Strategies for Operations Improvement at Coles Truganina DC - Case Study Example

STRATEGIES FOR OPERATIONS IMPROVEMENT AT COLES TRUGANINA DC Student’s Name Course Tutor Institution Date of Submission Introduction Coles Truganina DC (also called Coles Distribution Center) is a distribution center for Coles Property Group Limited constructed by Vaughan Constructions Limited. After completion of the construction process, assessment results indicated that the goals of the project were met and the property met the critical requirements of a distribution center. However, the performance of the facility depends on the effectiveness and efficiency of operations carried out within it after the completion. As Trkman and Desouza (2012, p. 4) explained, an organization’s operational performance is highly influenced by the effectiveness of the approaches taken to address the risks that the stakeholders and the entire organization are exposed to. The extent to which staffing needs of a firm are addressed is dependent on a firm’s staffing plan, and this has a direct impact on the effectiveness and efficiency of operations. A staffing plan should be developed with regard to available financial resources. In order to enhance the quality and quantity of productivity of an organization, the management should establish effective strategies for measuring and managing performance. Operations in the warehouse should also be improved by developing an inventory that directly addresses risks, and outlines the organizational strategies. This is a projection that is also supported by Niknamfar (2015, p. 1086) who explained that the effectiveness of operations in a warehouse highly depends on the approach taken to manage the inventory held in the warehouse. Utilizing opportunities available to improve the sustainability of warehousing operations is vital in order to enhance the efficiency and longevity of the operations. Last, an organization’s performance is highly influenced by the effectiveness of the approaches taken by the human resource management to address the emerging or expected cultural issues (Alvesson, 2012, p. 47). An audit report of Coles Truganina DC after completion found out several issues that can have a significant impact on the operations of the site and thus, the management should address them. Ideally, the operations of Coles Truganina DC can be improved through assessing and addressing the expected risks, developing a suitable staffing plan, adopting effective performance measurement and management strategies, adopting the most suitable inventory management approach, establishing ways of addressing cultural issues that may arise and utilizing opportunities for warehousing sustainability improvement. Addressing Expected Risks An audit of Coles Truganina DC showed that the facility is exposed to several risks that can lead to significant negative impacts on its operations if they are not well addressed or managed. First, the stakeholders of the organization are exposed to occupational health and safety risks (AH & S). As Butler (2012, p. 38) explains, OH & S risk refers to danger or harm on overall health that a person is exposed to. Internal stakeholders of Coles Truganina DC are exposed to numerous OH & S risks. For example, the workers in the organization are likely to develop back pain problems because of regularly lifting and carrying heavy cartons when loading and offloading trucks. To address the risk, the organization should install a conveyor system meant to carry the cartons in order to reduce manual handling. The organization can install magnetic belt conveyors, bucket conveyors, screw conveyors or pneumatic conveyors (Butler, 2012, p. 41). In addition, the risk of developing the back pain problem can be reduced through using lift trucks instead of manual handling. To manage the risk further, the might need to offer the warehouse staff with manual handling training (Butler, 2012, p. 41). The staff and visitors at Coles Truganina DC may suffer fractures because of falls, strips, or slips. To reduce the risk, the floor should be kept dry and all workers should be provided with training on how to maintain good standards for housekeeping. The employees should as well be provided with footwear that protect them from slipping. Besides, the floor designs should be changed and slippery tiles replaced with others that are not slippery in a bid of reducing accidents. Second, Coles Truganina DC is exposed to technology risks. Technology risks, as Trkman and Desouza (2012, p. 6) explained, are hazards associated with operating technological devices and machines. Coles Truganina DC utilizes technologies such as enterprise resource planning and IFS software to support its operations. If such technologies fail to operate properly, the operations of the firm will be adversely affected. For instance, a failure in the IFS program implies that the firm will not be able to make automatic inventory bookings. Such problems can lead to a significant loss if not addressed properly and in time. In this regard, the risk of failure of such technologies should be reduced or managed through ensuring that the software is well maintained, serviced and updated in case of need (Trkman & Desouza, 2012, p. 17). Furthermore, Coles Truganina DC is exposed to operational risks. Operational risks are the hazards occurring as a result of failed internal systems, people or processes (Trkman & Desouza, 2012, p. 21). For instance, Coles Truganina DC can lose part of its inventory through theft by workers or through lack of proper calculation of units of items delivered and supplied. To address the issue, the organization should install a surveillance system to monitor movement and activities of the workers and visitors (Trkman & Desouza, 2012, p. 55). Further, the management of the inventory should be given to competent individuals and all units of products entering and leaving the warehouse should be properly recorded. In other words, all transactions should be well-recorded and kept in books of records. The risk can also be reduced further through adopting an effective inventory management approach, conducting regular auditing of products and books of records and offering to train the warehouse workers on how to carry out inventory management effectively (Trkman & Desouza, 2012, p. 45). A suitable Staffing Plan As stated earlier, a distribution center is essential in all organizations since it determines whether the staffing needs of an organization are met (Ward & Phetteplace 2012, p. 194). The table below presents a suitable staffing plan for Coles Truganina DC: Staffing Plan for Coles Truganina DC for 3 shifts Role Responsibilities No. of Staff required Rate/hour Total Cost of labor/hr Site General manager/ Supervisor To manage the main activities conducted on the site 1 AU$45 AU$45 Assistant Site Supervisor To assist the supervisor in managing the major activities of the site 3 AU$30 AU$90 Human Resources Officer To ensure staffing needs are met 1 AU$40 AU$40 Assistance Human Resources Officer To assist the human resource officer in addressing staffing needs 3 AU$30 AU$90 Receiver Recorded unloaded units of pallets of products 30 AU$20 AU$600 Hauler Transporting received pallets to storage 60 AU$18 AU$1080 Putaway driver Puts pallets into racks with forklift 60 AU$20 AU$1080 Lumper Provides guidance in the process of unloading shipments 18 AU$19 AU$342 Replenishment driver Uses forklift to pull pallets from racks 30 AU$20 AU$600 Loader Loading trucks 150 AU$20 AU$3,000 Off-loader Unloading trucks 150 AU$20 AU$3,000 Facilities and housekeeping Cleaning and maintaining the warehouse building 40 AU$17 AU$680 Inventory management Placement and tracking products 30 AU$28 AU$840 Inventory auditors Counting and checking inventory when it is being shipped in and out of the warehouse 60 AU$20 AU$1,200 Quality assurance Checking the quality of products received 90 AU$25 AU$2,250 Asset protection Loss prevention and building safety 30 AU$20 AU$600 Equipment maintenance Maintenance of pneumatic, mechanical and electrical equipments 30 AU$20 AU$600 Information technology Officer Supporting information systems 24 AU$27 AU$648 Total 750 AU$16,785 NB: Except for the general manager and the human resource management officer, the rest of are divided into three shifts. For example, the number of loaders per shift will be 150/3=30. Contingency Plan for Coles Truganina DC Contingency planning involves preparing for unexpected incidences. With regard to staffing, incidences such as employee absence, injuries on workers, unexpected increase in workload, and increase in the number of employees quitting an organization may lead to major problems in the operations and productivity of the organization (Dummert, 2012, p. 44). In this regard, it is vital for a firm to make preparations on how to address such issues promptly. Below is a suitable contingency plan for Coles Truganina DC: 1. In case any staff member leaves the organization, strategies should be put in place to recruit a new individual to replace the one who has left. 2. The workers should report planned absence or the inability attend work to the supervisors. The supervisor should communicate with the other workers to so that they can cover the absence. 3. In case of need, injured or sick staff members can be replaced with workers employed on short contract basis. 4. In case the workload in the facility increases unexpectedly and it is expected to remain higher than usual for long, the new workers should be recruited so as to accommodate the workload 5. In a rare event in which most of the facility’s workers are unable to work, the management should contact the suppliers and the parent company to explain about the issue. In case it is possible, workers from other distribution channels of the parent company can replace those who are not able to work at Coles Truganina DC during the time of absence. In case no solution is found, the facility should cease to operate until a solution is found. Financial Justification The managers, supervisors, and workers at Coles Truganina DC should be provided with satisfactory remuneration that is not above or below the national and regional average to motivate them and make them satisfied and committed to their work. As such, the salary figures given in the staffing plan are based on the average national and regional figures. If a loader is offered a salary of AU$10, for instance, he is likely to be discouraged and lose motivation to work hard. The worker is likely to seek work in other organizations. At the same time, offering the loader a wage of AU$30 will not make economic sense since the overall salary expenses will offset the net income of the organization. The same case applies to all the other internal stakeholders of Coles Truganina DC. As indicated on the staffing plan, the total wages for all staff members in the facility per hour is AU$16,785. Each member of staff is allocated 48 hours per week, except the general manager and the human resources officer. The total amount of wages per week will be approximately AU$16,785×48×748=AU$602,648,640. The amount per year, without including the salary for the general manager and the human resource officer, will be approximately AU$602,648,640×4×12= AU$28.927 billion. The facility is justified in incurring such labor cost. Conducting Performance Measurement and Management Performance measurement, in this context, refers to the regular measurement of an organization’s productivity and level of success to determine its efficiency and effectiveness. Measurement of performance is a vital aspect of every organization since it enables managers to determine whether their organizations are performing well or not (Waal, 2014, p. 114). In addition, the results of performance measurement process enable the management to determine the steps to take to enhance organizational performance. In other words, outcomes of a performance measurement process enable the management to determine the performance management approaches to adopt. Performance management is a continuous process that involves undertaking or implementing steps and strategies meant to improve organizational performance. For an organization to have efficient and effective operations, it needs to constantly measure its performance using appropriate key performance indicators and utilize the results in determining the suitable performance management strategies that should be adopted (Waal, 2014, p. 115). In order to improve its operations, the management should measure the performance of their organization regularly using suitable key performance indicators and adopt effective and efficient performance management strategies (Waal, 2014, p. 115). One of the suitable key performance indicators that can be used to measure the performance of Coles Truganina DC is determining whether the site is able to operate 24 hours per day 7 days a week without difficulties. The performance indicator is essential since one of the main goals of the facility is to operate full-time. The second key performance indicator is to determine whether the facility will be able to service the targeted supermarkets in Victoria efficiently. This is because offering efficient services to the targeted supermarkets is one of the major goals of the facility. Another important key performance indicator is to determine whether the facility will be able to service more than 400 trucks daily without delays or inconveniences, which is one of the goals of the facility. Another key performance indicator is determining whether the firm deliveries from suppliers arrive in time. Determining whether deliveries arrive in time is important since it will determine whether the facility will have excess inventory or shortages. As Waal (2014, p.116) explained, excess inventory and shortages usually increase costs associated with inventory management. Another key performance indicator is to determine whether the cost of holding inventory is as low as possible (Waal, 2014, p.116). Operational problems such as breakages, damages, and theft of inventory lead to increase in the cost of holding inventory, which has an adverse impact on net returns. The last key performance indicator is to determine whether the workers are satisfied and committed to the assigned responsibilities and the organization. This is important since the level of satisfaction and commitment of the workers influences their productivity (Waal, 2014, p.116). Several performance management strategies can be adopted to enhance the operations of Coles Truganina DC. As mentioned earlier, however, the performance management strategies adopted should be modified based on the performance measurement results (Ferreira, Shamsuzzoha & Cunha, 2012, p. 673). The management should adopt strategies meant to improve areas that have weaknesses. For instance, if the facility is unable to operate 24 hours a day 7 days a week because of lack of enough workers, it should consider adding more workers or adopting a better working plan that will help to solve the problem. If the facility is unable to service the targeted supermarkets because of the shortage of inventory, it should consider adding more stock or adopting a better inventory management approach. In case the workers are not satisfied and their productivity level is low, Coles Truganina DC should consider adopting strategies that enhance employee satisfaction, motivation, and commitment. They include giving them competitive remuneration, offering rewards in recognition of good performance, offering extra benefits such as medical cover, ensuring there is work-life balance and maintaining conducive work environment (Ferreira, Shamsuzzoha & Cunha, 2012, p. 676). Managing Inventory in the Warehouse Inventory management is the main activity carried out in a warehouse. As such, adopting a suitable inventory management method is critical to operations improvement (Niknamfar, 2015, p. 1086). To manage the inventory held in Coles Truganina DC, there is a need to maintain a high level of accuracy. The best approach is to adopt the vendor-managed inventory management approach to ensure that there are no shortages or too much stock in the distribution center. Coles Truganina DC should make an agreement with suppliers about economic order quantities and reorder points. When reorder point is reached, the supplier for the product is notified automatically. Coles Truganina DC should implement a program that informs the suppliers how and when the products should arrive and the properties they should have. All products should be checked and recorded upon delivery and the arriving stock should be recounted before they are stored in the distribution center (Niknamfar, 2015, p. 1087). Counting and verification should also be done accurately for products being moved out of the distribution center. To facilitate accuracy, inventory management should be automated. For instance, bar-code scanners should be used to check and record units of products when they are being taken in and out of the distribution center. Duties should be segregated to facilitate coordination and accuracy (Kristiantoa et al., 2012, p. 346). For instance, different persons carry out verification of the delivery and recounting of stock. How to improve Warehousing Operation Sustainability Enhancing sustainability of an organization is a key factor that influences the longevity of its operations. The sustainability of operations of an organization is improved through enhancing environmental, economic, and social sustainability. Environmental sustainability involves adopting practices that prevent damage or that facilitate protection of the natural environment (Epstein & Buhovac, 2014, p. 58). Economic sustainability involves adopting practices meant to enhance economic performance of an organization. Social sustainability involves adopting practices that are meant to meet the needs and interests of all stakeholders (Epstein & Buhovac, 2014, p. 58). To enhance sustainability of Coles Truganina DC operations, there is a need to protect the natural environment through adopting practices such utilizing renewable sources of energy such as solar systems instead of using energy derived from fossil fuels, contributing in cleaning the environment and adopting proper disposal approaches for non-renewable and harmful products. To enhance economic sustainability at Coles Truganina DC, there is a need to adopt practices that will enhance its performance and productivity, such as adopting effective technology and efficient management of inventory to prevent loss. In order to enhance social sustainability, there is a need to address the interests of the stakeholder, such as ensuring the workers are given competitive remuneration and maintaining positive relationships with the suppliers and the parent firm (Epstein & Buhovac, 2014, p. 58). How to Address Cultural Issues Cultural issues usually emerge in organizations because of different cultural backgrounds of the internal stakeholders. Conflicts and misunderstanding occur among individuals at the workplace because of differences in cultural aspects such as religious beliefs, customs, social values, and workplace values (Alvesson, 2012, p. 68). The problem is more pronounced in new organizations such as Coles Truganina DC that recruit workers from different organizations with different workplace values. For instance, Coles Truganina DC might recruit workers, supervisors of middle managers from different organizations. Some of the recruited employees may not even have work experience. As such, there is a likelihood that differing cultural factors at Coles Truganina DC will lead to conflicts and misunderstandings among the internal stakeholders. If not addressed, the negative effects of cultural differences might lead to extreme cases of conflicts that can disrupt the operations of the facility. In order to enhance the operations of the facility, therefore, it is vital to find suitable strategies of dealing with the cultural issues that might arise. One of the strategies to address the issue is to arrange meetings with the workers and managers of the facility that will be focused on sensitizing them about their difference and encourage them to embrace their diversity (Alvesson, 2012, p. 69). There is a need to encourage interaction among them. Encouraging teamwork will help to facilitate close interaction between the internal stakeholders. Further, there is a need to establish an effective conflict management approach that will help in solving conflicts occurring as a result of cultural differences in a fair manner. Additionally, there is a need to conduct employee assessment regularly to determine their attitudes towards their fellow workers (Alvesson, 2012, p. 69). Conclusion Overall, the design of Coles Truganina DC mainly meets the desired standards of a distribution center. However, the facility’s operations need to be improved for overall performance to be enhanced. Adopting effective approaches of addressing expected and emerging risks will help in enhancing the operations of the facility. In order to perform well, the staffing needs of the facility need to be met and they should be tied o the available financial resources. As explained in the above report, the operations of the facility can be improved further through adopting appropriate performance measurement and management strategies as per the needs of the facility. Effective inventory management will play a significant role in enhancing the operations of the distribution center. Adopting practices meant to enhance social sustainability, economic sustainability and environmental sustainability will play a significant role in improving the warehousing sustainability of the facility. Last, the operations of the facility should be improved through adopting effective strategies of solving cultural issues that may arise. References Alvesson, M., 2012. Understanding Organizational Culture. Washington DC: SAGE. Butler, K. C., 2012. Multinational Finance: Evaluating Opportunities, Costs, and Risks of Operations. London: John Wiley & Sons. Dummert, M., 2012. ‘Staffing Models: How to Do It Right. Biomedical Instrumentation & Technology, Vol. 46, No. 1, pp. 44-47. Epstein, M. J. & Buhovac, A. R., 2014. Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts. San Francisco: Berrett-Koehler Publishers Ferreira,  P. S., Shamsuzzoha, C. T. & Cunha, P. 2012. ‘Framework for performance measurement and management in a collaborative business environment,’ International Journal of Productivity and Performance Management, Vol. 61, No. 6, pp. 672 – 690. Kristiantoa, Y., Heloa, P., Jiaob, J. & Sandhu, M., 2012. Adaptive fuzzy vendor managed inventory control for mitigating the Bullwhip effect in supply chains. European Journal of Operational Research, Volume 216, No. 2, pp. 346–355. Niknamfar, A. H., 2015. ‘Multi-objective production-distribution planning based on vendor managed inventory strategy in a supply chain,’ Industrial Management & Data Systems, Vol. 115, No. 6, pp.1086 – 1112. Trkman, P. & Desouza, K. C, 2012. ‘Knowledge risks in organizational networks: An exploratory framework’ The Journal of Strategic Information Systems, Vol. 21, No. 1, pp. 1–17. Waal, A. D., 2014. Strategic Performance Management: A Managerial and Behavioral Approach. Suffok: Palgrave Macmillan Ward, D. & Phetteplace E., 2012. ‘Staffing by Design: A Methodology for Staffing,’ Public Services Quarterly Volume, 8, vol. 3, pp. 193-207. Read More