Product Movement in Supply Chain Network

The product manufacturing of Apple is global, as the sourcing of raw materials and the production, all are international (Sheffi and Rice, 2005). The image below shows the product movement in supply chain network of Apple:
The design and development of the Apple products take place in headquarter of the company which is situated in the United States. The next phase is procuring raw materials for the development of the designed product. It is done through the countries such as USA, China, European countries and other Asian countries (Prater, 2001; Lee, 2002; Moncka et al, 2015; Lee, 2004; Christopher, 2016). It means that the sourcing of raw materials of this company is wide. The production (which is the next phase) of the Apple products take place in China and then the developed product is warehoused in California and other locations using the UPS/FEDEX services. The major reason behind the presence of such a wide network for the product manufacturing is the cost of production. The raw material procurement are done from various countries at the lowest cost possible and then the product is manufactured in China where the labor and land are available at low cost in comparison to USA and Europe.

Product Movement Examples

This sub-section discusses some other companies’ supply chain network for comparative understanding.

Dell
Dell manufactures Personal Computers for the end consumers. The supply chain network of Dell can be considered as the shortest in the PC industry. The existing supply chain network of this industry consists of five stages, namely, Suppliers, PC maker, distributors, retailers, and final consumers. However, in case of Dell, there are only three stages, namely, suppliers, Dell, and final consumers (Rai et al, 2006).

Coca-Cola
Coca-Cola is a beverage company and the supply chain network of the company follows the traditional pattern in almost all of the cases. There are various intermediaries between the suppliers and the final consumers. The stages are suppliers, manufacturers, distribution, retailers or vending machines. The company also has international presence in the manufacturing (Alvarado and Kotzab, 2001). However, the sourcing of most of the raw materials is done in the country in which it has manufacturing plants.
Increasing Inter-modality in Supply Chains
The intermodal refers to the selection of different mode of transport. Various companies are opting for intermodal supply chain format as it is less time consuming and incurs less cost. The intermodal transport consists of three modes, namely, air, water, and land (Panayides and Song, 2008). The combination of all these can be a great supply chain decisions for the companies if used effectively. Apple has chosen intermodal transport supply chain methodology for its products. The use of air and road has been the preferred choice for the transport of the finished Apple products. The air transport consists of Boeing 777s FedEx. The combination of air and land transport system is fast and consumes less time of the company in transporting the raw materials and finished products from one location to another. The fast intermodal transportation allows the company in fulfilling the demand all around the world in the shortest time possible.
Inter-modality Issues
There are certain intermodal transport issues that have been identified in the case of Apple. One of the issues is that the extensive use of air transport and land transport significantly increases the cost which eventually converts into the selling price of the product. The air transport has always been the costliest mode of transport due to the increasing oil prices and service requirement. Moreover, as the manufacturing plant of the company is situated in China, supplies are procured from two-three continents, and warehouse is in USA, thus it consumes more travel cost than anything else (Evangelista and Morvillo, 1990). The reduction in the air travel could have increased the profitability of the company further. However, one of the challenges in this is finding the alternative or mixed mode of transport that can solve this challenge.
Inter-modality Solutions
One of the preferred modes of transport for the Apple product can be the combination of all three modes, namely, air, water, and land. At present, the company extensively uses air and land transport which is a costly affair. If the water transport mechanism is also combined together, then it will reduce some cost burden from the air travel. The suggested method is that the company should prefer water and land combination for the material or the products that does not require instant fulfillment. The inclusion of air transport should be in the times when the demand is high and saving time is critical than cost (Bowersox et al, 2002). Moreover, to ensure that the company effectively uses the water-air-land model, it has to do effective estimation of the demand of raw materials and finished products at each destination. The reason behind the same is that the inclusion of water transport will reduce the cost but it will increase the duration involved in the transportation.

New Intermodal Choice Advantages and Disadvantages

There are certain advantages and disadvantages that have been identified in the new intermodal choice which is water-air-land.

Advantages of new intermodal choice are mentioned below:

- It will help in reducing the cost incurred by the company in transportation of raw materials and products to different locations.
- Company can use intermodal containers or ISO containers that do not require filling forms or exchanging certificates at each junction.

Disadvantages of new intermodal choice are mentioned below:

- The use of water transport is likely to increase the time spent in transporting the products or the raw materials.
- The manufacturing plant of the company and the warehouse has to increase the inventory level to keep the buffer for extended period.

Intermodal Choice Examples

This section discusses some of the examples of intermodal choice that can give better comparative understanding:
Red Hook Container Barge
Under the CMAQ Program of Federal Highway Administration, the purchase of some barge has been proposed which will reduce the 54,000 truck trips taken on the New York route per year (FHWA, 2016).

References

Alvarado, U. Y., & Kotzab, H. (2001). Supply chain management: the integration of logistics in marketing. Industrial marketing management, 30(2), 183-198.
Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2002). Supply chain logistics management (Vol. 2). New York, NY: McGraw-Hill.
Carlton, J., & Kawasaki, G. (1997). Apple: The inside story of intrigue, egomania, and business blunders. Random House Inc..
Christopher, M. (2016). Logistics & supply chain management. Pearson Higher Ed.
Evangelista, P., & Morvillo, A. (1999). Alliances in Liner shipping: an instrument to gain operational efficiency or supply chain integration?. International Journal of Logistics: Research and Applications, 2(1), 21-38.
FHWA. (2016). Congestion Mitigation and Air Quality Improvement Program. Retrieved on October 31, 2016: https://www.fhwa.dot.gov/environment/air_quality/cmaq/policy_and_guidance/retrofitfunded.cfm
Lee, H. L. (2002). Aligning supply chain strategies with product uncertainties. California management review, 44(3), 105-119.
Lee, H. L. (2004). The triple-A supply chain. Harvard business review, 82(10), 102-113.
Linzmayer, O. W. (2004). Apple confidential 2.0: The definitive history of the world's most colorful company. No Starch Press.
Malone, M. S., By-Carlson, D., & Leah, S. (1998). Infinite Loop: How Apple, the World's Most Insanely Great Computer Company, Went Insane. Random House Inc..
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.
Panayides, P. M., & Song, D. W. (2008). Evaluating the integration of seaport container terminals in supply chains. International Journal of Physical Distribution & Logistics Management, 38(7), 562-584.
Prater, E., Biehl, M., & Smith, M. A. (2001). International supply chain agility-Tradeoffs between flexibility and uncertainty. International journal of operations & production management, 21(5/6), 823-839.
Rai, A., Patnayakuni, R., & Seth, N. (2006). Firm performance impacts of digitally enabled supply chain integration capabilities. MIS quarterly, 225-246.
Sheffi, Y., & Rice Jr, J. B. (2005). A supply chain view of the resilient enterprise. MIT Sloan management review, 47(1), 41.
Solomon, M. C., Doczy, P., Homer, S. S., & Wolff, S. (2004). U.S. Patent No. D490,420. Washington, DC: U.S. Patent and Trademark Office.

Zuker’s Warehouses

This section will discuss the warehouse aspect of the Zuker Warehousing. It is a warehousing provider in Florida (Zuker, 2016). The company is small in size and it is mainly into the warehousing services and, therefore it’s suitability for this study has been decided. The company

4.1 Warehouse Floor Plans

The diagram given below is the floor plan of the warehouse facility of the Zucker warehousing. The complete warehouse has been divided into four compartments. The first compartment consists of “Thru Wall Exhaust Fan” and “12 Foot Overhead Door”. The second compartment is located in the center with exhaust fan on one wall, air-conditioner, security window and see thru window into warehouse (Zucker, 2016). One of the compartments has been converted into the office where the warehouse manager spends his time. However, in case of emergency, this area is also converted into storage facility. One of the compartment (identified as Office #1 in the image) is the permanent are for the office staffs. The overall warehouse plan is simple and do not show complexity in comparison to other huge warehouses.

Warehouse Facilities Examination

The examination of the warehouse facility of the Zucker Warehousing shows that its simplistic design does not require major attention in its maintenance. Moreover, there are enough space in the doorway and the gallery that can allow easy flow of the products from the warehouse to the trucking area and vice versa.
The warehouse facility designed by this company is not similar in all the places. The warehouse facility layout depends on the requirement of the customers reaching the company (van den Berg and Zijm, 1999; Tompkis and Smith, 1998; Faber et a, 2002). The above is the simplest floor plan provided by the company to the customer that has been considered for this study.

Strategic and Operational Requirements

There are some issues that can be identified in this floor plan. The products that require better environmental management might not be able to sustain in this warehouse plan (Livesay et al, 2002; Autry et al, 2005). The open space warehouse with exhaust fan and air-conditioner will not be suitable for the critical and high end products. Therefore, to attract the customers who prefer the facility with the high-end facility, some improvements are required.

4.2.2 Proposed Layout Design and Order Picking Principles

There are some improvements that have been suggested for this warehouse design. The suggestion includes layout design as well as the storage environment. Mentioned below are the suggestions:

- There should be the facility of controlled atmosphere. This will provide the opportunity to keep temperature sensitive products and materials (Mohsen and Hassan, 2002).
- The presence of air-tight door should also be there. The oxygen management system within the room should also be there. The oxygen management would be suitable for bringing in the customers who are interested in storing fruits.
- The movement of the individuals within the central area can be challenging as there is single large exit door with a smaller “B” internal door. Therefore, to improve the mobility, the presence of two doors should be there. One door can be developed near the exhaust fan on the other part of the gallery. This will ensure that the individual enters from door “B” and exits with the material from the other door. Moreover, the products should also be arranged that supports the movement instead of acting as the roadblocks.
- The focus on the movement should be focused as it will help in improving the order picking speed for the clients that are regular visitors to the warehouse or supplies products directly from the warehouse (De Koster et al, 2007; Caron et al, 2000). This will ensure that the orders are fulfilled in a fast and efficient manner.
- The storage area can be increased by reducing the door way and office area for increased storage space.

4.3 Various Factors Relating Proposed Design and Order Picking Principles

There are various factors that are directly concerned with the proposed design and order picking principles. The sub-sections ahead consider these aspects one by one:
4.3.1 Inventory Types
The proposed inventory types for this warehouse are raw materials and finished goods. The reason is that to include other inventory types – work in progress, service inventory, and transportation – the warehouse has to increase the movement facility which will require major structural change (Roodbergetn, 2006; Lai et al, 2002; Gu et al, 2010). However, after the application of the proposed steps above, the warehouse will be suitable enough to house various types of different weather products.
4.3.2 Utilization of Space
The utilization of space in the current layout is not appreciable as vast space has been given to the door way and office and less space has been given to the central storage area. The utilization of the current space depends on the type of the products that will be stored by the clients of the company in this warehouse.
4.3.3 Stock Movement
As per the proposal, the stock movement is likely to increase as inclusion of one more door will improve the movement. The entry and exit will become smooth.
4.3.4 Technology
The suggested technology at present is the temperature control and oxygen control only. These will keep the major issue with the environment management on the right track. Warehouse technology can also be used such as RFID which will ensure efficient movement of the product (Chow et al, 2006).
4.3.5 Location of Picking Areas
The picking area will be on the door “B” as it is near to the main gate. The entry door will be the other door that will be developed as per the proposal (near to exhaust).

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4.4 References

Autry, C. W., Griffis, S. E., Goldsby, T. J., & Bobbitt, L. M. (2005). Warehouse management systems: resource commitment, capabilities, and organizational performance. Journal of Business Logistics, 26(2), 165-183.
Baker, P., & Canessa, M. (2009). Warehouse design: A structured approach. European Journal of Operational Research, 193(2), 425-436.
Bassan, Y., Roll, Y., & Rosenblatt, M. J. (1980). Internal layout design of a warehouse. AIIE Transactions, 12(4), 317-322.
Caron, F., Marchet, G., & Perego, A. (2000). Layout design in manual picking systems: a simulation approach. Integrated Manufacturing Systems, 11(2), 94-104.
Chow, H. K., Choy, K. L., Lee, W. B., & Lau, K. C. (2006). Design of a RFID case-based resource management system for warehouse operations. Expert systems with applications, 30(4), 561-576.
De Koster, R., Le-Duc, T., & Roodbergen, K. J. (2007). Design and control of warehouse order picking: A literature review. European Journal of Operational Research, 182(2), 481-501.
Faber, N., de Koster, R. M. B., & van de VELDE, S. L. (2002). Linking warehouse complexity to warehouse planning and control structure: an exploratory study of the use of warehouse management information systems. International Journal of Physical Distribution & Logistics Management, 32(5), 381-395.
Gu, J., Goetschalckx, M., & McGinnis, L. F. (2010). Research on warehouse design and performance evaluation: A comprehensive review. European Journal of Operational Research, 203(3), 539-549.
Lai, K. K., Xue, J., & Zhang, G. (2002). Layout design for a paper reel warehouse: A two-stage heuristic approach. International Journal of Production Economics, 75(3), 231-243.
Livesay, M. F., Getchell, D. L., & Singer, C. H. (2002). U.S. Patent No. 6,339,764. Washington, DC: U.S. Patent and Trademark Office.
Mohsen, & Hassan, M. D. (2002). A framework for the design of warehouse layout. Facilities, 20(13/14), 432-440.
Pandit, R., & Palekar, U. S. (1993). Response time considerations for optimal warehouse layout design. Journal of Engineering for Industry, 115(3), 322-328.
Roodbergen, K. J., & Vis, I. F. (2006). A model for warehouse layout. IIE transactions, 38(10), 799-811.
Tompkins, J. A., & Smith, J. D. (1998). The warehouse management handbook. Tompkins press.
van den Berg, J. P., & Zijm, W. H. M. (1999). Models for warehouse management: Classification and examples. International Journal of Production Economics, 59(1), 519-528.
Zucker. (2016). Zucker Warehousing Services. Accessed on: October 31, 2016 [http://9427317.com/]

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