Logistics and operation managements
Logistics is a term referring to the systematic management of stream of merchandise from the production stage until the consumption stage to meet the necessities of the clients or corporations. Logistics, therefore, involves the incorporation of information, transportation, supply, material management, and packaging and security. It also refers to a canal of supply chain that adds to the good the worth of time and place utilities (Fernie, 2004).
Food Supply chain management
Chain management refers to the approaches used by companies to integrate warehouses, manufacturers, stores, and manufacturers efficiently and effectively, in order to ensure food get manufactured and distributed in accordance with the demands of the clients. This will also ensure they get to the right locations, at the right time, at the right quantities hence reducing inconveniences. In the end, this minimizes costs, while satisfying the needs of the people. Supply chain management is also known as logistic networks because it involves unprocessed materials, work in progress stocks, finished goods, industrialized centers, distribution centers, and retail outlets. The current supply chain system at local restaurants is paramount and should be effective for the restaurants to meet the needs of the clients during Olympic Games.
The supply chain systems for the restaurants should be proactive. This will help them in meeting the immense needs of the customers. The logistic and operation processes are designed to meet all the needs of the customers, suppliers, and distributors. The advantage of this logistic system is that it is flexible and therefore it meets the dynamic business environment. This has in the past enabled the organization to respond to rapidly to changes in the business environment because of its flexibility in offering supply chain solutions. The system has to be able to take advantage of new opportunities swiftly, when they arises. This is critical for optimizing inventory and handling all the costs responding to rapid changes in demand of the company’s products (Fernie, 2004).
The supply chain system for these local restaurants is going to be been able to provide visibility and accuracy in food supply. This will ensure that the products are delivered as promised from the suppliers, warehouses, and to the customers. The consistent external and internal measurements will be used to measure performance and to eliminate wastes. The visibility solution allows the person to have the latest information and data on the supply chain performance. Integration is essential for the supply chain across all the multiple elements because distribution and warehousing services are well coordinated. The supply chain system for the restaurants will ensure business move faster because of proper organization and planning. The different central suppliers are reliable and, therefore, the company will be assured of regular supplies from the food producers and manufacturers, immediately. The ten distributors, who are both local and international, will be selected to ensure that the products reach the market at the right time and therefore avoid shortage of products in the market and hence maintaining the quality (Mangan, 2008).
Advantages of supply chain management to the restaurants
Restaurants will gain a lot from our logistic (supply chain management) services. First, supply chain management is essential for the success of this company because it will ensure all customers in the target get the products. Implementation of the supply chain will enhance faster response to changes in demand and supply. This is promoted by the improved visibility, due to adaptive supply chain networks. This will further be more responsive since the company capitalizes on the new opportunities. This process is necessitated by the quick sense and response to changes. Supply chain management will increase customer satisfaction. This is because it will provide common information and framework that will support collaboration and communication among all the stakeholders (Mangan, 2008).
Supply chain management will enable the company to adapt and meet the customer demands at all times. Concerning this, all stakeholders will be served without fear or favor at all levels. Communication and coordination will be improved. Therefore, all the staff and any other interested parties will get what they want at the right time. Communication and coordination will improve delivery and transportation of goods to the right destinations at the right time. This will reduce shortages, since there are well-planned systems between the company and suppliers. This in turn will enhance consistency. Communication and coordination will improve the relationship among the stakeholders such as storekeepers, transporters, manufacturers, and distributors (Fernie, 2004).
When the supply chain is implemented, compliance with all the regulatory requirements within and without the organization will be enhanced. It will be easy to monitor and track all areas in the business operations such as health and safety of all the stakeholders. Supply chain management has its own guiding rules and principles that guide the company’s stakeholders on what to do. In case one deviates from the regulatory requirements, it will be easy to trace and take corrective action if need be.
Implementation of supply chain management will lead to improved cash flows. This will consequently, promote financial stability of the company. Information transparency and accountability will lead to a shorter period of cash-to-cash cycle times in the company. Further, it will reduce inventory levels and increase stock turnover across the network. This will in turn lead to a lower overall cost and increased profit margins of the company. This will in turn lead to lower operational expenses because of a timely planning for transportation, manufacturing, warehousing, and procurement of the company (Mangan, 2008).
Implementation of a supply chain management by the company will ensure better products, orders, and execution tracks that will lead to improvement in performance, lower costs, and high quality. Profit margins can be improved through better communication and coordination with all business partners and stakeholders. Greater synchronization with business priorities will be attained. This means that, tight connection with trading partners and stakeholders will ensure the supply chain management is aligned to all business priorities and strategies. It will also lead to improved organizational performance and goal achievements in the organization. Supply chain management is necessary because every stakeholder knows what he or she needs to do within a certain period. Role assignment will be easily based on one’s competency and skills; hence, professionals will be in control of their work (Fernie, 2004).
Recommendation for a strategy for the company on external suppliers
For the company to maintain a healthy relationship with external suppliers, the company should have reliable suppliers who will deliver the products at the required time and the needed quantities and quality. Suppliers will motivate customers because their demand can be met. The current number of suppliers of 12 should be increased to at least 20 and the number of local distributors added. Further, each supply should be more than 45 retailers for it to ensure consistency and reliability. The suppliers should be paid regularly so that they can be motivated to supply to the company the required raw materials without delay or failure. The warehouse should be large enough to accommodate the large stocks from the suppliers. This will reduce congestion; avoid poor record keeping, and loss of some of the supplies. Suppliers are vital; hence, failure to cooperate with them may lead to the failure of the company (Fernie, 2004).
Recommendation strategy for the company on external distributors
The Company should ensure the external distributors deliver the products to the expected destination within the stipulated period. The external distributors should be monitored in order to avoid delays of products to the target customers and all market segments. The number of distributors should be increased from 10 to twenty (20) so that customers can get the goods all the time without shortages. The company should ensure external distributors are provided with guiding rules and principles on where to pick the products and the destination to deliver them.
Analysis of the consequences of the recommendations
The strategy used by the company for the external suppliers is noteworthy because it will affect the company’s distributors and consumers. Failure of suppliers to meet what they are expected to supply by the company will create more problems to the stakeholders. This means the products will delay in reaching the market and customers will not be satisfied. The distributors will lack what to carry to customers and the warehouse will serve no role.
The strategy that the company should use for the external distributors will affect the customers and the company. This is because failure of the external distributors to deliver goods to the customers will affect the image and reputation of the company negatively. However, if the distributors deliver the products to customers as expected, it will enhance the reliability and company’s stability. This, in the end leads to customer retention and improved profits (Mangan, 2008).
Managing Information (Supply Chain Management)
Supply chain management systems are important in the coordination of planning, production, and logistics with suppliers. The management of information is utilized in planning by construction of a chain-planning matrix, which is used to monitor the business activities. The supply chain tasks realized from the matrix are interrelated through material and information. The main objective of the connection is to integrate and coordinate the planning tasks. The flow of information can either be vertical or horizontal flow. The latter involves the customer orders, sales forecasts, internal orders among others while the former involves the coordination of subordinates’ plans in the information of the total quantities allocated to departments or processes (Fernie, 2004).
In the production, the supply chain management is vital in having the right information, which will allow optimal production of goods or services. In situations of poor or total failure of proper supply chain management, there are experiences of deficits of production or over production, which are likely to lead the business to a loss. Supply chain management therefore is important in observance of optimality. The use of supply chain management in logistic with supplier is to ensure that they deliver to the business only what is necessary and which is to meet production demand. In situation where more is supplied, it will require storage; which is an additional production cost. Logistics involves the physical distribution, which is an important tool in supply chain management.
Supply chain management by definition is the whole practice of networking from the sourcing, procurement, production, and logistics management, which brings the result of the required product or service. Supply chain management is a sub element of information management, which involves coordination and collaboration with the suppliers, third parties services providers, intermediaries, as well as customers.
On the other hand, supply chain is a combination of organizations, which are directly connected by one, or upstream or downstream movement of products, services, finances, and information from the sources until it gets to the customer. A basic supply chain has six elements, which include the production. In this context, production is the realization of what and how many products to make. A decision is also made on what to produce at which plant and whether to produce or even to outsource from outside suppliers. This strategy should also ensure that capacity and quality of goods produced meet customer satisfaction.
Supply is the other component of supply chain. It encompasses facilities that the company can be able to produce with efficiency and economy ensuring quality of the products. The organization should ensure that it outsource the products which it cannot produce economically. The other component is the inventory component. It involves the strategy to ensure that production is optimal and there are no deficit of stocks experienced or otherwise an over production. It ensures that market demands are met and there is always enough stock in the store (Fernie, 2004).
The location is another component of supply chain. It involves the location of a plant or a warehouse in a position that is convenient for timely delivery and avoidance of long transportation, which is costly. Location decisions should put in consideration the tax and tariffs implications and ensure that the organization enjoys the benefits. The other component is transportation. In line with the inventory, transportation mode used by the organization should be fast and reliable. Transport cost covers almost 30% of the production cost and use of the wrong transportation mode will affect the business (Mangan, 2008).
Information component is another critical factor in supply chain. The information should be processed and linked to other stakeholders who are utilizing the information ensuring that it is timely for effectiveness. It is still through the sharing of information that innovations are done.
The supply chain management helps to reduce the bullwhip effects. Bullwhip effects in supply chain management refer to the tendency where the consumers or user of materials buys more than they require in the immediate future. With the supply chain management, the bullwhip effect is eliminated using the planning matrix constructed to regulate the production process. Supply chain management ensures that only the optimum purchases are made. It provides value for business because it ensures that losses are eliminated as well as any unnecessary expenditure. Through the location and transportation components on supply chain, the value of the business is obtained through efficiency (Fernie, 2004).
Supply chain planning system is a computerized program through which the processes of an organization are handled according to the intention to realize the organizations capability in making accurate forecasts regarding their future demands. On the other hand, supply chain execution system refers to the programs made to process the tasks that have been formulated to arrive at the necessary production levels. Both the supply chain planning system and the supply chain systems are technological applications, which assist the organization in monitoring the production process for efficiency. They both work together where the planning system works as a framework while the execution system does the operations within the framework.
The supply chain management has however been faced by many challenges. One of the challenges is the people or the training and development. This involves skill development and recruiting as well as retention practices. The other problem is how to manage and operate global sourcing offices. With the increased worldwide business operations, managing supply chain becomes a challenge especially through internet due to the very nature of practice. The other challenge involves the cross function and collaboration. The combination of the engineering and quality management reflecting the nature of procurement, with other functions like sales and marketing in requirement management seems to bring conflicting interests. This entire problem can be solved by use of technology where internet can be applied for proper communication of information to all stakeholders worldwide. Again, the use of software, which is specifically designed to support supply chain management, can be a solution (Fernie, 2004).
A push-based model of supply chain management is one that is driven by forces, which affect the organization. The push factors make the business to comply with certain impetus for its success failure to which the forces can push the business out of existence. A pull based supply chain model on the other hand, is one that is driven by attractions in certain areas. When an organization spots an opportunity, it makes a model to fit the opportunity. In the contemporary world, most organizations are opportunity oriented and therefore they prefer the pull based models (Mangan, 2008).
Fernie, J., 2004. Logistics and retail management: insights into current practice and trends from leading experts. London: Kogan Page Publishers.
Mangan, J., 2008. Global logistics and supply chain management. New York: John Wiley and Sons.