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There is no such thing as constant. Everything in this world evolves, even strategic performance measures. An organisation must be open to the idea that some measures changes over time. Organisations must research on different approaches to be at par with the changes on the systems. Business organisations today particularly the manufacturing and retail organisations operate in a turbulent and dynamic business environment. The contemporary business environment is undergoing a metamorphosis as rapid technological innovations, competitive markets, diverse customer preferences, and extensive global operations prevail in it because of the value of time. For them time is equal to money. To ensure continuous operation and survival in today's rigid business environment, a business firm has to be open to change and improvement. Business processes, services, products and operations should be consistently subject to evaluation and refinement. The norm is to deliver quality products and services while maintaining flexible and effective operations.
One of the most vital aspects of a business operation is the management of the supply chain. The supply chain comprises of the coordinated arrangement of manpower, technology, and production processes that transforms raw materials into tangible products or services. The supply chain is the overall process that determines how business firms secure materials, exploit people, utilise machines, and follow business processes to develop specific products and services for the satisfaction of consumers. This business operation is crucial as any defect in one area can render adverse impacts to the others. Thus, management of the supply chain entails strategies and constant monitoring to ensure its consistency to deliver outputs to the customers at the most convenient time.
Time is valuable to any business organisations since it corresponds to satisfaction of clients and business progress. Satisfaction and progress reflects to the money earned by the organisation. In manufacturing and retail organisations, time is very vital. In manufacturing business, let say in food industry, products should be delivered in appropriate time to avoid food expiration that may possibly results to failed transaction and loss of money. The needs of the supply chain demand the efficient and speedy movement of goods to the end user with enhanced levels of service. Increasingly, this entails the customisation of goods and services according to the requirements of individual clients. In order to maintain their competitiveness, all parties involved in the process, including manufacturers, vendors and logistics providers, must be able to offer and provide a swift and individually customised service to value time and money. In retail business, time is also important because of continues changes in the demand of the consumers. The retail businesses should learn how to cope up to the current trend and time in business to have more profit. Retail businesses should consider the changes in business arena. They should know the competition, position in the market value of money and time.
A certain business has to improve the flexibility of its supply chain network and coordination among the various entities involved in the process. Coordination and flexibility go hand in hand because a company that has well-aligned supply chain operations is guaranteed total flexibility. A business has to plan its supply chain operation in advance to minimise wasted transactions. Garber and Sarkar (2007) reports that the pursuit of supply chain flexibility is by designing a supply chain model. A supply chain model requires the company to determine the kinds of strategies and amount of time to suffice current customer needs. In this approach the business has to analyse and understand customer and stakeholder expectations in order to conceptualise the supply chain requirements and costs involved in each. Today, with these reasons, time management has increasing prominent to the success of any company.
From the challenges in both manufacturing and retail industry, appropriate time management maybe used in order to maintain product traceable and avoidance of product expiration. Every business organisation is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfil the needs of each kind of customer in their target markets. Thus, they should emphasised the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that the business industry creates breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself.
Question 2. What systems/techniques do companies use for managing their inventory? Discuss for both retail and manufacturing environments.
In handling the inventory, both manufacturing and retail industries can do a supplier or vendor managed inventory (VMI system) and the so-called warehousing. In its true form a supplier or vendor managed inventory (VMI system) passes the responsibility for managing stock levels within the store to the supplier, with the retailer providing the information that allows the supplier to schedule its production and finished stock level so that automatic replenishment is guaranteed. In certain instances, it makes sense for a supplier to provide a stock filling service. For example, with small item merchandise, such as batteries or spices, it is not unusual for the supplier to offer a shelf stacking service as part of their cost price to the retailer. The supplier simply invoices the retailer for the stock that is replenished on each visit (Gillooley & Varley 2001).However, VMI is a more complex arrangement, with a supplier taking on the strategic development of a product category as well as providing the operational stock-servicing role. In a VMI system the retailer and the supplier agree to a forward planned assortment, and then the supplier is provided with real-time sales information so that it can replenish automatically and spot the sales trends. This allows the supplier to plan production in a way that means fast-selling goods can be replenished without delay and the build-up of unwanted merchandise at the end of the season is reduced (Gillooley & Varley 2001).
In principle, VMI is similar to a Quick Response (QR) system, but the supplier has more control over range development. In effect suppliers rent shelf space, and if they see a trend developing for a particular type of merchandise, then it is expected that they, rather than the retailer, will make the decision to offer increased variety in that type of product. As with other highly integrated stock management systems, VMI cannot work without a true partnership existing between retailer and supplier; it takes the role of category captain one stage further (Gillooley & Varley 2001). Without this, VMI is open to abuse and some so-called VMI systems simply push the stock holding burden up the supply chain to the supplier, relieving the retailer of any end of end of season over-stock. Information is, again, the key and must be shared openly if suppliers are to take on such a strategic role in product management. Only when suppliers can see the pattern of sales developing can they react efficiently to demand. If they are not able to supply efficiently, then the costs will end up being passed back to the retailer in higher prices for future merchandise (Gillooley & Varley 2001). The VMI strategy allows for a quicker and easier way for business to replenish the stock levels in the store they are operating. This kind of strategy makes sure that the business has its own stock when it needs to use it. In business industry setting the VMI strategy provides more chances for the different branches under the business market to innovate but maintain the standards and quality of the product. This helps in making sure that the products of the different market branches are adaptable to the trends and practices in a specific area.
On the other hand, warehousing was once considered as a liability to the organisation as it would cost the companies much expense. Previously, in the time in which just-in time gain fame in industries, warehousing was considered a weak link in the supply chain and was thought to demise. However, currently the concept of warehousing is changing as it is now gaining an important part in the supply chain. Basically, with warehousing and the use of proper technology to quickly move products helps a certain business in business industry to save time, avoid product expiration, increasing productivity. The right technology enables the flow of information between the workers' handled devices and the core business systems.
In addition, warehousing is becoming prominent as more and more activities are occurring within them. John Boyd, president of Princeton, NJ-based Boyd Company Inc., has also observed that many of the companies are not only performing traditional warehousing functions, but many of the companies he observed are bringing in functions that are traditionally located at corporate headquarters into the warehouse (Supply Chain Management Review, 2001). These activities includes back office operations, customer service, call centres, accounting departments and editorial functions like producing manuals that go into packaging for consumer electronics products.
Question 3. What are the main factors that encourage logistics to change? What changes do you think there will be in the next decade? (With reference materials)
In business development, logistic tends to become the most crucial factor that contributes in decision-making process of the business organisation. A decision is the results of making a judgment or reaching a conclusion. Decision-making is a rational choice among alternatives. It is universal to all managers. Basically, the success or failure that a person experiences in life depends on the decisions he or she makes. One decision may make the difference between a successful and an unsuccessful career. Actually, decision process and continues changes in business arena conforms to the logistic process in a certain business. Meaning to say, decision processes and continues changes in business arena encourage logistics to change.
Over the last two decades of the twentieth century, theories of organisational change have had a tremendous impact on business and not-for-profit companies. The extent of the influence of popular theories of change including Culture Change, Total Quality Management (TQM), Business Process Re-engineering (BPR), Organisational Learning, and, Six Sigma is evidenced throughout the business world. Many of the top corporations, have implemented one or other change program over the last twenty years, often at the cost of millions of dollars, and involving large-scale restructuring and extensive job losses (Mills 2003). At the end of the day, while it is generally agreed that certain change programs have become widely popular, there is considerable debate about the success or failure of the subsequent changes themselves. Business critics blame suggested failure on incorrect implementation. Other business critics are less convinced, questioning the lack of evidence of a clear link between the implementation of selected change program within the logistic system and subsequent business success. It is argued that, within management thought and practice, the notion of organisational change has changed in significance over the last two decades, from one of many potential strategies of managing to a key influence on organisational effectiveness and survival. The focus has shifted from the strategic choice of the actor to one of incontrovertible external forces that managers need to anticipate, react to and manage. It is contended that organisational change as imperative has become an important management discourse that can be witnessed in the discursive practices of companies (Mills 2003).
Explaining the popularity of change in logistics in sense making terms it can be argued that change has become a conventional management practice, developed and sustained through a powerful management discourse, whose on-going character influences the decision-making of large and small companies, profit and not-for-profit companies alike. Whether or not the adoption of a particular program of change is the right course of action for some companies doesn't seem to matter. Decisions to implement change programs are based on plausibility rather than accuracy. Prior to 1980, within business texts, organisational change as a management technique was either not mentioned at all or was limited to discussion of group dynamics and employee resistance to change (Mills 2003).
Over time, the emphasis on change programs has switched focus from ways to improve employee satisfaction to a goal today of customer-driven corporate effectiveness. But something more than a change in focus has occurred. The notion of organisational change has taken on new meaning. Since the early 1980s, it has become an imperative rather than a technique to be considered at appropriate times, a holistic rather than a piecemeal approach to organisational effectiveness (Mills 2003). Organisational change is done by a company when it believes that the company is not adjusting to the new trends in its environment. The change that needs to be done includes improving the Hong Kong businesses' relationship with the employees. Business should have good relationship with the employees so that the firm will run smoothly. This will also make the employee respond to the challenge of competitors with quickness and conviction. Another change that should be done by Hong Kong business is to educate the employees about the new technologies. This will make the employees have a quick response towards globalisation and the market pressures being thrown at this sector in Hong Kong. Moreover a change that should be done by the business industry is to use diverse kinds of management and marketing strategy so that they can compete with new rival firms that are either within the country or outside the country.
Question 4. In today's business environment it is not unusual to outsource activities. Discuss the advantages and disadvantages of outsourcing the logistics processes?
Logistics is about operations and execution, and that makes it a people business. The raw talent is there. One of the next big challenges will be in ensuring that logistics professionals already in the field and those entering from other disciplines or from the education system have the right skill sets to survive and thrive. That will be no small challenge given the pace of change.
The need to go beneath surface logistics is particularly important for international network organisations. Similar surface operations in different countries may belie very different goals and motivations among the network's organisational nodes in their respective countries.
Despite all the talk about reducing inventories and improving distribution networks, manufacturers are paying more to move and handle their goods. The cost of the business logistics system swelled to hundreds of billions in amount in the past years. There is therefore a need to develop and implement cost reduction strategies in overall logistics systems in businesses. The challenges to keep goods moving fast, efficiently, and at a reasonable cost seem to be mounting from every direction, but the tools to deal with those challenges are readily available and just needs to developed and implemented by various companies dealing with logistics.
As part of the advantages and disadvantages of outsourcing the logistic processes, one school of thought views logistics as the umbrella strategy for many of the concepts discussed here - they are all relegated to implementation alternatives.
Outsourcing often refers to the delegation of non-core operations from internal production to an external entity specialising in the management of a certain operation (Gussert, A. 2005). The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy redirected at the competencies of a particular business, or to make more efficient use of the worldwide labour, capital, technology and resources. Outsourcing of logistic processes is not a new phenomenon--although the subject has hit the headlines only recently. Many business companies started creating jobs overseas to gain access to foreign markets. They audit, consult, and repair where customers are located. To put it mildly, they do not tell the overseas customers to come here. Moreover, many foreign markets are growing quickly as numerous domestic ones have become saturated. In various industries--ranging from banking to consumer products to .job placement to aerospace-leading firms report that their overseas revenues exceed their domestic sales.
Remember, too, that some businesses hired specialised workers overseas to adjust to immigration limits (Gussert, A. 2005). When they could not get those workers here, they had to send the work to them. While doing so, the companies learned how to use modern technology to shift the location of work economically. They become accustomed to taking advantage of lower costs, domestic and foreign. Telecommuting from employees' homes may have paved the way for some enterprises to extend the process to new suppliers, at home and abroad.
Most fundamentally, a great many companies are focusing their efforts on their core competence. They subcontract out most of their activities to domestic suppliers. Viewed from that perspective, overseas sourcing is a minor part of the trend to decentralise business operations. In addition, these companies have learned that, in many cases, the higher productivity of workers offsets the wage differentials and other costs of operating overseas.
Outsourcing can help a company operate in an increasingly competitive global marketplace. Lower costs are the key to maintaining a firm's position in the modern global economy. Outsourcing can enable a business to provide 24/7 coverage, especially for customers who need around-the-clock support. On the other hand, it is impractical for a firm to adopt a unilateral policy against outsourcing work-especially when its foreign and domestic competitors are doing it. The specific decisions are made on hard-nosed business grounds--including balancing productivity and labour costs.
In researching outsourcing logistics, I've found some troubling issues. On the one hand, I've found numerous situations in which managers could have both reduced the cost of their in-house operation and still improved service. On the other hand, I've found situations where the organisation had decided that communications was too "mission-critical" to turn it over to a third party.
There are valid reasons to explore outsourcing, but the objective of any study of alternatives should be to figure out how to improve service and reduce operating costs, not to outsource for its own sake. The most positive contribution that could come from the current fascination with outsourcing would be forcing managers to seriously evaluate the practices of their organisation.