Contemporary Logistics Management - Essay Example

Executive Summary The textbook used for this particular case study was Contemporary Logistics, International Edition, 9th Edition, Pearson-Prentice Hall. The case study involves the story of clothing manufacturers in the Pacific Rim. Specifically: Global sourcing has become a widely used strategy for retailers, manufacturers, and other industries. The portfolio of sourcing place available to Australian industries provides a variety of products, components, technology, maintenance and service options at competitive costs. Pacific Rim sourcing brings substantial benefit to many companies, but also comes with risk. You are a consultant who has been asked to write a report that discusses what logistic management would involve for clothing manufacturing firms sourcing in the Pacific Rim. The objectives of the report are to explain with reference to the literature the logistics requirements for getting the supplies from the Pacific Rim to Australia, write an action plan that lists the steps of logistics management, describe each of the steps by stating what will be done and why it will be done, and discuss the constraints of logistics management in meeting the clothing firms' sourcing needs. This is to be accomplished thorugh writing an academic report; providing an executive summary, introduction, and conclusion; using the report as a way to demonstrate knowledge of the course content, including the textbook and additional readings that have been utilized, using appropriate headings, using 8 references, using minimal direct quotes, using text referencing and a reference list; and ensuring all aspects of the marketing guide are satisfied. Introduction Explain with reference to the literature the logistics requirements for getting the supplies from the Pacific Rim to Australia. (Select a country you are familiar with). Global sourcing is a procurement strategy aimed at exploiting global efficiencies in production. While a global sourcing process is usually initiated as a mechanism of exploiting cross-geographic arbitrages (simply put, identifying cheaper global sources), it is now a standard step in the global expansion of firms. Global sourcing advantages extend to identifying alternate supplier sources, utilizing buffer capacities and taking advantage of specific geographical talent pools (Wikipedia 2008). The textbook containing this case study also encompasses the entire concept of the supply chain. The supply chain can be defined as: A supply chain, logistics network, or supply network is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer. Supply chains link value chains. A typical supply chain begins with the extraction of raw material and includes several production links, for instance; component construction, assembly and merging before moving onto several layers of storage facilities of ever decreasing size and ever more remote geographical locations, and finally reaching the consumer. Many of the exchanges encountered in the supply chain will therefore be between different companies who will seek to maximize their revenue within their sphere of interest, but may have little or no knowledge or interest in the remaining players in the supply chain. (Wikipedia 2008) The purpose of this report is to discuss what logistics management would involve for clothing manufacturing firms sourcing in the Pacific Rim. In doing so, the purpose is to explain with reference to the literature the logistics requirements for getting the supplies from the Pacific Rim to Australia, write an Action Plan that lists the steps of logistics management, describe each of the steps by stating what will be done and why it will be done, and discuss the constraints of logistics management in meeting the clothing firms' sourcing needs. Given in the case study is that: Global sourcing has become a widely used strategy for retailers, manufacturers, and other industries. The portfolio of sourcing place available to Australian industries provides a variety of products, components, technology, maintenance and service options at competitive costs. Pacific Rim sourcing brings substantial benefit to many companies, but also comes with risk. You are a consultant who has been asked to write a report that discusses what logistic management would involve for clothing manufacturing firms sourcing in the Pacific Rim. Logistics Requirements "Logistics is the art of managing the supply chain and science of managing and controlling the flow of goods, information and other resources like energy and people between the point of origin and the point of consumption in order to meet customers' requirements. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process and finished inventories where required at the lowest cost possible. Logistics and Supply Chain services are provided by a wide range of 3rd party suppliers. (Wikipedia 2008) For the purposes of this particular case study the country in the Pacific Rim that was chosen is the United States. One of the most important logistics requirements when it comes to clothing being shipped from the United States to Australia is speed, innovation, and punctual delivery. "The complexity and importance of the fashion supply chain is increasing. Retailers no longer spend their full buying budget upfront. As fashion brands now produce partly for their own risk without confirmed orders, they are experiencing increased excess stock. To react quickly to market demands and reduce inventory risks, supply chain management is now a key issue for any fashion company" (DHL 2008). The Pacific Rim refers to the countries and cities located around the edge of the Pacific Ocean. There are many economic centers around the Pacific Rim, such as Hong Kong, Singapore, Seoul, Tokyo, Manila, Los Angeles, Shanghai, Taipei, Ho Chi Minh City, Sydney, Melbourne, Brisbane, Auckland, Santiago, San Francisco, Seattle, San Diego, Portland, and Vancouver. Honolulu is the headquarters of various intergovernmental and non-governmental organizations of the Pacific Rim including the East-West Center, Institute of Asian Research In addition, the RIMPAC exercise is coordinated by United States Pacific Command which is headquartered in Honolulu. The region has great diversity - with the economic dynamism of Hong Kong, Taiwan and Singapore; the technological expertise of Japan, Korea and the western United States; the natural resources of Australia, Colombia, Canada, Mexico, the Philippines, the Russian Far East and the United States; the human resources of China and Indonesia; the agricultural productivity of Australia, Chile, New Zealand, the Philippines, and the United States among others. (Wikipedia 2008) Fashion trends make it essential for rapid-fire supply chains. Purchase orders with a lead time of several months are simply not an option. If top-selling styles cannot be sold within approximately 35 days miss the boat. "In addition, addition, many fashion companies produce more collections to ensure that consumers see new models each time they go shopping. Logistics plays a vital role in meeting the key success factors of cost efficiency, timeliness, complete range availability and good product quality" (DHL 2008). Competition in the vast and creative field of the fashion industry is surprisingly all about speed: who can get the latest trends to market the fastest. Marketers are not only concerned with initial orders, but also with reorders. The ideal type of solution would allow for decreased costs, purchase order lead time, and time it takes to respond to the market in the form of production and sourcing. Sometimes this takes outsourcing, but other times it can be handled effectively in house. The idea is to target a solution for the clothing segment "with retail fashion network services and full visibility in the supply chain" (DHL 2008). Action Plan Write an Action Plan that lists the steps of logistics management. Our Action Plan involves both improving customer service and automating the supply chain. A supply chain can be defined as a: logistics network, or supply network is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer. Supply chains link value chains. A typical supply chain begins with the extraction of raw material and includes several production links, for instance; component construction, assembly and merging before moving onto several layers of storage facilities of ever decreasing size and ever more remote geographical locations, and finally reaching the consumer. Many of the exchanges encountered in the supply chain will therefore be between different companies who will seek to maximize their revenue within their sphere of interest, but may have little or no knowledge or interest in the remaining players in the supply chain. (Wikipedia 2008) Customer service can be defined as: Customer service (also known as Client Service) is the provision of service to customers before, during and after a purchase. According to Turban et al, 2002, "Customer service is a series of activities designed to enhance the level of customer satisfaction - that is, the feeling that a product or service has met the customer expectation."Its importance varies by product, industry and customer. As an example, an expert customer might require less pre-purchase service (i.e., advice) than a novice. In many cases, customer service is more important if the purchase relates to a "service" as opposed to a "product". Customer service may be provided by a person (e.g., sales and service representative), or by automated means called self-service. Examples of self service are Internet sites.Customer service is normally an integral part of a company's customer value proposition. (Wikipedia 2008) The Starting Step The first step is choosing whether to handle marketing efforts in house or to hire a company that specializes in it. It is much cheaper in house, but it takes up a lot of valuable time and may or may not be conducted by an expert in the field. According to DHL, one such company that can handle the logistics of a clothing company, they can easily: Optimized production and sourcing logistics to enable rapid response to market and cost savings Strong Customer Relationship Management One-stop shopping for the full range of logistics services from a single source Full customized, integrated logistics solutions and total supply chain management Financial strength and stability Worldwide network and resources for global support Customized end-to-end logistics solutions worldwide. (2008) The Real Starting Step One of the first things that an outside helper would need to do would be to decide on the packaging of the product. "Packaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages. Package labelling (BrE) or labeling (AmE) is any written, electronic, or graphic communications on the packaging or on a separate but associated label." The action plan is for clothing manufacturing companies in the Pacific Rim to select an outside source for their logistics needs, such as DHL. DHL claims to be able to help with the entire fashion logistics concept "as a leading, best-in-class player" which "provides the fashion industry full customized, integrated logistics solutions, from sourcing to intercontinental shipping out of production to final delivery at retail outlets around the world. It is a real turnkey solution. The benefits they provide include swatch and sample deliveries; warehousing, consolidating, and transport management; picking at source; thorough supply chain visibility vendor/purchase order information; quality control; warehouses; retailer distribution; and perfection in all of the important details (DHL 2008). There are many different reasons why choosing the proper packaging for a product is important. They include physical protection, barrier protection, containment or agglomeration, information transmission, marketing, security, convenience, and portion control. There are also a variety of types of packaging and machines to choose from. These include blister packs, skin packs, vacuum packs, bottle caps, over-capping, lidding, closing, seaming, sealing, cartoning, boxing, casing, tray forming, packing, unpacking, closing, sealing, cleaning, sterilizing, cooling, drying, conveyors, accumulating, feeding, orienting, placing, filling, handling liquid, handling powder, package filling, closing, form, fill, seal, inspecting, detecting, checkweighting, palletizing, depalletizing, unit load, product identification labeling, marking, wrapping, converting, slitting, perforating, attaching, and more (Wikipedia 2008). According to DHL's website: Absolute understanding of the logistics requirements of the fashion industry lets DHL Solutions integrate into customer systems at any point, to create a proactive and flexible approach to specific needs. A skilled and motivated workforce plus state-of-the-art communications ensure better lead times, greater flexibility and unrivalled reliability. DHL Solutions covers the full range of picking:from conventional, flexible manual operations to automated low-cost, high throughput sorter-belt and pick-to-light processes. Dedicated fashion engineers know the business and match customer needs with the best-suited supply chain solution. This expertise, combined with simulation of the various options, provides maximum insight. (DHL 2008) Constraints of Logistics Management "Theory of Constraints (TOC) is an overall management philosophy that aims to continually achieve more of the goal of a system. If that system is a for-profit business, then the goal is to make more money, both now and in future. TOC consists of two primary collections of work: 1) The five focusing steps and their application to operations; 2) The Thinking Processes and their application to project management and human behavior. According to TOC, every organization has - at any given point in time - one key constraint which limits the system's performance relative to its goal (see Liebig's Law of the Minimum). These constraints can be broadly classified as either an internal constraint or a market constraint. In order to manage the performance of the system, the constraint must be identified and managed correctly (according to the Five Focusing Steps below). Over time the constraint may change (eg because the previous constraint was managed successfully, or because of a changing environment) and the analysis starts anew. The publicity and leadership behind these ideas has been dominated by Eliyahu M. Goldratt through a series of books, seminars and workshops. Goldratt introduced the theory of constraints in his 1984 book entitled 'The Goal'." Pros and Cons of Logistics Management INCLUDING CONSTRAINTS A lot of times, companies can perform a logistics management analysis at no cost to you. Time saved is a big pro, as "Time constraints are sometimes the biggest reason that most companies cannot make a crucial decision to conduct a detailed study of their current shipping patterns and operations. Internal staff may be unable to dedicate time for this process" (Logistics Management Specialists 2008;. 1). Costs saved and optimal freight and alternatives all add up to make this a wise investment. What It All Means "Global sourcing entails identifying, evaluating, negotiating and configuring supply across multiple geographies to reduce costs, maximize performance and mitigate risks. Sourcing is also a cornerstone of total cost management (TCM), a technological and process framework for the optimal alignment, management and control of the total cost of ownership (TCO) of supply relationships" (Minihan 2003). History of Logistics & Supply Chain Management: Logistics has always been a critical part as one of the 4 P's in Marketing: Product, Place, Price and Promotion. The "Place" component ensures the product is at the right place, at the right time, in the right quantity and the right quality. Read about how the logistics discipline started and where it is headed. Logistics & Supply Chain Management Defined: According to the Council of Supply Chain Management Professionals (CSCMP), a professional organization for Logistics and SCM professionals, logistics is defined as: "the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming to customer requirements Conclusion "Global sourcing entails identifying, evaluating, negotiating and configuring supply across multiple geographies to reduce costs, maximize performance and mitigate risks. Sourcing is also a cornerstone of total cost management (TCM), a technological and process framework for the optimal alignment, management and control of the total cost of ownership (TCO) of supply relationships. Resources "Customer Service." 2008. Wikipedia. Online. Htt://http://en.wikipedia.org/wiki/customer_service "Global Sourcing" 2008. Wikipedia. Online. http://en.wikipedia.org/wiki/Global_sourcing "Logistics." 2008. Wikipedia. Online. http://en.wikipedia.org/wiki/Logistic Minihan, Tim. 2003. 'Global Sourcing." Aberdeen Group. Online. "Pacific Rim." 2008. Wikipedia. Online. http://en.wikipedia.org/wiki/Pacific_Rim "Packaging." 2008. Wikipedia. Online. http://en.wikipedia.org/wiki/Packaging "Rapid Response to Market. 2008. DHL. Online. http://64.233.167.104/searchq=cache:Ey5XaGK2dxQJ:www.dhl.com/publish/etc/medialib/g0/downloads/sector.Par.0014.File.tmp/fashion_solutions.pdf+This+expertise,+combined+with+simulation+of+the+various+options,+provides+maximum+insight&hl=en&ct=clnk&cd=1&gl=us "Supply Chain." 2008. Wikipedia. Online. http://www.wikipedia.com/supplychain Murphy, PR & Wood, DF 2007. "Contemporary Logistics - International Edition." 9th edn, Pearson - Prentice Hall: Upper Saddle River. Read More