Logistics
Q1. The Factors Responsible for Making Supply Chain Networks Irrelevant
There are several factors that have contributed to the yesterday’s supply chain networks becoming irrelevant in today’s business world. First, there has been a need to study the cost and service level associated with supply chains (Ironside, 2007). Indeed, the cost and service levels that worked in yesterday’s supply chains have become redundant in today’s business environment. This is because of the changes in fuels and transportation costs as well as the increased level of competition among companies. For instance, a supply chain network that worked yesterday could become obsolete today because of increased costs of transportation.
In addition, the quality of service demanded by clients can increase (Ironside, 2007). Further, today’s businesses have become extremely competitive, and this can force a company to change its supply chain network (Ironside, 2007). For instance, demand for quality services can compel a company to seek distribution centers that are close to the customers. In addition, high interest rates can force a company to hold lower levels of inventory. Moreover, the growth in outsourcing of services in countries with low labor costs has made it possible to have distribution centers across the globe. These centers must be strategically located to reduce overall costs. Finally, governments and regulatory authorities have been studying the effects of transportation and burning of fossil fuels.
The irrelevance of yesterday’s supply chain is based on the changing level of processing in the distribution centers (Ironside, 2007). The processing ranges from repackaging goods of the right size to making packages of pre-determined assortments. In essence, yesterday’s supply chain have become irrelevant because today’s supply chain networks form the common thread between purchasing, storing, distribution, manufacturing, dispatching and sales and marketing. It is important that supply chain needs create a balance between supply and demand in order to eliminate unnecessary costs, for instance, holding costs (Ironside, 2007). In addition, today’s supply chain networks form a big part in the competitive marketing arena of modern enterprises.
Q2. The Feasibility of the Design Solutions in the Napolitano Article
The feasibility of the designs envisioned in the Napolitano article has significant weaknesses. The article suggests an increase in the frequency of supply chain network strategy assessment to meet client needs (Napolitano, 2009). However, this approach is not feasible because if a well developed supply chain network is lacking, such an assessment would not bear any meaningful results. In addition, Napolitano article argues that the network changes and transport costs are critical in enhancing supply chain activities. However, the article does not propose a clear plan for improving the variables. In reality, it is important for companies to set objectives and priorities (Napolitano, 2009). Further, it is important to determine the common parameters across business units. The supply chain networks should be analyzed at different stages using flow diagrams, best practices and a diagnostic criterion.
The article proposes that the network design technologies can help companies to integrate local and regional trends into their supply chain strategy (Napolitano, 2009). However, this approach is dependent on a company’s marketing strategy. If a company pursues a global strategy, there will be little consideration given to local trends. Moreover, supply chain networks must be pilot tested, evaluated before they are rolled out.
It is paramount that managers access the right channel configuration to meet the expectations of clients and their financial goals in the down economy (Napolitano, 2009). The design of the channel should identify the levels of production and inventory to meet customer demand, the necessary participants in the supply chain, their locality, their roles and responsibilities (Napolitano, 2009). Further, a decision should be made on whether to seek a third party players or just use in-house logistics.
Q3. Burlington Coat Factory, IKEA, and Electrolux design of Logistics
Burlington Coat Factory distribution system is a leading example of a good design. It uses several distribution centers to meet different distribution expectations (Trebilcock, 2006). In addition, each one of the centers has a unique capability. The Ironside and Napolitano articles have shown the need for the design of effective logistics frameworks.
In the case of the Burlington Coat Factory, the company saw the need to design logistics that would match is aggressive growth capabilities (Trebilcock, 2006). As a result, the company designed a network with four centers of distribution. IKEA is a world-wide leader in the furniture market (Trebilcock, 2008). The company’s warehouses are situated below the store. Some of the company stores have distinct and separate warehouses (Trebilcock, 2008). Although this confuses clients, the warehouses are built below the stores. From the design of its stores, it can be seen that IKEA has incorporated the designs suggested in the Ironside and Napolitano articles. For instance, the warehouses are located below the store, making warehouses to be close to the customers. This enhances services provision to customers since their waiting time is drastically reduced.
Electrolux uses a third party logistics. The third party supports the company’s logistics network through transportation services, forwarding, warehouse services, processing and the development of information technology (Hannon, 2007). As proposed by the Ironside and Napolitano articles, using a third party logistics service is critical in reducing associated costs, such as warehousing and transportation costs. In addition, the cooperation with third party logistics leads to high customer service.
From this discussion, it is evident that the three companies have used the three companies have adhered to the design suggestion as proposed in the Ironside and Napolitano articles in redesigning their logistics
References
Hannon, D. (2007). Electrolux Designs a Logistics Network to Support Global Sourcing, Purchasing, 136. (11). 29
Ironside, F. (2007). Yesterday’s Supply Chain Networks are Costing Businesses Today, Supply Chain Europe, 16, (5): 30
Napolitano, M. (2009). Redrawing Your DC Network, Logistics Management (2002), Highland Ranch: 48 (6) 36.
Trebilcock, B. (2006). Burlington Coat Factory Builds a Distribution Network, Modern Materials Handling, Warehouse Management, B 61 (10) 26
Trebilcock, B. (2008). IKEA Thinks Global Acts Local, Modern Materials Handling, Warehouse Management, 63 (2) 22
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