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Cuero limited, is a company that is involved in the manufacture of shoes and has 3 factories for manufacture that include Catesby factory, Kilsby factory and the Buckhorn Weston factory. The company is also involved in retailing, distribution of shoes materials and the operations of a mail order business.
The purchasing and supply performance of any company has a tremendous impact on the general performance and returns of the business. This is because it determines the effectiveness, cost of sales and the overheads incurred by the business.
Taking a look at the performance of the purchasing and supply performance of Cuero ltd, it can be said that it is not efficient, cost effective and convenient. To begin with, the many retail chains (60) lead to the high cost of delivering goods to the shops. There is also delay of supply of the products to the shops at some time and this leads to shortages where demand is instantaneous.
Further, the many retail shops incur high operations costs compared to the income they derive making them non profitable. It is therefore necessary for Cuero ltd to review their retailing duty by either outsourcing retailing to other firms. This would relieve the company the burden of distribution and as well make it possible to concentrate only in production.
Supply chain of Cuero limited
The supply of raw materials e.g. skin and nails has been favorable for the company’s needs. This is due to the fact that the company gets its supply from the nearby factories. The supply of solvents from Indonesia on the other hand will entail high cost implications as it will involve high transportation and importation costs which will deflate the company’s earnings.
It would be thus recommended that the company should only get involved in the purchase of skin and nails which are from nearby factories while the purchase of solvents should be entirely tendered to other autonomous firms in order to reduce the purchase costs.
In addition, Cuero ltd needs to tender its distribution centre (Balcombe) to get rid of the costs of distribution to its shops. The cost of maintenance of the Lorries proved to be high making the company incur high costs. Lorries were also at times making late deliveries resulting into a clash between the drivers and gate security staff. Again, it is worth noting that the scheduled was on an inflexible plan. Moreover, it led to a mismatch in the supply and demand.
The location of the deport thirty miles away from the nearest motorway would also be inconvenient for fast deliveries. To mitigate the losses, Cuero ltd should ensure that the Lorries are in a proper state and that the supply is matched with the demand. The company should also consider the idea of outsourcing the service to avoid the cost of maintaining the drivers and other employees in the department. The location of the depot should also be on a place that is near a motorway to lower the fuel costs and enhance faster deliveries.
Of great concern is the fact that there were many suppliers and agents chasing few buyers. According to Chen, (2004), Staid, and Michaelson, (2002), the number of suppliers and gents directly relates to the costs of supply and it therefore mean that the expenses were heavy compared to the income. For Cuero ltd to overcome the upheaval, it should aim at reducing the number of suppliers and agents and also step up its marketing strategies to increase the buyers. If well implemented, the sales level would magnify against diminishing costs.
Finally, the policy of the company on ordering has a devastating effect on the company’s supply. The fact that all orders must go through the marketing department delayed instant supply. This would lead to stock out costs that would impact negatively on the company’s goodwill.
The company should adopt devolved ordering to realize quick supply. On the same note, forward buying should be tolerated for future production to be determined. Buying should not be done by different personnel for consistency purposes and quick supply (Solloish and Semanik, 2007)
It can therefore be concluded that the management of Cuero must react to the purchase and supply performance if it has to correct the company’s declining performance. If not properly controlled, it would be difficult for the company to realize its going concern.
Chen, I. J., P. A. (2004). Towards a theory of supply chain management: the constructs and measurements. In: Journal of Operations Management, 22/2: 119-150
Solloish F, B and Semanik , J. (2007). The procurement and supply managers’ desk. New Jersey: Wiley and sons Inc.
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Staid, M., and Michaelson, L. (2002). Purchasing and supply chain management: supply support. London: Military and Naval Science publications.