Tuesday, June 4, 2013

Logistics activities of a Fishing equipment company

Executive summary There are a variety of activities that firms engage in their endevours to increase their operational efficiency. Also, the increasing global competition and the increased usage of the possibilities created by the internet have been very instrumental in the invention of many ways o doing business for instance online retailing. Online retailing has been greatly used by firms who are keen on capitalising on the new consumer profile who are more into the online buying due to the variety, lower costs and the convenience. The firm thus has to incorporate this into its agenda. The paper deal with three main issues; logistics activities of the Australian company in terms of the order management and customer service, design of distribution centers and operations and the physical distribution of the fishing equipment in Australia. Introduction Logistics management is a component of supply management which deals mainly with the planning, implementation, and control of the effective and efficient forward and backward storage and flow of goods, information and services between the points of consumption and points of origin with the aim of satisfying the needs of the customers of the given firm. Logistical management can be made effective when its various elements are seriously taken into consideration. The commonly discussed elements include such activities such as warehousing, packaging, handling of the various materials, management of the inventories, information, clear logistical networks and transportation, supply and demand planning. Logistics management can also have element of production scheduling and planning, sourcing and the procurement practices. Many firms have been forced to change their various logistics activities due to the reining environmental factors in the industries where they operate for instance change in customer preferences, economic hardships, requirements for convenience and variety. This has also been coupled with the political changes for instance more free trade agreements for instance the reduction in the barriers that have characterized (Roberts, and Berger, 1999). The new firm will source its fishing products from China who will be comparatively cheaper than if they sourced from Australia due to reduced manufacturing in the force of increased costs of production. The new firm part from souring the fishing equipment from China will also engage in online retailing where the equipment will be offered to the potential consumers through the internet. The consumers are more inclined towards online retailing du to the fact that they are able to get lower price deals, there is also the advantage of convenience and finally the consumers can easily have access to a wide range of products from which they can choose from. The paper will discuss the logistics activities of the Australian company in terms of the order management and customer service, design of distribution centers and operations and the physical distribution of the fishing equipment in Australia. Online retailing Globalisation has brought about many changes to the business environments of many firms. In the firm’s endeavours to increase their profitability as well as the welfare of their consumers, many firms have tapped into the opportunities brought about by the advent of the internet for instance online retailing. Online retailing can easily increase the performance of the organisation and has also been increasingly been used by firms as a source of competitive advantage. The consumers in Australia have increasingly been attracted to online retailing due to the lower prices, convenience and the wide range of products that they can access through the avenue (Grosso, 2005). According to Commonwealth, (2011), the online retailing industry in Australia has been growing at an unprecedented rate, increasing it value from 24 billion dollars in 2010 to 33.8 billion dollars in 2011. The firm therefore needs to move away from the brick and mortar store models which are used by the competitors so that it can cash in on the opportunities that are available. Order management and customer service The order management systems (OMS) is very important to firms especially those that have outsourced their production processes as they have very little control over the production timelines. The system helps the firm in the efficiently and effective management of the orders that may be received. The orders come in different forms for instance through the emails or directly at the website of the firm. Thee orders needs to be managed properly so that the billing of the customers can be correct while also ensuring that the customers get the right products when and where they need them. the in-store retailers on the other hand had a more physical contact with the customers thus in instance they had the ability to ask for the clarification from the customers as well as the customers having the opportunity to check out the various products, thereby choosing those that served them best (Roberts, and Berger, 1999). Online retailing has extended the order management process beyond the four walls of the company thus a need to make well informed and timely order management decisions. Any delay which may result from the upstream processes, may affect the whole operation of the firm. The OMS can manage and control the variations which may occur in the upstream processes mostly in china (Grosso, 2005). A simple retailer ordering process Source: Author generated. Simple buyer ordering process Source: Author. The ordering process from the retailer will ensue when the buyers of the fishing equipment search in the online catalogue of the firm, put items in their online shopping baskets, give their particulars which include their billing preferences and addresses. Upon the lick of a button, the information will be delivered to the seller; the order is then automatically entered into the ordering system. After knowing the quantities that the different customers need, the firm can get to decide on how often the stocks of the firm should be replenished. This will require that the inventory of the different products is kept. To ensure that the inventories are efficient, the firm will use the most efficient and cost effective means of transport. Once the goods arrive, they will be stored in the warehouse of the firm which is located in Australia (Monczka, Handfield, Guinipero and Patterson, 2010). The individual orders by the customers are then picked and packaged according to their specification in readiness for shipment to the various addresses which the persons had indicated. If the above process goes on smoothly for instance when there is no misunderstanding between the customer’s orders and the actual products which are delivered to them, difference in the quality of the product from what was ordered to, losses, breakdown of the fishing equipment and a general lack of any other complaints, there will be little need of customer service. However, customer service is very important as it will in improving the standing of the business in the eyes of the consumers and also a cornerstone of value for the customers. The issues that are dealt with by the customer service include the quality of the delivery of the products, the general availability of the products as well as the timing of the delivery of the fishing equipment (Roberts and Berger, 1999). Design of distribution centers and operations Design Since the firm deals with online orders of the customers, it is important for the firm to have distribution centers in major urban areas in Australia. This will significantly reduce the time it will take the firm to deliver the products to the consumers. The warehouses where the products are kept should be geared towards aiding the process of effectively and efficiently allowing for the firm to deliver the products to the consumers. Cost is a very important factor and the firm wi2ll focus on ways through which it can reduce the logistical charges for instance the charges that a film will incur in getting the products from the warehouses to the addresses of the buyers (Coyle, Bardi and Langley, 2003). The distribution center of the firm is more or less a center for order fulfillment as the customers do not visit the warehouses to view the products but the item are directly delivered to the consumers. The distribution centers allow the firm to be able to keep a huge variety of fishing equipment in the single store. The distribution centers should be set out throughout the major cities. This would help the firm reduce its carbon footprints as well as be timely in its delivery due to the nature of the demands of the fishing equipment which are highly dependent on the seasons of the year. The firm should be able to deliver the products so that the levels of customer complaints can be minimised thus cutting down on the losses that the firm might incur due to cancellation of orders due to delays. The distribution center will receive huge quantities of products which are directly shipped from China. The product will then be divided into slightly smaller quantities depending on the orders that the firm had received to the individual stores. The firm will focus on just in time (JIT) logistics where the products which are ordered by the products hit the smaller distribution centers when they are due to be delivered to the customers. This will help in the optimal optimisation of the spaces in the distribution centers. However, in the main distribution center, the firm will focus on bulk receipt so that the firm can be able to minimise the inventory costs that they will incur, maximise on the variety of the fishing equipment that it can offer and also to save on costs in terms of reduced shipping voyages. This will also ensure that in case of any problem with the products that have been delivered to the consumers, the replacement can be transported immediately thus leading to a lower order cancellation rate and the satisfaction of the various customers (Coyle, Bardi and Langley, 2003). Various types of containers will be used at the different levels of the distribution of the products. When the products are being shipped from China into Australia, large intermodal containers will be used as they are very efficient in the handling of large volumes of goods. The container will ensure that the goods reach the destination sound. The different categories o goods will be stored in different pallets, which are then stacked into the containers, done to ensure that the brittle products are not broken by the other hard products an also to ensure ease of sorting out the products. Secondly, Totes will be used to transfer goods from the large distribution center to the smaller centers. From the small centers to the addresses of the consumers, cartons and cases are used depending on the size of the product that had been ordered by the customers (Wood and Murphy, 2011). It’s important that distribution centers are organised in ways that will ensure that they are efficient and are able to support the carrying out of the various activities that the firm seeks to undertake in the stores. The large distribution center should be located in close proximity to the shore, so that the movement of the products from the ships can be cost effective. Operations There are a variety of operations which will take place in the distribution centers. The first will be the unloading of the products as soon as they hit the centers. This can be done through the use of forklifts or conveyor belts. However for the firm, conveyor belts will be used to increase the efficiency as well as reduce costs for instance in terms of labour. There are also exports operations especially to deal with the orders that are leaving the country. The work can b carried out in conjunction with shipping companies or other logistics firms. The other operation which is important for the firm is to certify that the products that are received at the centers are high quality and thus reduce product returns. The other operation which is carried out is the packaging of the products depending on the needs of the other distribution centers or those of the customers (Wood and Murphy, 2011). The other operation that is carried out at the distribution center is the transportation of the products to the other stores which are distributed throughout the major cities or to the customers. Physical distribution in Australia Physical distribution is very important for the firm logistics process especially due to the fact that the products have to be moved between the distribution centers and the customers. Different transport modalities are used to distribute the products within Australia. The products ill be moved to the different warehouses and stores and finally to the customers through the use of various modes such as roads, ships, rail and air (Berglund, van Laarhoven, Sharman and Wandel, 1999). The choice o the mode that will be used by the firm greatly depends on the costs consideration as well as the level of efficiency in delivering the products to the consumers, which is the ultimate goal of the firm. Rail system Transportation of the goods within Australia mostly utilises the rail system to move huge volumes of materials from the main distribution center to the different logistical centers. When the good are shipped in bulk, the costs that will be incurred are lower. For instance when a firm uses rail to transport 2,000 units of the fishing equipment, it may incur 2000 dollars. When the units increase to say 6,000 the cost may rise to 5,000 dollars. The importance of the bulk transport can thus be seen in terms of the 1,000 dollars that will be saved by the firm. Due to the nature of the railway system in Australia, especially in regards to Sydney, the firm can be able to move its products from the distribution center in Sydney though the channel to Adelaide, Melbourne, Brisbane, Perth and even Queensland. Road transport Road transport is also used to distribute products to areas which can not be served by the other means of transport. When the products are being moved to the warehouses, especially into towns that have no rail connections, road transport is used to solve the problems of access. The road transport especially through the use of vans can be used to supply the products to the addresses of the different customers. The flexibility of this mode of transport is very important for the achievement of the goals of the firm as they are able to move from one door to another delivering the products. Air transport The Sydney airport can be used as a terminal from where the products that are urgently ordered can be transported to the various people who ordered them. This method of transportation will be used to deliver fishing products which satisfy two criteria; products which are not very bulky. The products must also be of very high value, this is meant to ensure that the high costs associated with the transportation will be offset by the high prices which the consumers have to bear. After the goods leave the airport at Sydney aboard any of the cargo airlines which operate from the airport at Sydney, they will be received at the other airports such as Adelaide, Melbourne, and Perth or even at Canberra etc where the products can be loaded onto vans for delivery to the people who ordered them. All these depend on the location of the people who ordered the products (Tseng, Yue and Taylor, 2005). Interchanges in distribution in Australia The distribution channels in Australia seek to achieve a variety of objectives. The first is the optimisation of the networks whereby both the hierarchies and the nodes of transportation work towards reducing the costs that thee firm will incur in the overall delivery of the goods and also reducing the effect that the transportation has on the environment (Christopher, 2005). When the potential for the synergy between the different medium of transport are used, the firm will be able to reduce costs of its logistics and supply chain management greatly. Therefore the firm must used the most efficient nodal interchanges and structures and also ensure that the distribution hierarchies work together perfectly. Secondly, the firm must also speed the supply chain to ensure that the demands of the consumers are met effectively. This will include reducing the lead times, the windows allowed for the orders and the deadlines for the delivery of the orders (Gaballa and Abraham, 2008). The firm thus need to use the most efficient means of transportation that are available to them, encourage more expedited orders and also increase the number of trips that the vehicles will take thus in the process increasing the speeds of the vehicles. However, the different initiatives of the firm may be faced with a variety of conditions which may prevent the firm from increasing the efficiency of their operations. The first is the global financial crisis which led to many firms reducing the number of their fleets. Also, the volatilities of the foreign exchange rates and the instabilities in the oil producing countries may also lead to increase of costs that the firm incurs fro instance though high fuel costs. Finally, the schemes that are meant to reduce the levels of pollution for instance treaties such as the Copenhagen Summit on Climate Change have all affected how firms operate (Estrada-Flores, 2009; Department of Climate Change, 2009). Bibliography Berglund, M., van Laarhoven, P., Sharman, G., Wandel, S., 1999, Third party logistics: is there a future?”, International Journal of Logistics Management 10, 59-70. Christopher, M., 2005, Logistics and supply chain management: creating value-adding networks, 3rd Ed, Pearson Education Commonwealth 2011, Economic Structure and performance of the Australian Retail Industry July 2011, Australian Government Productivity Commission, Commonwealth of Australia, [online] http://www.pc.gov.au/projects/inquiry/retail-industry/draft> Retrieved 21/01/2012 Coyle, J., Bardi, E. and Langley, C. 2003, The Management of Business Logistics: A Supply Chain Perspective, London: Thomson Learning Department of Climate Change, 2009, “Australian National Greenhouse Accounts: National Inventory by Economic Sector 2007”, Commonwealth of Australia, Barton ACT., pp. 1-20 Estrada-Flores, S., 2009, “Technology Platform 1: Supply Chain and Logistics, Opportunities and challenges faced with emerging technologies in the Australian vegetable industry”, Horticulture Australia Ltd., pp. 1-82. Gaballa, S. and Abraham, A. 2008, Food miles in Australia: a comparison of emissions from road and rail transport, CERES Community Environment Park, pp. 1-28. Grosso, C. 2005, Retailing: what’s working online, [online] < http://www.theaustralian.com.au> Retrieved 21/01/2012 Monczka, R., Handfield, R., Guinipero, L., and Patterson, J. 2010, Purchasing and Supply Chain Management, London, UK: Cengage Learning Roberts, M. and Berger, P. 1999, Direct marketing management, Upper Saddle River, N.J.: Prentice Hall Tseng, Y., Yue, W. and Taylor, M. 2005, “the role of transportation in logistics chain”, Proceedings of the Eastern Asia Society for Transportation Studies, 1657 - 1672 Wood, D. and Murphy, P. 2011, Contemporary logistics, New Jersey: Pearson Education Publishing