Growth and Performance of Elle Sports - Case Study Example

Assessment 2 - Academic Report Name: Course: Tutor: Date: Executive summary This report seeks to solve the dilemma facing Elle sports concerning the supply and delivery of the sports items particularly sports shoes for women. Among its suppliers is Trento Company that supplies them with the sports shoes for women. As part of their general assessment of their performance and flexibility in the market, it was found that there has always been a greater disparity in the delivery terms between Elle sports and their suppliers, Trento. They are also finding so hard to adapt with the 10-day delivery lead-time demanded by their clients compared to their 15-20 day delivery time capability. This has been a serious drawback to Elle sports especially in their achievement of their set goals and targets. Therefore, the firm is faced with a greater challenge of either shifting to another supplier or sitting around the table and trying to formulate a solution for the problem in conjunction with Trento. On the other hand, Trento is also being faced with an even worse situation of losing some of their esteemed customers. This has become a significant issue of concern to the management. In this report, some issues emerged ranging from the overall logistics, supply chain management, internal organization, procurement, order management and customer service. However, other aspects emanate indirectly from this scenario such as warehousing management, transportation logistics, demand management and handling of the international transactions and logistics. All the above aspects have been tackled in this report both in brief and in detail concerning the scenario. A solution has been provided after a thorough assessment of the pros and cons of various ways in which the above case can be best handled without causing much effect on the operation of the firms. Concisely, this report has evaluated the above scenario by considering the effect of the solution arrived at by Elle Sports on both their own operations and the operations of their suppliers, Trento. In addition, Trento’s inability to meet their client requirements has been considered as a better solution recommended for Elle Sports. From the above scenario, it is also evident that Trento as a supplier has been caught in a technological fix where most of their operations are manually operated despite their increasing number of clients. Putting all factors in consideration, Trento needs to carry out a considerable transformational program in most of their operations to meet their client’s demands. There is a dire need for a change in their flexibility especially in terms meeting the new market demands and keeping pace with technology. Table of Contents Executive summary 2 Assessment 2 - Academic Report 5 Introduction 5 Logistics and Information Technology 6 Organizational and Management Issues in the Case Study 7 Supply chain management 9 Procurement and order management 10 Customer service 12 Delivery Lead time, manufacturing strategy and decoupling inventory 13 Supplier selection perspective 14 Conclusion 14 Recommendations 15 References 16 Assessment 2 - Academic Report Introduction Logistics is in absolute terms regarded to as the overall responsiveness of any system to the general demand for goods and services in the market (Robert & Bernard 2006, p.329). In order to ensure that this is achieved, some aspects should be factored in ranging from supply chain management to the general internal organization of the supplying firm. The market has become too competitive such that new challenges are faced each day and everything has turned out to be survival for the fittest. Flexibility is of much importance to any firm operating in the dynamic market where new customer demands are being met every day (Paul & Donald 2006, p.275). Time happens to be another essential ingredient and tool for competition where client demands are to be met as required and on time. Any delay in terms of delivery of services might lead to the eventual outfacing of a firm completely out of the market due to loss of customers. It is an obligation to any supply company to meet their client firm’s demands and make their deliveries on time because any delay may hamper their operations. Depending on the nature of client firms involved, the supplying firm should tailor their operations in such a way that they can accommodate all their client’s interests (Sunil & Peter 2007, p.143). In this context, the scenario mainly surrounds two firms, Trento (supplier) and Elle Sports (retail firm). Trento, as the supplier, is unable to meet the delivery lead-time demanded by their client, Elle Sports. In addition, Trento is not only experiencing problems in meeting Elle’s demands but all their clients are complaining. In fact, two client firms have already terminated their contract with them. There is an even greater danger of losing most of their pure, loyal and prestigious client firms if something is not done as quickly as possible (Arnold & Tony 2007, p.213). The sluggishness and complacence on Trento is a time bomb that can explode any time and bring along with its adverse effects that might see them leaving the market never to recover again. This report considers the Elle Sports as it seeks to advise Elle Sports on the most appropriate step to take between settling for other suppliers. It can also try to crack the fix together with Trento and agree on the way forward. One key issue in this situation is the fact that it falls within the mandate of the supplier to meet their client’s demands and not the vice versa. This case study reveals a number of logistics issues and operational issues facing Trento and need to be addressed by the management in order to achieve efficiency in service delivery. There is a need for the restructuring of the whole system since the number of transactions has increased due to the ever-increasing clients with different demands that need to be met. Their current system of operation is a greater liability and a drawback to all their clients and they have become an obstacle to the progress of their clients (Mentzer et al 2001, p.21). Logistics and Information Technology In this case, the main issue surrounding the entire situation is related to the logistics. It is evident that Trento has been unable to meet the client’s demands due to their slow operations and uncoordinated flow of events. The firm has not yet embraced technology despite their larger client base spread all over. The firm is still depending on the old system of manual operation yet most of their clients have already gone high-tech. Therefore, it makes it exceedingly difficult for them to harmonize their operations and satisfy their customers. Failure to meet the client demands simply means the firm is overloaded with so much work than the capacity it can handle. It also means that the supplier is not being flexible enough to accommodate the increasing number of clients and differences in their demands. Dealing with many clients means embracing an appropriate technology that will suitably address each client’s needs make and make the service delivery faster (Andreas & Carl 2011, p.75). The market is becoming too dynamic, and time is becoming a precious tool. Elle Sports cannot afford to lose their customers just because their suppliers have failed them. It is either Trento reacts extremely fast to the situation or they risk losing even their intensely loyal customers. The entirety of business is all about profit maximization through customer satisfaction and efficient service provision. Therefore, Elle should not at any time compromise their performance for the sake of their less organized suppliers. If Trento is unable to meet Elle’s delivery lead-time, it then goes that they are not qualified to be tendered as their suppliers. This is because one of the requirements for one to be contracted as the main supplier is that the respective firm should be in a position to meet the client’s demands to the latter. Trento has no option but to restructure their operations to a better-automated system in order to retain their clients and meet what they want. Elle Sports is a retail firm having their own strategies, plans and targets they wish to meet and should not at all give way to any interruption from their suppliers (Sunil & Peter, 2007, p.146). Organizational and Management Issues in the Case Study The logistic issues in this scenario have their roots embedded in the general organization and management of the entire firm. Trento has thirty-five suppliers, 15 being local suppliers while the remaining 20 are from foreign countries. This shows how much of the global transactions this firm handles. Any firm handling such a larger lot of suppliers both local and international is not at any time expected to have only five personnel handling all the transactions including the orders from customers and making purchases from the suppliers. There is poor coordination of departments such that most departments operate independently yet expected to achieve the same goal and objectives (Paul & Donald, 2006, p.271). The poor coordination spurs goal blindness among the employees and departments and slows down the process of service delivery to the esteemed customers. For instance, the procurement department works independent of the other departments like the logistics team and purchasing department. For successful flow of events and quick service delivery, the management should see to it that all departments within the firm are coordinated well. This explains why the firm is not doing well in terms of meeting the needs of their clients because there is entirely no coordination between even those departments that are expected to work hand in hand (Anna, 2006, p.251). The organization system embraced in the management of the firm does not harmonize department and mostly promote independence of the departments. This should not be the case since one department may cause delays simply because each department is reading from a different script. Supply chain management There are three fundamental aspects when it comes to supply chain management, speed, quality and flexibility (Hill & Charles 2007, p.264). The three concepts work together to bring forth efficiency in the supply chain. Elle Sport stands in the position of a retailer who deals with final consumers of the goods while Trento are the main manufacturers who assemble the various parts from the different suppliers into finished products which they then supply to the retailers according to their respective orders. Therefore, Trento is charged with the responsibility of supply chain management by ensuring that the products manufactured are enough in the market to meet the market demand. They should ensure the final products meet the client’s specifications and are readily available when demand arises (Andreas & Carl 2011, p.75). Looking at their current state, Trento has not succeeded in managing their supply chain because they can no longer meet the market demand. The market demand is far much higher than what they can unquestionably produce and supply. There are also delays from their suppliers of the various parts used to make the shoes hence affecting the delivery of the final products to their clients as demanded by most of their customers. There is a need for Trento to improve on flexibility in their production techniques to embrace a faster production system that would ensure that enough is produced to meet the demand in the market without any shortage or surplus. Procurement and order management Procurement staff ensures that goods are purchased in time and properly. Trento has loopholes in their procurement procedures. This occurs in the sense that the personnel in charge of receiving and processing orders are the same personnel that deal with procurement or the goods and services required for the production of the final products. Given the size of the firm and its client base, all the task of procurement and order management cannot be handled by the same staff and thereafter expect a better performance. There is a need to incorporate a single automated system that would handle all this tasks differently but in a coordinated manner (Bloomberg & Murray, 1996, p. 166). It is extraordinarily difficult for same individuals to receive orders from customers. They also get involved in ensuring the right amounts of the raw materials and other goods required for production are supplied in time. This is what brings about much delay in the supply of the various shoe parts and causing wrong entries of product details. Procurement has its lengthy procedure, which should be handled by a separate team from that in charge of order management and other transactions in order to promote efficiency. A striking aspect concerning Trento is that they receive most of their orders from customers verbally before other written documents follow thereafter (Cooper et al 1997, p.12). This means that there lacks a better system that can process such information faster and elaborately. Because of over-reliance on the manual system of recording entries for respective orders, Trento also experiences a challenge of their personnel making wrong entries relating to the product details and thereby leading to the supply of the wrong goods to the customers. This not only inconveniences their esteemed customers but also makes the firm incur losses and waste much time trying to meet the customer specifications. The customer morale depreciates and it discourages them since the supply of wrong products to them means they have to wait until the right goods are supplied to them. Trento should embrace technology and incorporate an automated system that will accurately keep better databases for the transactions relating to their suppliers and their prospective clients (Douglas & James 1998, p.312). Customer service For any business to flourish and succeed in the market, they have to satisfy their customers and win their trust by creating customer loyalty. Trento has failed to satisfy its customers and that is why they have already lost two of their loyal customers. They are also on the verge of losing many more if something is not done soon. For instance, Trento has been unable to supply the required goods to Elle Sport in the specified time because of the logistical problems relating to their poor system. Other clients are complaining of not being satisfied (Hines, 2004, p.78). In addition, several clients have pressured them to embrace a computerized system of operation due to the problems they are experiencing because of Trento’s inadequate system. These complaints from the customers are clear indicators that the firm is doing less in terms of customer service since no customer can complain where there is an exceptional customer service (Kaushik & Cooper, 2000, p.82). Another indicator that Trento is not rendering quality service to their customers exists where they sometimes supply wrong products to their customers. This occurs because of errors brought about by wrong entries of product details when taking orders from their customers. Other issues like demand and warehouse management are depicted in this scenario. Trento’s response to an increase demand is too slow and they are not reliable at all. Their production system is less flexible and their warehouse management system is too inefficient since they cannot tell when the demand for a product is rising or on the decline in order to take in appropriate measures (Ketchen & Hult 2006, P.575). A complete warehouse management system would ensure that there is enough to meet both the local and international demand. Given that some of their raw materials are from abroad, they should use an appropriate transport system that will ensure faster delivery of the required goods. It is evident from the number of suppliers that Trento largely depends on the external supplies than the local supplies. External supplies have so many complex logistics that consumes much time, which then births into delays in production of the final products (Larson & Halldorsson, 2004, p.98). Delivery Lead time, manufacturing strategy and decoupling inventory Delivery lead time has a closer relationship to the manufacturing strategy of any given company or business entity. The manufacturing strategy is a key competitive tool that can be used by a given business to outdo their competitors. It is concerned with the formulation of viable strategies to be used and the allocation of required resources for the achievement of the set goals. For instance, Elle Sports cannot risk their performance by changing their set delivery lead time, which has been tailored to suit the manufacturing strategy. On the other hand, Trento has to strategize on how they will improve on their manufacturing strategy and tailor their delivery lead time to suit most of their clients. Given that they have already identified their weakness and the management is interested in improving the performance of the business. Therefore, as a way of faster reaction to a confronting problem, the necessary strategies that will aim at reducing the delivery lead time should be put in place and necessary resources allocated for the fulfillment of the same. This is the only viable way Trento to be used in order to prevent the foreseen loss of important clients. They should focus at embracing at a manufacturing strategy that will bring in flexibility and help a great deal in meeting the client’s demands. In addition to the above information, Trento seems not to have a self-sustaining decoupling inventory, which would have come in handy to meet the clients’ urgent need without causing any delay. A good supplier should have a reliable decoupling inventory that will help cater for any rise in demand that cannot be immediately met by the company’s production process. Therefore, with all such drawbacks, it is very clear that Trento’s capacity to handle increases in demand is completely unreliable. They should adopt a better system that will see to it that there are always some decoupling inventories to help strike a balance in market demand. Supplier selection perspective It is one of the most important factors to be considered for any successful purchasing and supply sustenance. For instance, incase Elle sports ought for another supplier, a number of factors have to be put into consideration and most importantly, the ability of the supplier to maintain sustainable supply that will cater for the demand in the market. The supplier to be chosen upon should be reliable enough and ready to meet the demand of their clients (Mentzer et al 2001, p.14). . Conclusion From the above analysis and assessment relating to the scenario, various logistic issues have been addressed in order to come up with a formidable solution to the situation facing Elle Sport. The report has surfaced a number of issues mainly focusing on Trento’s inability to meet the requirements from Elle Sport. It is true from the scenario and the assessment above that Trento was unprepared in meeting their client’s demands. There are many indicators of poor planning and uncoordinated management system. In addition to their peril, they also suffer from poor organization in terms of their procurement procedures, warehouse and demand management, order management and the general customer delivery services. Considering the ever-changing market trends, Trento still has a long way to go as a supplier. A lot has to be done on their operational system such that it cannot be changed in a shorter time because the whole system needs restructuring and incorporation of another system that will address the client’s demands more appropriately. Trento is technologically behind and as much as Elle would want to keep pace with the current technology and outdo their competitors; this might not work well for them if they continue transacting with Trento. In my own opinion, Trento is not a suitable supplier for Elle sports and their current capacity is not sufficient to cater for fast-growing firms like Elle sports. Recommendations Therefore, when all the above shortcomings and loopholes in Trento’s operations are squared and weighed against the market standards, it will be a greater risk to the survival, growth and performance of Elle sports if they continue with Trento as their supplier. It is recommended that Elle quickly look for another supplier considering that Elle Sport is a profit-oriented business set up and would not subject themselves to poor performance because of delays from the suppliers. This would help them a formidable deal avoid the foreseen future disappointments. They should embark on the process of contracting a different firm that will comfortably meet their demands better and as required (Larson & Halldorsson, 2004, p.98). References Andreas, W. & Carl M.W., 2011. Supply-Chain-Management in stürmischen Zeiten. Berlin. Anna N., 2006. Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, Edward Elgar Publishing Arnold, J.R. & Tony, 2007. Introduction to Materials Management. Pearson Education Bloomberg, & Murray, 1996. The Management of Integrated Logistics: A Pacific Rim Perspective. Prentice Hall, Riverwood, NSW Cooper, M.C., Lambert, D.M., & Pagh, J., 1997. Supply Chain Management: More Than a New Name for Logistics. The International Journal of Logistics Management, vol. 8 (1), pp. 1-14 Douglas, L.M & James, R.M., 1998. Fundamentals of logistics management, Ell Ram; McGraw- Hill Hill & Charles W.L., 2007. International Business: Competing In the Global Marketplace, 6th ed. New York; Irwin McGraw-Hill Hines, T. 2004. Supply Chain Strategies: Customer Driven And Customer Focused. Oxford: Elsevier Ketchen Jr. & Hult, T.M., 2006. Bridging Organization Theory and Supply Chain Management: The Case of Best Value Supply Chains. Journal of Operations Management, 25(2) 573- 580 Larson, P.D. and Halldorsson, A., 2004, Logistics versus Supply Chain Management: An International Survey. 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