Daniele Francescon Stephane Nicolay
AMERICAN LIGHTING PRODUCTS Case Study
Business Logistics
November 2008
TABLE OF CONTENTS Preface 3
Analysis of the situation 3
Physical flow of goods 3 Organisational structure 3 Information management: order processing and demand forecasting 4 Performance 4 Costs 5
Identification of major issues and problems 6
Incipit 6 Initial consideration: need to redesign the system 6
Generation of alternative solutions 7
First solution: centralization for the west area 7 Second solution: LOC for consumer products 8
Further considerations and conclusions 9
List of references 10
Appendix 1 – Calculations 12
Preface
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There are different ways through which a performance of a system can be assessed (order fill rate, production condition, accurate documentation among the most important), and the measure used by ALP seems to have some deficiencies in assessing the real impact of the operations undergone by the company and the final customer satisfaction. In fact can be said that such a measure doesn’t take in to consideration returned items, and considered the logistic process concluded in the moment in which the freight leaves the stocking point, in this way lacking an overall view of the process that can be seen as an old view of the logistic system. If customer service is defined as “the entire process of filling customer’s order […] handling the possible return of the goods” the current measurement system adopted by ALP is leaving out all the post-transaction elements which are vital to establish a good relationship with the customer and have to be planned for in advance. This is also one of the reasons why the service level is so strongly affected by stock availability. Focusing on the end-user side could give a more realistic picture of the performance of the company at a logistic level.
The variability of logistics performance is quite relevant. ALP has not been able to guarantee a reliable service to its customers in the last years. There seems to be a lack of organization when providing the service to the customers, in the sense of establishing priorities and
Global Supply Chain – You Better Be Good…………… Time and Distance……………………………..……………… Where Do the Lost Savings Go? …………………………. The 10 Capabilities of Global Logistics Leaders…….. Lack of Global Technology Enablement …..………….. Summary………………………….................................... Sponsor Perspective …………………………………………. About Supply Chain Digest……………………………...... Global Logistics Capability Diagnostic………………… . End Notes ……………………………………………………….. 1 2 3 5 13 14 16 17 18 25
The cost, efficiency and capacity of the national logistics system was also identified as an area of concern. From a market perspective barriers to entry and limits to competition were pin pointed.
As higher demands continued to be placed on GMM’s production and distribution operations, its transportation network lacked collaboration. In effect, each operation was making individual logistics decisions, creating costly redundancies and inefficiencies throughout the supply chain. However, On-time delivery is critical in their business, and they consistently meet their customers' requirements. With cost, service and punctuality always at the forefront, consolidates shipments, manages carriers, and optimizes air, sea and ground routes. (Penske, 2010)
Over the last few decades, the role of logistics in business has increased in scope as well as in strategic importance (Caplice and sheffi, 1995). In general, distribution logistics is expected to ‘provide the right goods at the right time, at the right place, in the right amount and quality, and at the right price’ (Jünemann & Daum 1989, p. 18.)
It emphasizes on differentiation of logistics operations, effectiveness and efficiency. Fugate analyzed the relationship between organizational performance and logistics performance and concluded that logistics performance is not only multidimensional but also a function of resources used in logistics in relation to outlined outcomes and objectives against other players’ in the industry or competitors. The authors concluded that the better the joint quality of planning, human resources logistics and customer feedback and satisfaction, the lower the levels of redundancy, waste, and inefficiency (Fugate, et al 2010.p8-22).
Effective management of operations and supply chain is a crucial source of competitive advantage for any business in a rigorously competitive environment. Operations management generally denotes the process of managing a firm’s resources with the ultimate aim of delivering value to the customer (Krajewski, Ritzman & Malhotra, 2013). To stay ahead of the competition, an organisation must constantly strive to transform its operations – it must seek to eliminate inefficiencies in the supply chain. This report compares the operations of 99p Stores and Sainsbury’s fulfilment process. Sainsbury, which was founded more than one and a half centuries ago, is one of the most popular retailers in the UK, commanding the third largest market share after Tesco and Asda (Christie, 2013). 99p Stores is also a retailer that operates in the UK, though it is quite smaller compared to Sainsbury. While Sainsbury has been doing online retailing since 1996, 99p Stores is currently in the process of testing the viability of online retailing.
Coyle, J. J., Bardi, E. J. & Langley, C. J. (2003).Management of business logistics: a supply chain p
ACKNOWLEDGEMENTS I am indebted to all of my colleagues who have contributed to this manual. Very few of the ideas contained in here are totally original. Thanks much to all of you for spending so much time discussing how you do things in class and allowing me to share your ideas in this manual. F. Robert Jacobs
It is known to us, “in each industry, the customer is god, is operator's food and clothing parents.” This tells us that customers are important to organizations. With the current intense competition in logistics nowadays, most companies can provide high quality goods, even are willing to cut down prices if reasonable. However, how can suppliers gain a competitive advantage when high quality is expected and price must be maintained at a level to generate a reasonable return? In our views, it is no doubt that how various supplier service activities are valued by customers, more specifically, that is, the ability of logistics
Inventory handling is very crucial as per the physical distribution management is concerned. This is because it has direct influence to satisfaction of customers. Inventory levels are said to a function of market type within which the company operates. Therefore companies should not run out of inventory so as to maintain their customer base. Transport is the influence of distribution cost. Therefore the chosen mode of transport should be at apposition of protecting the goods from damage thus not endangering the future of the business. In reference to the article regarding the distribution centers, several retailers like the Tesco & Sainsbury have diverted all their warehousing to various logistic companies to offer transportation services. In an economic point of view, marginal cost (MC) is equal to marginal revenue (MR), (Acemoglu, 2012). This statement also applies to marginal marketing expense (MME) equals to marginal marketing response (MMR). This will only occur when there is an increment in the service levels. In conclusion, the knowledge of physical distribution is only essential to purchasers and work study management can be related to PDM since it entails accuracy and efficiency. On the other hand, logistic structure should not be nonflexible but can be
Operations Management is concerned with the managing of resources and activities that produce and deliver goods and services
The focus of the present article is on identifying the steps involved in choosing a good TPL provider, and these steps will be mostly related to the retail and service industries. Every industry has its own unique needs and so it is important that the TPL provider is right for the particular company. This research shows that TPL can be very effective if the proper tools are used in implementing one. Background Logistics is the process of strategically managing movement and storage of material or products and related information from any point in the manufacturing process through consumer fulfilment. Many articles and abstracts focus on how TPL are being used more often. TPL has become a more popular technique for managing transportation, warehouse and inventory management. TPL are often seen as providers of the integrated supply chain, which uses many value-added services to work with the customer. The market for TPL services is growing by 18 to 22 per cent a year. TPL originally began as public warehousing during the 1970’s. Managers of warehouses began selling space to businesses in the area that had run out of space or were in need of additional space during the busy seasons. During the 1980’s TPL expanded into selling not only space but also offering throughput to physical distribution managers who wanted to improve customer service with their current customers. By the 1990’s TPL saw the consolidation of both warehousing and transportation organisations to offer
The Recent acrimonious debate has focused on the argument of whether logistics and marketing is friend. Marketing is defined as the management processes of individuals and groups create the demand and meet the demand. (Kotler et al. 2013). Converse (1954) made a speech at twenty-sixth Boston Conference on distribution. He claims that the process of selling goods and the process of satisfying consumer’s needs is closely related to logistics. Christopher (2011) states that the performance of marketing is to depend on logistics supply chain. There is no doubt that the logistics is a close link to marketing, in other wards, the logistics is the best friend for marketing. Madhani and Pankaj (2012) claim that the main task of supply chain is to optimize the process of production and distribution in order to control the cost. In contrast, marketing is meet customers’ need in order to maximize profits. As a result, supply chain and marketing work independent, both of them are enemies. However, logistic has a direct and positive decisive influence on the marking in terms of product value, marketing mix and customer service.
Following the paradigm shift on the role of logistics management in the recent decades, there has been a wide recognition of this as a very important aspect a business strategy in general. However due to the numerous factors promoting complexity of logistics management companies have adopted the idea of outsourcing their logistic activities to Third Party Logistics (3PL) providers. Hence, 3PLs have taken a critical role towards supply chains of heir customers.
In 1981, AHP had reached sales of more than $4 billion by producing 1,500 marketed brands in 4 different kind of business; prescription drugs, packaged drugs, food products, and housewares and households products. Moreover, AHP is known to be the largest and profitable business in prescription of drugs;