Quality Evaluation on Manufacturing Enterprise's Logistics SystemDecheng WenSchool of Business &ManagementShandong University27 Shanda Nan Road, Jinan, Shandong Province, Chinawdc928@163.comGaoshan WangSchool of Information ManagementShandong Institute of Economics7366Erhuan Dong Road, Jinan, ShandongProvince, Chinawgs6107@126.comAbstract -In order to excavate the third profit mine sufficiently,manufacturing enterprises need tooptimize its logistics system and improve their logistics system's quality continuously. So themanufacturing enterprises should carry on the synthetic evaluation on the quality of logistics systemin order to understand their logistics system comprehensively and providefoundation information anddirections for their logistics system's adjustment and optimization. This article analyzesmanufacturing enterprise's logistics system with systems engineering method, establishes anevaluation system to the logistics system's quality,and develops one kind of practical evaluationmethod for enterprise's logistics system with Analytic Hierarchy Process. Finally, the paper providesa practical example of a company which produces domestic electric appliance as a guide to use thismethod.Index Terms - Analytic Hierarchy Process (AHP), Quality evaluation, Manufacturing enterprise'slogistics system, Systems engineeringIINTRODUCTIONThe modern logistics system has become the "the third profit mine" for manufacturing enterprises.In order to excavate the third profit mine sufficiently, the manufacturing enterprises need to optimizetheir logistics system and improve their logistics system's quality continuously. So manufacturingenterprises should carry on the synthetic evaluation on the quality of logistics system in order tounderstand logistics system comprehensively,and then provide foundation information and directionfor the system's adjustment and optimization. It is necessary to establish a quality evaluation system
Quality Evaluation on Manufacturing Enterprise’s Logistics System Decheng Wen School of Business & Management Shandong University 27 Shanda Nan Road, Jinan, Shandong Province, China wdc928@163.com Gaoshan Wang School of Information Management Shandong Institute of Economics 7366 Erhuan Dong Road, Jinan, Shandong Province, China wgs6107@126.com Abstract - In order to excavate the third profit mine sufficiently, manufacturing enterprises need to optimize its logistics system and improve their logistics system’s quality continuously. So the manufacturing enterprises should carry on the synthetic evaluation on the quality of logistics system in order to understand their logistics system comprehensively and provide foundation information and directions for their logistics system’s adjustment and optimization. This article analyzes manufacturing enterprise’s logistics system with systems engineering method, establishes an evaluation system to the logistics system’s quality, and develops one kind of practical evaluation method for enterprise’s logistics system with Analytic Hierarchy Process. Finally, the paper provides a practical example of a company which produces domestic electric appliance as a guide to use this method. Index Terms - Analytic Hierarchy Process (AHP), Quality evaluation, Manufacturing enterprise’s logistics system, Systems engineering I. INTRODUCTION The modern logistics system has become the "the third profit mine" for manufacturing enterprises. In order to excavate the third profit mine sufficiently, the manufacturing enterprises need to optimize their logistics system and improve their logistics system’s quality continuously. So manufacturing enterprises should carry on the synthetic evaluation on the quality of logistics system in order to understand logistics system comprehensively, and then provide foundation information and direction for the system’s adjustment and optimization. It is necessary to establish a quality evaluation system
for the logistics system.The quality evaluation system should select properevaluationmethods andprovide scientific tools for appraising enterprise logistics system's quality synthetically.II. ESTABLISHTHEQUALITYEVALUATION SYSTEMIn order to evaluate the quality of logistics system well and truly,manufacturing enterprises shouldestablish a scientific evaluation system firstly [1].A.Principles of evaluation system designAlong with the progress of logistics theory and technical practice, it is necessary and possible toestablish a proper evaluation system for logistics system in order to reflect the real condition of acompany'slogisticssystem.Sucha systemshould reflectthe company's own requirements and itscustomer'sdemandsobjectively,and shouldbeeasytobeunderstoodandaccepted.Sosomeprinciples should be followed when designing the quality evaluation system for logistics system, suchas the objectivity principle, the system principle, the feasibility principle, the integrality principle, thevalidityprincipleand thepertinenceprincipleB.Composition ofevaluation systemThe quality evaluation of the manufacturing enterprise's logistics system is a kind of complexsystem engineering,and must adopt a reasonable system framework for a simple combination ofseveral indexes cannot reflect the logistics system's quality correctly.The enterprise logistics system'squality mainly refers to the completion degree of the functions such as purchase, transportation,storage, allocation and distribution and so on, thus the quality evaluation system should also mainlycontain the indexes, which have direct or indirect relations to thefunctions, such as supplier's quality,supply logistics, storage, information level, logistics technology and so on. See Fig. 1.Quality evaluation ofenterprise's logistics systemlogisticsBQuality of SupplyEvaluation of SupplierAStockFunctionDQualityof DistributionSystemFLogistics InformationLogisticsELogisticsCQualityofProductionFig.IEvaluation indexes ofmanufacturing enterprise'slogistics system
for the logistics system. The quality evaluation system should select proper evaluation methods and provide scientific tools for appraising enterprise logistics system’s quality synthetically. II. ESTABLISH THE QUALITY EVALUATION SYSTEM In order to evaluate the quality of logistics system well and truly, manufacturing enterprises should establish a scientific evaluation system firstly [1]. A. Principles of evaluation system design Along with the progress of logistics theory and technical practice, it is necessary and possible to establish a proper evaluation system for logistics system in order to reflect the real condition of a company’s logistics system. Such a system should reflect the company’s own requirements and its customer’s demands objectively, and should be easy to be understood and accepted. So some principles should be followed when designing the quality evaluation system for logistics system, such as the objectivity principle, the system principle, the feasibility principle, the integrality principle, the validity principle and the pertinence principle. B. Composition of evaluation system The quality evaluation of the manufacturing enterprise’s logistics system is a kind of complex system engineering, and must adopt a reasonable system framework for a simple combination of several indexes cannot reflect the logistics system’s quality correctly. The enterprise logistics system’s quality mainly refers to the completion degree of the functions such as purchase, transportation, storage, allocation and distribution and so on, thus the quality evaluation system should also mainly contain the indexes, which have direct or indirect relations to the functions, such as supplier's quality, supply logistics, storage, information level, logistics technology and so on. See Fig. 1. Fig. 1 Evaluation indexes of manufacturing enterprise’s logistics system
1)EvaluationofsupplierSupplier management is an important part of logistics management. And manufacturing enterpriseswhich adopt modern production pattern, such as JIT, pay more attention to supplier management [2-6j.Delivery delays,Oos (Out-of-Stock)ofmaterials or components, and quality problems can resultin serious kickbacks for the manufacturing enterprise, such as disturbing productive plan, increasingcost of inventory and soon.Therefore,enterprises must carry on evaluation of supplier'squality,andmakeit beakeypartofthequality evaluation systemoflogisticssystem.The index system of supplier's evaluation is the basis and the standard to carry on the evaluation ofsuppliers synthetically. The indexes should involve all the factors that can affect supply cooperationrelationship, such as supplier's prestige, financial condition, quality control and guarantee,flexibilitylead time, shipment in time, and delivery agreement and so on, as Fig. 2 shows.Evaluation of Supplier ARiskServiceReputatGuaranteeA4ofqualityqualityionandandA2financeA3quantityLAlqualityAnSurveytasksTerrorGuaraSto0SurMarket credit432ReliantlevelAmeuantityeauDelFlexibilitynancialveyendmeAlnteeprocessoftasksA13on10conditionasureofA2processoftimeAlIA14A42A23A242A2?Fig.2Targets system of suppliers'quality evaluationMore and more enterprises are realizing gradually the importance to establish good relationshipwith the suppliers, and realizing that it is improper to choose suppliers purely by the product's priceSo, enterprises should consider supplier's evaluation indexes across-the-board. In order to meet therequirements of customers and mutative market, manufacturing enterprises should improve theirproducts unceasingly. Therefore, suppliers are asked to provide diversiform, timely and flexiblesupplyofrawmaterialsandparts,2)Qualityofsupplylogistics
1) Evaluation of supplier Supplier management is an important part of logistics management. And manufacturing enterprises which adopt modern production pattern, such as JIT, pay more attention to supplier management [2- 6]. Delivery delays, OOS (Out-of- Stock) of materials or components, and quality problems can result in serious kickbacks for the manufacturing enterprise, such as disturbing productive plan, increasing cost of inventory and so on. Therefore, enterprises must carry on evaluation of supplier's quality, and make it be a key part of the quality evaluation system of logistics system. The index system of supplier’s evaluation is the basis and the standard to carry on the evaluation of suppliers synthetically. The indexes should involve all the factors that can affect supply cooperation relationship, such as supplier's prestige, financial condition, quality control and guarantee, flexibility, lead time, shipment in time, and delivery agreement and so on, as Fig. 2 shows. Fig. 2 Targets system of suppliers’ quality evaluation More and more enterprises are realizing gradually the importance to establish good relationship with the suppliers, and realizing that it is improper to choose suppliers purely by the product’s price. So, enterprises should consider supplier's evaluation indexes across-the-board. In order to meet the requirements of customers and mutative market, manufacturing enterprises should improve their products unceasingly. Therefore, suppliers are asked to provide diversiform, timely and flexible supply of raw materials and parts. 2) Quality of supply logistics
Supplylogistics refers to theflow activity ofenterprise's materials and parts from its supplier omiddleman to workshop.Productivity of supply logistics is the relationship between output and input that used in supplyingrawmaterialsandparts.Cost of supply logistics,which can be reflected by turnover days of reserve capital and the costratio of supply logistics, has become a focus of enterprise's supply logistics system. Reducingreserve's turnover days and cuttingdown the cost ratio of supply logistics can cut down the cost ofsupply logistics and the cost of production, which can result in stronger price superiority and marketcompetitive power for a manufacturing enterprise [7].Workshop is the customer of purchasing department, and the quality of supply service is thepremise of regular production of workshop.The quality of service can be reflected by the realizationrate of supply plan and the reject rate of purchase. High realization rate of supply plan can meet theworkshop's needs well.The reject ofpurchasewould wasteand affect manufactured product's quality[8]. See Fig. 3.QualityofSupplylogisticsBCost control BzService quality B,Productivity BB13Supplycapacityperpersonplan B31Turnover days of reserveCost ratioofsupplyRealization rate of supplyReject rate of purchase B32ofmillion Yuan output B12capital B21logisticsB22Yuanoutput BiConsumptionofmillionReserve being impropriatedFig.3Qualityevaluationsystemofsupplierlogistics3)QualityofproductionlogisticsProduction logistics belongstoenterprise's interiorlogistics.It is theintegration of materials,inprocess products, equipments and infrastructure which are used in the process of carrying,machiningdepositingandtransformingaswellastherelatedinformationandpersons.Reducingthecostof
Supply logistics refers to the flow activity of enterprise’s materials and parts from its supplier or middleman to workshop. Productivity of supply logistics is the relationship between output and input that used in supplying raw materials and parts. Cost of supply logistics, which can be reflected by turnover days of reserve capital and the cost ratio of supply logistics, has become a focus of enterprise’s supply logistics system. Reducing reserve’s turnover days and cutting down the cost ratio of supply logistics can cut down the cost of supply logistics and the cost of production, which can result in stronger price superiority and market competitive power for a manufacturing enterprise [7]. Workshop is the customer of purchasing department, and the quality of supply service is the premise of regular production of workshop. The quality of service can be reflected by the realization rate of supply plan and the reject rate of purchase. High realization rate of supply plan can meet the workshop’s needs well. The reject of purchase would waste and affect manufactured product’s quality [8]. See Fig. 3. Fig. 3 Quality evaluation system of supplier logistics 3) Quality of production logistics Production logistics belongs to enterprise’s interior logistics. It is the integration of materials, in process products, equipments and infrastructure which are used in the process of carrying, machining, depositing and transforming as well as the related information and persons. Reducing the cost of
production logistics can cut down the cost of production, so the cost and the convey task in productionlogistics should be taken into consideration [9]. It is as Fig. 4 shows.Qualityof ProductionLogisticsCConveying task CCost control C2ofequipments C13conveyWorkequipments C12Syntheticmaterials C14cost to output C2iPercentageIntegrityrateumit nalerial C22Task inunit time CllLOSSTransitepersonnel C1sefficiencycostutilizingofofof conveyratioconveytransitrateof0Fig.4Quality evaluation system of production logisticsTask volume per unit time reflects the speed of material's transformation. This index can reflecthow well the enterprise manages its inner transportation's speed. The bigger its value is, the faster thegoods are transformed. As mentioned above, the convey technology condition and the degree of itsutilization influence material's movement directly, so the rate of convey equipment in good conditionand the comprehensive utilization rate of equipments can be used to evaluate thequality of logisticssystem.The comprehensive utilization rate of equipments reflects the using degree of the equipmentsThese two indexes complement each other and can reflect the management level of equipmentcomprehensivelyThe material's transporting should guarantee that the materials are not only transported quickly butalso not be damaged during the transporting. Therefore, the rate of materials' loss in transporting alsoshould beconsidered.Work efficiency of transport worker also affects the operating efficiency of transport. In order toimprove the work efficiency of transport worker, an enterprise must organize its workers well,enhancetheir technique and arouse their enthusiasm.The index can reflect thetransportefficiency andenthusiasmoftransportworkers.4)Stock function
production logistics can cut down the cost of production, so the cost and the convey task in production logistics should be taken into consideration [9]. It is as Fig. 4 shows. Fig. 4 Quality evaluation system of production logistics Task volume per unit time reflects the speed of material’s transformation. This index can reflect how well the enterprise manages its inner transportation’s speed. The bigger its value is, the faster the goods are transformed. As mentioned above, the convey technology condition and the degree of its utilization influence material’s movement directly, so the rate of convey equipment in good condition and the comprehensive utilization rate of equipments can be used to evaluate the quality of logistics system. The comprehensive utilization rate of equipments reflects the using degree of the equipments. These two indexes complement each other and can reflect the management level of equipment comprehensively. The material’s transporting should guarantee that the materials are not only transported quickly but also not be damaged during the transporting. Therefore, the rate of materials’ loss in transporting also should be considered. Work efficiency of transport worker also affects the operating efficiency of transport. In order to improve the work efficiency of transport worker, an enterprise must organize its workers well, enhance their technique and arouse their enthusiasm. The index can reflect the transport efficiency and enthusiasm of transport workers. 4) Stock function