Logistics & Supply Chain Management - Essay Example

Logistics and Supply Chain Management Inserts His/Her Inserts Grade Inserts 11 May Hughes (1998) Road maps are used as guides for evaluation performance. The research focuses on XYZ Company which is part of a large multi-national American organization they assemble transmissions for the North American Truck market. The research focuses on the company’s use of roadmap in the re-organisation of the company as part of its operational adjustment. The road map is an excellent benchmark for attaining the companys goals and objectives. 1. The different strategies needed to be employed to each of the 4 categories of suppliers and material/equipment purchased. Current manufacturing concept: The XYZ Company previously manufactured gears and shafts for the transmissions they produced. The current manufacturing process focuses on the gears and shafts as well as they have always produced but the re-organisation will involve the introduction of a significant large number of parts not previously produced at the Birmingham plant. The current manufacturing concept focuses on setting up two manufacturing locations. Location one is geared towards manufacturing Gears and Shafts only. In location 2, the transmission will be assembled at another European sister plant. Roadmap to the new cell manufacturing process plant. Hughes (1998) emphasized a road map is adapted and evolved with the industry that it serves. The road map includes a common purpose. The road map incorporates technology to ensure achievement of XYZ Company’s organizational goals and objectives. The use of computers to track the current status of the company’s purchase requests will increase the XYZ Company’s decision making activities. The use of high technology, computer tracking system, will ensure immediate resolution to a current supply chain bottleneck or hindrance. The use of roadmaps will ensure that the company can easily connect the arrival of the XYZ Company’s raw materials purchases to the production of just in time finished goods and services. The timely delivery of the finished goods and services will increase the XYZ Company’s service quality image to the current as well as prospective clients. In addition, the roadmap is flexible. The roadmap serves as a tool, guide, or basis for making adjustments in the current supply chain situation. The road map is a systematic or organized process of ensuring the smooth flow from cash to inventory to revenues. The road map is grounded on innovativeness. The roadmap is adjusted to fit any unexpected or unavoidable inputs or factor in the supply chain management process. Likewise, the roadmap serves as a challenge to all stakeholders concerned to offer better services to the clients. The roadmap serves as a benchmark that needs to over achieved and even surpassed in terms of quality, quantity, and deadline to be heeded. The new procurement manager in the Purchasing Management team of XYZ Company appointed the researcher ensures the smooth transition to a Cell Manufacturing set up, the researcher identifies the following issues that need to be managed: A. The Procurement of New Plant Equipment. From March 17 to 25, 2011, the XYZ Company will purchase 40 new CNC machines to be purchased these cost new approximately £450,000 each and have a lead time of 3 to 10 months. The researchers will buy new machines with be purchase from auctions of liquidated stock from companies who went bankrupt. These will typically range from £10,000 to £50,000 depending upon condition (these will then need to be serviced and installed by the XYZ Company’s own personnel. The machines are expected to arrive prior to the October 27, 2011 start of the new production operations (Douglas, 2000). B. The Procurement of Previously used Equipment. From August 1 -10, 2011, the researcher of XYZ Company will purchase approximately 40% previously used machines. The previously used machines will be checked and repaired to ensure the machines will hit their benchmarks in terms of production output starting October 27, 2011. C. The identification and use of New Suppliers. Further, the XYZ Company management will continue its current process of identifying and using new suppliers. The company will continue to ask purchase price quotes from three or more different suppliers. The suppliers will be asked to submit their best offers in terms of the 40 new CNC machines to be purchased. The suppliers’ prices will be studied to determine if their price offers are reasonable enough in terms of the model, design, size, weight, and other descriptions of the 40 new CNC machines. Based on initial queries from suppliers, the average cost new approximately £450,000 each. In addition, it is estimated that the suppliers have different delivery dates. This is understandable because some suppliers are middlemen. Middlemen are scouting around for machine manufacturers or sellers of the company’s required 40 CNC machines. Thus, different suppliers have lead times of three to ten months. The company will choose the supplier that can deliver the machines a month prior to the October 27, 2011. This is imperative because the company will have one month to test the machines and to make adjustments to machines that do not work up to par. D. The management of existing suppliers’ increased supply. Furthermore, the management of XYZ Company will continue its current status of ordering supplies from its current and prospective suppliers. The current process ensures there is ample inventory to fill the production plant’s current as well as the next month’s raw materials inventory needs. To continue the current process of ensuring the constant supply of raw materials, management informs three suppliers to submit selling price quotes for the company’s raw materials needs. The quote price will include the quantity, the price, and the date of delivery of the raw materials, if the supplier wins the company’s contract to supply the raw materials and other requested needs (Etzel &Stanton, 2001). October 27, 2011 Start of full production operations. Failure to start on this date will have disastrous financial effects on operations. The delay will cause significant problems to the supply chain of the organization if the plant is not in full production by then. 2. Supply chain strategies that can be adopted to ensure a smooth supply of material for C & D. The company will keep a list of committed and motivated suppliers. The company will conduct a background investigation on new supplier applicants. Upon approval as the company’s list of suppliers, the company will choose the supplier with the best purchase price offers in relation to the type of supply delivered to the company. The chosen list of approved suppliers is segregated in accordance with the company’s benchmarks. One such supplier identification is the developed partners. Such partner classifications show that the supplier is the cream of the crop or the best in the supplier group of stakeholders in the company. 3. Discussion of how one can set up partnership agreements with suppliers also how you will decide on which suppliers you will enter into partnership agreements. Initially, the XYZ Company will scrutinize the yellow pages, or other list of suppliers advertising their products. The XYZ Company asked the suppliers to submit their company profile, list of currently served, and historically served clients. The supplier applicants are asked to submit their financial statements for the past five years. The financial statements will indicate if the supplier company has been profitable for the past five years or more. The XYZ Company can call the supplier’s list of current and prospective clients to determine the quality of the suppliers’ services. After approving some of the supplier applicants’ requests to be included in the company’s prestigious list, the company chooses the supplier offering the best selling price quote in relation to the service or product being offered to the XYZ Company (Weele, 2005). During a worst case scenario, some suppliers do not meet deadline, quality, and quantity requirements specified in the XYZ Company’s purchase order requisition. Consequently, the performance evaluation rating of the supplier will be graded accordingly to reflect the suppliers’ current service quality. During continued violation of delivery, quantity, and quality product requirements, the XYZ Company may be forced to cancel the erring suppliers from the XYZ Company’s supplier list. 4. Discussion of how one will handle suppliers who you have influence with and those you do not. The XYZ Company manager should handle different suppliers differently. Normally, the manager is more comfortable dealing with suppliers where one has the capacity to influence them. For example, the XYZ Company manager can request for ten percent discount on the suppliers’ current selling price in exchange for winning the XYZ Company’s raw materials purchase contract. Likewise, the XYZ Company manager can request the supplier to reduce the delivery days from two weeks to three days. The XYZ Company manager will be more comfortable striking a beneficial purchase deal with a supplier that is willing to accept the discount terms of the XYZ Company manager (Etzel & Stanton, 2001). On the other hand, the XYZ Company manager will be uncomfortable dealing with a supplier who is cold-hearted. This normally occurs when the supplier has influential contacts with someone in the XYZ Company management. Such suppliers are banking on their close relationship with the top ranking manger or officer of the company to approve their purchase dealings. In this case, the supplier does not need to bend to the supply terms offered by someone who is lower in rank within the XYZ Company. Consequently, the XYZ Company purchasing officer may entertain thoughts of contacting suppliers who are not cold-hearted when compared to contacting suppliers who are cold-hearted if choosing a friendlier supplier is possible. On the other hand, the XYZ Company purchasing officer may have to adhere to the higher officer’s preference for the cold-hearted suppliers. The higher ranking officer may have very valid reasons for choosing the cold-hearted supplier over the other suppliers who are friendly. One such good reason is that the supplier has proven that its products are of top quality and the prices had been proven to be reasonable in relation to the product weight, size, output quantity, and other benchmark criteria (Weihrich, 2009). 5. Discussion of how one will approach Inventory Management e.g. Order Driven and also discuss how you will approach the defining of the “road map” what you need to do to define the “road map”. The inventory management principle grounded on ensuring that there are enough raw materials to produce the finished goods or products needed by the company’s current and prospective clients. The company should ensure that the store shelves do not suffer stock-outs. First, the company comes up with a projected or budgeted revenue data for the next month’s or next accounting period’s estimated sales of the company’s products. The production’s job is to ensure that the company produces the goods needed by the by future clients. For example, the clients’ forecasted sales for the next month is 20,000 units. The production department should manufacture 20,000 or more units during the next month to ensure the clients’ needs are satisfied. It is against company policy to see the day when the client eagerly visits the company’s display center to buy the XYZ Company products only to find that the store shelves are empty. This situation will cause the dismayed clients to buy their much-needed requirements from the competitors. This would result to the current month’s sales loss as well as possible future losses from the clients’ final preference to buy from the competitors’ shelves (Weele, 2005). In addition, to ensure that the production department manufactures the clients’ required products during the next sales period, the production department must contact the purchasing department. The production department must check to determine if the purchasing department orders the minimum required raw materials needed to manufacture the goods needed by the marketing or sales department. In terms of defining the road map, the inventory management aspect of XYZ Company is one of the many activities under the road map. By comparing the road map dates and the scheduled production and raw materials purchase activities with the inventory management discussion in this section. It is very clear that the inventory management is part of the entire supply chain management process. Currently, inventory management includes the manufacturing department’s responsibility of filling the client’s current needs, wants, and caprices. The inventory management process includes ensuring the suppliers deliver the required raw materials and other supplies on or before the scheduled delivery date. Likewise, the road map will continue with the delivery of the finished goods to the clients’ home, office, or other customer-specified location (Weele, 2005). Based on the above discussion, road maps are beneficial guides for evaluation of the organisation’s overall performance. XYZ Company which is one synergetic section of a large multi-national American organization they assemble transmissions for the North American Truck market. Further, The inclusion of computers to trace the current location of the company’s purchase requests will increase the XYZ Company’s decision making policies. The incorporation of computer technology and computer tracking system will ensure just in time resolution of a current supply chain bottleneck or hindrance. The use of roadmaps will aid the company to easily make better connection between the arrival of the XYZ Company’s raw materials purchases to the production of much-needed finished goods and services. The timely delivery of the finished products and services will enhance the XYZ Company’s service quality image among its current and prospective customers. In addition, the roadmap can be adjusted to fit into any situation profitable. The XYZ Company’s use of roadmap in the re-organisation of the company is geared towards constantly supplying the clients’ needs. Indeed, the road map is an excellent tool for attaining the companys goals and objectives. REFERENCES Craig, C., Douglas, S., (2000), International Marketing Research. London, Brisbane, J. Wiley & Sons Etzel, M., Walker, B., Stanton, W., (2001) Marketing. London, McGraw –Hill. Hughes et al., (1998), Transform Your Supply Chain. London, Thompson Press. Weele, A. (2005). Purchasing & Supply Chain Management: Analysis, Strategy, Planning and Practice. London, Cengage Learning Press. Weihrich, H. (2009). Management. London, McGraw Hill. Read More