Executive Summary
In every organization, logistics and operations management play a pivotal role in promoting the effectiveness of every activity and process carried out. This report gives an in depth discussion of the aspects of logistics and operations management in a China and Western country (Australia) relations context.
It is evident that there has been a considerable growth in trade in most countries. The engagement in trade between China and Western countries has however been on the rise including its registration and involvement in the World Trade Organization (WTO). For this reason, there have been dire need to develop, reinforce and manage the logistic and all operations that transpire between China and all the Western nations in an effort to allow for success in the all the activities and processes involved therein.
This study will focus on the logistics and operation management practices that are involved in trade between China and western countries covering aspects such as the unique features that can be depicted from the supply chain, the notable best practices, the challenges encountered and the strategies that have been put in place in an effort to deal with them, the critiques, the trends experienced and all other issues associated with the logistics and operation management. Some background information about China will also be given.
Introduction
Logistics and operations management go hand in hand. Logistics entails the management of the movement of products and services between the place of origin and the point of use or consumption. This is usually aimed at meeting the needs of both the customers as well as the organization/country involved. It entails aspects like transportation, information, security, storage, inventory and packaging among others. Logistics is therefore an element of the supply chain.
Operations management refers to the management process associated with effective management of the activities which are involved in the production of goods and services in an organization. In every organization, the operations management managers play a very important role in facilitating the effectiveness of the organization. The major roles in operations management involve management and designing of business processes and activities that are involved in production of the goods and services.
In addition, operations management is also involved in management of materials, information, people and all the equipments which a business needs in production and delivering of the goods and services. Logistics on the other hand deals with the movement of the products all through from the producer to the consumer (Stevenson 2005). This piece of work looks at the issue of logistics and operations management with much emphasis being given to China and western countries relations with an inclination towards Australia.
Preliminary Information about China
China is a nation in East Asia with a surface area of 9,561 thousand square Kilometres. The total population is estimated to be 1,341.4 million, as per the year 2010. Its capital is Beijing. China’s trade is growing day by day with its interaction with other nations becoming a key issue. Some of the nations with which China has been involved in trade include the United States of America, Japan, Hong Kong, Republic of Korea, Taiwan, and Australia among others. China is Australia’s third largest trading partner.
In regard to the trade relationship that exists between China and Australia, it is clear that there has been a lot of involvement. In the year 2010, Australian’s exports to China amounted to 58,340 (A$m), the imports from China 39,249 (A$m), thus a total trade of 97,587 (A$m). Major Australian exports to China include coal, crude petroleum, wool and iron ore and concentrates.
The major Australian imports from China on the other hand include clothing, computers, telecom equipments and parts as well as prams, games, toys and sporting goods. There is also service trade between these countries, for instance, in transport and education (Market Information and Research Section, DFAT 2011).
It is clear that trade is not a new concept in China. However, with the increase in engagement in international trade especially with the western countries, the issue of logistics and operations management has become a necessity and has to be handled strategically to avoid all forms of problems that would arise due to poor management.
Review of Literature
There is a significant amount of literature that have been put forward, by different authors, in regard to the concept of logistics and operation management both in domestic as well as international trade.
Some of the relevant literature entail that which touches on the characteristics of the supply chain, the practices involved, the challenges encountered, the measures put forward to curb the challenges, the positive and negative critique associated with the concept as well as the trends that have been observed. All this will be in respect to trade between China and the Western countries.
Zairi (1998 p.60) asserts that one of the main operations aspects is the supply chain management. In every organization, the effectiveness of the supply chain management plays a very important role in facilitating the success of the organization. The supply chain can be seen as a series of cycles which involves communication between the buyer and the seller (Chopra & Meindl not dated). The supply chain can also be viewed in terms of three main processes. These include the Customer order cycle, Replenishment cycle and the Manufacturing cycle.
In the contemporary business world, the supply chain operations have undergone significant changes through technological developments. However, several organizations and countries have encountered problems by adopting the new technology without making necessary arrangements, an issue which has made them to incur huge losses (Epiq 2010).
For instance, several companies have ended up spending more by adoption of some of the procurement software due to ignorance. However, these negative impacts can be overcome by adoption of these new methods slowly rather than just abruptly. This will enable an organization to make the necessary changes in an appropriate manner.
According to Kennerley and Neely (2003 p.213), a cycle view is very important while viewing the company’s supply chain operations. The cycle view of the company’s supply chain helps an organization to define the processes involved in production and the owners of each process.
The processes involved in the customer order cycle are the customer arrival, customer order fulfilment among others. Customer arrival implies that the customer reaches the location where they can access the choices available. In this case, the customer makes the necessary choice of the products they want. In the customer order entry process, the customer informs the seller of the goods they want to purchase. This process also involves allocation of the products to the consumers.
In the process of the order fulfilment, the customer’s order is fulfilled and then sent to reach the customer. This may involve picking the order from the inventory, packaging it and transporting to the customer. The last step in this process is customer order receiving. It involves the delivery of the product to the customer.
The cycle view of the company’s supply chain is very important especially when making decisions concerning the operations of an organization. However, this process may need some changes depending on the changes in the supply chain. For instance, the company is supposed to make appropriate changes in case the level of demand increases in order to satisfy new demand (Walters & Rainbird 2004 p.467).
The supply chain within and between China and Australia can be termed as a strong one due to the efforts that have been put forth by the two countries. Commitment is a key issue that has enhanced the trade relationship between the two nations. The Trade and Economic Framework sets a guideline for the bilateral trade and economic relationship including stipulating how various activities in the supply chain should be carried out to allow for success and mutual benefit.
All in all, trade is not a smooth process and problems have been experienced in the process of trade between China and other Western countries and Australia in particular for instance trade barriers. Some of the notable disruptions of trade between China and Australia include the Asian financial crisis of 1997 and the Iraq war and drought. This has however been dealt with effectively (Department of Foreign Affairs and Trade, Australia and the ministry of Commerce, China 2005).
Some of the strategies that have been adopted in an effort to deal with trade barriers include the signing of agreements between the countries. The Australia-China Trade and economic Framework is an example and was signed in October 2003 with an aim of strengthening the trade relationship (commercial and policy linkages) between the nations.
Trade trends between China and Australia are positive and there seems to be a productive relationship between the two nations with each benefiting from the other in one way or the other especially through imports and exports. This is because the nations have a comparable economy that allow for a complementing relationship.
A significant growth has been witnessed in the Australia-China trade relationship in terms of scale and depth over the past ten years. This has been attached to the comparative economic strengths, a strengthening investment relationship, economic complementarities as well as the closer bilateral and economic cooperation between the nations (Melnyk & Denzer 1996).
Although success has been experienced in the bilateral relationship, it is recommended that the there should be strategies to achieve quick development since the strong factors that are fuelling the current increase in trade and investment are not likely to decline.
The laws governing issues such as dumping, security and other issues should be strengthened to avoid negative effects. Capacity building is also a positive aspect that should be embraced. This will help in facing the opportunities and challenges that come along with emerging economic aspects such as globalization.
Capacity building has been deemed to be very crucial in allowing nations to be in a good position when it comes to handling of the potential economic crisis as well as strengthening their economic basis in an effort to achieving a healthy and sustainable economic growth and development. This allows for great achievement in different processes including globalization (Chanaron & Jolly 1999 p.614).
In a nut shell, the Free Trade Agreement between China and Australia is a key element to which the success in trade between the two nations is attributed. Both governments should therefore enter into FTA negotiations as soon as possible, to cover products, services, investment and bilateral cooperation (Department of Foreign Affairs and Trade, Australia and the ministry of Commerce, China 2005).
Conclusion
From the above discussion, it is evident that the concepts of logistics and operations management are crucial in trade and business processes. They however become more crucial when the trade is international or rather where more than one country is involved due to the complexities associated with the processes. This is because they affect the efficiency and effectiveness of the operations which in turn affect the economy, productivity as well as profitability of a given business organization and a nation as a whole.
These processes should therefore be handled with a lot of care so as to minimize problems that may arise due to poor management. There also ought to be effective strategies and measures put forth in an effort to deal with the challenges that may arise within the supply chain to ensure that the effects are not adverse such that they may cost an organization or even a nation a great loss.
Reference List
Chanaron, J. & Jolly, D. 1999, ‘Technological Management: Expanding the Perspective of Management Technology’, Management Decision. 37:8 613 – 620.
Chopra, S & Meindl, P. n.d, Supply Chain Management. Web.
Department of Foreign Affairs and Trade, Australia and the ministry of Commerce, China. 2005, Australia – China Free Trade Agreement: Joint Feasibility Study. Web.
Epiq. 2010. Supply Chain Operations. Web.
Kennerley, M., & Neely, A. 2003, ‘Measuring Performance in a Changing Environment’, International Journal of Operations and Production Management. 23:2. 213-219.
Market Information and Research Section, DFAT . 2011, China Fact Sheet. Web.
Melnyk, SA & Denzer, DR. 1996, Operations management – A Value Driven Approach. New York, McGraw Hill.
Stevenson WJ. 2005, Operations Management, 8th Ed, New York, Mc Graw Hill.
Walters, D & Rainbird, M 2004, ‘The Demand Chain as an Integral Component of the Value Chain’, Journal of Consumer Marketing, 21:7 p465-475.
Zairi, M 1998, ‘Best Practice in Supply Chain Management: The Experience of the Retail Sector’, European Journal of Innovation Management. 1:2 59-66.