types and varieties of careers seen along the Silk Road can belisted as follows: ◾ Producers of goods◾ Skilled craftsmen◾ Bankers◾ Moneylenders and moneychangers◾ Commission agents◾ Carriers such as caravaneers carters muleteers ship owners and ship captains and crew◾ Interpreters and translators◾ Caravan guides and guards◾ Law and contract enforcement officers for business transactions◾ Musicians dancers and courtesans Trade along the Silk Road also supported the economy of intermediateindustries and locations that provided services to travelers such as caravanserais (Weisbrod 2008). Caravans needed guides over the most hostile sectionsof the journey who knew the land and the climate. Interpreters in the medievaltimes were often illiterate and translated oral communications simultaneouslywhile translators translated written texts. They were more likely bilingual ormultilingual on the native level by birth who were familiar not only with thelanguage but also with the customs of both parties. The Byzantine Empire hadcontact with Turkish civilizations Arabs and Persians thus bilingual or multilingual individuals who interpreted from Greek to Turkish Arabic or Persianand vice versa were required. With the decline of the Byzantine Empire thecommerce with the West increased thus interpreters who knew Latin weremore in demand. Read: The Globalization of Markets by Theodore Levitt What Levitt Mean by Living in the Republic of Technology? Daniel J. Boorstin author of the monumental trilogy The Americans characterized our age as driven by “the Republic of Technology [whose] supreme law…is convergence the tendency for everything to become more like everything else.” In business this trend has pushed markets toward global commonality. Corporations sell standardized products in the same way everywhere—autos steel chemicals petroleum cement agricultural commodities and equipment industrial and commercial construction banking and insurance services computers semiconductors transport electronic instruments pharmaceuticals and telecommunications to mention some of theobvious. Explain A Failure in Global Imagination Many companies have tried to standardize world practice by exporting domestic products and processes without accommodation or change—and have failed miserably. Their deficiencies have been seized on as evidence of bovine stupidity in the face of abject impossibility. Advocates of global standardization see them as examples of failures inexecution. In fact poor execution is often an important cause. More important however is failure of nerve—failure of imagination. Consider the case for the introduction of fully automatic home laundry equipment in Western Europe at a time when few homes had even semiautomatic machines. Hoover Ltd. whose parent company was headquartered in North Canton Ohio had a prominent presence in Britain as a producer of vacuum cleaners and washing machines. Due to insufficient demand in the home market and low exports to the European continent the large washing machine plant in England operated far below capacity. The company needed to sell more of its semiautomatic or automatic machines. Read: Supply Chain Management Tutorial Read the Whole eBook What is the Definition of Supply Chain Management? Supply Chain Management can be defined as the management of flow of products and services which begins from the origin of products and ends at the product’sconsumption. It also comprises movement and storage of raw materials that areinvolved in work in progress inventory and fully furnished goods. The main objective of supply chain management is to monitor and relate production distribution and shipment of products and services. This can be done by companies with a very good and tight hold over internal inventories production distribution internal productions and sales. Supply chain management basically merges the supply and demand management. Ituses different strategies and approaches to view the entire chain and work efficiently at each and every step involved in the chain. Every unit that participates in the process must aim to minimize the costs and help the companies to improve their long-term performance while also creating value for its stakeholders and customers. This process can also minimize the rates by eradicating the unnecessary expenses movements and handling. What are the key benefits of supply chain management are as follows: Reading the Following Article from Industry Week: Supply Chain Technology Brings the World Closer Together Where are some of the Supply Chain Areas that Software Technology is Being Utilized? For example software technology is used in areas of the supply chain such as:Transaction processing—resulting in a reduction of manual work and costsimprovement of information quality speeding up of information transfer and volume of transactions used to drive the use of IT for transaction processing.Supply chain planning and collaboration—information is used for running processes such as demand forecasting production and distribution planning procurement sales & operations planning (S&OP) as well as VMI and CPFR initiatives that benefit both a company’s internal and external supply chains.Order tracking and delivery coordination—for tracking the progress of s or deliveries or in providing this information to interested parties shared across supply chains. Requirements: just to fill out spread sheet Develops better customer relationship and service.· Creates better delivery mechanisms for products and services in demand withminimum delay.· Improvises productivity and business functions.· Minimizes warehouse and transportation costs.· Minimizes direct and indirect costs.· Assists in achieving shipping of right products to the right place at the right time.· Enhances inventory management supporting the successful execution of just-intime stock models.· Assists companies in adapting to the challenges of globalization economicupheaval expanding consumer expectations and related differences.· Assists companies in minimizing waste driving out costs and achievingefficiencies throughout the supply chain process. ‘