Essay: Situation of world market

Chapter 1: Introduction

I- Executive summary

Volatile, it is maybe the right Word to describe the situation of today world market. The globalization of the trades dealers, the diversification of supply sources, the specialization of production sites, the transfers flow cross-sites, shorter delivery times, all these factors make strategic the optimization of the global supply chain and expose it to shocks and disturbances.

Optimization of the global supply chain involves using many factors, human, materiel and even organizational. An unmanaged network results in inefficiencies of all the structure.

According to QuickMBA copyright 2006« a problem frequently observed in unmanaged supply chains is the bullwhip effects»; the bullwhip effects is composed by the lack of communication, a lack of coordination, non respect of the delay time, an overreaction to backlogs and more.

According to the benchmarking ASLOG v2002, it is showed that “16 % of the companies attach a little importance on performance measuring”. Perhaps they are confident of their business and their place on the market; however, at present, according Norman E. Marr November 1984, pages 125 – 126 “This situation can become dangerous, as there is a high variability of the market, strong competition and growing demand of customers”.

The focus of this project is to provide an understanding of the key performance measuring in order to establish an effective supply chain management strategy and to know how to use these key performance in different countries, developed and developing ones.

II- Background :

I have read an interview of a logistics manager of Newton VaurealConsulting, Alexandre de la Nezièrewhichappears in 2008.In this interview he discusses about the performance indicators in the Supply Chain and the difficulties to find the right indicator. Thanks to this interview, I knew that A French association called ASLOG and another American called SCORE offer two different models, with a complementary approach of the performance in term of supply chain.

In a certain way I wanted to understand these two different performance measuring concept and to know if these models are applicable in company’s in developing countries facing a constant globalization.

In addition to that the Ministry of Transport and the World Bank made jointly a diagnosis about the performance of trade and logistics in Morocco; This new study emphasizes the role of logistics in the competitiveness of the Moroccan economy, identifies the areas of logistics in Morocco which is important to improve and proposes actions plans for a successful transition of Morocco from a rudimentary to a modern logistics.

From this study, it was clear to see that although companies were gaining a better understanding of the importance of Performing in managing their supply chain, they were style failing to understand the foundations of it, for example, how to measure it, how to control it and to optimize it, to name a few.

Many works has already been conducted by a variety of different organizations such as external consultants “A22 expert or Etude yonne” that advise their clients but the clients, themselves, fail to understand the fundamentals of performance measuring and optimization.

In addition to that these works are however still limited to Supply chain optimization in general it is not a comparison of the different keys performance of two different economies and cultures which are facing both a constant globalization and a high concurrence in order to see which one is the most effective .

I. Aim and objectives :

The choice to study the performance in term of supply chain as it one of the principal keys of the good running and the survival of Logistics Company’s within a high concurrence market. The drivers of my research are two different supply chain companies, one is established in Morocco a country in a developing way and the other is established within France.

The company’s chosen were judged appropriate for different reasons, some were chosen because I have already done and internship there, thus I had access to all the informations and also because the company is situated in 70 range of the best companies in Morocco the company name is Panalog and the other it’s because it is an important actor in the European economical tissue and one of the most influential one in France

Through this dissertation, I will try to give a new vision of the performance measuring as I will focus on the comparison of different key performance used in different kind of country and companies in order to find the most relevant one and help the company situated in Morocco to become more competitive.

ALL this pushed me to ask some questions to myself about this subject and after a short review, I found the principal question of my research which is:“What are the opportunities and threats, in terms of performance, within the global chain logistic facing a Moroccan company in an increasing global market?”

According to William F. Wagner 2004, ”if you can’t measure it, you can’t manage it”, and this drives me to the main issue which is to know if the standards for being successful in terms of supply chain in developed countries are affective in a developing country likeMorocco.

Being performant is definitively something abstract for me. According to many documents, there are definitely some standards to respect for being more successful. Are these standards effective in Morocco? Are there other criteria that a company has to fallow in Morocco in order to be successful, and this is what I’m going to dissert.

The aim of my research is to fill a gap :

• To understand the supply chain and logistics topic because it will help me to have a good understanding of the subject and a clear overview of the topic
• To develop my knowledge of the performance measuring
• To have a global understanding of the benchmarking
• To learn how a company can choose and use between different metric in order to analyse her business
• To have a clear idea of what are the best metrics that a Moroccan company have to use in order to analyse and to perform in an increasing globalisation and concurrence environment

II. Rationale for the problem

It all really started since the completion of a three-month internship in Panalog, a logistics company in Morocco, I have come to the conclusion that the management of supply chain is the domain I want to focus on, dissert and master.

In the latter company,my role was to identify the possible improvements in performance and profits for a specific client companies. I found this experience exceptionally educating, as I discovered an entire new world, while participating in a real logistics professional environment.

The management of supply chain really intrigues and impresses me, especially theoutcomes and profit that a company can make when there is a good management in this area.

During this internship, my final aim was to determinate the best metrics in order to analyze the performance of the client company in term of warehouse management, of supplier connections and intern organization.

This was not easy to do and the results were not really relevant so that why through this dissertation, i wanted to more develop my knowledge in this subject in order to be more competent in this domain.

Chapter 2: Literature Review

First though, a broad understanding of the key areas involved in supply Chain management and performance measuring is necessary. This is the focus of the literature review.

The diagram below outlines the areas considered and the approach taken for this chapter.

Figure 1: Areas considered and approach taken

I. Logistics and Supply chain

“Logistics is a function whose purpose is to satisfy the needs of different customers in the best economic conditions and a high level of services for a business”. (AFNOR, standard X 50-600)

The logistics relate to the management of materials transportation, packaging, storage, and information flows associated with the concept of traceability

In other terms, from the customer perspective according to seven RS of logistics, the logistics is the concept of “Getting the right product to the right customer, in the right quantity, in the right condition, at the right place at the right time and at the right cost”. John Brockwell 2007

The logisticians are in charge of managing the tools that can help to achieve the different objectives and mobilize resources to get there.

These are the several activities that a logistics manager may be responsible; traffic and transportation which is an important part of the logistics system, the logistics manager is responsible for selecting the mode of transportation used in moving the raw material and finished goods, a second activity is

the warehousing and storage it involves two separate but related activities inventory managing and warehousing , a Third area of interest is the packaging, the type of selected transportation highly affect the packaging requirement,; a fourth area to be considered is the material handling which is important to efficient warehouse operations,

the material handling is all the mechanical equipment for short distance movement such as conveyors, forklift trucks and containers.

There are other several areas such as inventory control, order fulfillment, production planning, demand forecasting and purchasing, all this scope of activities have to be well considered and managed in order to drive an effective logistics.

II. Top Areas of Concern for Global Supply Chain

The first highest concern in the global supply chain is according toBeth Enslow from AberdeenGroup, Inc 2006 is “the continued lack of critical supply chain process visibility due to manual-driven processes. The lack of visibility is especially crippling to large enterprises, 79% of which cite this as a major concern”

The second highest concern according to Beth Enslow 2006 “is the uncoordinated nature of multi-tier supply chain processes, which causes an imbalance of supply and demand across tiers”

To help in order to improve the global supply chain, companies need more accurate forecasting and overall supply chain visibility.

Figure 2: Top Areas of concern for global Supply chain

III. Performance measurement

a. Performance measurement

“If you can’t measure it, you can’t manage it”, William F. Wagner 2004

Most organizations want to achieve efficiency in operations and effectiveness in dealing with their customers, but this is difficult unless they have specific performance metrics that enable them to gauge their success in achieving these objectives.

“There is many different metrics, but the point is that an organization has to choose the appropriate one, as sometimes a metrics can lead to an inappropriate outcome”. John j.coyle from Pennsylvania state university 2002 The Management of business logistics, a supply chain perspective, 7th edition

Moreover,

“A performance measurements need to change over time, not only the performance standards for example 80 %, but also the individual metric, for example percentage of orders shipped on time. If companies introduce a new technology or change the existing processes, the standards may change to 90%,” J. Bardi 2002

Thus we can say that a continuous improvement should result in raising performance expectations over the time.

A second aspect is that “Namely, the specific metric may have to change, orders shipped on time and orders shipped complete were frequently used for performance metrics in logistics but in many of the best companies it says that the metrics changed to order delivered on time and order delivered complete which emphasis a more intense customers focus”. (Edward J.Bardi from the University of Toledo 2002 The Management of business logistics, a supply chain perspective, 7th edition)

Another major factor of performance measurement is focused on a total measurement coast; by the use of a dashboard which is constructed through a multiple measures with no one measure being a single determinant of success.

“There is a special challenge in determining which costs to measure and how to accurately determine these costs”. (John J.Coyle from Pennsylvania state university 2002 The Management of business logistics, a supply chain perspective, 7th edition)

A Performance Measuring System can be analysed in different ways by using different methods. However,

“There will never be a one size fits all and a PMS has to be Flexible and agile“. (Chris Morgan 2002 from Cranfield School of management)

In this way, the issue of adopting a ready-made technique is generally inexistent. Whereas according to Newton VaurealConsulting a French association called ASLOG and another American called the SCOR offer two different models but can be complementary in their approach.

The ASLOG achieved a benchmark of eight indicators “rate of reliability of sales forecasts, customer service rate, rate of claims, service rate internal production, rate service provider rates, reliability of estimates of purchasing, logistics cost and rate of inventory turnover”. The French logistics association. Frédéric Hendrick 2001.This method is presented as a questionnaire, according to groupeisf 2008, for each of the sixty questions, three answers types corresponding to different levels of control are used to provide a quick profile of the company.

In the other side, the method score created in 1996 by the SCC (supply chain council) gives also a good reference for the analytical methodology performance across five key processes in the Supply Chain “Planning, Supplying, Produce, Deliver, and Return and prioritizes indicators at three levels processes, tasks and activity”, Dr. Lokanandha Reddy Irala from Dhruva College of Management. This last method uses five criteria analysis reliability, responsiveness, flexibility, cost, assets.

According to Cotton and Alii 2000 there is a third model called WCL (World Class Logistics) from Michigan State University. The aim of this model is to evaluate a company on its logistics from a questionnaire of 68 questions whose answers can be constructed indicators arranged in a reference model for comparisons between companies.

The publications of these associations allow for comparisons within a single industry or even between different activities. They thus establish a reference for those seeking to improve their performance by comparing the relative level.

Some of the main characteristic of an agile supply chain are “a quick customer response, supply chain flexibility and a controlled supply project”. Chris Morgan 2002

b. Benchmarking

Benchmarking can be philosophically defined as follows

“Benchmarking is the practice of being humble enough to admit that someone else is better at something, and being wise enough to learn how to match them and even surpass them at it” APQC, 1992

In other words, according to Benson 1998

“Benchmarking is the process of continuously measuring and comparing one’s business performance against comparable processes in leading organisations to obtain information that will help the organization identify and implement improvements”. Benson 1998

According to David Kearns, CEO of Xerox Corporation is the first company to have organized a process of "competitive benchmarking" from 1979 “Benchmarking is a continuous process of evaluation of products, services and methods of a company relative to those of its most serious competitors or companies recognized as leaders.
The benchmarking is composed by standards procedures and metrics comparable across different companies or different divisions within the same company or group. As we seen before, there is three different models, the ASLOG, WCL (world class logistics), Method SCORE

The process called benchmarking is “Quite straightforward to explain but is extraordinarily difficult to conduct successfully in practices”. Alan Rushton from the chartered Institute of Logistics and Transport 2001

The reason for including this process is that benchmarking “Represents the heart of performance measurement and its help the manager to be aware”. Benson 1998

Benchmarking emphasizes attaining so-called breakthrough improvements, as shown below (Andersen and Pettersen, 1995)

Figure 3: Benchmarking performance

In this figures, the star represent a practices that are news for the company

“There are no dashboard and steering standards in logistics: food, mechanics, the automotive, services, industry pharmaceutical, cosmetics, and services. Each industry and each market has its characteristics”. CCI de L’yon 2006

What are the bases of the constitution of a logistics dashboard?

“Choose meaningful information for managers depending on their situations, use of data generated by the specialized services, harmonizing definitions, timing and presentation of key information, allow the speed of presentation.” CCI de l’yone 2006

What are the roles of the indicators?

“The indicators should be: simple, few, understandable by those concerned, linked to strategic objectives, in support of change, warning of drift” A 22 expert in logistics

IV. Information systems

” An information system represents all the components involved in the management, storage, processing, transmission and dissemination of information within an organization” Logistiqueconseil.org 2005

In Transportation and Logistics, and more generally in the business world, the term information system has many different meaning

An Information system is “An organized set of resources (personnel, data, procedures, equipment, software,) to acquire, store, organize and communicate information in text, images, sounds, or data encoded in organizations” Rémy Courdier 2005

According to the main purpose of each kind of company, there are different information systems.

According to Logistiqueconseil.org 2005 there is information system for media transactions which is “transaction processing, industrial process control, support operations office and communication” .

in the other hand there is an information system for

“Media management for example the production aid reporting and decision support”. Logistiqueconseil.org 2005

In a conventional information system of a large company, there are generally

“An Enterprise Resource Planning which integrates all computer systems to assist the work in the company and a systems called specific which is custom developed, where you will find more applications in the areas of billing, support production, or ancillary functions” Jane P. LAUDON 1994

The Principal question her is Information system, but what for?

There Is 3 major raison for using the information system,

The first one is «The decision, the SI automates a number of decisions that result in appropriate action, the second raison is the control, the SI must be the memory of the organization by processing information on its past history, this help to control the evolution of the organization by detecting strange situations ”. Robert REIX 1995

The other major raison is “The coordination, the SI should also handle information about this company in order to coordinate the various sub-systems” Robert REIX 1995

“Regarding information systems, there are few players in terms of publishing and integration solutions in Morocco” Mounir Siraj from the newspaper Aujourd’hui le Maroc 2009

”The main problem lies in the fact that managers often do not know the cost of logistics and this Problematic is due to the generally non-self-evaluation of leaders” Mr Gautrin in the seminar January 2009 in Casablanca

Supply chain remains a major logistical challenge for companies wishing to reduce their costs and improve management of physical flows within their organization,

“Business leaders in Morocco have to realize the challenge of this activity” Mounir Siraj 2009

V. The best logistics companies

Various studies have sought to identify the best companies in logistics. In the early 2000s, the magazine Business Logistics Today shows the "Best-in-class management of the supply chain”. This gave his "Top 10 Best Supply Chains".

This ranking was achieved through the collaboration of consulting companies and academic centers. We present the rankings of the years 2003, 2004 and 2005. Despite the diversity of stakeholders who conducted these surveys, there are names that appear frequently, they have been highlighted in yellow.

Also, for people familiar with the challenges of supply chain, there is company names often associated with good management practices in the supply chain.

VI. Globalization and organization

Globalizations

The globalization encompasses many areas like the society, the culture, the politics, the economy and even the environment.

“The aim of the globalization is to increase treads in goods and services, to increase the international movement of capital as well as the international migration. All these factors increase the economic interdependence among countries”. Edward J.Bardi 2002

“Thanks to the news technologies and the success in logistics, the countries are becoming closer and closer, the result of that is that the world is becoming more competitive”. John Langley from Georgia institute of technology 2002

Due to this A firm will produce anywhere in the world where there is a coast advantage and leave the transportation from country a to country b to the logistics professionals.

The global market has developed because of the similar global needs and wants. Through interdependent extensive communication technologies and the international satellite TV’s, peoples through the world learn and develop the desire to have many of the same product.

“The most important step in designing and implementing global logistics strategies is to understand the service needs of customers in location dispensed throughout the world. The whole of the logistics operations should be based around the customer’s needs”.The management of business logistics, a supply chain perspective 7th edition 2002.

Changing political and legal environments

This section describes several instances wherein changing political and legal environments have enhanced opportunities for trade and logistics activity through the world

1. A single European Market :

The twenty seven member nation of the European Economic Community has agreed to a single unified European market. The plan integrated more than 320 million consumers and workers.

According to the act 1987, “the single European market eliminated the trade barriers between EU members nation and facilitated the free movement of goods, services and capitals and peoples among them”.

“The creation of this single market highly affect the logistics in three different ways, the first is the facilitation of inter country shipment procedures through the use of one single document called (SAD) to reduce border crossing time. Second is the simplification of customs formalities for shipments. Third is the Introduction of common border posts”. John j. Coyle, Edgward J.Bardi, C.John Langley Jr 2002

Overall these initiatives will facilitate trade and the emergence of a more competitive business environment among EU members Nations and also will reduce the cost of doing business.

“This reduced cost of doing business would be due to improved efficiency of logistics operations focusing on ocean, rail and trucking”. C. John Langley director of the logistics institute at the Georgia Institute of technology 2002

2. The north American free trade agreement

The NAFTA which became law in 1994 creates the world’s richest trading block with the joining of the United States, Canada, and Mexico.

“The NAFTA agreement encompasses 360 million People and a total market of $6.6 trillion. Almost half of the tariffs on us and Canadian exports to Mexico were eliminated” BBC news, September 2003

“In the long run the role of NAFTA is to create a better trading environment, but in the short run, it has created much confusion due to the record keeping required to proof the origin of the product to obtain favourable tariff treatment”. John. j Coyle 2002

NAFTA’s impact on logistics involves making the structural changes needed to operate a borderless Logistics network in North America. Information systems, procedures, Language, labels, and documentation are being redesigned.

3. Asian emergence

“Pacific rim countries have emerged as a key player in the global business environment”. Edward J.Bardi from the University of Toledo 2002

This position gives her an important position in the global trade market. The Pacific Rim includes countries bordering the Pacific Ocean from North and South America to Asia and Oceania.

“Most of these countries have experienced major economic change and growth to become components of an economically integrated trade region”. Matt Rosenberg 2003.

These countries have become important suppliers of finished goods such as furniture, consumer electronics, and automobiles. The advantage many of these countries offer is low labor cost and high quality.

4. Maghreb country’s

“Over 80 years, Morocco has decided to open its economy in the world to promote its growth. An opening which led in 1996 by the Association Agreement with the European Union and more recently with free trade agreements, including the United States”. Klau Senders. Finance & development September 2006

“The opening rate of the economy was 55%. The export has become one of the pillars of the Moroccan economy”. The World Bank 2003

In the other side there is this convention for cooperation in the maritime domain between the countries of the union Arab Maghreb

According the ratification of the 10 march 2001 signed by five ministers of five different countries, this convention aims to:

• Affirm the right of countries of the UMA
• Search the creation of joint projects,
• Improve coordination of ocean activities,
• Avoid all obstacles which may hinder the development of shipping,
• Involve shipping to the economic complementarities in the Maghreb
• Developing the maritime transport sector in accordance with the Maghreb needs and foreign trade of EU countries, Sources : convention of cooperation, 2001

Chapter 3:Research Methodology

I. Epistemology

II. Methods

In order to obtain a strong understanding of the project requirements it is necessary to adopt a variety of research methods. This chapter outlines the various methods of research, which were used, a rationale of why they were adopted and a brief description of how each method was developed.

The chart below provides an outline of each stage of the project and the research methods that were used.

Figure 5: Research area & methods

There were five main types of research carried out. These are outlined below:

• Supply Chain forum was used in order to provide a global perspective of a variety of experts in Supply chain
• Primary research was used through the different interview and the analyze of Panalog, the company where I have do my internship.
• Secondary research was used throughout the dissertation. At stage one it was used to gain a clearer understanding of the current issues within the supply chain performance. For stage two it was used to Analyze the issue found in stage one and finally it was used for developing the recommended solution and for testing the different performance metrics for stage three.
• Many Case study were used, some in-depth, while others were used in order to verify a point. They were used to provide an industry perspective of the issues and solutions which presently exist.
• The interviews were conducted with a variety of different professionals, in order This was to gain primary research on Supply chain performance measuring provided by experts in the fields of Supply chain management in Europe and in North Africa

The research methods used in this study are mainly qualitative with a use of analyzes There are two main reasons for this.

Firstly, research conducted showed that although there has been a lot of statistical research produced on the Performance within the supply Chain, there has been very little on the topic of key performance and optimization for the case of Morocco, both by Government or organizations.

Secondly, as there are so many different methods for Performance measuring it was deemed that a attempting to gain first hand statistical research would have provided inconsistent measures.

With the Creation of A single European Market, The North American free trade agreement, The Asian Emergence, and the Agreements between countries of the Maghreb, companies has to be more and more performant do to the globalization.

This has meant that the area of Supply Chain performance is still developing, and attempts to find quantitative data were deemed to be outdated or worse still misleading.

The only survey found to be of real value was a study by the World Bank and The ministry of equipment and transport in Morocco, which has been used as the basis for developing a suitable solution.

The following pages provide further analysis on each research method.

1. Supply chain Forum

A lot of the information available on Performance in supply chain was qualitative. It was therefore a good idea to join a supply chain forum, to have varieties of views from professionals and experienced peoples.

1.1 Development

The forum which was joined was SupplyChainFocus. This was jointly created by some American professionals in the supply Chain sector; we can also find in it many strategies, point view and professional experiences. It was set up to provide information for international supply chain management analysis community and consists of 2000 members.

1.2 Problems encountered

The only problem encountered was to subscribe in it, the owners had to approve my inscription. This made it difficult at the beginning but then after a few days I gained a full access and created a topic about my dissertation, many members where interested by my topic, and we start to discuss the views provided, and also to develop certain views with others opinions.

1.3 The success and significance of the outcome

Due to the restrictions of time, this mode of approach was very important, as it allowed a variety of experts to be contacted in a short space of time. The results provided were interesting as they were provided from experts or even from experienced persons within the field of supply chain. This technique also provided new kind of research, as some of the members in the forum had published articles and white papers of their own.

2. Case Study

The initial aim of the case studies was to help gain an understanding of the different issues surrounding Performance measuring in term of supply chain. The case studies were chosen in order to provide a variety of different issues to do with the topic of study. These are explained below.

Case Study	Main focus	Reason
Structure, speed and salience: performance measurement in the supply Chain, by Chris Morgan	Supply chain management, Performance measuring, Performance management quality .	This articles gives me a historical and a prospected view in 2015 of the performance measuring. This case study was really useful, the author move from “What is a PMS” To” what a Good PMS should look like”
Performance metrics in supply chain management, Jack PC Kleijnen and Martin T Smits	Critical analysis of various performance metrics for supply chain management (SCM), Multi metrics in SCM via the balanced scorecard	This case study gives me some examples of Supply Chain Performance metrics , an economic theory of the performance metrics and an example of balanced scorecard where the author use different performance metrics
The logistics, the business and the productivity in Morocco, World bank &Ministry of transport	Logistics in Morocco and the need to develop it. Analyze of the sector	This case Study help me to have an overview of the Moroccan situation in term of productivity and business in addition to an interesting prospective of the Moroccan supply chain management

2.1 Development

Information was gathered by a variety of means. These included books, magazines, newspaper articles, annual reports and Websites. A variety of views from experts were gained from marketing publications and websites.

2.2 Problems encountered

Many of this case give information about the concept of performance measuring, but this still stay theoretical and not really focus on my subject.

2.3 The success and significance of the outcome

As the information available on Companies performance measuring is very qualitative but really rare, this case studies were deemed to be a very good option as they allowed views and opinions of different intellectual and they provided constructed views to be put into the context of industry.

3. Secondary research

The principal of the secondary research was found through 4 Major Books, but also expert views and current practice.

The Books are:

• The management of Business logistics A supply chain perspective 7th edition by John J.coyle, Edward J.bardi, C.John Langley JR
• The handbook of logistics and distribution Management
• Essentials of Materials Management, Ted Barker.
• Tableau de bord de gestion et indicateur de performance 2nd edition, Pierre Voyer

3.1 Development

The approach taken at each stage of the project is outlined below:

Stage	Areas	Approach
1	Understanding	There were four main areas which were researched, Supply chain Management, Supply chain Performance, Benchmarking, and globalization. Mainly articles and books were studied in order to gain an understanding of the areas. Surveys and study cases were also looked at in order to provide statistical data.
2	Assessing	Once an understanding of the topics was gained, key issues started emerging. This area was developed using white papers and articles, mainly from the internet.
3	Providing solutions	Desk research was used in two ways in this section. Firstly, in order to find the issues which required analysis and secondly, to seek best practices at present in the different focus areas. This was used in order to develop an effective tool for Supply chain Performance.

3.2 Problems encountered

The main problem with secondary research was obtaining relevant information on the topic area. Since the subject of Supply chain management has not been researched extensively, there were limited articles which were specific to the study. Another issue was that the information provided in most of the articles was very vague.

3.3 The success and significance of the outcome

Although the information gained from this method was not all specific to this study, it did provide valuable insights and views.

Furthermore, a lot of the research provided avenues for additional data in the form of interviews with key figures in the field of Supply chain management.

This method was particularly relevant for obtaining a firm understanding of brand management and the key issues relevant to this field.

4. Primary research “Interview and Internship”

I have done an internshiplast year’s as a part of my DUT diploma in Paul Sabatier University in France, through this internship I gained a lot of information about the Company Panalog.

In addition to that, Interviews were performed in order to gain a better understanding of the area of study. They were split into two types -unstructured and questionnaire based. The interviewees are outlined below:

4.1 Development.

The first interview with Mr Karim Houari responsible of logistics in Panalog was made during my holidays in Morocco in January. After a few mails exchanged, Mr ghelab accepted to meet me in a coffee in the center of Casablanca. The interview was really decontracted and the cadre was informal.

The second interview with James Delarue from “berniss le transport” was really difficult to organize and it was organized through many mails because I did not have the opportunity to go to France to meet him

4.2 Problems encountered

The interviewers were very helpful at providing information within their own domains. Mr. Karim Houari. Although this made it difficult to gain views from the same person on the different sectors, it did strengthen findings on the need for experts in certain fields to gain knowledge of other sectors that could have an impact on theirs.

Although Mr. James Delarue showed an interest in the study, his work commitments made it very difficult to gain extensive knowledge from him. However, he was able to provide articles and white papers he had written, which provided valuable insight.

Chapter 4: Secondary and Primary Evidence

I. Industrial Logistics sector in Morocco:

Market of more than 35 million citizens and with exceptional geographic advantage because it is situated at the crossroads of Europe and sub-Saharan Africa, Morocco has become an important industrial tissue relatively developed and diversified, that knows a significant development internationally. According to Géraldine Reintjens from CCI Magazine 2009 “The industrial countries represents one of the most promising markets for companies situated in Europe because of its large population, its ability to modernize and its economic dynamism”.

The logistics is a sector which has the potential to add value. A good development of this sector would allow Morocco to integrate the standards of the European companies and even to be more attractive.

It could also boost the Moroccan economy by showing new essential services to multinationals such as the emergence of developed logistics platforms in order to create added value and enable the growing range of the Moroccan economy.

Moroccan firms must master the optimization of the supply chains with new time constraints, reliability and quality that are the key in this sector

The outsourcers are moving towards delivering just in time, which involve to be very quick, sometimes less than a week between the order and the delivery.

Morocco has prepared this new competitive environment by undertaking an ambitious program of reforms in customs and road transport, aviation, ports, and programming and construction of new infrastructure.

On the other hand, major investments, such as the new port of Tangier-Mediterranean program of motorway were also undertaken.

Despite these significant efforts, there remains significant potential for improvement to take full advantage of this important sector.

c. The weight of logistics in the Moroccan economic activity

According to recent studies in this area, especially on behalf of the Ministry of Equipment and Transport and the support of Industry, it is noted that: the cost of logistics accounts for an industrial branches represent the half to two thirds of the costs of labor;

According to Karim Ghellab mystery of equipment and transport in Morocco 2006 “The total logistics costs in Morocco amounted to about 20% of GDP. However, this ratio is higher than the countries of the European Union including those who joined in 2004 (the ratio is between 10 and 16%). Major emerging economies such as Mexico, Brazil and China, meanwhile, logistics costs in the range 15 to 17% of GDP”. Morocco has thus a potential gain of several points of GDP which would come from a more efficient logistics.

d. The Market Opportunities

i. Tangier-med

One other major advantage of Morocco is according to the newspaper Le Monde, “ the new harbour Tangier-Med I and Tangier med II, the biggest harbour in Africa” it principal activities is the transshipment of containers with a capacity of 8, 5 million of containers.

According to Tangier International Conference on Transshipment, 20 may 2008 by Karim Ghellab, “Tangier Med is a port of last generation, he is designed to accommodate the latest generation of container”, Tangier-med is both a platform for global business transfer and a gateway for Morocco to accommodate traffic associated with the activities of import-export.

Boasting an exceptional location in the heart of the Strait of Gibraltar, according to Hassan Abkari 2008” Tangier Med port provides direct access to major shipping lines east / west with zero deviation for ships”. In addition to that its location at the crossroads between the Mediterranean and Atlantic gives her the advantage to capture the North-South routes serving Africa and South America.

ii. Geographic situation

The country offers a wide range of possibilities and represents a hub for distribution to markets in Africa, and Eastern Europe. Furthermore according to ADM 2006 “the Road Network in Morocco is one of the most developed in Africa with more than 95 000 km of roads with a highway network of more than 2000 km”.

The physical proximity of the European Union is a unique asset for Morocco which must be fully exploited.

At a time when, on major shipping routes, the container ships go faster and faster and the unit cost of transporting a container is becoming weaker, Morocco remains nevertheless an advantage compared to Asia.

Indeed According to World Bank 2006 “a container carrying route Shanghai-Antwerp-Hamburg or Singapore costs about 1300 Euros but only 500 to 600 Euros from Hamburg to Antwerp Casablanca or Tangier”.

The comparative advantage of Morocco on the European market is its ability to fit in short production cycles. From a logistical standpoint, Morocco will rely increasingly on international road transport must be fast, reliable and not too expensive.

All these characteristics confirm the advantageous position of Morocco in term of business and supply chain

iii. New Government effort in this domain

However, it is appropriate to cite the rapid advances made by the Kingdom of Morocco for the facilitation of trade in various areas, including the modernization of road transport of goods, the improvement of the security of the supply chain, the generalization of the Data Interchange (EDI), the facilitation of crossing the Strait and Ports, the development of logistics platforms, and development of training.

According to the World Bank report, it is also noted that progress by Morocco provide useful lessons for other developing countries facing similar issues and challenges.

In addition to that, the Moroccan government opened the sector of transport to private companies and this gives a new life to the sector with the creation according to CGEM 2004 of more than 3000 Transport companies and more than 7000 jobs

e. The obstacles to the development of logistics in Morocco

In Morocco even if there is many advantage within the logistics sector, is still remain many obstacles, according to the CGEM, the Moroccan transport federation and Ghalid Benjelloun 2009 “the port transfer cost are higher by almost 30% compared to the regional competition.”
Another major obstacles is the prohibitive cost of land for setting up logistics platforms including Casablanca, Agadir, Meknes and Nador,

Almost all companies that offer a full range of logistics services are subsidiaries of European groups with a client base of multinational companies;

The mail remains dominated by subsidiaries of multinational companies (DHL, UPS, FEDEX and so on.

First of all the Poor road infrastructure, national network congestion, late arrival of GPS is all problems that make transportation a challenge to overcome,

Second of all On the other hand, the operational workforce is lacking in this area as there is virtually no training in this sense, knowing that the job is existent, but the quality of hand-d ‘work is not available on the market, unlike the labor executive who suffers a turnover rate very high.

The major difficulty is undoubtedly the lack of platform distribution in Morocco. Indeed, Morocco has particular filing or storage (between 200 and 1000 m2) still attached to plants.

According to Karim Ghelab 2008, these are the main obstacle of the logistics development in Morocco.

• Institutional vacuum on logistics and supply chain management,
• Deployment of low-tools throughout the chain,
• High cost of crossing the Tangier-Algeciras
• High cost of port passage in Morocco
• Lack of fluency in financial transactions (particularly because of the necessary approvals from the Exchange Office)
• Limited visibility of consumer needs
• Lack of technical expertise in the field of supply chain.

f. Reducing costs by operating levers logistics

Reducing logistics costs is a subject that has to answer a fundamental question which is what to do to increase profits without the need to deploy new investments?

Two solutions are often considered, the first one is to increase the selling price of products. What might make the company less competitive and the second one is to reduce logistics costs.

The reduced costs are the potential gains that do not affect the competitiveness of the company but instead makes it more efficient than its competitors.

Many specialized studies like AFNOR, ASLOG and others agreed that “logistics costs are a significant burden of the value chain”.

To reduce these, different strategies can be implemented:

• Reduced costs by virtue of experience
• Reducing costs through process reengineering
• Reducing costs through operating levers

The interesting strategy her is the reduction of costs through operating levers, there is two kind of levers, Growth levers and leviers of productivity.

According to Thierry Jouenne, professeur associé, CNAM Paris:

“Growth levers are :

• Quality of service and customization of products and services to increase sales and retain customers
• Reduced time to market for rapid and effective launch of new products
• Responsiveness and flexibility to meet fluctuations in demand without delay or additional cost
• Outsourcing logistics to expand the zone of influence
• Master in international flows to the vast Export”

“Levers of productivity are:

• Reduction of logistics costs (inventory, transportation, structure) to improve margins
• Inventory turnover to increase cash flow
• Improved visibility to reduce the cost of demand uncertainty
• Collaboration logistics and implementation of ICT to thin the chain and reduce costs Interface
• Pooling of storage and transport to reduce logistics costs and GHG emissions”

g. Example of a Moroccan company “Panalog”

i. Identity form

Panalog is a free zone logistics company which provide warehouse facilities and national or international transportation. The facilities provided by Panalog generate better transit times for the sea and land movement of goods from South Africa, Europe and America.

Panalog is situated in North Africa, Morocco, and more exactly in the industrial district of Bouskoura in Casablanca.
Panalog have100 employees, Establishment of markets of Food, plastics, textile raw materials and chemicals.

Panalog was created in 2006, with a capital of 1 millions of Moroccan Dh

• Services offered by Panalog
• Physique Infrastructure of Panalog
• Turnover repartition
• Metric for performance measurement
• Leverage gain

II. Industrial logistic sector in developed countries

a. The weight of logistics in the French economic activity

According to Flash-info study of a sector by Laetitia Nourissat 2008, ”the logistics is a Major economic player in France with more than 1.6 milliard annual investments”.

According to David Cramwel 2009 “The logistics activities in France are 1 516 000 jobs, including 53% in trades of logistics and 47% in trades of freight transport”.

Having borders with 6 European countries, France is at the confluence of transportation routes north-south and east-west European continent and close to its economic heart.
France has a natural vocation to play the role of plaque exchange for international transport, especially as it offers itself an industrial base and a market leading.

Alongside the major French groups such as specialized Nobert Dentressangle, Stef-TFE, Geodis, FM Logistics, many foreign companies are present in France: Fedex, DHL, Kuehne + Nagel, Arvato Services, Schenker, Ziegler, Kaoten Natie, Wincanton, Nippon Express NYK Logistics.
They are making a significant and ongoing investment in the creation of logistic platforms on all of France.

“24% of the logistics French market is controlled by overseas groups: Fedex, DHL, Kuehne et Nagel, Arvato Services”. Laetitia Nourissat Gourd 2008.

b. The Market Opportunities

France offer An exceptional geographic situation, because it situated in the middle of 6 European countries, in addition to that, France provide infrastructures and equipment of high quality, according to WEF, The Global Competitiveness Report 2008-2009 by Klaus Schwab, France is “the 1st European country in term of the quality of the road network” .

According to FDI Markets, Financial Times 2008, France is the “1st European destination for foreign investment projects in the logistics sector” and according to Union International des chemins de fer, janvier 2009, France is “1st European country for the quality of railway infrastructure.

In addition to that France offer a favorable legislative and administrative environment which is an important factor for foreign investor

c. Obstacles

d. Example of a French company

i. Identity form

“Bernis, which is a local-level contact that provides real management of your delivery flows, optimizes all your logistics operations by providing a true multi-task services offer. There is 6 regional warehouses, with over 30,000 m² of floor space devoted entirely to the various aspects of the logistics chain, provide you with the expertise we have built up in various major business sectors: Health/Hi-tech, Multimedia, the Automotive Industry, Industries and Technology, the Consumer Market, Brand Names and Distribution, Home and Leisure, and Luxury Goods. Furthermore, at our disposal we have the study and analysis capacity of Géodis Solutions, a structure entirely devoted to Supply Chain Management studies, as well as the Géodis Group’s expertise in this field”

ii. Services offered by a French Company “BERNISS Le transport”

Upstream logistics:

• Management of supplies and returned items.
• Unpacking, quality checks, stockpiling.
• Suppliers advanced warehouses.
• JIT (Just in Time) deliveries.
• Synchronous supplies, Kansans.
• Pre-manufacturing.

Downstream logistics:

• Inventory management.
• Order preparation.
• Price labelling/Placement in blister packaging.
• Post-manufacturing/Co-packing.

Packaging:

Specific operations (checking, mounting, assembling components) upon request

Packaging or repackaging products in accordance with our customers’ requirements

iii. Physique Infrastructure of Berniss le transport :

As we can see in the graph bellow, berniss le Transport” have a real power in term of workforce, they have almost 400 drivers .

Figure 6: Work force

iv. Turnover Breakdown

During the last 10 years Berniss le transport start to be one of the most important actor in the logistics sector in France, according to the turnover analysis, between 2000 and 2004 the turnover increased by almost 30 %.

Figure 7 : Turnover

v. Metric for performance measurement.

After exchanging many email with different responsible of the company” Bernis le transport”, without any effective answear, I had the chance to talk with James Delarue, the general responsible of Berniss communication, after explaining him my objectives , he finally decide to give me some informations about the performance measuring system used in “Berniss le transport”

After a few explanation about the performance measuring in term of supply chain, the responsible start to talk about the model ASLOG, the model that was explained in the chapter 2 , and he told me that this model was the base of their performance measuring, system and that this model have to be adapted to fit all the different sectors and the different internal objectives.

I understood that the informations that I am asking for are really confidential, He then sent me this synthetic document about the process of performance measuring called “Measuring the logistics performance” by SSM Group 2006. This document was presented in three different parts

the first part is about Auditing the present situation of the company by Establishing general audit principals which involve to Define data requirements, to Form the collection task force, to Identify the sources of data and to Determine the data gathering method; then Conducting the external audit which involve to Identify the customer groups , to give a Sampling of customers, to create some questionnaires and to organize and analyze de data collected; in addition to that conducting the internal audit which involve auditing the demand profile, the supply profile, the services, the resource utilization and the planning processes

The second part is Auditing data flows, Investigating trade-offs by Identifing the major cost elements Considering the different options to reduce costs a second aspect is Smoothing of demand patterns by Reviewing demand amplification maps, Comparing demand pattern with ordering pattern and Exploring ways to eliminate distortion .

The third part, the most interested one was called “configure to be supply chain” which involve selecting performance drivers, finding the correct supply chain metrics and to organize a plan metrics and Testing new design against needs.

I have notice that all this information are just general information and that they are not proper to “Berniss le transport “. What I wanted to know exactly is what are the different metrics, to see a planning metrics or to know the performance drivers.

According to James Delarue Berniss le transport use a dashboard, it is followed at the highest level of the company and staffs are regularly informed of logistics performance.The dashboard comes with comprehensive instructions that specify the differences between the achievements and objectives and measures taken or proposed corrective and evolution of the factors that contribute to the achievement of objectives.The global dashboard is designed to be taken into account in detail at each stage of the flow to the extent possible, the service rate and / or the time and the stock and the costs of transportation and handling they are significant.

III. Comparison between the French and the Moroccan company

This comparison was difficult to make but thanks to Mr James Delarue and Mr Karim Houari, I have collected enough information to make it. The first comparison is essentially made through the answer of the different interviews and the second one is made through the information of the two companies

The questions	Panalog	Berniss le transport
Which model of performance measuring is used ?	a specific performance measuring system included in PCDA	ASLOG
How the performance of global logistics is it measured?	The dashboard is comprehensive, it is followed at the highest level of the company and staff are regularly informed of logistics performance	The dashboard comes with comprehensive instructions that specify the differences between the achievements and objectives and measures taken or proposed corrective and evolution of the factors that contribute to the achievement of objectives.
How are staff informed of logistics performance	Information concerning the extent of logistics performance are brought to the attention of logistics staff at least once a month	Information on the logistics performance measurement data are logistics personnel but also to the entire staff of the company each month or each week depending on the type of indicator
How is organized the information on the logistics performance ?	The logistics objectives are treated as objective quality, financial or social goals	The information system and procedures used to guarantee the reliability of indicators, and this in an objective and independent
What is the plan for progress in the logistics business?	Specific actions logistics (time, customer service, inventory, logistics costs) have been conducted with positive results. Others are planned	A complete progress plan is covering all aspects of the logistics are in place. The head of logistics progress plan is appointed explicitly. He informed the management. Its availability allows him to devote sufficient time to this activity.
What are the audits performed in the logistics business?	Formal inspections evaluate the correct application procedures and operating methods	External audits conducted regularly by customers or on their behalf or at the request of the company itself, complete internal audits and can compare the company system to a repository outside of best practices
How are logistics objectives set?	The development of logistics objectives is the subject of "round trips" so many that every objective is coherent and realistic. Information on such sites or competition exist and are used to set targets.	the objectives of each member of the logistic team is defined from the general objectifs of the compagnie The commercial services have an importante role in the defining theses objectives.
How is it integrated logistics in developing the strategy?	The main indicators of logistics performance and logistics cost items are identified and integrated into the budgetary targets.	For major decisions facing the company, a study of their consequences logistics (service, inventory, transportation, flexibility) is carried out carefully and systematically. It is then really taken into account
How do you work on the utility rates?	The rate of production or service delivery is defined with the appropriate accuracy. It is followed at least monthly and communicated to those concerned	Targets are set in a prospect of improvement. They are linked to concrete interventions. The delays in production and supply are monitored and analyzed, and the various factors that could cause disruptions delivery
How do you work on logistics costs?	The costs of handling, transport, storage and logistical administration are evaluated at least annually	Targets are fixed in a prospect of improvement. They are bound concrete interventions. A standard storage cost exists for the company: it takes into account the financial costs, surfaces, buildings, equipments, packaging, handling, management, inventories, risk of deterioration, loss , obsolescence
How do you work on stock levels?	Indicators are defined and detailed inventory by product category. It is assessed at least monthly and communicated to those concerned	Targets are fixed with an objective of improvement. The aging analysis of stocks is made Regulary and controlled (every three months minimum) and measures are taken to address the inventory obsolescence

Chapter 5

Logistics and supply chain management attract the attention of a growing number of managers. To this end, several studies have been conducted on the subject. It is clear from these analysis of the literature:

• It is undeniable that the management of the supply chain has an impact on the operational performance of the organization.
• There are not many studies have been carried out in Morocco or even to understand the level of deployment of logistics practices, the level of performance, and barriers to implementation of a supply chain performance. The one that comes closest was in 2005 (World Bank 2006).

To this end the objective her was to conduct a major study that would map the state of deployment of logistics practices in Morocco and to identify issues specific to the Moroccan context.

This study is conduct throught by a comparison of two different strategies. The results of this comparison are a major step of a benchmarking approach for many Moroccan businesses. We must understand that benchmarking approach is an important management tool for many successful companies ( Vitasek Manrodt, 2005).

In a context where the Moroccan economy is composed of many SMEs, they often lack the resources to conduct such an exercise, the approach should prove invaluable for managers. This could lead to the production of a benchmarking tool to help companies to assess themselves over the years and thus be able to set new goals.

Through its impact on corporate image, logistics strengthens trade policy. For her constant costs, it contributes to competitiveness. By its requirement of communication, it helps to change attitudes of staff.
The logistics must be a major component of business strategy. The logistics division, meanwhile, must be organized and have goals consistent with respect to this strategy. These goals, even if offered by the operational elements of the company, are validated by its management, after consultation with other functions to ensure consistency throughout.

The pursuit of customer satisfaction expressed by goals that relate to the quality of service provided: availability, timeliness, reliability and timeliness of information.

The search for cost improvement goals through control of inventory levels, optimization of physical flows and research interests of economy and productivity with respect to all processes.
The logistics performance is measured by indicators contained in a dashboard global logistics in both companies. These indicators provide the gaps between outcomes and objectives and monitor the factors that contribute to the achievement of these objectives.

In a global context, the ultimate objective for governments is to measure the efficacy of the performance of trade logistics and the ultimate objective for companies is to select the right performance drivers and to determine the good metrics.

Ideally, this indicator should be measured continuously, simple to implement and covering all the problems of logistics.

Specifically, this indicator does not exist today in developing countries but also developed ones.

It exists some models for examples the ASLOG used by “Berniss le transport” but they are adapted to the different needs and objectives of the company.

As we seen before, the company Panalog, use a different system which is created by the mix of the model ASLOG and SCORE, according to Karim Bouhari it is a process of amelioration, the role of this process is to remettre en question all the precedent actions in order to improve them .

For governments and the private sector, these performance measuring system are used to make trade-offs: a measure requires continuity, Simplicity which goes against the detail of the analysis, In other terms a measure covering all aspects of logistics requirement which do not allow a regular measurement.

Accordingly, for completeness and balance and regular simple measure, several Indicators are necessary. In addition, like I said before during the chapter 2, The Research of quality in the logistics area is characterized by what we can call the second phase of logistics.

These indicators are relatively simple to implement which should allow comparison with other countries. They Do not identify the problem in details but express delayed in the overall competitiveness of the country overall. They should be conducted annually.

The calculation of total logistics costs requires some assumptions about inventory levels and estimates the total cost of road transport, rail, and air.
the principal key indicators such as price and time of transporting a container filled with a
product exported by Morocco along the main lines of business.

The metrics help to

• Make choices between several possible logistical procedures, particularly in the case of outsourcing all or part of the supply chain or procurement process in order to compare the costs of logistics solutions proposed by the vendor, and internal logistics
• Follow the flow evolution and performance of the supply chain in order to measure progress and actions to be taken either to correct malfunctions passengers or to carry out actions to improve the medium term
• Designing a new logistics or a new mode of production and / or distribution
• Compare with other logistics of the same company or different companies with a similar activity or not

Furthermore, Qualitative and quantitative indicators are necessaries for the performance measuring of supply chain. Also, the chosen indicators depend on the company objectives because depending on the indicator chosen, the company can improve the service, reduce the logistics cost or more optimize the transport of goods.

Today as we have seen through the different articles, in Morocco there is any national performance indicators, the have any referential and even they always try to be more and more competitive. The globalization is one the major raison for that , the companies are all the time confronted to an increasing competition.

Whether it involves all elements of the logistics chain, either one or two links in this chain, it affects all sectors of the economy or a specific branch.

Moroccan businesses suffer from a lack of technical resources specialized in the field of supply chain. Businesses need services advice in the areas of logistics and a better management in the goods supply which are extremely limited today.

These resources exist in Morocco but not many. The experts should be able
meet the needs of companies in terms targeted support that can help solve any problems and improve their performance in the short term (audits, establishment of hard operations, close preparation of specifications, configurations)