Introduction
The economic uncertainties experienced for some time now have undoubtedly cast a gloomy outlook over the heads of many business leaders. The onset of the financial crisis coupled with monumental increases in global oil prices and cut-throat competition heralded a new era of an organizational restructuring that was previously unknown to many. The upheavals that characterized the financial markets in 2008 shook even the most assiduous and conscientious business managers, in the process causing mayhem to some of the most astute corporations the world has ever known. But the smart ones survived the great wave. Companies that had initiated organizational-wide restructuring and quality programs to coincide with the changing market needs were not overly affected. Streamlining of organizational processes, especially in supply chain and logistics came in handy to save many companies from the imminent danger of collapse. This essay evaluates how McClarin Plastics, headquartered in Hanover, PA, has benefited from undertaking logistics quality initiatives to streamline its operations.
Brief description of logistics and supply chain
Logistics is sometimes confused with the supply chain. However, the terms are different, though interrelated. In business terms, logistics is an all-encompassing business planning framework that is developed for purposes of managing materials, core services, communication and information, and capital inflows (Logistics World, 2009). It follows that logistics management is that crucial component of supply chain management that is delegated with the duty of efficiently and effectively planning, executing, and controlling the flow and storage of goods and services between the source and the destination to responsively meet the needs and requirements of customers. Logistics management also deals with directing crucial information throughout the processes described above (Gourdin, 2006). Organizations that have invested heavily in logistics, especially in ensuring the quality of all the processes and systems involved, have been able to reap immense benefits in terms of increasing value for both their customers and shareholders. McClarin Plastics is one of them.
Quality Initiatives are taken by McClarin Plastics, Inc.
According to Gitlow (2000), “quality is a predictable degree of uniformity and dependability, at a low cost and suited to the market” (p. 2). Before McClarin Plastics undertook to initiate quality initiatives in 2000, the organization utilized traditional business processes and practices with no provisions whatsoever for checking the quality of the business processes involved using tools and techniques such as Total Quality Management (TQM) or Six Sigma (Krausman, 2008).
The pursuit of quality calls for the respective companies to fully integrate their system of interdependent business processes and stakeholders. This was not the case at McClarin’s before the logistics quality initiatives were launched. As a result, the company was incurring a lot of losses arising from an uncoordinated supply chain network. According to the company’s Vice President of marketing and engineering, Mr. Rojer Kipp, nobody seemed to know or understand what the other was doing. This made the company incur a lot of losses in increased costs of doing business and wastage.
Cooperative Lean Certification (CLC)
Having learned its weaknesses in the logistics and supply chain, the company initiated a lean manufacturing methodology called Cooperative Lean Certification (CLC), targeting all employees, customers, and suppliers (Krausman, 2008). The key architects of the quality initiative believed that the best way forward for the company in the face of stiff competition was to forge sustainable affiliations within its core supply network, in addition to conserving the already existing partnerships. Instead of concentrating its quality initiatives on the internal business processes of the company, the company went ahead to accommodate customers and suppliers in the learning processes. According to the authors of the book, The Machine that Changed the World, it is extremely difficult to lean the operations of an organization if efforts geared towards that initiative do not incorporate customers and suppliers. This kind of thinking informed the decisions made by the management of McClarin Plastics, Inc.
Through this quality initiative, the interrelationship between the major players in the supply chain was nurtured to its fullest potential. For instance, suppliers were expected to deliver a particular component in exactly the right capacity and at the desired time. This enabled the company to return to profitability by undertaking a purposeful framework geared towards reducing wastage and costs. Also, the CLC sessions facilitated all the players in the supply chain to aggregate together and learn how their performances were interrelated, and how they affected one another (Krausman, 2008). The underlying factor was to make all the players understand that a malfunction in one component will ultimately affect the ability of other components to perform, often resulting in unnecessary wastage of raw materials and energy.
This logistics quality initiative posted impressive results for the company within a few months. The initiative served to free a lot of space within the company’s warehouses, in addition to reducing waste and conserving renewable energy for other uses (Krausman, 2008). The cash flow pattern was also enhanced. Practical results arising from the quality initiative are there for all to see. For instance, the company’s sales volume has more than tripled from the first time the initiative was used in 2000.
The CLC sessions have enabled all the players of the logistics and supply network to work as a team by making them abide by the same guidelines. This aspect alone has facilitated the company to produce quality products, ultimately enabling them to win customer loyalty and hence more business. The quality initiative has also enabled the company to undertake timely deliveries to their customers and at low prices because the initiative can keep the costs of production at a bare minimum.
Lean Continuous Flow Work Cell (LCFWC)
To boost the CLC logistics quality initiative, the company has also come up with another initiative called the Lean Continuous Flow Work Cell (LCFWC). Instead of producing different parts of a component from different locations, the company developed the LCFWC logistics quality initiative to facilitate the complete production of a particular component in one location (Krausman, 2008). This has brought enticing results for the company. The initiative has freed around 39,000 square feet of the much sought-after warehouse space to be used for other processes such as production. This has brought positive multiplier effects in that neither does the company need to spend capital to finance construction projects aimed at creating more space nor does it have to spend money to lease more warehouses for its use. Therefore, this quality initiative has enabled the company to conserve land and financial resources, in addition to streamlining its supply chain by making sure that all related activities are carried out in one building. The energy and man-hours lost transporting parts from one location to another have also been greatly reduced.
Conclusion
The importance of undertaking quality initiatives in logistics can never be underestimated. Indeed, many organizations are now shifting their goals away from traditional and inflexible business processes to integrated business processes where customer satisfaction and quality inform their way of conducting business. This is the way to go if organizations are to remain adrift in turbulent economic waters (Gourdin, 2006).
References
- Gitlow, H.S. (2000). Quality management systems: a practical guide. CRS Press. ISBN: 9781574442618
- Gourdin, K.N. (2006). A Competitive advantage for the 21st century. Wiley-Blackwell. ISBN: 9781405127134
- Logistics World. (2009). what is logistics?Web.
- Krausman, M. (2008). The greening of lean manufacturing.