The report is meant to analyze the importance of logistics in nowadays business. As logistics cost rises every business aims to improve its supply chain management as this will not only ensure that it is cost effective but will also help the organization in creating a competitive advantage. The logistics is the flow of goods and information from the supplier of the raw material to the tail- end customer. Trento a women shoe manufacturing company is facing problems in its logistics such as order processing, procurement and transportation and distribution system. The lacks of a computerized process along with low levels of staff deployed in logistics team are factor contributing to the organizations inefficiencies.
Trento can resolve these issues by taking various steps such as the use of Electronic Data interchange whereby a data base is created to link the suppliers and customers and aid in inventory management. The organization can also improve its supply chain by moving from its pull system to a combination of push and pull system. Warehouse management can be improved by incorporating various mathematical formulas to determine the optimum level of inventory. Elle sports could further this cause by providing information of different processes and helping Trento in the process of bench marking.
At the end of this report, it can be concluded based on various data and facts that Trento must improve the logistics problems it is facing else risk losing its major customers. Logistics is an important function of any business and the right techniques can help Trento in getting back its market share and thus once again gaining a competitive advantage.
Recommendation for Trento includes incorporating various supply chain management theories such as JIT and TQM along with greater collaboration with the customers to satisfy their demands. An ongoing improvement process needs to be initiated such that information on external and internal processes is collected on a regular basis and reports are provided to the management so that timely steps can be taken to counteract problems that may arise within the logistics system.
Table of Contents pg
Title Page (i)
Executive Summary (ii)
Table of Contents (iii, iv)
List of Tables and Figures (iv)
1.1 Background 1
1 .2 Aim 2
1.3 Scope 3
2.0 Trento and problems within logistics system
2.1 Supply chain 4
2.2 Order processing and procurement 4
2.3 Inventory and warehouse management 5
2.4 Transportation Policies / distribution strategies 6
3.0 Solutions to logistics problems
3.1 Supply chain Management: Manufacturing flow management process 7
3.2 Improvements in Procurement and order processing through EDI 7
3.3 Warehouse management 8
3.4 Outsourcing- the last possible option 8
4.0 Elle sports and Trento
4.1 Current situation and Elle sports response 8
4.2 Elle sports Initiatives 9
5.0 Conclusion 10
List of figures
1.1 A supply chain 1
1.2 Distribution strategies (a) direct shipment (b) warehousing 6
1.3 Cost ratio of logistics item 7
Existing economic conditions and fierce competition is forcing Trento to seek new ways to reduce cost and enhance profitability and cash flow. The business is feeling increasing pressure to improve various logistics involved in the supply chain. Trento needs to alter the way the organization is executing its business process and to integrate these processes within and beyond the enterprise.
The basic problem that many firms nowadays face is the inability to integrate the logistics in the supply chain management. It is necessary to establish an understanding of the importance of logistics throughout the organization. Logistics deals with planning and control of material flows and related information in organization. The basic aim of the logistics function is to get the right material to the right place at the right time, while optimizing a given performance measure (e.g. minimizing total operating costs) and satisfying a given set of constraints (e.g. A budget constraint). The key to successfully managing logistics lies in deciding how and when raw materials, semi-finished and finished goods should be acquired, moved and stored.
Illustrated below is a supply chain diagram that indicates how goods are moved from one end of the supply chain to another.
It can be seen that the supply chain is a complex system whereby the goods are initially manufactured by the supplier such as in our case Trento and then passed on to central distribution centers (CDC) and then onwards to regional distribution centers (RDC) and then finally to retail outlets such as Elle sports that deliver the goods to the final consumers. The supply chain might be less complex if the assembly and manufacturing are integrated together and without the existence of regional distribution.
Trento is seen to be facing a number of problems regarding its distribution channels an essential part of the logistics is ensuring that the supply chain does not break and this would mean an emphasis on logistics such as procurement, transportation and warehousing. Without ensuring that sufficient purchases are made on time the procurement and order taking process is likely to be slow. It is also essential that there are proper storage facilities and transportation of finished goods is made on time. Combination of these would ensure the success of the business in running effectively while also retaining its major customers such as Elle sports.
The purpose of this report is to analyze the various problems faced by Trento due to the inefficient management of the logistics system such as procurement, transportation and warehousing. It further goes on to suggest on how these problems can be resolved.
This report intends to cover on how best practices can be used to change existing business process along with how enterprise integration can help to reduce costs along with an increase in productivity. It further intends to highlight how customers of Trento such as Elle sports can help to improve the supply chain management and their by improve business efficiency.
It also includes an analysis of what is best for customers such as Elle sports if the suppliers are unable to meet their demands. The decision would revolve around the choices of whether to switch to new suppliers of to help Trento in establishing a better logistics system.
The report evaluates the importance of logistics in the nowadays competitive business environment and how an efficient flow of goods can help companies such as Trento to become more profitable. Evaluation is done of the processes involved in the manufacturing and delivery of goods and how problems can be identified and resolved.
2.0 Trento and problems within the logistics system.
The logistics system within Trento has been broken down into different parts such as procurement, Order processing, transportation and warehousing and problems have been identified within each section.
2.1 Supply chain
Within the supply chain their might exist a pull system or a push system whereby in pull system finished products are only manufactured when the customers require them. Conversely in a push system production and distribution decisions are based on forecasts and hence the production anticipates effective demand and inventories are held in warehouses and at retailers. The use of a push system or pull system is dependent upon product features, manufacturing process characteristics as well as demand volume and variability.
Within the Trento we see a pull system whereby orders from Elle sport trigger the production cycle. However the time specified by Elle sport of delivery within 10 days cannot be met as Trento not only has to order the raw material within the given time but also has to manufacture the goods. This means that the process inevitably extends over a period of 15-20 days. The inability to supply at the right time means Elle sport might become disgruntled and switch to another supplier.
2.2 Order processing and procurement
Order processing within a logistics system refers to the flow of information and is likely to include a number of operations. Once the customer requests the products either by filling out an order form or by telephoning in the order, the order is then transmitted and checked. This is followed by checking up on the availability of the item and then verification of customer's credit status. The items are then either retrieved from the stock or produced and delivered to the respective customers. Customers are kept informed of the status of their orders on a continuous basis. For the order processing system to be efficient and responsive to the customer's needs it is essential that the above mentioned logical flow of process is observed.
Trento fails to adopt the right form of order processing and thus increases the risk of losing its valued customers. The lack of a computerized system means that verbal calls are taken up for orders and the use of illegible handwriting means that the orders are often mixed up and fail to satisfy the customer demands. Moreover, only a team of five is involved in the ordering process which not only includes taking orders from customers but also…