How Do Logistics Systems Function - Essay Example

Logistics System Name Professor Institution Course Date Logistics system Introduction In the world of business where products are manufactured in an international system of production and are traded to the international market, supply chain turns out to be key determiner of business effectiveness and success (Cao et al., 2015, p.25). Certainly, the competition in global markets is no longer anchored on one which put manufacturing companies against one another but majorly between their supply chains which comprise of emphasizing on the rapid reaction to the needs of customers at lower prices (Jin, Fawcett & Fawcett 2013, p.207). In Australia, the best performing companies cites proper chain management as one of its strong points to such success. One of such companies is the Devondale Murray Goulburn Company which is the market leader in milk processing and dairy products manufacturing. Based on the information, this paper will critical analyse the recent literatures to find out logistics or supply chain performance indicators used by Devondale Murray Goulburn Company to achieve its current success. Overview of the company Devondale Murray Goulburn is a dairy manufacturing which was established in 1950 in Melbourne Australia (Devondale Murray Goulburn 2015). The company with the 15 dairy farms coming together to have a company which can help the manufacture their milk to avoid glut. The company has since grown to be the leading processor milk exporter in Australia. According to Lin (2013) reports that Devondale Murray Goulburn commands dairy market share of 21.8% followed by Lion Pty Ltd and Fonterra Cooperative Group with a market share of 14.6% and 10.4% respectively. Today the company has expanded and have nine plants situated in Victoria and Tasmania. Lin (2013) contended the plants have help the company process 3.4 billion litres representing 36% of Australia’s milk supply. The milk and dairy products are both consumed domestically and abroad. The company’s global business represents 9% of global dairy trade and supplying to more than 100 countries of the world. Devondale Murray Goulburn has more than 2500 suppliers who happen to be largest shareholders and employees on more than 2000 across all its plants. Due to its high quality manufacturing, the company was accredited with ISO Certification (SO 9001:2000 and NSF HACCP – 9000 (Devondale Murray Goulburn 2015). Its Compliance with manufacturing standards of practice has also been verified by the Dairy Technical Services situated in Melbourne. The company deals in products such as cheese, milk, spreadable fats, soy products and yoghurt. Supply chain performance indicators According to Cagnazzo, Taticchi and Brun (2010, p.163) A performance indicator is a form of measurement which assesses the effectiveness and success of a company concerning the business it engages. Usually, that success is regarded as the repeated, intermittent accomplishment of some degree of operational objects such as zero defects of cheese. However, at time success is marked by making some progress towards strategic objectives (Cagnazzo, Taticchi & Brun 2010, p.167). Today there are several supply chain exists including supply chain efficiency, supply chain responsiveness, supply chain flexibility and supply chain quality management. However, companies normally select the most critical one and suit their strategy to evaluate their success. Based on the awards entailing quality such ISO certification and NSF HACCP – 9000 it easy to conclude that Devondale Murray Goulburn has been using supply chain quality management indicator to assess their over performance. This will be discussed with two supply chain practices comprising of customer relationships and lean six sigma. According to Kotzab et al., (2011, p.235) Supply chain management has been defined as a way of put together suppliers, producers, distributors and vendors so that products can be produced and disseminated with right quality and quantities, at the right moment, to the right place with the objective of reducing system costs as well as satisfying customers expectations. Supply chain quality management therefore entail satisfying or surpassing customer expectations by effective managing suppliers, producers, distributors and vendors and bring together to ensure flow of operation from stocking of products to distribution (Stock & Boyer 2009, p.694). Sweeney et al., (2015, p.56) argues that with the introduction of supply chain quality management, its look like the support for idea that incorporating quality supply chain management into an organization and is supporting functional systems and areas is critical for the success and effectiveness of the organizations. Since operational incorporation is frequently quoted as precondition for globalization, quality management can work as a great base whereupon to integrate supply chain management platform. Stock, Boyer and Harmon (2010,p.32) stated that supply chain quality management platform leads to operational benefits like the reduced lead times of production, decreased costs, increased quality and faster product development. It also an important role in the effectiveness of the quality management plans. In his article regarding supply chain quality, Talib, Rahman and Qureshi (2011, p.276) exhaustedly discussed supply chain quality management and related integration concerns and claimed that organizational performance and sustainability can be improved by use of supply chain quality management. Rajagopal, Zailani and Sulaiman (2009, p.651) clarified how sourcing and purchasing activities has resulted to quality management and held that supply and purchasing chain executives can definitely influence supplier quality. Firms which have supply chain quality management programs are likely to focus on formal performance assessments of purchasing staff, involving purchasing staff in major decision-making practices, encourage purchasing staff that take risks, offer more quality management training to purchasing staff, and reward them for attaining the organizational goals (Kotzab et al., 2011, p.236). supply chain quality normally focus on eight principles consisting of leadership, customer focus, people involvement, system management, process management, constant improvement, mutually positive supplier relationship and accurate plan to decision-making. These eight principles observed by Devondale Murray Goulburn have shown some success in the recent years. The customers seem to be happy with what the company offers and its services. Customer relationship in supply chain has become very important aspect in this era of globalization and technology advantage (Thuym & Hau 2010, p.467). Customers have become more complex to handle because they have the information and also wants more. In such condition establishing loyalty has become difficult. Devondale Murray Goulburn understands this turn of events in the market and has put various measures to strengthen customer relationship. According to Swati (2010, p.222), customer relationship entails using different tools to plan, organization and bring the customers closer to your business. Communication is the major factor in customer relationship. Thuy & Hau (2010, p.471) argued that Communication takes different forms such marketing, email and telephone which can be used to inform the customers about the new products, service, price and even policies. A company which does not care about the customer relationship is likely to lose them to the competitor. Just as This Devondale Murray Goulburn has done before, this means the companies need to put emphasis on loyalty program as a way of bring customers closer and retaining them. Talib, Rahman & Qureshi (2011, p.269) posited that customer relationship as a practice of supply chain is very important because it helps determine a bigger percent of company revenue. The practice stands out than the rest because it determines customer service competency, loyalty and profits. At Devondale Murray Goulburn customer relationship strategies are used to make sure milk and other dairy products reach the customers within the required period following the successful completion of sales are by computerizing business processes and procedures used for support sales and service. Another important supply chain practice which has helped Devondale Murray Goulburn rise to its prominence is the lean Six Sigma. As a company which operates in milk processing and dairy product manufacturing which is normally full of challenges, lean Six Sigma offer some solution to Devondale Murray Goulburn. Lin (2013) affirmed that the biggest challenges faced by companies are milk glut. Therefore, teams can be formed and with adoption of Lean Six Sigma within these teams, performance increase because has the capability to produce more within a short to make milk and dairy product ready for the market ahead of the competitors. This strategy does not just reduce wastage of time but of products too. Other forms of waste reduced by lean Six Sigma include overproduction, defects, non-utilized talent, waiting, transportation, motion, inventory, and extra-processing (Lee, Wei & Lee 2009, p.874). To stay efficient, agile and Devondale Murray Goulburn requires gradually more constant investing in innovation. The advantages of this methodology comprise of the capital investment, improvements in the service quality and client satisfaction. According to Augusto, Cauchick and de Carvalho (2014, p.63) lean six sigma provides that efficiency and accurate methodology to sustain the growth of integrated quality management system in manufacturing plants so as to execute virtually free of faults and waste of time. The strategy ensures that only what is needed is manufacture is what is called small batch processing. Chakravorty, S.S 2009, p.4) contended that Toyota Motor Company is one of the examples where lean Six Sigma have worked success and can provide a case study for managers who intends to improve efficiency in the workplace. Toyota today is ranked as the leading company in vehicle manufacturing. Conclusion In the present competitive market, businesses cannot react fast to the consumer demands by means of traditional operation system as it used to in 20th century. This paper has established new platform where customer now strictly insist on product quality and service are ready to pay to get value of their money. The situation has left the business with no choice to manufacture products which meet such standards. Supply chain now plays a key role production of quality products. As the competition increases market forces are likely to change therefore these paper advice contemporary managers to always innovate supply chain so as to sustain change. Critical analysis of the Article “The implementation of supply chain management theory in practice: an empirical investigation Introduction Since its advent of supply chain management idea in the late 1980, it has considerably risen to fame in commercial and academic spheres (Sweeney et al., 2015, p.56). As the 21st century unfolds, research continues to conduct by various scholars in relation to supply chain management. In spite of broad acknowledgement, and its influence on performance, many people still cannot differentiate the theory and practical when it comes to adoption. Therefore, this part will critically analyze an article discussing supply chain implementation. Devondale Murray Goulburn will be used as an example to provide a broad analysis on the topic. Analysis of the Article Supply chain management has been recognized as the one vital strategy for effective operation in manufacturing companies and has become a major requirement for success and effectiveness in the global economy (Engelseth & Felzensztein 2012, p.674). Despite, some companies have become a success due to adoption of good supply chain management; others still find it a challenge. For that reason, various scholars and researchers have over the years studies the implement and offered some guidance to contemporary companies. Some of such scholars are Sweeney, David, B. Grant & Mangan (2015) who have put together their thoughts in the article “The implementation of supply chain management theory in practice: an empirical investigation”. As state earlier, some companies are yet to find the rhythm of implementing supply chain management. The article suggests that the managers who have a problem with supply chain management might have had difficult to draw the line between theory and practical on the issue (Sweeney et al., 2015, p.57). The situation arises because of different definition which has been offered by various people. The article evaluates various themes including importance of supply chain management in the company. The three researchers claimed that there is considerable proof that the successful execution of supply chain management can lead to performance improvement in companies. A research conducted in 196 firms held that the higher degree of supply chain management practices can actually result to improve performance of the organization and improved competitive advantage (Sweeney et al., 2015, p.57). Another similar research carried out within 322 global companies held that firms with the greater degree of customer and supplier integration will certainly have the leading performance rates in terms of improvement (Vanichchinchai and Igel, 2009). At the same time supply chain management increases the product quality and services quality by means of consistence satisfaction and surpassing of the needs of customers. This argument points out customer focus as one of the key factor in achieving customer satisfaction. In supply chain perspective, customers do not just consist of the end-user but many people in-between the users, like suppliers, producers and sellers. However, over half of the problems pertaining quality in the supply chain are often attributed specifications owning to the poor communications between people directly involved with the supply chain. In several ways, the procurement requirements released by consumers are unclear whilst the suppliers don not always want to argue with buyers about their product needs during the process of bidding (Talib, Rahman & Qureshi 2011, p.273). Thus, Devondale Murray Goulburn must always focus on to the expectation and needs of the end-users, and every employee working within the supply chain system has to concentrate on the expectation and needs of the backward consumers. In research conducted in 2009, Rajagopal, Zailani and Sulaiman concluded that to focus on customer and quality, the need the customers has to be deployed in every level of the supply (p.657. The process is also beneficial to the company in that it help know the weakness of every level of the supply chain. Using this approach, Devondale Murray Goulburn can be able to improve its operation efficiency in almost every level so as to increase customers’ satisfaction. One of the tools that the company has been using to maintain customer focus and ensure quality is total quality management. One tool which can be used in this process is the Quality Function Deployment. This tool is to determine the potential and unique needs of the customers so as to fulfill them. Such better performance is actually built the leaders strongly insisting on proper management on supply chain (Jin, Fawcett & Fawcett 2013, p.209). Leaders normally lead by example by defining roles and rally every employee to work in areas assigned. Such perspective regards effective leadership as an important aspect of supply of supply chain. In various literatures, researchers have argued that efficient supply chain quality management relies on the leadership effectiveness since quality endeavors can get the real impact just with the leadership support and acknowledgment. In supply chain situation at Devondale Murray Goulburn, the managing director Gary Helou, the company has set standards for suppliers on which form of milk should be brought to the company. The managing director has in the leadership for eleven years in the food industry and understands the leadership roles in supply chain and its effects on customers. The leadership roles in supply chain is to bring suppliers, producers, distributors and customers together and telling them what is expected of them. Suppliers too have recognized the importance of leadership in supply chain quality management. Majority of the Devondale Murray Goulburn supplies (2500) are its share and they understand that quality of their supplies determine their returns (Devondale Murray Goulburn 2015). The suppliers feel they own the company so their leadership in supplying quality milk matters most to producing quality processed milk and dairy products within the time for the market. The manufacturing and product quality process of suppliers bear great influence on quality of ultimate products. It implies that the focus of supply chain quality the research and practice has shifted from business focus to the focus on supply chain. In the supply chain situation, several companies, particularly some bid enterprise like Devondale Murray Goulburn depend majorly on the suppliers quite often to deliver quality. The leadership and focus was rewarded with ISO9000. Therefore, Jin, Fawcett & Fawcett (2013, p.213) claimed that setting up of supply chain quality management platform in terms of management ISO9000 ideas will encourage the members’ involvement and enables the execution of the quality control in the whole system of supply chain. Sweeney et al., (2015, p.56) stated that despite such outstanding importance of supply chain management and factors for implementation, some companies have been having problems with implementation due to confusion in definition of supply chain management in relation to logistics. A particular area which brings in confusion is the connection between supply chain and its major antecedents, logistics. Various literature reviewed demonstrate insufficient agreement in correlation to how to the definition of supply chain. Four constructs has been shown by Sweeney, David Grant and Mangan (2015, 63) which cause the confusion and are also important factors for implementation of supply chain in another company. These constructs include setting up objectives, supply chain philosophy, managing the chain flow of supplies, the relationship in the supply chain. In most cases, the company sets objective covering both company and the customer. However, companies are always more into meeting the objective related to its core business which is to make profit hence forgetting the customer objective (Sweeney et al., 2015, p.61). In a nutshell, the company confuses the relation between company’s individual objective and the company objective about the customer. In the first fundamental constructs, the four authors therefore remind the contemporary managers of the significant of the focusing on customer objective. The fundamental One which is also an objective of supply chain is similar to an approach referred as to as” triple bottom line” (Sweeney et al., 2015, p.64). This approach normally focuses on people particularly customer service, planet like environment and profit (finance). Devondale Murray Goulburn incorporates this construct into its sustainability strategies. With this construct, the company recognizes that even as it operates, it should not compromise the lives future of generation it its endeavor to make profits. In other words, the focus is not only the product which satisfy the need but also conserving the environment in which the customer lives because the company still need them tomorrow or even in future (Sweeney et al., 2015, p.65). The second construct talks of integration of supply management philosophy. This construct to some perspective, emphasizes of creating a culture effective supply chain management. (Rajagopal, Zailani & Sulaiman 2009, p.655) opined that The process will first start with replacing the traditional and frequently highly disjointed supply chain platforms with more incorporated architectures which is what supply chain philosophy is all about. Leading an effective supply chain and sustaining it is always the desire of every manager within Devondale Murray Goulburn. Managers leading the implementation of a new supply chain concept must first understand that creating new platform in one thing and sustaining it is another. In various studies it has been found out that sustaining supply chain philosophy takes some major principles including customer involvement, focusing on the vital areas, or problems, empower and create change agents and seeking ideas from (Lee, Wei & Lee 2009, p.866). The application of creativity and enthusiasm of by every employee has been found serve as precondition to the real impact of the supply chain quality management. Various studies about the supply chain quality management, different scholars concluded that a positive environment which encourages employees’ involvement ought to be created to motivate the creativity and enthusiasm among the employees in every level of the supply chain (Cao et al., 2015, p.31). Such atmosphere makes employees feel respected and valued with company. In their part, they compensate by manufacturing quality milk and dairy products to meet the company goals and customer needs. Cagnazzo Taticchi and Brun (2010, p.174) posited that involvement does not just mean engaging in decision making which relates to organizational goals, but it also involves defining employees’ roles within the system of supply chain so as to reduce conflicts and disruption from achieving quality. Another construct discussed which is also confusing contemporary managers is the managing the flow of the supply chain. Kotzab et al., (2011, p.238) argued that the process majorly involves management of resources and information flow which ought to be managed in holistic way. It implies that a plan should be paced which will not distribute flow of raw material from getting in the company within the required time. Conclusion The paper presents another dimension of understanding supply chain management and its tenets. The assessment has established that supply chain management can be used to reduce product manufacturing lead, consistent performance improvement and to improve competitive advantage of the firm. Over the years, companies have tried to implement effective supply chain quality management, and whilst some have succeeded, others have failed terribly. Experts attribute such failure cases to poor and confusing definition of the supply chain management. Four constructs which are also confusion has been put forth as important components of supply management including setting up objectives, supply chain philosophy, managing the chain flow of supplies, the relationship in the supply chain. As important aspects, this paper concludes that managers must find the right their definitions so as to satisfy customer needs. References Augusto, P, Cauchick, M, de Carvalho, M.M 2014, ‘Benchmarking Six Sigma implementation in services companies operating in an emerging economy’, Benchmarking: An International Journal, Vol. 21, No.1, pp.62 – 76 Chakravorty, S.S 2009, ‘Six Sigma programs: an implementation model, International Journal of Production Economics’, Vol. 119 No.1, pp.1-6 Cagnazzo, L, Taticchi, P & Brun, A 2010, ‘The role of performance measurement systems to support quality improvement initiatives at supply chain level’, International Journal of Productivity and Performance Management, Vol. 59 No. 2, pp. 163-85. 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