Supply Chain Management - Nostovias New Airport - Case Study Example

Running head: Supply chain management: Nostovia's New Airport Supply chain management: Nostovia's New Airport s name] Contents Foreword-------------------------------------------------03 1. Executive Summary-------------------------------------04 2. Introduction------------------------------------------06 3. Recommendations for perishable foodstuffs-------------06 4. Recommendations for food stuff with longer shelf life-07 5. Total Quality Management------------------------------09 6. Time-Event Networks-----------------------------------10 7. Value Engineering-------------------------------------10 8. Work Simplification-----------------------------------11 9. Quality Circle----------------------------------------11 10. Proposed Initiatives for improvement at restaurant--12 11. References------------------------------------------13 Foreword: This report is a blueprint for the effective supply chain management at Nostovia's New Airport. It contains practical and suitable recommendations for the Economic, Regional and climatic set-up of Nostovia from the Development Committee for serving the needs of the increasing customers load sustainable growth and competitiveness of Nostovia New Airport and its contribution to regional and universal prosperity. The Committee is expecting that the implementation of these initiatives and recommendations will lead to prosperous growth of the Nostovia's New Airport and the airport will be able to achieve its vision of serving 3.5 million passenger movements per year, the Nostovian economy will be able to achieve competitive advantage in regional areas. On behalf of the PK Management Consulting Company development Committee, I present this report to his Supreme Highness Prince Jaidee. Executive Summary: Perhaps the foremost social and economic responsibility levied upon private and public organisation in recent decades is the maximisation. This responsibility is being increasingly codified in law and various governmental orders. Its influence is becoming increasingly pervasive through a constant series of federal court decisions as well as steady enlargement in the size and scope of administering agencies. Despite the pressure from the competitors Nostovia's new airport will undertake effective supply management as the cutting edge. Higher number of satisfactory customers and efficient services will maximise the profitability of Nostovia by attracting a large number of foreign tourists. It is argued that the supply chain standards are not fixed at a uniform level or universal conditions cannot be established. Several factors should be taken into consideration while implementing a supply chain implementation or improvement plan. Factors contributing to the effective development of supply chain management are many and varied, which include: Careful analysis of economic conditions. Evaluation of technology and skills. Consideration of climatic and cultural conditions. Competitive advantage in international market. The report contains practical recommendations for the effective and successful implementation of supply chain management at Nostovia's new airport. Introduction: The main source of competitive advantage in services industry is efficient service for the customers. Supply chain plays an important role in the efficient service provision to the customers. "The goal of a supply chain should be to maximise overall supply chain profitability. Supply chain profitability is the difference between the revenue generated from the customer and the total cost incurred across all stages of the supply chain. Supply chain decisions have a large impact on the success or failure of each firm because they significantly influence both the revenue generated as well as the cost incurred. Successful supply chains manage flows of product, information, and funds to provide a high level of product availability to the customer while keeping costs low." (Chopra & Meindl, 2004; 44) Recommendations for perishable foodstuffs: For the supply chain management of perishable food stuffs tracking and tracing is a very important. It is also of immense significance to evaluate the condition of the food in order to deal with the problems of spoilage or loss of taste of the food. In order to deal with the problem the management at Nostovia needs to create a navigator in whom RFID tags will be tagged to the perishable foodstuff in order to keep a record of the freshness of the products which will be served in the restaurant. The data mentioned at these tags will provide the information to the quality assurance department about the exact time taken by the products to reach to the restaurant. It is very important for the perishable products to keep a balance between spoilage and out-of-stock. Supply chain managers at Nostovia airport restaurant can use the replenishment algorithm, which will provide the restaurant with a fully automated replenishment system. "The benefits of the QTT approach to supply chain management include improved food safety, because fewer goods go bad and products can be recalled more efficiently; reduced costs due to less spoilage, lower inventories of products and crates and greater efficiency in logistics; and improved customer service since food providers can deliver custom levels of quality for specific retail customers." (Roberti, 2005) Recommendations for food stuff with longer shelf life: The restaurant at Nostovia Airport should undertake the approach of goods flow on supply chain according to their shelf life and not just on the time they've been in the supply chain. "For instance, products with long lead-times that have been exposed to high temperatures during distribution would be sent to the retail shelves before those with short lead-times but distributed under more favourable conditions". (Roberti, 2005) The international sourcing policy effects the corporate, marketing, purchasing, and other strategies. It is important for the Management of Nostovia Airport to connect the future objectives with corporate objectives and strategy. The purchasing function should also be undertaken in order to support the airport objectives. It is often observed that the purchasing functions in the firms are undertaken without gathering proper and enough information. Also the purchasing decision of most of the companies are not undertaken in the line of the strategy of the company. It is also important for the management of Nostovia airport to undertake strategic planning while undertaking the purchasing decision. Most of the researchers emphasise the need of aligning the purchasing function with the firm's strategic planning process. In order to undertake effective planning according to the airport's goal it is important to plan and implement strategic planning more effectively at the departmental level. Some of the researches also pay great attention in establishment of the link between the customers and the suppliers as part of their purchasing strategy. The purchasing decision in the right direction can also help the airport management in acquiring the market leadership through cost reduction. "Purchasing's contributions to corporate strategic planning include the following: monitoring supply market trends, interpreting the impact of these trends on the firm, identifying the materials and services required to support company and strategic business unit strategies, and developing supply options." (Ellram and Carr, 1994) The Concept of TQM: TQM is defined as both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organisation. It is the application of quantitative methods and human resources to improve all the process within an organisation and exceed customer needs now and in the future. TQM integrates fundamental management techniques, existing improvement efforts, and technical tools under a disciplined approach. (Besterfield, Michna, Besterfied & Sacre, p.1) There are many techniques, which can be undertaken by the management of Nostovia's Airport in order to assess the management of quality. Some of them are described below: Time-Event Networks: Time network analysis is a logical extension of the famous Gantt chart. Often referred to as the program Evaluation and Review Technique (PERT) an in its essentials as the Critical Path Method (CPM), this technique of planning and control has wide potential use in many applications. But PERT and its various refinements, like PERT/COST, have considerable potential for use in many aspects of planning and controlling operations (Koontz and Weihrich, 1994; p.648). For a restaurant like Nostovia's airport restaurant, having the expanded supply chain PERT/ COST analysis should be performed in order to evaluate the effectiveness of supply chain. Value Engineering: On individual product level a product can be improved and its cost lowered through value engineering, which consists of analysing the operations of the product or service, estimating the value of each operation, and attempting to improve that operation by trying to keep costs low at each step or part. The following specific steps can be taken in order to improve the supply chain at Nostovia's Airport restaurant. 1. Identify the costs for each part and operation. 2. Identify each part's relative contribution value to the final unit or product. 3. Find a new approach for those items, which appear to have high cost and low value. (Koontz and Weihrich, 1994; p.648) Work Simplification: Work methods can be improved through work simplification, which is the process of obtaining the participation of workers in simplifying their work. Training sessions should be conducted in the company to teach concepts and principles of techniques such as time and motion studies, workflow analyses, and the layout of the work situation. (Koontz and Weihrich, 1994; p.648) Quality Circles: The supply chain management should establish a group of people from the same restaurant area who meet regularly to solve problems they experience at work. (Goldstein, 1985; p.504-517) Members should be trained in solving problems, in applying statistical quality control, and in working in-groups. A facilitator should work with each group consisting of six to twelve members. The QCs may meet 4 hours a month. Although QC members may receive recognition, they should also receive monetary rewards. Quality circles should evolve from suggestion programs. In both approaches, workers will participate in solving work-related problems. Although in suggestion programs the problems are usually quite specific, those dealt with by quality control circles are often more complex and require the involvement of several team members. The team should consist primarily of rank-and-file workers and sometimes it can also include supervisors. (Koontz and Weihrich, 1994; p.649) Proposed Initiatives for improvement at restaurant: TQM is based on a number of ideas. It means thinking about quality in terms of all functions of the enterprise and is a start is a start-to-finish process that integrates interrelated functions at all levels. It is a systems approach that considers every interaction between the various elements of the organisation. Thus, the overall effectiveness of the system is higher than the sum of the individual outputs from the subsystems. The subsystems include all the organisational functions in the life cycle of a product, such as (!) design, (2) planning, (3) production, (4) distribution, and (5) field service. The management subsystems also require integration, including (1) strategy with a customer focus, (2) the tools of quality and (3) employee involvement (the linking process that integrates the whole). A corollary is that any product, process, or service can be improved, and a successful organisation is one that consciously seeks and exploits opportunities for improvement at all levels. The load-bearing structure is customer satisfaction. The watchword is continuous improvement. (Ross) Following steps should be taken in order to improve the supply chain of the restaurant: 1. Management Commitment: Top management must become convinced of the need for quality and must clearly communicate this to the entire staff be written policy, starting that each person is expected to perform according to the requirement or cause the requirement to be officially changed to what the restaurant and the customers really need. 2. Quality improvement team: From a team composed of department heads to oversee improvements in their departments and in the restaurant as a whole. 3. Quality measurement: Establish measurements appropriate to every activity in order to identify areas in need of improvement. 4. Cost of quality: Estimate the costs of quality in order to identify areas where improvements would be profitable. 5. Quality awareness: Raise quality awareness among employees. 6. Corrective action: Take corrective action as a result of steps 3 and 4. 7. Zero defects planning: From a committee to plan a program appropriate to the restaurant and its culture. 8. Supervisor training: All levels of management must be trained in how to implement their part of the quality improvement program. 9. Zero defects day: Schedule a day to signal to employees that the Restaurant company has a new standard. 10. Goal setting: Individuals must establish improvement goals for themselves and their groups. 11. Error causes removal: Employees should be encouraged to inform management of any problems that prevent them from performing error free work. 12. Recognition: Give public, non-financial appreciation to those who meet their quality goals or perform outstandingly. 13. Quality councils: Composed of quality professionals and team chairpersons, quality councils should meet regularly to share experiences, problems, and ideas. 14. Does it all over again: Repeat steps 1 to 13 in order to emphasise the never-ending process of quality improvement. (Ross) References Besterfield, D. H., Michna, C. B., Besterfied, G., H., & Sacre, B. S., (no date available). Total Quality Management, Third Edition, pp. 1-3. Chopra, S., & Meindl, P., (2004). Supply chain Management: Strategy, Planning and Operation, Second Edition, Pearson Education, Inc. United Kingdom, pp. 44. Goldstein, S. G., (1985). "Organisational Dualism and Quality Circles," Academy of Management Review (July 1985), pp.504-517. Koontz, H., and Weihrich, H., (1994). Management: A Global Perspective, Tenth Edition, McGraw-Hill, International Editions, pp.633-653 La Londe, Bernard J. and James M. Masters (1994), "Emerging Logistics Strategies: Blueprints for the Next Century," International Journal of Physical Distribution and Logistics Management, Vol. 24, No. 7, pp. 35-47 Lambert, Douglas M., James R. Stock, and Lisa M. Ellram (1998), Fundamentals of Logistics Management, Boston, MA: Irwin/McGraw-Hill, Chapter 14. Lisa M. Ellram and Amelia Carr, (1994). Strategic Purchasing: A History and Review of the Literature, April 1, 1994, International Journal of Purchasing and Materials Management -Spring 1994, pp. 10-18. Roberti, M., (2005). RFID Will Help Keep Perishables Fresh, Aug. 3, 2005, available at http://www.rfidjournal.com/article/articleview/1775/1/1/ Ross, J. E., (no date available). Total Quality Management: Text, Cases and Readings, Second Edition, Florida Atlantic University, Boca Raton, Florida, pp. 1-3 Read More