Competitive Advantage of Youngs Seafood and Grimsby - Case Study Example

Table of Contents FORWARD 2. INTRODUCTION 3. LOGISTICS AND SUPPLY CHAIN 4. MODERN LOGISTICS RECOMMNDATIONS FOR YOUNG’S SEA FOOD 4 E-Logistics 4.2 Home Stretch 4.3 IT and Logistics 4.3.1 RFID application 4.3.2 Direct Store Delivery 4.3.3 OLAP Cubes 4.3.4 GIS 5. BENEFITS 6. REFERENECS FORWARD Logistics is the last stage of a product supply chain and this stage is concerned with the movement of the final finished product to the customer. In physical terms, the customer is the final destination of the product which is in turn linked through a marketing channel. This stage includes the co-ordination of order receipts, warehousing management, selecting transport carriers, shipment and distribution of the product to customers and set up an invoicing system to receive payments. This paper makes an attempt to relate the concept of logistics for the advantage of Young’s Sea Food, Grimsby. Further, the paper also discusses how this concept relates to the Supply Chain Management. INTRODUCTION Logistics is defined as “the time-related positioning of resources”. A good logistics supply chain would include the right resources in the right place, at the right time, right quality/quantity and at the right cost. It took some time for the company - Young’s Sea Food to accept logistics as a management process. Most of their competitors have already established this sector as one of the foundation stones to deliver diverse services and products while aiming high profit margins and customer satisfaction. Today, logistics management is acclaimed as a combining process that provides information networks and necessary infrastructure essential for the development and functioning of global supply chains. The company - Young’s Sea Food has already taken various initiatives such as real time manufacturing and distribution, supply chain engineering, efficient consumer response systems and the lean models. The main aim of the company management is to search for new levels of supply chain efficiency and integration. Supply chain collaboration remained an elusive goal for the management. The company’s management has recognized that the future to competitive edge is to define internal improvements and plan far outside the frontiers of the normally envisioned enterprises. In today’s global and volatile market and with ever increasing competitors for Young’s Sea Food, the consumer demands are rising by the minute. It is now acknowledged as a strategic necessity, to forge partnerships beyond geographical and industry-vertical boundaries. Collaborative planning systems are providing the capabilities for accelerating the co-management of planning processes and efficient sharing of information. Logistics collaboration and sharing of infrastructure needs to become a reality for the company in order gain an edge over other market players, (Lambert and Stock 2002, p. 342). In the case of Young’s Sea food, a business which consists of complex supply chain systems, it is important that every aspect of the chain adds value to their product in some form or other. An effective logistics management is an act of optimizing all actions throughout the supply chain process for the company’s business, and an efficient management of the logistic activities is the key to obtaining higher competitive retail business advantages. However, to reach at the helm of leadership and success, it is important that the set up of Young’s Sea food should bring about a radical change in its existing logistic methodology and should be willing and determined to shift to the new paradigm. The benefits that could be achieved with the help of a leveraged logistics strategy executed along with other enhanced supply chain management techniques can increase customer satisfaction, lower inventory tasks, less product obsolescence, and reduced workforce for the company. It is beyond doubt, that the ability to achieve a competitive advantage is dependent on the amount of logistics management synchronization and teamwork that any organization can show along with its supply chain partners, (Kok and Graves 2002, pp. 45). There are a number of activities that have been shortlisted by the company’s management which could be enhanced with the help of a better logistics management system. They are: Assembly sub-assembly of products, Package and product labeling of goods, Management of inventory Processing and planning orders Track and trace products Reverse logistics Subsequently, by the application of better logistics management capabilities, Young’s Sea Food can achieve the following: Greater operational flexibility Ability to expand geographically Focus on core competencies Ease of achieving economies of scale LOGISTICS AND SUPPLY CHAIN J. Kyle Addison, Global Supply Chain Manager for DuPont PPE’s apparel operations made the following observation. “Supply Chain Management Engine application is straightforward, easy to use, and cost-effective. It allows us to consider multiple factors, such as work-in-process, inventory levels, plant capacities, and production plans, in such a way that we can now optimize production scheduling to meet customer demand in a better way.” –  Many other experts have a similar definition on the issue of SCM: “A supply chain is a network of overwhelming facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a well formed distribution system, thereby increasing the satisfaction quotient for the customer.” The existing business of Young’s Sea Food has multiple supply chains that operate independently at all levels. For example, the marketing, distribution, production planning, manufacturing, and the purchasing department work according to their respective supply chain statistics leading to conflicting issues most of the times, (Stadtler and Kilger 2004, pp. 25). To gain more competitive advantage, companies like Young’s Sea food need to undertake a number of schemes to increase their source of information and visibility into their tasks. Some of the schemes are Logistics management, Enterprise resource planning or ERP, customer relationship management (CRM), supply chain and other management software that can be implemented within the supply chains to enhance the productivity and profit margins. The supply chain processes work to improve the services, cut costs, and increase the flow of information to boost supplier to customer relations, (Stadtler and Kilger 2004, pp. 25). Logistics management has become a dedicated part of Supply Chain management. Because supply chains are constantly changing and evolving, a company may develop a number of logistics strategies for specific product lines, specific countries or specific customers. The supply chain constantly changes and that will affect any logistics organization, (Cummings & Worley 2001, pp. 34). To adapt to the flexibility of the supply chain, companies should develop and implement a formal logistics strategy. This will allow a company to identify the impact of imminent changes and make organizational or functional changes to ensure service levels are not reduced, (Simchi-Levi et al 1997, pp. 105). MODERN LOGISTICS RECOMMNDATIONS FOR YOUNG’S SEA FOOD Young’ s Sea Food, in order to gain higher competitive advantage, can utilize some modern IT logistics trends being used in the industry. This integration of logistics with modern technique will help the managers at Young’s Sea food to take a complete 360 – degrees view at the entire business activity, other than just looking at the end results. E-Logistics The Internet has created new means to reach the market. It has compressed time and moved the emphasis from supply-based to demand-based. The focus is converging on the customer. Many experts have coined the term e-logistics with home delivery (the ‘last mile’) but it is, in fact, an issue for the B2B market just as much as it is for the B2C market. The term e-logistics came about with the dotcom start-ups and was marked by the rush of the retailers to establish their position in new market, (Lambert and Stock 2002, p. 342). It is essentially about electronically managing the order-to-cash process. The basic e-logistics model remains customer-focused, giving the purchaser (whether business or individual) the ability to: • electronically place and pay for orders; • track orders from source to delivery; • select appropriate delivery time. This model combines bricks and clicks in the fulfillment process. It will include picking, packing, order confirmation and dispatch, customer help lines and returns process. In addition, demand driven secondary production activities, such as final assembly and servicing, are likely to increase with Business to Business and Business to Consumer Web-based transactions. Home Stretch Online consumption by the buyers in UK has been predicted to rise ten times in next four years. Though, this accounts for a minor percentage of total retail sales, it is still having an inconsistent impact on supply-delivery operations. The e-fulfillment logistics model for the last mile will transform a number of times before the favored solution for supply and return is agreed. Establishing partnerships with existing distribution channels can be a good option for Young’s Sea food. Recognizing the value of existing mature supply chain infrastructures, the company is planning a network based on established parcel delivery companies, the doorstep provider, eight-till-late local pick-up points and courier services, (Simchi-Levi et al 1997, pp. 105). IT and Logistics Use of IT technologies like logistics electronic data interchange (EDI), Logistics Management Information Systems (MIS), RIFD, the Direct Store Delivery (DSD) and the geographic information system (GIS) can definitely prove to be turning factor for Young’s Sea Food. These techniques are basically examples of a sophisticated knowledge management system that supports the logistics business model in a highly competitive manner. The company can invest a substantial amount of money on an electronic warehouse that will drive the product information automatically without any man handling of information at any point in the logistics chain, (Lambert and Stock 2002, p. 342). RFID application - One of the most common IT applications within a logistics supply chain is that of bar codes which makes data collection accurate and fast. Most of the enterprises apply the bar code shipping labels or RFID application on their finished goods that are about to leave the company premises. But with changing trends, mangers have learned that if the use of bar codes is pushed back into the production system, then it provides tremendous labor and material savings, (Hyde 1992, pp 25). These new Information trends if applied by Young’s Sea food in the company’s Logistics chain can definitely lead to less time delays and this times saved can easily be converted into financial benefits and increased productivity. Direct Store Delivery (DSD) - Similarly, the use of Direct Store Delivery (DSD) and other route accounting operations when combined with mobile printing applications saves a lot of time and reduces the cost by a remarkable amount and in turn increases the return on Investment. OLAP Cubes - A Goods supply data cube helps the company to identify the main products that can be sold easily over phone by analyzing the past trends of the tele-callers and the sales graph. The sales data can be recorded and converted in the form of an OLAP cube and then changed into textual form which can used for decision making by the management upon which products to re-in force in the market by studying their popularity chart, (Kok and Graves 2002, pp. 45). This data in the form of cube provides detailed information for resolving problems within the logistics distribution network of the business. Similarly, a problem with the Distribution network has been cited at many instances, causing difficulties with suppliers, production facilities, and distribution outlets. At the same time, the inefficient data distribution has been identified as a cause that leads to loss of integration of various processes and causes the inability to predict demands, forecasts, inventory and transportations needs. The use of data in the form of OLAP cubes can help to sort out the errors and analyze the losses and its causes in an effective manner. GIS - A Geographic Information system or a GIS is a tool to capture, store and managing data which are spatially related to Earth. In close terms, the system is related to managing, integrating, storing and analyzing geographically referenced information. From the perspective of the business provider like Young’s Sea food, utilization of GIS to the value chain administration, human resources, technology development, procurement, sales and marketing, services and operations are adding value to the inbound and outbound logistic services. Better management of distribution resources, higher level decision making, and easier routing, scheduling, tracking is made possible with the use of GIS in Logistics, (Sustar. & Sustar. 2005). Likewise, there are a number of IT applications that can benefit the organization to develop its information system so as to meet the customer requirements. Business information, production reports, warehousing data, inventory problems can be supported with the help of better managed Information and Business Intelligence solutions coupled with some of these IT solutions, (Hyde 1992, pp 25). BENEFITS An effective integration of Logistics management within the existing supply chain of Young’s Sea Food will help to integrate and optimize all actions throughout the supply chain process, which is the key to competitive business advantage, (Martin 1993, pp. 195). This section studies some of the positive effects of the implementing Logistics solutions (described above) on the overall performance of the sea food company. Direct paybacks – the above mentioned techniques and processes can be effectively managed and this also involves the reduction of manual tasks which as a result reduce the total cost of business and other trading activities for the sea food company. The normal average cost per transaction required for purchase order management and business activities account high which can easily be reduced with the introduction of more value-added activities, (Simchi-Levi et al 1997, pp. 105). Operational benefits – Use of IT integrated logistics techniques within the supply chain improves the estimation process by a great extent. This process can be used to reduce the interruptions that generally occur in the production schedule and distribution processes. This further added to real time visibility of the demands and more components of manufacturing can easily be outsourced, reducing costs. Reductions in interruptions lead to less usage of machine and labor resources thereby reducing warehousing costs for the company, (Kok and Graves 2002, pp. 45). Technical profits – the integrated activities make use of customary internet modus operandi for messaging of trading / business dealing information, which make the company’s production and logistics chain system the most cost effective of all than other cross business technologies. The flow of inputs from raw materials to the assembled good or service can be effectively coordinated with the help of logistics and IT integrated activities. The integration of technology with logistics management will help the management to forecast product distribution, warehousing, manufacturing needs, and transportation, apart from optimizing the sales circulation by evaluating the key inventory measures. REFERENCES 1. H. Stadtler and C. Kilger: Supply Chain Management and Advanced Planning: Concepts, Models, Software and Case Studies, Indiana University Press, 2004, p. 25. 2. D. Simchi-Levi et al.: Designing and Managing the Supply Chain: Concepts, Strategies, and Test Studies, Harvard University Press, March-April 1997, pp. 105-116. 3. A.G. de Kok and S.C. Graves (Editors): Supply Chain Management: Design, Coordination and Operation, Cambridge University Press, Cambridge, England, 2002, pp. 45-78. 4. D.M. Lambert and J.R. Stock: Strategic Logistics Management J.J Coyle, E.J. Bardi and C.J. Langley: The Management of Business Logistics. Indiana University Press, 2002, p. 342 5. Cummings, T. & Worley, C. (2001) Organization Development and Change (7th edn). Cincinnati, OH: South-Western College Publishing, pp. 34 - 54. 6. [Perf 2003] “Supply Chain Performance Score Card Data Table for Electronic Equipement”, Performance Measurement Group, 1050 Winter Street, Waltham, MA 02451, http://www.pmgbenchmarking.com/ 7. Hyde, A. (1992). The Proverbs of Total Quality Management: Recharting the Path to Quality Improvement in the Public Sector. Public Productivity and Management Review, 16(1), 25-37. 8. Martin, L. (1993). "Total Quality Management in the Public Sector," National Productivity Review, 10, 195-213. 9. JISC (2006b), Projects, Available at Kirchmer M., (2004), E-business process networks – successful value chains through standards, Journal of Enterprise Information Management, vol.17, no 1, 2004, pp. 20-30. 10. Sustar, B. & Sustar. R. (2005). Managing marketing standardization in a global context. Journal of American Academy of Business: Cambridge, 7(1), 302. Retrieved October 10, 2005, from ProQuest database. Read More