Q (1). What are the standard logistics operational characteristics of a consumer product company?
The logistics operational characteristics are vital towards the success of a company, especially one that provides services and products to consumers (Pontius, 2016). The main focus in such areas is what the customer wants more than what the company can supply. Hence, the company has to come up with strategies that will meet the demands of its clients in the quickest and cost effective way. A proper strategy will enable the company to be ahead of others, regardless of the abnormalities that may occur during low or high tides.
The first characteristic is achieving maximum customer service. As stated in the previous paragraph, the customer acts as the pivot point of the business and a company ought to look for ways of satisfying them. The possible way is by ensuring plenty of supply during high demands (Hanfield, 2016). The second characteristic is ensuring the products sold are of a high quality; subsidized products will lead to loss of customers. The third characteristic is achieving the minimum cost of production in a bid to save on operational costs. However, it is important to not the need to balance out the workforce in a bid to ensure fair representation and sharing of jobs. Lastly, the company should be flexible as it ensures its constant level during market changes (Hanfield, 2016). Their prices should have a small marginal variation between high and low market times.
Q (2). State the problem areas of the consumer product company considered in the case. What is the specific area of logistics considered in the case?
The main problem facing LeanCor is increase in multiple acquisitions by customers. Despite it being a positive feature towards the company, it seems to spill out of hand. The company is struggling to expand its resources and warehouses as well as maintaining the current order acquisition. Currently, the distribution network is overlapping, and some their distribution centers grew to 64 locations. The expansion brought about an increase in inventory and fixed cost. With the current workforce, the company will struggle to maintain its customers, since it would take some time before the board meets and sets a new recruitment exercise.
The initial plan by the company is to lower the logistics cost, warehouse, distribution points and average cost per unit. Despite the significant changes in several local optimizations, the costs were quite high and would be an issue towards the company if it does not lower with time. The inventory availability has to increase to cater for the overwhelming customer, but it would only be possible through a fill network analysis, which will pave the way for proper implementation. Lastly, the customer service level needed improvement due to several customer requests such as one-day delivery, 24/7 flexibility, and more inventory availability. However, the company had plans underway to establish warehouses four-hour distance from its customers. The move will ensure fast and efficient delivery of products.
Q (3). The target areas of improvement (by LeanCor) are elucidated in the case. Link these target areas of improvement to the areas in logistics. Do you recommend adopting lean technique in the demand chain of this consumer products company? What is your opinion for adopting the agile technique for the case company? Provide substantial technical reasons behind your opinion.
LeanCor pointed out several areas of improvement in their logistics. The main one was their distribution network. The influx of new customers rendered their current method obsolete as there was an overlap of orders. It was not up to the task, and the company was struggling to process the influx orders. The other issue was inventory availability since the current system lacked proper pools of items in the warehouses. The increase in customers brought instability in the company’s operations, and the current workforce could not tally up the new items. As described in the document, the inventory availability had to undergo a full network analysis and implementation before its authorization into the system. Another issue was the fast delivery of products to the consumers as it would guarantee a better response.
It would be ideal for the company to adopt the lean technique in its demand chain of consumer products. It will ensure the company has a proper transition from the old system and assure full implementation on the workforce. The agile technique would not favor the company since it would distort their operations. The transition ought to be smooth and transparent in a bid to cater for the current and new customer base. Apart from that, the agile technique will be quite costly for the company since they have to cater for the trial period. The lean technique will ensure the company makes critical changes to the system with time.
Q (4). Analyze the implications of this reduction considering the “risks” in the logistics chain. Some sources of the risks should be considered during the analysis, and these sources should be illustrated with appropriate justification.
The reduction of warehouses by 13 would affect the company negatively in the initial stages, but it will level with time. One of the negative effects is restocking of other warehouses and inventory rechecking to include the new stock. The main issue might be an overflow of products in the remaining warehouses, which will lead to overcrowding. Eventually, some of the products will expire or spoil within the warehouse. The second negative effect is the alteration of customer preferences. The affected customer base will have to look for alternative warehouses to purchase their items. However, the company’s delivery service might come in handy in delivering the products to the clients instead of them coming to the warehouses. One of the positive effects is cost effectiveness in that the company will save on rent and wages from the 13 warehouses. Moreover, it will help the company to manage its warehouses effectively and provide better services to its customers.
References
Hanfield, R. B. (2016). Chapter 2 Logistics-Basic Concepts and Characteristics. Retrieved from Adam-Europe: www.adam-europe.eu/prj/7095/prj/CourieL_WP2_Chapter2_final.pdf
Pontius, N. (2016, April 14). Logistics Strategies for Business: 19 Experts Share Tips on How to Develop a Winning Logistics Strategy. Retrieved from Camcode: www.camcode.com/asset-tags/how-to-create-a-winning-logistics-strategy/
Staff, L. (2014, March). Case Study: Distribution Network Design. Retrieved from LeanCor: http://leancor.com/wp-content/uploads/2014/03/Case-Study_Network-Design_Healthcare-Industry.pdf
