Case Study on of Logistic Operations

Logistic Operations: As the company has faced dissatisfied scenario of customers with an outburst of problems that are becoming too hard to be handled in a better way so it is assumed that the company is going through this problem due to unmanageable treatment of their logistic operations. The employees have been feeling an outrageous pressure of working over the regular working requirements and hence are becoming de-motivated for such inefficient logistic system. The company faces this problem due to international logistical mishandling and inadequate sources of information even though the company has evaluated the local and international logistical operations in a right manner yet they are facing such issues because of the overlooked facts about basic operations involved in domestic as well as global logistics operations. Some of the basic differences in the company’s local and international logistic operations are as follows:

·         Language difference – domestically, single language has been used by all the logistic employees whereas; many versatile languages are being spoken globally by other logistic personnel.

·         Culture difference – there’s an evident difference in culture and other work ethics all across the globe.

·         Distance – the long distances around the globe among countries increases the supply chain for global operations than domestic operations.

·         Government – each country has their different government and rules and regulations.

·         Meaning – even the same words used all across the word has different meanings in different countries which can lead to miscommunication.

·         Infrastructure – each country has different infrastructure than other.

·         Labelling – labelling laws are different among different countries.

·         Currency – currency change or change in exchange rate and its fluctuations is quite common that hinders the global supply chain system.

·         Environment – every country wise the environment fluctuates for logistic and supply chain matters and different compliances and regulatory environmental changes are considered by different countries.

·         Political difference – it is a common factor that different countries go through different political instability situations.

·         Transportation – different countries have different transport regulations.

·         Paperwork – different countries have different paperwork requirement such as most of the countries have 20 to 30 page requirements.

·         Government schemes – advancement in licenses, free shipping bills and drawbacks have differences in different countries.

·         Customs – exporting rules and regulations have different custom requirements in different countries for import of goods and services.

·         Agreements – change in agreements such as SAFTA and NAFTA are different among countries.

·         Payment modes – global logistics have different modes of payment under different country regulations.

·         State regulations – accounting, insurance and banking regulations are different among countries.

·         Preservations – transit time varies according to different atmospheric conditions and global requirements.

·         Carrier – international logistics have different modes for transportation and charter vessels.

·         LC conditions – contractual conditions have different obligations and modes of payment in different countries.

·         Stuffing – loading options varies among countries with consolidation, documentation and dock stuffing options for different countries.

Q2)

3PL stands for third-part logistic provider which is an organization or a company that serves as a third party in carrying out logistical operations and other services for the sake of supply chain management and other functional services and operations for outsourcing. Third-party logistics providers have specialization in integration of warehouses and other transportation services that escalates customer’s needs depending on their demands and service of delivery for raw materials and products manufactured under the third party association. On the other hand, the term 4PL stands for fourth party logistic provider and it was accentuated as a consultation group to provide trademarks for business logistics. It is an integrated assembling of resources, capacities and other technologies that are deployed into its own working organization or some other organization for the sake of designing, building and running comprehensive supply chain solutions.

Q3) 

Since the company holds two dimensions of logistics handling organizations i.e, third-party logistics handling company and fourth-party logistic handling company so the managers have to decide which form is best suitable for the integrations of supply chain logistics to carry out company manufacturing processes and other basic operations. The enhanced usage and credibility of 3PL has made it obvious for the managers to integrate its use primarily for many reasons that can turn the business into a more efficient form of supply chain logistic processes and other outsourcing benefits. The first and foremost reason to prefer 3PL over 4PL is the time saving factor as the company does not have to get involved in a chain of suppliers and other parties rather a simple one basic third-party can carry out the operations most suitably for the company. It saves valuable time and frees up the resources available in organizations hence allowing the company the focus more on its competencies than worrying about basic generic issues. Although, it shouldn’t be made a guaranteed resource of availability of resources whereas 3PL hold those specialised expertise that provides essential logistic support that generated potential for business adding value and basic supply chain value adding options. It is a crucial source of creating and sharing responsibilities in terms of outsourcing into a third-party logistics company. It adds more to the potential and value adding capacities of supply chain with re-engineered business provision that can contribute to supply chain management and escalated economies of scale for various managing locations. The most beneficial role of 3PL is that it is asset based beneficiary logistic rather than 4PL and also, 4PL does not provide such enhancing benefits hence, it has been advised that ABC Ltd. Should go for 3PL service integration for logistic operations and export activities.

 Make vs Buy

Q1)

Although, the costs incurred for both manufacturing operations are same for in house and procurement cost, the company still needs to evaluate and assess what supplier is best suitable for purchasing matters and what problems the manager has to face in carrying out these operations. The first and foremost issue is the cost stability issue i.e, if the cost rises to be high for little procurement bits in contrast to basic manufacturing carried in in-house operations so it advised that the company should go for buying from outside to achieve higher flexibility and also less risk involvement for the forecast of main operations predicted to be an ultimate demand for returns and sales over essentials lower demands than forecasted demands which isn’t wrong. This makes the manager to critically evaluate if he should make the company go through outsourcing or in-house manufacturing for smooth logistic operations.

Following are the general issues faced by Mr. Mohan of ABC Ltd:

·         Relative risk involvement

·         In-house availability of capacities

·         Necessary control and secrecy

·         Capital investment compared to tax expenses

·         Relative economies

·         Access to knowledgeable and skilful suppliers and its advantages

·         Robust supplier maintenance opportunity

·         Requirement complexities and its types

·         Effective uncertainty and risk modules

·         Available scope degree

·         Technicality degree

·         Risk of costs and schedules

·         Process confidentiality

·         Essential deliverables

·         Accounting system of contractors

·         Entire responsibilities of contractors

·         Performance capacities of contractors

·         Subcontracting limit

·         Execution period

·         Pace of work

·         Price competitive extent

Q2)

One of the most prevailing methods for overall maintenance of the company resources and budgeting for manufacturing essentials includes the use of outsourced contract maintenance whereas, in-house manufacturing and staffing is a hybrid and coherent process including both outsourcing and in-house manufacturing and third there is one complete outsourcing option. The manager of the companies need to analyze what’s best suitable for the company product manufacturation that can produce progressive and excellent output for overall success of the business operations that too based upon unique needs and driven extents that makes a company require for some better options.

Outsourcing is very crucial for not just simple manufacturing of resources but to maintain and increase the assets of company with multiple coherent industries including IT and manufacturing and aviation that serves prevalent methods for best incorporation of resources and assets. The three approaches to maintain management is important to many levels for the pure manufacturing are; complete outsourcing, in-house staffing and hybrid of in-house and outsourcing.

Following are the advantages and disadvantages of outsourcing maintenance which should be in cognition with equipments, tools, risk reduction, costs, expertise, lower risk, management focus and work quality.

ADVANTAGES of Logistic Operations

·         Cost Savings:

Maintaining costs is the most crucial element of saving costs for the overall operations of companies so that increased and waste expenses can be controlled so that subsidized procurement operations can be tackled such as pensions, mean standards costs, medical expenses and vocational costs. It is also important to keep the factors flexed and faster in pace with absorbent hiring costs and house-staffing costs whereas, the outsourcer has to bear the burden of these costs and other financial liabilities for workers.

·         Personnel issues:

Many factors related to core personnel of the company such as maintenance of functions, disciplinary actions, accusations and responsible issues for contractors. Many in-house activities including labor relations, human relations, benefits, payroll and time saving are mainly handled by contractors that makes the management more responsible and keen towards managing time issues.

·         Expertise and staffing flexibility: Required skill set and proper management of resources of for up-skill and tailored staffing are beneficial for flexible and quick managing costs to deliver timely investments and high level of expertise with low time involvement and less costs that too with the provision of expertise that can impact the performance of working capacities of the personnel of the company with more utilizing services with specialized in-house staffing that can decrease the inadequate performance factors. But this can also serve as a potential weakness depending on the location and market as well as skills of management and their provided services for the acquired summarization of overall functioning.

·         Equipments and technology: It becomes the responsibility of an outsourced contractor to provide with all updated technologies and new deployed resources to make the use of new told and equipments for well-versed staffing resources that can curate the technical utilization by the company into deploying training for the staff for in-house usage and to have complete hold on the costs and acquisition of supply chain resources that can outsource the required skill set.

·         Core business focus: By deploying outsourcing into businesses, managers can easily manage and focus solely on their core functionalities of their proficiencies with higher driver towards business and integrated objectives for high skills.

DISADVANTAGES: Loss of Control – although outsourcing has too many benefits but on the same time, there can be one disadvantage that the company might lose its control over its own resources with subjective inability to keep the direction of management and contractors and maintenance of core functions.

·         Staff turnover – when the in-house employees find out about company outsourcing its core operations, then many staff members actually quit the job as they don’t feel facilitated enough anymore and feel as if the company isn’t meeting their expectations enough to keep them a viable part of the organization.

·         Reduced management roles – since most core functionalities have already been shifted to the outsourced company so the in-house employees are left with less tasks and have no other choice of completion of management roles.