Strategic Warehouse Management MGT 496
Irina Weisblat
Introduction
Whenever a company is seeking to expand its operations and particularly to a foreign country, it is an important thing for such a company to ensure that it thoroughly considers all the possibilities it has for growth. In order to attain such operational efficiency, the company has to have a set of measures that it adopts to track the progress of its growth in the foreign market as quickly as possible in order to mitigate the losses that come from trying to adjust to the business environment of the host country. One such important measure is the use of a supply chain in executing its range of functions, namely, production, transportation, and so forth.
The importance of a supply chain is that it defines the recommended operations of a firm’s supply chain in order for the firm to gain a competitive advantage in the market. The supply chain also provides a good way to analyze the costs and benefits pertinent to the operations. It focuses on the organization’s actual operations and the recommended supply chain in meeting a particular objective. However, Keller (2014) points out that the range of benefits of the supply chain cannot be realized without having a suitable and conveniently operational warehouse design.
Thesis Statement
In contemporary institutions, the supply chain has invariably been considered as a cost of performing business. The problem with many organizations is that they fail to fully recognize and appreciate the importance of having a good supply chain in their day-to-day business operations. Any organization that functions without the guidance of a supply chain risks jeopardizing its operational and financial objectives. To attain maximum supply chain performance, the management of the new company and the leaders of the organizations’ supply chain must critically assess the core of their supplier chain, that is, the design of the central warehouse.
Warehouse Design and Operational Structure to Manage the Warehouse
A good warehouse consists of several components that must be incorporated into its structure. It should incorporate four main factors that define the full scope of the advantage of a well-structured warehouse design. It must incorporate:
Flow: This is important in defining the sequence of the firm’s warehouse operations logically. Flow entails having the current function as close as possible to the successive function. Flow ensures that the materials, traffic, and people move in a well-ordered and uninterrupted manner. It eradicates incidences of high traffic, cross clashes of process flows and minimize work density. Resultantly, it helps to locate the materials in the warehouse facilitates easier, which makes the handling of a firm’s equipment efficient. A warehouse with a good design helps in smoothening the flow of operations without process obstructions.
Accessibility: This entails designing a warehouse in a way that allows the materials, products and other required input to be easily accessed. Accessibility requires that areas holding the rapidly moving stock to be easily reachable without compromising on space.
Space: In considering how to best use the available space, the management of the new firm should appreciate the benefit of allocating maximum space for the purposes of stock processing and operational storage. Minimum space should be allocated to related functions like working areas, battery charging, offices, et cetera. The directives will ensure maximum operational efficiency.
Throughput: This not only looks at the product categories that leave the firm through the warehouse, but also into the product’s status and its speed through the flow. Nature denotes the elements that have a possible impact on the process of the product flowing through the flow, such as security requirements, hazard, product fragility, bulk and the compatibility of the product with other products. The importance of assessing product velocity is helpful in determining the volume of the product that is going out of the warehouse every day.
In terms of organizational structure, the system is appropriately run by the control and planning procedures. These controls and procedures are accordingly inspected and assessed for effective implementation by the relevant management executives.
Present Considerations for Workforce Management
According to Louisiana State University (2016), there are some important considerations that must be heeded in effectively managing the workforce at the new warehouse. Manufacturers and companies that seek to go foreign encounter three unique challenges in managing their workforce. They are:
Languages and customs - It is imperative for the company to ensure that its workers understand the requirements of the company in a way that allows them to effectively relate to the management and the company. This will save time and costs and subsequently augment the production of the new warehouse.
Cultural disparities – It is imperative for the company to clearly define its expectations for different roles in the warehouse to ensure success in workforce management. It is important that cultures conform their operational apparatus to the culture of their corporation and considering that cultures do vary, the firm should ensure that it achieves the appropriate balance between localization and standardization.
Regulatory requirements - The new company must abide by the Australian business environment regulations if it is to successfully manage its workforce (labor laws). This is because these regulations have an impact on the workforce and affect the worker’s compliance with the set organizational goals.
Investigate Key Regulations and Other Key Issues (E.G. Labor Climate) Related To Managing a Warehouse in Australia as a Foreign Entity
There are several key regulations in Australia that govern the warehouse operations of a foreign country. These are:
Australia does not permit any activates in the warehouse that entail value adding, aside from the sanctioned storage, unpacking, blending, packaging and repackaging of the allowed goods.
Australia limits activities allowable in the warehouse in order to ensure that the goods are secure and to ascertain the protection of the revenue payable to the Australian Commonwealth. As such, the new firm must stick to the business activities it stipulates in its business plan.
Australia holds the custodian of the warehouse license answerable for the security and proper accounting of the goods to the satisfaction of the responsible Australian department, and any breach in revenue payment results in the license holder being accountable.
Develop Export Procedures And Import Procedures In The U.S. Entering a different business area like the USA devoid of any contextual know-how invariably leads to unforeseen and often pricey errors. Every product that crosses the United States’ border is subject to clearance by the US customs. Accordingly, to obtain clearance to export Australian products into the U.S, the new firm should establish the required steps of entry, investigation, evaluation, cataloging and liquidation.
The export procedure in Australia entails:
Entry of goods
Every good must be accompanied by the requisite documentation and the appropriate charges paid up.
Inspection of goods
The new company ought to know that the United States customs inspect every item that enters the U.S. borders to establish if the products are appropriately invoiced, are not prohibited, if the country of origin is appropriately labeled, among other requirements.
Classification, assessment, and liquidation
Classification and assessment are crux factors that affect custom duties. Appraisals of the merchandise require for the importer to exercise utmost care. Liquidation occurs after the entire appraisals and classifications are done.
Regulated merchandise as well as countries of origin
The new firm must establish that the products it intends to ship to the United States are allowed in the U.S. It can cross check this with the sanctions allowed and the list of items that the U.S. bans (Reuters, 2017).
Export Procedures
The U.S. system of border control implements the restrictions of importing products into its borders. Accordingly, it detects, interdicts and inspects any fraudulent undertakings geared towards evasion of paying tax, terrorism activates and any violation of the terms of the pre-established trade practices.
Discuss Supply Chain Risks And Possible Mitigations As a new establishment, it is important for the management of the new company to formulate ways of limiting the impact of disruptions to the supply chain. According to Coyle, Langley, Novack, & Gibson (2012), this can only be however managed by correctly pinpointing the risks that are inherent in the company’s supply chain and formulating strategies to mitigate them. Some of the possible risks in the supply chain include:
Strategy Risk: This entails rightly choosing a good strategy of managing the supply chain.
The management of the new firm must know that rules to do not generally apply to all companies, but that each must tailor its business strategies according to its operational requirements. For instance, a small company may opt to source within if it lacks the ability to keep up with global suppliers.
Mitigation: To avoid this, the new company must expressly define its business strategy and pick out and qualify the correct suppliers and using relevant market know-how to direct its operations.
Implementation risk: This will entail the new company establishing their partners and evaluating the issues regarding their capacity prior to entering into contracts with them. It helps the new company get good attention from its suppliers, for instance, through working with suppliers who get a large part of their revenue from working with it.
Mitigation: Speedily ramp new firm suppliers in order to achieve early visibility into the
possible risk factors that could potentially hinder the new company’s initial performance, production, and other aspects.
Market risk: It entails the possible risks that the new company faces in terms of compliance, market exposure, finances and regarding the brand itself. It means that once the company establishes relationships with suppliers in order to outsource products either partly or fully, the new firm is at the mercy of the suppliers. This means that if the product should not be availed to the customer, the reputation of the new firm is compromised.
Mitigation: The management of the new company should identify the tolerance of the standards of quality of its products. It should also identify the likely effect a compromise would have on the firm. The new company should institute strategies that allow it to closely monitor its lines in order to make early detections of any risks that could negatively impact the brands of the firm, including its capacity to comply with the business regulations in Australia.
Performance risk: This involves assessing the quality of the relationships with currently suppliers and looking into any financial issues. It is not enough that the new firm establishes relationships with suppliers, but should vigilantly look into how productive or risky these relationships are.
Mitigation: In agreement with Mentzer (2001), it is important that the new company should continuously monitor all of its suppliers in order to minimize disruptions that spring from performance problems, labor strikes, bankruptcies, et cetera. Reaching this level of effective monitoring entails using technology.
Demand risk: It involves monitoring the challenges and fluctuations in inventory and demand. This would help the new company to separate objectivity from momentary enthusiasm.
Mitigation: The new firm should carefully watch its suppliers to assess that they are not laden with the new business. The firm should check to ensure the new suppliers’ desire to advance their businesses to affect the commitments of the new firm.
Analyze Which Operations SWM Would Outsource and Which Operations SWM Would Directly Manage and Explain Why
According to Hompel and Schmidt (2006), outsourcing is accost effective strategy for companies. As such, SWM can outsource:
Health specialist trainers: Since the company is expanding to Australia, a new territory, it is important that it outsources qualified Australian health specialists to train and certify the company’s workforce on the required health standards in various areas of warehouse operations.
Business strategists: It can outsource qualified Australian business strategists and assess the real cost of formulating and implementing warehouse operations ion its own and compare it to using an outsourced specialist.
HR specialists: It can outsource HR specialists that will help it to manage the HR aspects of performance management, sick pay, payroll et cetera.
On its own, the company can directly manage:
Equipment purchases: The Company does not need to outsource equipment as it seeks to be a permanent corporate resident in Australia. Thus, the cost of outsourcing the machines may be expensive in the long run.
Budget Items
A tactical supply chain firmly controls and oversees all the elements of the management of materials and their physical distribution, both as raw and as finished products. This therefore means that any company willing to establish its presence in the market must come up with a budget that factors in all the requirements of a good supply chain. Below is a budget sample for the new company, with possible improvements to the budget to be made upon further consideration by management.
Budget Model For The New Company’s Supply Chain
Pertinent Metrics To Measure The Success Of The Warehouse And The Total Supply Chain
Being a new company, it is necessary to ensure that initially, the management adopts and applies some systems to aid in evaluating the success of the warehouse as well as that of the supply chain. In view of that, there are some recommended metrics that would be highly efficient in making time to time assessments of the success of the two components. They are:
Perfect Order Measurement (POM): It is guaranteed that mistakes will occur at any point of the supply chain. The importance of this metric is that it presents a precise way of determining the faultiest links in the supply chain. Its importance for this company is further accentuated by the fact that it can also apply to every level of the process, namely production, transportation, procurement and many more.
Carrying Cost of Inventory: This refers to the total cost of storing inventory over a certain time period. It factors all the charges that come with storing inventory, such as insurance, freight, labor, et cetera. When these charges are then multiplied by the value of average inventory, this metric is obtained. Obtaining these costs will help the new company to make good assessments of how profitable and sustainable their warehouse design and supply chain is.
Supply Chain Cycle Time: This metric seeks to evaluate how the time it takes to fill a client’s order in the event that the levels of the inventory were zero. When the longest times at every level of the cycle are compounded, it yields this metric. For the new company, it is beneficial in that it presents the company with a good evaluation strategy to assess the general condition of the supply chain, as the longest delays at every stage can be clearly pointed and accordingly dealt with.
Customer Order Cycle Time: The importance of this metric is that it evaluates the time it takes for a client to receive his product after ordering. Obtained by calculating the days or time between the date of delivery and the date the order was placed, this metric is important for the new company in that it firstly facilitates the measurement of customer satisfaction and secondly, being geared to facilitate the transportation of Australian products to the U.S, the metric presents the new company with a good chance to institute and quickly polish up its export supply chains.
Conclusion
Australia’s rank on worldwide shipping paths as well as its big local market makes it a viable market for the new company to establish a new warehouse in any Australian city. This is because in Australia, design and establishment of warehouse operations has come of age and hence, the set up process will not be too difficult for the new company.
The CEO should realize that as aforementioned, a good and tactical supply chain strategy that is perfectly tailored to meet the needs of the new company in Australia is a strong backbone for any company. The studies surrounding the design of the business plan have realized that a good supply chain can only be sustained only on condition that the right warehousing strategies are known and fully applied. As such, the business plan began with developing a set of necessities for the warehouse design of the new branch.
This is particularly in regard to the reality of fully reaping the potential advantages that come with knowing how to correctly exploit the benefits, avenues and all the possibilities for growth and expansion a good supply chain presents.
The impulse by some of the clients in Australia for Strategic Warehouse Management, Inc. (SWM) to ensure that the new company aids in promoting Australian exports is another good avenue presented for SWM as it can solicit for the participation of the Australian government and business community to guide its operations in order to acquiesce to the request. Accordingly, this presents a chance for the new SWM branch to expand and extend its operations internationally.
Accordingly, it is a good move for the management of the new company to formulate a clear and concise supply chain strategy in order to guarantee the operational longevity of the new Australian company.
References
Coyle, J. J., Langley, C.J., Novack, R. A., & Gibson, B. (2012). Supply Chain Management: A Logistics Perspective. Cengage Learning. Ed 9.
Hompel, M. & Schmidt, T. (2006). Warehouse Management: Automation and Organization of Warehouse and Order Picking Systems. Springer Science & Business Media.
Keller, B. S. (2014). The Definitive Guide to Warehousing: Managing the Storage and Handling of Materials and Products in the Supply Chain. Pearson Education
Louisiana State University. (2016). Managing a Global Workforce. Retrieved on 3rd February, 2017 from
http://lsuonline.lsu.edu/articles/human-resources/managing-a-global-workforce.aspx
Mentzer, J. T. (2001). Supply Chain Management. SAGE
Reuters, T. (2017). U.S. Import Requirements. Retrieved on 3rd February, 2017 from
http://corporate.findlaw.com/litigation-disputes/u-s-import-requirements.html
