The paper was presented at the Polish Logistics Congress Logistics 2008 – “New challenges – new solutions”, Poznań, May 7-9, 2008.
The idea of a material and information decoupling point is one of the most popular concepts in logistics, perceived as a fundamental solution enabling the acquisition and maintenance of a leading competitive position for a group of companies forming a logistics chain.
The theoretical foundations of the material and information decoupling point concept have been presented in many publications, but few of them demonstrate its practical significance and application. This article is an attempt to analyze the location of the material and information decoupling point in an exemplary logistics chain operating in the Polish coal industry.
As a result of the analysis, the possibilities for the optimal location of the material and information decoupling point in the logistics chain of a hard coal mine were examined.
1. Introduction
The Polish coal industry is subject to continuous modernization and requires improvements in terms of technological solutions as well as management methods used. One of the most important areas for increasing the efficiency and effectiveness of enterprises in the coal industry may be the use of logistics concepts. This article presents an analysis of the functioning of a logistics chain in which the role of coordinator is assumed by a hard coal mine, the first link in this chain. The analysis of the hard coal mine’s logistics chain aims to examine the possibilities of constituting an efficiently functioning group of links representing successive phases of the physical flow of hard coal. The analysis was subordinated to solving an empirical problem consisting of examining the possibilities of a proper (optimal) location of the material and information decoupling point in the logistics chain. Potential difficulties regarding the appropriate placement of both decoupling points in the hard coal mine’s logistics chain may result from the specific operating conditions of individual links, limitations in technological and organizational solutions, coal processing methods used, the infrastructure available to the unit, and the required quality parameters of the final product.
2. Organization of material and information flow in the logistics chain
Logistics chains integrate all activities of participating enterprises and institutions necessary to satisfy the demand for specific products. The concept of a logistics chain is an extension of the logistics philosophy, which focuses on the realization of the flow of materials and finished goods.
In the case of a logistics chain, it is no longer about optimizing the flow within an enterprise, but about flows between cooperating enterprises and institutions. According to M. Sołtysik, in a given logistics chain, one should distinguish:
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a set of cooperating organizations that strive to achieve a superior goal in relation to their particular goals,
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a sequence of processes carried out in the sphere of physical flows (e.g., transport, warehousing, transshipment, etc.) and activities performed in the information-decision sphere (e.g., receiving and processing orders, inventory management, etc.).
A logistics chain is a tool for coordinating the flow of raw materials, auxiliary materials, and cooperative elements in the sphere of supply, production, and sales. Therefore, when speaking of a logistics chain, one can understand a specific way of organizing material and information flow.
In practice, two basic ways of organizing this flow can be distinguished:
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processes and activities triggered based on prepared plans and forecasts,
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processes and activities triggered based on demand reported by customers.
A chain in which logistics processes and activities, as well as certain non-logistics activities (mainly production), are performed based on previously prepared plans and forecasts can be called a supply chain. A chain in which logistics and non-logistics processes and activities are carried out based on customer needs, materializing in the form of placed orders, can be called a demand chain. Therefore, both the supply chain and the demand chain can be treated as varieties of a logistics chain.
In practice, it is difficult to create a logistics chain in which absolutely all activities are organized according to the principles of a supply chain or a demand chain. The most common solution is logistics chains in which some processes and activities are controlled by plans and forecasts, according to the supply chain principle, while others are based on demand reported by the customer – in this case, the flow is organized according to the principles of a demand chain.
In a supply chain, logistics activities initiated based on prepared plans and forecasts play a leading role. This means that part or all of the product flow in the logistics chain is controlled internally based on a push technique. In this case, the role and needs of customers take a back seat. What is important is only the rapid “pushing” of specific goods through successive links of the chain. This is a concept characteristic of more traditional organizations. Such a solution, on the one hand, does not reflect the actual demand emerging in the market and its variability, and on the other hand, it promotes excessive accumulation of inventory, particularly in the lower links of the chain, located closest to the customers. The dominant role of market forecasts, often burdened with a large error, favors the creation of negative phenomena that negatively affect the process of optimizing material and information flows.
Today, the supply chain is evolving towards a demand chain, where a pull approach functions. Most logistics processes and activities in a demand chain are triggered based on actual customer demand. In such a chain, it is the customer and their reported needs that are the initiator of most actions. The demand chain is therefore characterized by a higher level of flexibility and responsiveness to stimuli coming from the market. As a result, it is better able to adapt to environmental changes, which ultimately allows it to survive and gain a market advantage.
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