What is the integrated logistics for DEP/GARD. Diagram the DEP/GARD supply chain. What stages are adding value? What stages are not? Integrated logistics for DEP/GARD case study analysis. Woodmere products case study.
Integrated DEP/GARD Logistics Management
The increased pace of productive systems development has increased the emphasis on improved quality of products and services.
However, the matching competition in the market pace has limited the differentiation potential based on product or service quality. This has made companies to seek alternative ways of value addition to their products.
Activities such as customized services, information timing, inventory management, and customer satisfaction have earned an important place in the supply chain cycle.
Bowersox et al. (2013) opine that firms that have perfect knowledge on efficient integration of the core competence of their supply chains are competitively positioned to achieve better results and sustain their competitive advantage.
As such, the authors point out that logistics play a central role in differentiating companies in terms of their supply of products and services to customers (Bowersox et al. 2013). This post uses logistics management and customer service theoretical framework.
The Importance of B2B Logistics Customer Service
In a competitive B2B operating environment, an efficient logistics system can present a sustainable competitive advantage that will ensure that a supplier continues to operate profitably (Christopher 2010).
Since the logistics cycle involves a wide range of activities from raw materials acquisition to the final delivery of products to customers, the system is a central focus of an organization.
Logistics involves building a system of customer requirements that results in fulfilling these requirements and thus a stronger relationship between the business and its customers (Ellinger & Chapman 2011).
Building a strong relationship between two parties requires a clear understanding of the benefits that both parties will achieve through the relationship.
Efficient logistics customer service ensures that customers’ needs are well taken care of, and this often entails making available required products and services to customers in an appropriate location in a timely manner.
Thus, a logistics customer service system provides an outline of the physical movement of materials from the supplier to the end-user as well as the movement of information and payments in a reverse sense, creating a close relationship between the material supplier and the end-user.
Strong relationships between a business and its customers ensure that there is an efficient exchange of information regarding changes in market elements.
B2B logistics customer service allows an organization and its partners to integrate their external activities in a supply chain. From the supply chain point of view, non-integrated chains often result in difficulties for customers.
For instance, a lack of integrated supply chains between a supplier and a consumer can result in extremely high inventory levels, incomplete deliveries, and poor delivery timeliness. This increases costs for a procuring business in terms of high storage costs, increased emergency delivery costs and time wastage.
Suppliers also face difficulty when ascertaining when and how to produce due to a lack of information regarding customer orders and needs as a result of limited integration of supply chains. This generally results in poor customer service, increased production and delivery costs, and lower revenue turnover.
Conversely, integrated supply chains facilitate the seamless flow of information along the supply chain from suppliers to consumers and reverse, increasing the quality and timeliness of decisions made.
Due to cost reduction, enterprises are able to increase their competitiveness.
Lastly, customer service in supply chains adds value to the products and services delivered to consumers and in turn improving the performance of a business organization.
Within this context, a product is said to be of minimal or no value until it is delivered to the customer within the required specifications.
Logistics customer experience involves complex activities influenced by factors such as frequency of product delivery, the safety of such products, the stock level, and the time interval within which the order is released.
All these activities are mixed to achieve excellent customer service. Gotzamani, Longinidis, and Vouzas (2010) argue that companies that have their competition solely based on product characteristics are at a disadvantage relative to those businesses that increase value addition to their products through customer service.
Integrated DEP/GARD Supply Chain
Generally, a supply chain cycle consists of a system of activities, information, and resources between a supplier and its customers involved in the movement of a product from its production to the end-user (Waters 2010).
The integrated supply chain for DEP and GARD begins with the procurement of raw materials from suppliers for the manufacture of polymers.
These polymers are in turn the raw materials used by GARD in their manufacturing processes. DEP’s procurement department submits orders for raw materials from its suppliers. This is done electronically through facsimile and phone calls.
The chemical compounds used as raw materials are delivered within 6 to 8 days of order submission.
After the materials have been delivered to the company (DEP), the manufacturing division monitors these materials and schedules for the production run, based on the orders submitted by GARD through the marketing and distribution department.
These polymers are in turn the raw materials used by GARD in their manufacturing processes. DEP’s procurement department submits orders for raw materials from its suppliers.
This is done electronically through facsimile and phone calls.
The chemical compounds used as raw materials are delivered within 6 to 8 days of order submission.
After the materials have been delivered to the company (DEP), the manufacturing division monitors these materials and schedules for production runs, based on the orders submitted by GARD through the marketing and distribution department.
The marketing department receives orders from customers on production through electronic means such as facsimile and phone calls.
It takes the manufacturing division between 6 and 8 days to complete the production of customer orders. The manufactured orders are shipped to the warehousing division situated within a short distance from the production division.
The warehousing division verifies that the correct quantity and quality of orders received by customers are produced.
Warehousing personnel will then prepare shipping documents, communicate with the customer and schedule the products for final shipment.
It takes between three to eight days for the products leaving the manufacturing division to be shipped to GARD. Delivery of customer orders is done either through common carriers or private trucks owned by DEP.
GARD submits her orders and expects delivery within ten days after submission. On the other hand, DEP takes a minimum of nine and a maximum of fourteen days to produce and deliver orders submitted by GARD.
Integrated DEP/GARD Supply Chain Diagram
Insert diagram here
Key Supply Chain Issues faced by DEP
The main aim of a supply chain cycle is to avail products and services to consumers at the right place and time and within the right price range. Although DEP has been in operation for decades, supplying GARD with raw materials for over fifteen years (Coyle et al. 2009), the company has inherent issues affecting its supply chain. The most pressing issue is the time taken to procure raw materials, produce orders and deliver them to their respective customers. The supply chain cycle for DEP is within the range of 15 to 22 days. The company takes between six to eight days to procure all the chemicals required for the production of polymers. The least time taken to deliver raw materials is four days while the highest time taken to deliver chemical E and F is six days, with both having an allowance of 2 days (Coyle et al. 2009). Although the least time is four days, the company cannot commence production until all the essential raw materials are delivered. Upon the delivery of raw materials, the company takes seven days on average to finish manufacturing customer orders. The company takes three to eight days to move the finished products from its manufacturing plant to the warehousing department ready for shipment. In total, the minimum time period of 15 days and maximum of 22 days are considerably more and does not add value to the supply chain. With the changing customer needs, the firm could lose its competitive advantage due to the prolonged supply chain cycle.
The second issue affecting the supply chain seems to emerge from poor communication and coordination among DEP’s departments and between the company and its customers. For instance, regardless of the fact that the warehousing department is located just a few meters away from the manufacturing division, the company consumes up to eight days to move the finished orders to the warehouse and get it ready for shipment. The prolonged shipment time is evidence of poor coordination between the two departments. As such, these internal inefficiencies could significantly reduce the time utility aspect of the company to its customers.
Thirdly, DEP seems to have poor planning and risk assessment processes. This is evident from inadequate periodic assessment of the company’s operations, especially in its supply chain. Supply chain cycles must be assessed on a periodic bases in order to establish the changing business environment and customer needs. Failure to re-evaluate a company’s supply chain may lead to adverse impacts of risks such as inability to incorporate new technologies in the supply chain. From the case study, it emerges that Lippet has been relying on assessments done by O’Leary (Coyle et al. 2009) concerning DEP’s ability to deliver products within the required time threshold. However, the assessments made by O’Leary are biased since an independent evaluation of DEP’s capability by Binish exposes the inefficiencies within the company’s supply chain.
Lastly, DEP suffers from inefficiencies in its management especially in logistics department. Mr. Lippet seems to have limited knowledge in logistics management. The first instance can be deduced from the procurement of raw materials. The company seems to be compromising efficiency with cost of material acquisition.
From the records, the company awards the lowest bidder for the chemicals used in the production of polymers. As such, the lowest bidder is awarded 60 percent of the company’s business (Coyle et al. 2009). Lower costs are often achieved at the expense of delivery time.
The extended delivery time for the raw materials could therefore be attributed to the associated low costs. Secondly, Lippet seems to have limited knowledge on the performance of his docked. From the conversation with O’Leary, Lippet seems to lack knowledge on the current delivery threshold indices for DEP.
Recommendations for Retaining GARD as a Customer
DEP has no option but enhance its supply chain efficiencies if it has to retain GARD as a business partner. This is in view of the change in management especially in the logistics department. Mr. Binish has introduced revolutionary procurement and logistics methods (Coyle et al. 2009), which subjects bidders to ‘order winning criteria’.
Therefore, DEP will have to satisfy the criteria required by GARD’s new management in order to win the annual bid terms.
The first recommendation is for the company to re-train its managers especially in the logistics department on current practices. The managers would be trained on transaction elements which reflects the nature and timing of certain service requirements. These elements are subdivided into three categories. Pre-transaction element are customer service factors which emerge prior to actual transactions take place.
Transactional elements are those related to physical movement of resources and information, and are commonly concerned with logistics and distribution (Ellinger & Chapman 2011). Lastly, post-transactional elements occur after orders have been delivered to customers.
Knowledge on these elements would enhance customer service and result in an added element to order winning criteria.
Secondly, the company can reduce the total time taken to procure, manufacture and deliver products to its customers. Although the production period for the company is commendable, raw material procurement and warehousing times are a let down to the supply chain.
The procurement period should be compressed by subjecting the process to competitive bidding. As such, those suppliers that can deliver raw materials within the minimum possible time while retaining the costs within a required range should be contracted.
The time taken to move finished products to the warehousing department and prepare them for shipping should also be compressed. This can be done by enhance coordination between these departments and effective communication networks. The faster it takes a company to procure its raw materials, the faster it will manufacture and deliver customer orders.
Thirdly, DEP should control the overall supply chain costs. Supply chain costs increases due to changes in technology and rising freight costs (Ellinger & Chapman 2011). However, the company can use appropriate metrics in controlling such costs such that the costs do not fall outside the industry range.
Metrics provide the benchmark under which a business can measure how successfully it achieves its set goals and objectives. As such, DEP can use industry metrics in order to gauge its position in the industry and devise means of leveraging itself.
For instance, the company can calculate its delivery performance as the total number of products delivered in full and on time based on a commit date.
Lastly, the company should address the issue of poor communication systems within its departments and even streamline its information system with its customers such as GARD. As such, some of the changes that Lippet should implement should be geared at improving the performance cycle in its supplies and deliveries (Langfield-Smith & Smith 2005).
In order for the departments to relay information in real time, the company should adopt and implement a management information system. This will interconnect the procurement, production, warehousing, and marketing and distribution departments among themselves and to company suppliers and customers.
Incorporating MIS in ordering and delivery processes will ensure that the production department is informed of a customer order directly from the customer in real time.
Recommendation to Implement
Of the recommendations mentioned above, DEP should train its managers on the emerging trends in the logistics and customer care industry. Training the employees on logistics and customer care will provide knowledge that can be used to address the other issues emerging from the supply chain cycle. As such, the managers will be able to control transactions costs, compress the total cycle time and increase customer service to GARD.
Conclusion
The power of brands is rapidly declining in many markets and companies are finding it increasingly difficult to coin their competitive advantage based on product characteristic modification.
However, business organizations can use logistics and customer care window to add value to their products and thus increase their competitive advantage. This essay analyzes a case study with a logistics management and customer care lens.
References
1. Bowersox, D. J., Closs, D. J., Cooper. M. B. & Bowersox, J. C. 2013, Supply Chain Logistics Management, 4th edn, McGraw-Hill Irwin, New York.
2. Campbell, J. & Sankaran, J. 2005, ‘An inductive framework for enhancing supply chain integration’, International Journal of Production Research, vol. 43, no. 16, p. 3325.
3. Christopher, M. 2010, Logistics and supply chain management, Financial Times/Prentice Hall, New York.
4. Ellinger, A. E. & Chapman, K. 2011, ‘Benchmarking leading supply chain management and logistics strategy journals’, International Journal of Logistics Management, The, Vol. 22, no. 3, p. 403-419.
5. Gotzamani, K., Longinidis, P. & Vouzas, F. 2010, ‘The logistics services outsourcing dilemma: quality management and financial performance perspectives’, Supply Chain Management: An International Journal, Vol. 15, no. 6, p. 438-453.
6. Coyle, J. J., Langley, Jr., S. J., Gibson, B. J., Novack, R.A. and Bardi, E. J. 2009, Supply Chain Management a Logistics Perspective, 8th edn, South-Western Cengage Learning, Mason.
7. Waters, D. 2010, Global logistics: New directions in supply chain management, Kogan Page Publishers, London.
8. Clements, M.D. 2009, ‘How Buyers and Sellers Value B2B Relationships: A Relationship Value Continuum for Internet Based Exchange’, Journal of Internet Business, Vol. 1, no. 6, p. 56 – 81.
9. Langfield-Smith, K. & Smith, D. 2005, ‘Performance Measures in Supply Chains’, Australian Accounting Review, Vol. 15, no. 1, p. 39-54
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