Logistic System - Research Paper Example

Logistic System Part A Logistics and Supply Chain Practices Introduction We have several logistics and supply chain management practices that increase the competitive advantage of a business. They include among others lean thinking, information quality, customer relations, strategic alliance and information sharing (Elizabeth, p.14). This section discusses lean thinking and customer relations in the manufacturing and retail markets respectively. The discussion is also based on a critical analysis of recent literature review in logistics and supply chain management. Critical Analysis Lean thinking is essential to improve supply chain management. This is because lean thinking ensures things are done just as they should. As an example, Toyota has demonstrated superior results with regard to quality, cost and lead-time compared to most (if not all) of its competitors. This accomplishment has led to a widespread interest in the Toyota System of Production and its way of doing business. Subsequently, various reviews of "The Toyota Way" have been done. This has led to the characterization of lean production, which can now be seen as a generic description of the Production System at Toyota. Despite there being many, diverse perceptions of what exactly has led to Toyota's success, Toyota itself proposes that its system is based on considering the time from getting the client's orders to cash collection and shorten this lead-time by eradicating waste (Chiarini 2011). Customer relationship is also a key are that organizations must address to improve their supply chain management. This is because the only way to guarantee increased sales is to have the consumers believe in the products of the organization. Money cannot buy this. In the retail industry, Wal-Mart is a classic example of exemplary customer relationship that led to its success. It founder, Walton, always had the customer in mind when designing business processes. For example, he came up with the idea of exploring and innovating new possibilities that will increase customer experiences and satisfaction, such as self-service, offering discounts, and employing staff who had to be friendly to the customers. Wal-Mart and any other successful company had to develop a system of a few really unique competences that help them build differentiated value for their chosen consumers. Industry Examples Lean Thinking would be best exemplified by using a manufacturing example. To start with, it is derived from the approaches of the successful automobile manufacturer, Toyota. It became internationally renowned as a result of the work of James et al in their book, The Machine that Changed the World. The emphasis at Toyota, according to Taiichi Ohno, was actually “the complete elimination of waste”. Waste in this case is anything that averts the value-added movement of material from raw material all the way to finished goods. The customers of a firm are the final judges who tell whether value was created by the firm or not. The Lean thinking approach leads those who practice it to improve their organizations by aiming at the elimination of any and all the waste. Lean thinking focuses on improvement and promotes techniques to regulate the flow of materials on the shop floor. Lean thinking has also been widely used in software development. Successful corporations like Google are now using lean development methodologies based on the principles of lean thinking. Google is eliminating wastes of time and resources by welcoming developers all over the world to participate in developing its open source products. The developers are empowered and motivated by rewarding outstanding products which are developed within the shortest time possible. In addition, Google organises many seminars and workshops in cities all over the world to offer high level learning on its products. These practices have led to continuous improvement and expansion of Google products and revenues. On our customer relationship example, we review the success story behind Walmart. Walmart's success does not only just shoot from aggressive vendor management, its place as a low-cost retailer and impressive logistics. Rather, the main reason that really underlies Walmart's competitive advantage is the articulate and distinguished approach to the market with customer relations in mind. This approach brings about a win-win state of affairs between them and their customers as follows: They have a well-defined way to play attentions on their "always low prices" for an extensive range of consumer items, ranging from food to electronics to prescriptions. They sustain their low-cost fashion to play with an incorporated system of capabilities, including acquisition of real estate; efficient store design; and high quality supply chain management comprising among other things, expert point-of-sale data analytics. This, in turn, leads to high quality customer relations in terms of subjective satisfaction and expectations. Their product and service combination is preserved as tightly affiliated to their way to play and their capabilities system: sidestepping big-ticket items (such as large appliances or furniture) where it does not have a cost advantage, or where fresh, service capabilities might be required. Finally, they innovate constantly within its chosen constraints: for example tailoring product collections to fit local trends. This makes the customers associate themselves with Walmart. United Airlines is another good example of companies with excellent customer service relations for two main reasons. One, they save your seat up to the last second in case you may be running late. Few airlines do this. Secondly, they are very flexible in the way they handle flight delays. In many occasions, they not only communicate with customers early enough, but also try to find out those customers who have urgent issues or those who are already at the airport. They then open for them seats on earlier flights if they are available. Such practices have made the airline to win customers and turn them into happy clients for life. Part B Question 1: Reasons why Mr. Shelton upset and the things that should be done to address his complaint. Mr. Shelton had been a loyal customer of Presto Cleaner for more than a year until recently when he was angered by the loss of his clothes and the subsequent treatment from Presto Cleaner. Mr. Shelton has been upset by the new computerized system that Presto Cleaner has installed. He says that since the system was installed, things started moving quite slower compared to when the old system was in use. One now has to wait for up to fifteen minutes in a queue before being served. The service itself is also quite lengthy as the counter person has to enter every item, its attributes such as color, distinguishing feature, and the operation desired to be done on the clothes such as cleaning, pressing etc. This process would sometimes consume up to 10 minutes. As a result, the procedures of the new system upset Mr. Shelton as he thinks they are not necessary. Another thing that upsets Mr. Shelton is the requirement to buy a special bag every time if he has to use the new system. The bag is only $3, and he thought that he would reuse it next time he had laundry only to find that he had to buy another one. He wonders why the new system makes such a demand. It sounds unrealistic to him. But the main reason why Mr. Shelton is upset is indeed the fact that his clothes got lost at Presto Cleaner. On realizing this, he initiated efforts to recover them. He viewed the new system as inefficient or rather incapable of finding lost items because it could not trace them. In addition, he blames Presto Cleaner for treating him badly especially when he called Mr. Hoffner, who apparently did not believe at first that Shelton was a legitimate customer of theirs. He complains that the Dry Cleaner did not call to inform him on the progress of locating his lost items. He also complains about the extra costs he incurred when he had to buy extra shirts to cover for the lost ones. When he requested for the claims form, he was upset that it took too long to reach him. He was also angered by the requirements that he had to accomplish in order to qualify compensation. In fact, he points out that the requirements were impossible because one, nobody keeps the receipts of shirts they bought long ago, and secondly, the new system does not produce order receipts. To address Mr. Shelton’s complaint, Presto Cleaner should apologize to him and assure him that the loss of his clothes was more of a human error than a problem with the new system. They should also consider giving him free service for his next laundry. In addition, they should explain to him the benefits of the new computerized system and the motives why they disposed the old system. They should also give him a copy of their company policy which may enlighten him on their compensation procedures and how they handle customer complaints. Question 2: A QI Plan for Presto Cleaner Below is a QI Plan for Presto Cleaner. The plan has incorporated changes that would lead to better service delivery e.g., opening the business for some few hours on weekends and public holidays. The words Quality Improvement and QI have been used interchangeably in the plan. Quality Improvement Plan Presto Cleaner May 10, 2012 Section I – Introduction Mission: Presto Cleaner is in business to help our esteemed customers take good care for and lengthen the life of their investments in clothing. Vision: To be the leading professional laundry of the city area by providing unparalleled excellent cleaning services and customer service that exceeds both the customers’ expectations and the competition. Scope of Service: Presto Cleaner offers laundry services (washing, ironing and folding). Premises are open on weekdays from 8am to 5pm and 9am to 1pm on weekends and public holidays. The following QI Plan will serve as the basis of the obligation and assurance of Presto Cleaner to continuously improve the worth of the products and range of services it provides to customers. Quality Quality services are those that are provided in an effective, customer-focused, timely, reasonable, and well managed fashion. Presto Cleaner is committed to the continuing improvement of the quality of service its consumers receive as demonstrated by the results of that care.  The business continuously works hard to make sure that: The laundry services are appropriate to the needs of every customer and are always there when needed Error in the service delivery are avoided, and risks to clients are minimized The individual needs, expectations and queries from clients are respected and put into consideration and followed up. Services are offered in timely and coordinated manner. Quality Improvement Principles This refers to an orderly approach to evaluating services and refining them on a priority basis.  The Presto Clean methodology to quality improvement is founded on the following principles: Customer Focused approach to services development Superior quality services Fact-based decisions Prevention over correction Continuous improvement Continuous QI Activities The activities have been developed and accepted in a systematic and organized manner by the Presto Cleaner leadership and are used throughout the organization. Staff at all levels have been trained and involved in the process of performance improvement. QI comprises of two main activities: Measuring and evaluating how Presto Cleaner services are performing through periodic data collection and analysis. Conducting QI evaluation and taking appropriate action such as: Designing and innovation of new products and services, and/or     Continuous improvement of the existing services. The tools used for conducting these tasks are listed in the Appendix at the culmination of this Plan. Section II – Organization and Leadership Leadership This is a key success factor to the Continuous QI process. The following section elaborates how the leaders of Presto Cleaner will provide support to quality improvement undertakings. The leaders form a QI Committee. The committee’s role is to offer ongoing operational guidance of continuous quality improvement undertakings at the laundry. Monthly meetings are organised by the committee and comprises of the following individuals: the president, managers at all levels, and representatives from the subsidiaries. Mr. Hoffner chairs the committee. The committee’s roles include: Coming up with the QI Plan. Establishing goals and objectives that can be measured in terms of priority. Evolving the pointers of quality over time in terms of priority.  Periodically evaluating the data and information collected from indicators and taking appropriate measures where required. Reporting to shareholders and the Board of Directors on QI tasks on a regular basis. Formally assuming a specific methodology to Continuous QI. Section III – Goals, Objectives and Aspirations The above described Committee recognizes and sets the specific objectives and goals for each month or year. Below is a list of the current, long term goals for Presto Cleaner QI Program and the particular objectives for achieving them for the year 2012. To bring top management and laundry staff at one place for analysis of the reported or observed (bad) incidents at the laundry in order to find out the cause(s) of those problems. To tackle acknowledged problems and fix goals that will lead to finding lasting solutions To achieve progress that can be verified and validated in areas of high priority To accomplish effective reporting on both internal and external affairs To offer comprehensive training to management and laundry staff on the principles and practices of QI   To tailor and enforce the necessary principles and tools for Quality Improvement. Section IV – Performance Measurement This is concerned with the evaluation of the regular outcomes of the QI program and then taking appropriate action. Its main purpose is to: Calculate the degree at which the processes or results are stable and hence detect any variation from normalcy. Point out the problems and providing avenues, where the performance of the processes can be improved. Assess the issues that arise as a result of the provided services. Evaluate whether the processes (both new and improved) are meeting the expected performance levels. Choosing Performance Indicators The following factors were put into consideration when choosing the Performance Indicators: How relevant they are to the vision and mission of Presto Cleaner. The indicators must consider customer interests. Their significance to the laundry business. The indicators must directly focus on a core undertaking at the laundry characterized by: High levels of risk Is susceptible to hitches or Has high impact on the core business at the laundry Performance Indicator Features Considerations that will determine the indicators that will be used is comprised of: Having a scientific basis Validity Resource availability Consumer preferences Meaningfulness Assessment This is concerned with checking whether the QI practices are really bringing any progressive changes to Presto Cleaner. The assessment will be done in the following ways: Comparing the current status of Presto Cleaner with how it was in the past Checking whether the goals or expected standards are being realized Gathering data regarding the practices at the laundry with respect to available evidence. Comparing it other laundries or similar service providers to see if it is becoming more competitive. Section V – QI Initiative New services may be developed or make improvements existing ones. This is the purpose of the QI Initiative. The model that Presto Cleaner adopted is PDCA (Known in other words as: Plan-Do-Check-Act). Plan - identifying initial opportunities for improvement Do – adopting suggested solutions and implementing them Check -  collecting data and to check if there is any progress Act - making the changes a repetitive part of the projected activity Appendix: QI Tools  The following are some data analysis and presentation tools that will be used by Presto Cleaner in their Quality Improvement process. Flow charting Brainstorming Cause and effect diagram Benchmarking Root Cause Analysis Question 3: Description of the unique aspects of inventory management in large-scale food services such as ARAMARK's Olympic Games operations? Inventory management involves balancing the costs of inventory with the benefits brought by the inventory. For a large-scale services company like ARAMARK, inventory management may have some unique aspects compared to the contemporary inventory management. Some of these aspects include a stringent periodic review, high accuracy and management of the news vendor or newsboy problem. Food services are a fragile business. There must be a good understanding of the eating patterns and preferences of the consumers, their expectations and ways to deliver alternatives that will not compromise customer satisfaction. As such, a large-scale food services company like ARAMARK must ensure the inventory is reviewed periodically, probably on a weekly basis, to avoid running out favorite dishes or having too much of perishable stuff. Inventory management in this kind of organization also employs stringent accuracy. Many a times, the stocks in store vary with what is in the inventory. This scenario is highly avoided by food service companies to avoid potential loss or depletion in quality of the raw materials or ingredients. As such, the inventory is managed by extra staff that is hired specifically to manage the inventory. These staff also conducts cyclic counts either manually or by use of an automated system. In addition, the inventory itself is secured in a special placed and cannot by accessed just by anyone. Large scale food services companies also bear in mind the news vendor problem in their inventory management. The following circumstances are considered. In the immediately impending period, a random demand is anticipated. At the beginning of that time, management has to decide about the placement of a single renewal order from which the demand is filled. But there is only one opportunity to place the order. As such the inventory in hand after the order arrives must cover the demand that arises till the end of that period. The renewal lead time is assumed to be zero. This unique feature is important as it enables the efficient handling of perishable goods. Question 4: What lean production concepts can Laura apply in the above context? What challenges will she face? Below are some lean production concepts that Laura can apply in her new assignment at ARAMARK. Preventive maintenance – as an operations analyst, Laura should ensure preventive maintenance measures are carried out on the business premises. Preventive maintenance aims at preventing growth of bacteria an ensuring that the food services equipment does not malfunction or break down. Preventive maintenance can be done on the following areas: water quality, food preparation, POS software, ovens, grills and fryers. However, she may face challenges such as work overload due to the vastness of the premises, unresponsive or careless equipment operators and technical problems in the equipment or POS software which she may not be able to solve. Close supplier relationship – there is a need for operators to connect and maintain a close connection with their suppliers. Since she will only be in Beijing for a short period, she can build short term relations with suppliers based on competitive pricing. The relationship can be maintained through keeping an honest, strong communication line open. However, she may be faced by communication barriers if the suppliers are Chinese. The cultural differences may also make it challenging to establish and maintain relationships with suppliers in Beijing. Pursuing perfection – this she can do by always abiding to the law of the land and providing over-value services to her customers. She can monitor and analyze the process under her jurisdiction and take the initiative to improve them and device new ones. This will result to continuously increasing service delivery. The challenge here, however, will be her little say on making radical decisions. They may be ignored by colleagues due to her junior position in the organization. Responding to Customer Pull – This is about understanding the customer demands on her service and then creating her own process to respond to this. As the operations analyst, she can ensure that ARAMARK produces only what the customer wants when the customer wants it. Question 5: Limitations to the application of the lean principles There are limits to applying the lean principles described above. To start with, preventive maintenance is employed at all times and at all relevant places. But should the unexpected happen, like a failure of equipment or software or reckless behavior by a staff member, appropriate action is taken as per the company policy or the law. For example, the company may contact its insurer and draft some claims, the reckless staff may be require to take personal responsibility of their actions etc. On close relationships with suppliers, ARAMARK may only consider doing it on short term basis due to the seasonal nature of the event. Since it may be long before the summer games come to Beijing again, the firm may decide to cut contacts with the suppliers as soon as the games are over because they may not require each other soon. The same case applies to pursuing perfection and customer pull responses. They may not be emphasized as such. References Elizabeth, A & Rodney, K 2010, Implementing Lean Six Sigma throughout the Supply Chain: The Comprehensive and Transparent Case Study, Productivity Press, New York. James, P, Jones, D & Roos, D 1991, The Machine That Changed the World : The Story of Lean Production, HarperCollins Publishers, New York. Jeffrey, K & James, K 2011, The Toyota Way to Continuous Improvement: Linking Strategy and Operational Excellence to Achieve Superior Performance, McGraw-Hill, New York. Kristin, A 1992, Great Customer Service on the Telephone (Worksmart Series), AMACOM, New York. Michael, F 2012, Quality Improvement Plan Template, Accessed May 13, 2012. Roberts, B & Berg, N 2012, Walmart: Key Insights and Practical Lessons from the World's Largest Retailer, Kogan Page, London. Solomon, M 2008, The Truth About What Customers Want, FT Press, New Jersey. Read More