RESEARCH DIRECTION AND KNOWLEDGE MANAGEMENT OF SUPPLY CHAIN AND LOGISTICS IN THAILAND

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1 RESEARCH DIRECTION AND KNOWLEDGE MANAGEMENT OF SUPPLY CHAIN AND LOGISTICS IN THAILAND Duangpun Kritchanchai Department of Industrial Engineering, Faculty of Engineering, Mahidon University, Bangkok, Thailand Pongchai Athikomrattanakul Logistics Management Program, Graduate School of Management and Innovation, King Mongkut s University of Technology Thonburi, Bangkok, Thailand Tuanjai Somboonwiwat Department of Industrial Engineering, Faculty of Engineering King Mongkut s University of Technology Thonburi Thananya Wasusri Department of Industrial Engineering, Faculty of Engineering King Mongkut s Institute of Technology North Bangkok Woranut Koetsinchai Department of Mathematics King Mongkut s University of Technology Thonburi Abstract Supply chain and Logistics management has become an emergent strategy for a developing country, like Thailand, in this new economy. Low labour cost as a competitive advantage factor - is no longer sufficient for surviving under this high pressure and competitive economy. However, at the time that the concept plays a key role in Thailand industry and a number of researches have been conducted, all the knowledge in the field are still not effectively managed. The actual needs, trends and directions are still missing. The paper examines research and knowledge management directions as well as needs in supply chain and logistics management in Thailand industry based on recommendation from the TRF (Thailand Research Fund) sponsored workshop, and subsequent by the authors effort to synthesize and extract the visions formed in the workshop. A main goal of this paper is to stress on the needs of Thailand industry in supply chain and logistics development and to lie down the directions of research that should be subsequently conducted for serving the country needs. We proposed a framework that, firstly, high potential and key competitive industrial cluster should be selected for in-depth study. Then, exploratory research should be done in order to guide and indicate all the needs for implementing supply chain in each cluster. The critical activities in each industrial group for developing supply chain should be identified. After that, all those needs at particular areas should be subsequently tackled by conducting further applied research. Human Resources issues are also highlighted. It is hoped that the direction model presented in the paper can be a prototype for supply chain nationwide implementation for developing countries in South East Asia. Keywords: research directions, knowledge management, supply chain and logistics implementation, developing country, Thailand. Logistics Research Network 2003, London 255

2 Introduction Today high competitive global market climate sparks Thai industrial demand for supply chain and logistics management. Running the old style management and competing with competitors only sales and marketing side like the old day will not work again for Thailand. Since, edges of having lower labor cost and cheaper raw materials than other exporting countries are fading out. Markets for Thai products in most sectors are gradually losing to other countries. To stay competitiveness, companies in Thailand start cultivating supply chain and logistics management. The corporate crusade to gain competitive advantage using new supply chain and logistics management methods is constantly extending to all Thai industry. Regarding to this emerging need for Thai Industry, a group of Thai researchers, Thai Value Chain Management and Logistics Researcher s Consortium (ThaiVCML), leaders in private sectors, and government officers from Thai Research Fund joined an effort by organizing a workshop on November 2 nd -3 rd, The objective of the workshop was to elaborate a research direction in Supply Chain and Logistics Management for Thailand. Methodology and Outcome In order to have insight and synthetic outcomes, a group of participants was divided into three distinct areas: 1) Inbound Logistics and Supply Chain; 2) Physical Distribution and Transportation; and 3) Strategic Logistics and Supply Chain Management. Each group was assigned to examine all fundamental issues and factors in their area, and then try to lay down all needed and sufficient research that should be subsequently conducted for serving Thailand needs. The following are the research directions in each area, which the authors synthesized and extracted from the outcomes of the workshop. Research Direction of Inbound Logistics and Supply Chain The research of inbound logistics and supply chain should be emphasized on three directions: 1) To study state of the art and characteristics of inbound logistics and supply chain management, categorized by the types of industry such as textile industry and local community textile industry, automobile, electronics, and food industries; 2) To improve the effectiveness and efficiency of inbound logistics activities regarding introducing products to market, which include operations, manufacturing, organization and human-resource development and information technology; 3) To study the result of introducing inbound logistics and supply chain management such as the impact of improvement in logistics and supply chain systems on the industrial competitiveness of textile entrepreneur. The above result suggests that the research direction of inbound logistics and supply chain management can be categorized into three research groups including ground research, basic research, and research regarding the impacts of improvement in logistics and supply chain. Ground Research for Studying the State of the Art of Logistics and Supply Chain The research should be focused on significant components of the logistics and supply chain management and major problems occurring in each industry. The study of critical stages in supply chain pipelines that are bottlenecks and rush problems of Thai industry should be conducted. The research should also study what and where problems are as well as how to encourage an awareness of supply chain and logistics improvement in Thai industry. Examples of those researches are: 1) Food industry requires research on material management in order to solve the major problems involving long lead time, quality and environment; 2) Automotive industry needs research on the structure of inbound logistics and supply chain model including supported industries. Examples include automotive part manufacturers and trading partners; 3) Local community textile industry requires research on process improvement to reduce problems incurred by inconsistency of knitting and dyeing, and lack of skills and knowledge arising from high turnover problems, long lead-time asynchronous production planning and control, quality of raw materials, marketing, product design and development, inventory problems, intellectual property, pricing, competitiveness, and delivery; 4) Local community textile industry requires research on process 256 Logistics Research Network 2003, London

3 improvement to reduce problems incurred by inconsistency of knitting and dyeing, and lack of skills and knowledge arising from high turnover problems, long lead-time asynchronous production planning and control, quality of raw materials, marketing, product design and development, inventory problems, intellectual property, pricing, competitiveness, and delivery; 5) Small- and medium- sized enterprises require research on information technology to increase the value of supply chain pipelines. Applied Research on Effectiveness and Efficiency Improvement for the Inbound Logistics and Supply Chain Applied research should be conducted for each industry by implementing supply chain models for both short-term and long term, accounting for product design, product and process innovation, culture, organizational competency, information management and technology. Research on the Impact of Introducing the Logistics and Supply Chain Concept For Thailand, the research is focused on impact of introducing the supply chain models on improvement of competitiveness components including lead-time, quality, design, bullwhip effects, and labor. Research Direction of Physical Distribution and Transportation The research in this area can be classified into 3 areas: 1) physical distribution and transportation improvement in private businesses; 2) the efficiency improvement of national distribution and transportation, and defining strategy; and 3) directions in order to be a center of transportation in South-east Asia. Physical Distribution and Transportation Improvement in Private Businesses The objectives of this group are to improve the efficiency of shippers and carriers in order to achieve less cost in distribution and transportation, reduce delivery time and increase reliability in delivery performance. Achieving the objectives, the research must be conducted into 4 groups that are information technology development, strategic alliance development, human resources development, and transportation technology development. Examples of research in those 4 groups are: ground survey in information technology should be done to obtain currently situation of distribution and transportation activities and its consequences that affect to each industry sectors; applied research could then be done to define a strategic alliance roadmap for medium and small size businesses; ground research should be conducted to discover currently status of the labors such as wages, education, training, working hours and performance expected; and development of transportation and material handling technology could then be studied to discover appropriate technologies for the product groups. Improving of Domestic Physical Distribution and Transportation The research in this area is to improve performance of physical distribution and transportation s activities. Firstly, survey based research should be conducted to survey and analyze the activities such as flow of distribution and transportation relating to product groups, flow of transportation according to consumption points, etc. The outcome of the research can be very useful for applied research in order to support in developing the government s policies and investment related to the activities such as improving road routes or train routes, having distribution centers. Improving of International Physical Distribution and Transportation To improve physical distribution and transportation internationally, defining strategic policies supporting the activities should be done. Survey based research of domestic physical distribution and transportation can usefully support to applied research in the international activities. To improve performance in physical distribution and transportation, 2 types of research should therefore be conducted. Survey based research is to investigate weak and strong points of the 3 main aspects. The roadmap and applied research topic needed can then be addressed. Applied research Logistics Research Network 2003, London 257

4 could thus bring methods or techniques to bridge between current situation and competitive situation for each business sector. Research Direction of Strategic Supply Chain and Logistics Management In order to leverage this area of supply chain management research, the research are divided into three folds: 1) Focusing on assessing current business practice and strategy in each business sectors or industries, which impact the logistics and supply chain operations (Macro Level); 2) Focusing on assessing current business practice and strategy in each companies (Micro Levels).; and 3) Focusing on developing the best practice in creating and implementing logistics and supply chain strategies. The above result suggests that the research direction of strategic supply chain and logistics management can be categorized into three research areas including collaboration, human resource development, and uses of information technology. Collaboration The objective of this research area is to find out the obstacles, ways, and ultimately possibility of establishing collaboration efforts across the supply chain spectrums, vertical and horizontal, both within enterprise and between organizations. This also includes the collaboration between industries, private and government agencies, and academic parties within the same value chain. Examples of research are: 1) Ground research focuses on assessing the possibility of forming cluster in each industry and evaluating all necessary factors like human resource, product development, economy, and manufacturing capability; 2) Applied research emphasizes on developing collaborative model, implementation plan, and all related deployment issues. Human Resource Development The outcome of the workshop indicated that workforces and decision makers in Thailand have limit understanding about supply chain and logistics management. To properly lay down the strategic supply chain, these people have to be trained and upgraded their understanding of logistics operations. Examples of research in this area are: 1) Ground research focuses on assessing current understanding, needed knowledge and skill of logistics and supply chain operations in each industry; 2) Applies research focuses on developing sufficient tools and educational media like software, internet, or other devices to better train or educate logistics personal. This also include developing case study in particular industry. Information Technology The objective of this research area is to find the obstacle, limitation, suitability, and pros & cons of using logistics information system and enterprise information system. The research should focus on finding the need of using these emerging technologies in Thai company, especially in each industry. The research should point out all aspects both tangible and intangible issues of acquiring these systems. The applies research should focus on developing these systems in order to avoid importing from oversea. Discussions The outcomes from the workshop show that supply chain and logistics management is now recognized as a key competitive area for Thailand. Essentially the workshop participants all agree that the study and research conducted should stress on such area for enhancing the country development. Five research domains were recommended as parts of the country focus for creating competitive advantage. Also, in each domain, the current status of supply chain and logistic management in Thailand was demonstrated. 258 Logistics Research Network 2003, London

5 The first research domain stresses on the development of government and industrial sector policy. These policies set from each sector should facilitate the implementation of supply chain and logistics management in the country. Based on the current situation, the evidence shows that although the existed country policies, laws and regulations support the implementation of supply chain and logistics, there is no explicit analysis which indicates the effect of such policies on supply chain and logistics management in the country. Proper research should be conducted in identifying the interrelationship of the existed policies and the implementation of supply chain and logistics, suitable for the current situation and for the future. The second research domain includes the development of information technology (IT) for supply chain and logistics management, and its application with reasonable cost and suitable implementation. Even though it is all known that IT is an important factor for supply chain and logistics management, there is yet no study of the current status of IT application in Thai industry. The readiness for IT implementation has not yet been identified. Hence, the requirement and appropriate level of the use of IT in leading to supply chain and logistics management should be pointed out. The research for this area should state on, firstly, investigating appropriate and required level of IT for supply chain and logistics in Thailand and, secondly, developing a suitable IT applications for supply chain and logistics management for Thai industry. The third research domain identifies the need of strategic alliance research. This includes ways and methods of creating strategic alliance and how to select appropriate partners for building their supply chain. In Thailand, there is a high potential for creating strategic alliance horizontally and vertically. However an appropriate matchmaking has not yet been identified. Research should be conducted for indicating appropriate groups of industry in forming supply chain. The outcomes from research should be able to guide each industrial sector about their potential partners for developing supply chain. The fourth research domain highlights the importance of supply chain best practices. The evidence shows that the success of supply chain implementation can be seen mostly in Multi National Company (MNC) or large scale firm. Hence it is suggested that supply chain best practices from these large firms can be used as a prototype model for local and SMEs in Thailand. Research in this domain should notify factors for implementing these practices. Also all supply chain best practices appropriated for each industrial sector should be collected and documented. Lastly, the fifth research domain states the need of human resource development. The current situation in Thailand shows that we still lacks of supply chain and logistics resource persons in most organization. Supply chain education and training system together with knowledge and resource sharing should be developed for Thai industries. Also a database for collecting research and list of resource persons in supply chain and logistics management areas should be established. Conclusion Generally it can be said that supply chain and logistics development in Thailand is still at an early stage. Most firms tend to focus on technology in leading to supply chain. Nevertheless, based on Thailand current situation, they still lack of understanding in supply chain and logistics management concept. To apply appropriate concept of supply chain and logistics for Thailand, basic or grounded research is preferable. Thailand should initially begin with investigating backgrounds and status of economic and industry before stepping to an advanced supply chain and logistics development. Readiness and requirement should be stated at the first place. Therefore the research direction for Thailand should stress on studying, surveying and investigating the requirement, need and readiness of the country. Some research topics can be summarized as following. A survey of Thailand s readiness and status for implementing supply chain and logistics. Cluster analysis for each industrial sector or across industry. A collection of supply chain best practices for each industrial sector. Appropriate government policy for facilitating supply chain and logistics. Human Resource Development for supply chain and logistics. Future trend and direction of supply chain and logistics in Thailand. Logistics Research Network 2003, London 259

6 Despite of the need of these grounded research, some basic applied research are also appropriate. However it is to focus on developing basic tool for implementing supply chain and managing logistics for basic use such as developing a simple scheduling and routing software for delivery system, developing a database or information system for managing and linking information within a department or between departments, developing a basic MRP or CRP, etc, rather than an advanced or in-depth research for supply chain and logistics improvement. Acknowledgements With thank to the Thailand Research fund (TRF) for funding and the Thai Value Chain Management and Logistics Researcher s Consortium (ThaiVCML) for organizing the workshop on November 2 nd - 3 rd, Logistics Research Network 2003, London

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