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Requirement
Question 1
“Although there are good reasons to keep inventories in the logistics chain, they must be carefully managed.” Discuss the statement and use practical examples to justify your discussion.
Question 2
Read the attached Case Study Customer Service at Woodson Chemical Company (WCC)
(Source: Bowersox et al, 2013) and answer the following questions.
a What is the critical issue(s) in logistics management confronting WCC North America?
b What changes, if any, should be initiated to address the above-mentioned issue(s)?
c Identify the risks and benefits of your proposed changes from the perspective of (1) WCCNorth America corporate management; (2) WCC North America line distribution management; (3) WCC North America customers.
d What would be the impact on WCC North America operations if the proposed changes were successfully implemented?
e What changes, if any, would you recommend for WCC North America’s information processing arrangements?
f Is Melinda Sanders in a position to properly understand WCC North America’s problems? Why or why not?
g Do you think WCC North America’s current situation is applicable across its global operations? How, if at all, does it change the nature of the problem?
Solution
Question 1
Essay
“Although there are good reasons to keep inventories in the logistics chain, they must be carefully managed.”
Keeping surplus inventories in stock is always not a lucrative option for a businessman, but sometimes excess is always not a need of an hour due to unexpected customer demands & supplier inadequate supply. Keeping this in mind, the businessman should judiciously optimize their stock requirement & keep on circulating stocks. There are various ways to measure pitfalls & advantages with logistics chains (Christopher, 2016). In the today’s modern world of retailing & whole selling, smooth inflow & outflow measures the inventory levels. Through an Optimization and proper Coordination between various departments & divisions is the sign of a proper integration within the company. This cooperation helps in a smooth flow, reduced costs & better working style prospects. For example, a customer wants a new shirt & he will order with a company, so the company has to check for stock, raw material availability, transportation costs & then will check for delivery status. If the inventory & availability of stock is not there, then it would lead to delays & loss of customers.
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If at all inventory has to be maintained then costs & trade-offs has closely monitored. The company has the focus on the inventory ratios which means the company is optimally utilizing its sales turnover & churning inventory levels when they are operating high & this helps in also increasing good profit margins. Higher inventory levels & great profit margins is a sign of efficient management. As per the requisites & prerequisites of dealers & retailers a business can monitor a number of product units sold, needs to be manufactured & check for delivery status through an efficient & effective management system. Quality & quantity cannot be pre-assumed, but a business needs to prepare itself for the uncertainty & forecast the worst & good scenarios. Hence stocks available as raw materials, with the manufacturers, with the dealers, semi or finished goods & goods available during transportation all needs to be pre-planned & counted once. When we think off stocking inventory, we need to think of locations & timely delivery status & it all depends on the responsiveness from the customers & vendors. For example, when a customer walks into the nearest store to purchase a new or trendy designs if it's available customers buy it immediately, but if it's not available & customers demand it, it will lose the interest of customers & he will switch to different apparel stores & brands. Hence immediate requirement & readily available are the two key concepts from a customer point of view.
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Pitfall 1: No Supply Chain Metrics
Since there is no performance to measure adequate & full usage of inventories. Hence keeping a tab of inventories & of metrics will help in optimum utilization. -
Pitfall 2: Inadequate Definition of Customer Service
By filling a timely survey of customer satisfaction & keeping a trend of a customer order history will help a businessman to maintain stock accordingly. Sometimes unsatisfied or impatient customer frequently orders & cancels stock & sometimes some customers re-order same stock. Hence recording & analysing the stock history status will eliminate wastage & maintain existing stocks. -
Pitfall 3: Inaccurate Delivery Status Data
When orders are delayed & not delivered on time, due to the logistics unplanned situations or lack of man skills, then the smooth flow of stock gets the hamper. Hence delivering stocks on time to the customer, getting stocks delivered from the logistics team will help in judging accurate delivery status. -
Pitfall 4: Inefficient Information Systems
Transferring stocks from one inventory to another, losing out stocks in a transitions & information leads to problems in inventory/backlog status, planning future stocks. production plans, etc. It becomes a hassle & tedious job to record status manually. -
Pitfall 5: Ignoring the Impact of Uncertainties
Customer, delivery, logistics, inventories, supply management & there could be warranted & unwarranted uncertainties which a business needs to go through. Keeping a plenty or scanty will result hamper business cycles (Bozarth, 2016).
Hence quality check, quantity control, maintaining raw data of inventory, customer satisfaction , the information system will help in eliminating some uncertainties. -
Pitfall 6: Simplistic Inventory Stocking Policies
Tracking uncertainties, using information to stock inventory policies helps in gaining reliability. Periodically adjusting & stocking as per requirements is a continuous process. -
Pitfall 7: Poor Coordination
Poor delivery status, customer records, lack of MIS, inventories, goods lost in transitions are all common examples of poor coordination between various departments & individuals. -
Pitfall 8: Incorrect Assessment of Inventory Costs & transportation costs
Costs & Benefits of inventory investment is essential in decision making to evaluate opportunity cost of capital, warehousing, and storage. Depreciation costs, lost shell life, costs of transportation via road or shipments all needs to be assessed & recorded on the timely basis (Coyle, 2016). -
Pitfall 9: Organizational Barriers
Due to the lack of management control centralized & decentralized it results in the free flow of barriers. A proper administrative control which regulates inventories, checks excess or shortages or wastage helps in eliminating costs & repeated efforts. -
Pitfall 10: Separation of Supply Chain Design from Operational Decisions
Treating supply chain inventories separately from a plant & distribution channel helps in proper inventories records & in daily operational decisions. -
Pitfall 11: Incomplete Supply Chain
Inadequate customer demand & sometimes transitions of products from one manufacturer to results in delays & lags. Hence there will always be operational inefficiencies due to the manufacturer records, customer services , dealers orders etc. For example when we include dealers into the supply chain they help us on timely actions on orders, expedite shipments, and other pre-requisite requirements. Also, for a dealer knowing manufacturer inventory status will help in swift action.
Opportunities
There is always a scope of an improving opportunity & continuous scope of maintenance.
Design for Supply Chain Management.
Parameters such as manufacturing, servicing, assessability & customer satisfaction all evaluate “design for supply chain management.” Hence product designs should be judged as per the costs, benefits, product design & functionality (Dekker, 2013).
Integrate Databases throughout the Supply Chain.
Data manual & key recording all the all the entries from the various departments helps in analyzing the trends of data. It helps in prediction of shortages or excess, record for inventory status, manufacturer & production pipelines, customer & supplier satisfaction & delivery schedules status. This helps inaccurate judgment of data, remove obsolete, depreciated stocks & replace with fresh stock. Sometimes key products are redesigned with additional valuable inputs.
Integrated Control and Planning Support Systems.
Controlling, planning, execution should all work co-independently & co- exist in the same environment. All the policies, procedures should be transparent & supportive of each other.
Redesign Organizational Incentives.
Internal & external barriers within an organization hamper smooth flow of inventories. So various departments such as transportation, supply, logistics, purchasing & others should be interdependent yet be dependent on each other. For this, individual & departmental incentives, promotions, transfers, retirements should all be reconsidered & designed so that each one contributes effectively (Heizer, 2016).
Institute Supply Chain Performance Measurement & Expand View of Supply Chain.
Electronically view data can be evaluated & used periodically then manually recorded data for the MIS inventories, logistics, suppliers, transportation, etc. This can be shared & trends can be followed about the product redesigning, feedback & inventories can be maintained accordingly (Rushton, 2014).
Conclusion
Hence maintain inventories & keeping a regular flow of stocks is a responsibility & accountability of management as well of various individuals in various departments. Timely stocks, feedback from vendors, customers, dealers, etc. should all be recorded which helps in evaluating & assessing restructuring, monitoring & removing any obsolete or wastages. Keeping inventories with logistics is a good idea but should be properly checked & there should always be the rotational flow of stocks to avoid old stocks not getting used. Logistics & vendor management accordingly should be judged as per costs & benefits. A metrics should be maintained to keep a tab of existing or new stocks. Customer feedbacks & their satisfaction should also be taken with utmost seriousness (Rushton, 2014). While concluding the healthy inventory status, one has also to think about companies small/large scale operating style that will highlight the key relevance of inventory levels & throw some light on current demand, predict losses/gains by maintaining inventory stocks & lastly efficient management coordination. So the key focus is a timely flow, shortages or zero delays, keeping customers/vendors satisfied & at the same time removing wastages/obsoletes & any losses due to bad products.
Question 2
a) Critical issue(s) in logistics management confronting WCC North America
In the most divisions across the company, it is observed that sales were falling & there is a downward trend.
The company was improving customer service through feedbacks, servicing & hence leveling to make sales trends to rise high.
Due to the expanded operations management & communications are jam packed with work.
When there is an efficient & effective information technology the company, there is a scope of improvements which can help in stimulating growth in various other departments.
Hence, Woodson Chemical will optimally utilize existing & emerging resources to serve customers.
b) Changes that should be initiated to address the above-mentioned issue(s):
Citation from the paragraph is "of a focused market position, good raw materials & a lean, efficient organizational structure.” merging within Woodson Chemical divisions in the various supply chains. Co-existing with other departments & divisions will help in positive developments of the company growth. Joining hands in between suppliers and/or transportation would make sure timely supply, vendors records, removal of the obstruction, blockages in the pipeline & smooth transitions. For a long term relationships, it should also focus on customer satisfactions along with servicing vendors & dealers so that interdependency & coexistence is always there (Stadtler, 2015).
c) The perceived risks & benefits depend on the specific
1) WCC corporate management
Risks Benefits
Loss associated with failure : loss of investment , competitive position support, Potential competitive advantage
Improved worker morale employee faith Better relationships across divisions& supply chain
2) WCC North America line distribution management
Risks Benefits
Having correct operations and closer Greater certainty in demand advantage with relationships with customers information technologies
Regain workers confidence if the plan fails Less uncertainty with regard to supply given closer relationships with suppliers & transportation providers
3) WCC North America Customers
Risks
Benefits
Close relationships often entail disclosing
“trade secrets” or availability Better services through trusting relationships products with uncertainty in products
Information that would be valuable to competitors given that people are adverse to change Quicker Response & higher fill rates
Technologies & willingness to share information.
Less uncertainty with regard to supply given closer relationships with suppliers & transportation providers
d) Impact on WCC North America operations if the proposed changes were successfully implemented:
Under any conditions & situations, when we lower costs services improve. Due to the lower costs, it results in higher profits due to satisfaction & margins. When we service clients & our vendors, dealers it helps in better results & production. But lowering costs needs to be equated with the benefits & profits derived. Since lowering the costs will always have an increased satisfaction & an edge over the competitors, but at the same time, lower costs will result inoperational issues & economic scale of production.
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Place Your Ordere) Recommended changes:
There should be a free flow of communication, removal of blockages of communication & hence when there are various departments, there should always be allowed to communicate own their own. For example, Suppliers would like to know issues in inventories, delay status & customers would like to order, customize & check stocks availability. Timely considering customers feedbacks fixes delivery issues, highlights the product redesigning & incorporate pre requisite changes before a final result. Similarly, through effective communication vendors/dealers helps in providing guidance/feedbacks to management & if timely considered it would result in converting semi or finished products & redesigning it, incorporating changes
before getting in the end product result & wasting final products which will set extra losses to the company. Costs, benefits, risks managements should all go as per the process & this can happen only after crystal communications. If the company does not allow liberty or independence, it will result in confusions in end results/products, lack of strategies & constantconflict of interests. It's always noted that company, where lower, middle & workers are actively involved in the clear code of communications, results in higher turnovers & better coordinations among various departments & divisions, timely fixes the issues, delays & lags.
f) Ms. Sanders is not the topmost leader of the company but still due to her in-depth past experience she could divulge current issues. As per her resume/biodata, she has a hands-on experience with customers due to her positions with the various companies over the last six years. Because of the customer contact identifying the issues fixes the matter immediately. Good customers continuously provide feedbacks & help in continuous improvement on the job. Her only limitation might be her one of Woodson’s three North America Divisions where she was involved passively. As long as she is updated, regularly stays in touch with clients & customers & keeps herself fully informed about concerns/issues in her divisions & coordinates with the various structure operating units on timely basis, this will help her in contributing to corporate-wide discussions, highlighting the agenda, monitoring & controlling the key prospects & fixing all the negative things surrounding the business.
g) Due to the global instability & continuous volatile market exposures, WCC might have a turmoil status operating in various countries. WCC Company when operating in the various countries has to foresee various parameters such as economic & political disturbances, turbulence in supplies & forecast the unwarranted disturbances. Since the international sales are not mentioned & only national sales are discussed in depth, so any issues related to operational barriers, supplier issues, communications with customers helps in rotating sales trends. There are a number of culture barriers which disrupt communication in the cross national boundaries which should be followed & adhered to. Due to language & various culture issues, there will always be issues in monitoring & evaluating transitions & partnering. Information should available should be in a clear acceptable form. WCC while doing business globally also needs to invest time in cross training & development, keep an eye on the currency appreciation/depreciation, transportations or shipments costs & bear all the operating, maintenance costs along with taking care of regional & national sales. Thereby having the global business it needs to adhere & is bounded with various parameters, factors & face issues in a constructive manner.
References
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Bozarth, C.B. and Handfield, R.B., 2016. Introduction to operations and supply chain management. Pearson Higher Ed.
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Christopher, M., 2016. Logistics & supply chain management. Pearson Higher Ed.
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Coyle, J.J., Langley, C.J., Novack, R.A. and Gibson, B., 2016. Supply chain management: a logistics perspective. Nelson Education.
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Dekker, R., Fleischmann, M., Inderfurth, K. and van Wassenhove, L.N. eds., 2013. Reverse logistics: quantitative models for closed-loop supply chains. Springer Science & Business Media.
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Heizer, J., Render, B. and Munson, C., 2016. Principles of operations management: sustainability and supply chain management. Pearson Higher Ed.
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Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
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Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
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