ACME Distribution was founded in 1947 to address the logistics requirements for American conglomerates (White, 2008). The company has a well known philosophy that states ‘Doing It Right The First Time ’ (Murray, 2013). This philosophy has enabled the company to grow from the single-truck delivery it was used to be to the great delivery company it is today. It has a sufficient warehouse for its operations. In addition, the company is mainly operating in Colorado and California (White, 2008)
The significant pain of the ACME company is the trouble to cover long distances in supplying their customers. All of the major customers who purchase goods from the company are situated far away from the company’s headquarters.
For instance, for the company to deliver goods to PA factory which is in Charlotte NC, it has to incur the cost of covering approximately 497 miles (Blanchard, 2010). Considering that this is a daily transaction, the cost of production is increasingly becoming a challenge to the supplier. The load to be transported is 3,500 of supplies (Murray, 2013).
An additional 2,500 pounds of is transported to Columbia in South Carolina as well as 1500 pounds of pumps to savannah, Georgia both on a daily basis. The table below summarizes the distances covered by the company in supplying their customers with pumps on a daily routine (Murray, 2013).
The cost of transporting this loads of supplies is a challenge to the company even without considering the logistics involved in ensuring that the goods are safely delivered to the customers.
The least charge for a shipment would cost around 150 for a minimum of 499 pounds (Feller, Shunk, & Callarman, 2006). The company is incurring cost and at the same time compromising on its financial management scope. With the vast marketing activities involved in the chain of supply, the company is facing challenges in managing the tasks of manufacturing, promoting and supplying their products. The distance and the miles covered are hampering their effectiveness in performing their supplying duty.
By description, logistics means the supervision of company procedures from purchase, cargo space, transportation, and delivery of supplies inside the supply chain. Any obstructions in the chain of supply can cause a late delivery of goods or overdue services that may force the company to suffer losses due to procrastination of production process. The circumstances imply that logistics administration is a significant department in a company because it shapes the success of the organization.
The chain of supply in ACME is quite incompetent and very vulnerable to adverse malpractices. Such a system is vulnerable to loss of goods in transit, delivery to wrong the address, late delivery of goods to mention but a few. It is clearly seen in the case that the company is experiencing gross distribution hardships.
This is a clear indication of a poor supply chain, which should be recrified and improved with relevant actions. The company needs to look at some of the opportunities arising from the creation of distribution centers, warehouses and other production facilities that would serve the customers.
Having a single distribution center is a good idea because it enhances effective supervision and provides quality assurance. However, a company of such a big magnitude can not support its production with a single production plant. Considering the demand for its products and the frequency that the goods are supplied to customers, the management will be overwhelmed by the demand when it exceeds the supply.
Trade-offs are expenses that a business must avoid at all cost. ACME has incurred transportation costs which is straining the company’s financial muscles. This expense can be avoided by introducing an effective chain of supply in order to pass some of these burdens to other professionals.
Nonetheless, it is imperative to establish the fact that the company uses state of the art equipments in their operations. The use tof he latest computer technologies, which encourage the new members to be included in the chain, must live up to the already set high standard of operations.
The ACME practices a production process called Mass Customisation Scheme, which enables customers to produce their own goods in their desired design and according to their needs (White, 2008).
This is a great challenge to the companies since they have to customize their products to fit into the customers design and having different customers with different designs, it becomes a challenge. The company will need to develop a chain of supply that in its turn will increase their effectiveness in timely deliveries. The chain also has to address the issue of cost and marketing (White, 2008).
An ideal chain of supply employs some strategic ethics which include working closely with the customers. For security purposes, the ACME may exploit the use of radio frequency identification RFID to track the movement of their products from the warehouse to the customers. Furthermore, this will reduce the risk of loosing goods while on transit. Dealing with logistics involves forming a supply chain that is suitable the company and one that effectively enables the company supply the products as required by the customer.
In every business, logistics management is very vital for its success. Logistics plays a regnant role for ensuring a proper organization of production activities. This involves a cross-functional approach of managing raw materials in a company (Murray, 2013). Supply chain management includes supervision of the internal processing of raw materials into fully processed finished goods and the movement of the same goods to the customer.
The process of creating logistics strategy requires the revision of the supply chain visibility. ACME must recheck their supply chain visibility because they are actively changing and evolving every day. It is fair to note that the relevance in logistics management is quite imperative for every type of business units (Jacoby, 2009).
Determining a chain of supply must be influenced by the cost effectiveness of the same. Implementing a logistical strategy is important for a number of reasons including the fact that supply chains are not redundant but progressive. Adapting to the flexibility of supply chains is important because it helps a company to identify how the changes influence their business. To develop a supply chain a company must develop a strategic plan. This involves examining the goals and objectives of the company as well as the structural issues.
Functionality of the company also should be among the factors to consider and then lastly the implementation of the strategy. Implementing a strategic chain of supply is very important because it lays down the road-map which the company will follow in effecting the changes.
There are a number of components that are involved when developing a logistic strategy/supply chain. The components of logistic supply chain may differ in every company according to their priorities but there is a general list that contains such processes which are always common to all. These include:
- Transportation.
- Outsourcing.
- Logistics systems.
- Competitor.
- Information.
- Strategic review.
The current mode of transportation must be helpful for the company to deliver services effectively. The company must review their outsourcing policies and establish what benefits of effects a third party partnership would have on the logics strategy. Logistics systems are the implementation procedures put in place.
It is always wise for a business to check and monitor what the competition is doing. This helps the company to implement better policies and stay ahead in the market. Ignorance on the services offered by the competition may lead to loss of business ( Murray, 2013).
Accuracy in the information driving the supply chain must be observed and kept up to date. Disparities in the information channels may lead to errors in decision making and this may have adverse effects in the business. Lastly, the objectives of the logistics strategy must be in synchrony with the company’s. The ACME company could perhaps employ the collaborative supply chain to increase its efficiency and surpass the competition. Not many managers are using the collaborative supply chain and this would be a unique strategy for the Aacme.
Collaborative supply chain involves three steps which are introspective, supply chain design, and supply chain collaboration. Introspection includes two building blocks which are customer orientation and system thinking orientation (Nagurney, 2006). The supply chain on the hand consists of five procedures which are , scanning, mapping, costing, outsourcing, and rationalization. Lastly, the supply chain collaboration will entail the practices that the company will employ to enhance some of the supply chain fundamentals.
Supply chain fundamentals include alignment of the organizational relationship, sharing of information, measuring performance, empowering the people and collaborative learning (Wieland & Marcus, 2011).
These are some of the things that can help the ACME to form a strong and a cost effective supply chain. The cost incurred by the business in the chain of supply is mainly because the strategy used does not suit its services. Also, the company has to form a new channel of distribution with reference to the listed strategic logistical planning.
As it has been discussed above in the paper, the supply chain is very important because it deals with linking the producer and the customer together. The strategy used to affect the supply chain has direct impacts on the consumer. The negative impacts on the consumer will affect the producer since the customers will cease purchasing the goods or services.
And the same is true because if the customer is happy, the producer will also gain due to the tendency of the customer to purchase more goods. The relationship between the consumer and the producer is therefore highly depended upon the effectiveness of the chain of supply.
References
Blanchard, D. (2010), Supply Chain Management Best Practices (2nd ed.). New Jersey: John Wiley & Sons.
Jacoby, A. (2009). Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance (The Economist Books). New York, NY: Bloomberg Press.
Feller, A., Shunk, D., & Callarman, T. (2006). Value Chains Vs. Supply Chains. Web.
Murray, M. 2013. Creating a Logistics Strategy. Web.
Nagurney, A, (2006). Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits (New Dimensions in Networks Series), Camberley, UK : Edward Elgar Publishing.
Wieland, A. & Marcus, W. (2011). Supply-Chain-Management in stürmischen Zeiten, Berlin, UK: Universitätsverlag der TU.