Introduction
According to Taylor (3), “logistics and supply chain management is the process through which a company plans, implements and controls the efficiency and cost effectiveness of the movement and warehousing of raw materials, work-in-process inventory, final goods and any other important information from the point of extraction to point of consumption in order to conform to the required consumers specifications”.
Plastco Company is a company that deals with manufacturing of plastics from petroleum products. However, due to the effects of petroleum products to the environment, the company has changed its manufacturing process. The company has adopted re-processors methods in making plastic products.
Thus the company purchase and collects the plastic wastes from all over the UK and repossess the plastic waste into useable plastic products. Apart from producing plastics, the company also sells their collected plastic waste to other companies before they reprocess it.
Due to the demand of the plastic waste, the company receives a lot of inquires from companies like automobile and other industries that depend on plastic as raw materials.
As a result of the increased demand and the heavy workload the company faces, there are several issue that the company is facing in its logistics and supply chain management theories.
Therefore the Company is concerned with the movement and storage of plastics materials, managing information on the flow of raw materials and the collection of plastics from the point of origin to the final consumption who are the buyers of the plastic waste and products.
However there are many logistics problems that the company faces in it operation in different departments:
Purchasing department
In the purchasing department, the purchasing staff works out feedstock requirements using a Microsoft Excel file that contains feedstock requirements and purchase records. Thus, there is a need to work out feedstock needs for certain grades and colors by referring to production plans, sales forecast, and available feedstock.
However, this is made difficult due to daily changes in production plans and discoveries concerning the actual contents of feedstock. The supply of plastic waste is very unreliable; the production of finished goods cannot rely on a fixed bill of material or recipe.
In order to make the same finished goods from different feedstock available, the laboratory staff tests different recipes using different combinations of feedstock. This makes the establishment of feedstock requirements extremely difficult (Christopher 45).
The purchasing staff have to guess how different available feedstock could be used (the laboratory staff will decide after testing) to produce finished goods according to the sales forecast and production plan.
Often, the purchasing staff purchases particular feedstock for producing a particular product but the feedstock can be used for producing another product instead.
In addition, the communication and levels of command in the company are not adhered to as the purchasing manger indicating that the employees usually use the wrong machinery for the wrong processes without confirming with him first (Waters 204).
Supply market
The company is faced with uncertainty in the supply of the plastic waste and at times the plastics are usually contaminated making the reprocessing process difficult or impossible. However, its supply is more expensive and requires longer lead times.
Since there is no constant supply of a particular type of plastic waste, sometimes purchasing staff must purchase large quantities of “rare” feedstock when it is available in the market, often at a higher price.
Furthermore, the supply market is very sensitive to global demand since there are many other European and Asian buyers and currency exchange fluctuations. Many traders in fact prefer to sell plastic waste to China due to high demand there.
Fluctuation in price and currency, shortage of supply, and unreliable supply (supplied feedstock can frequently be different what is mentioned in the contract) are the main issues faced by the purchasing staff. They sometimes need to rush purchases when laboratory discovers that some of the feedstock is not suitable for the planned production.
Purchasing decisions can also sometimes affect space availability and therefore create more stock movement and storage. The table below shows the supply of plastic wastes in the Local UK market and Continental European market.
Another unique feature about this industry is that suppliers can also act as customers. PlastCo is a customer of plastic waste as well as a supplier or trader and there are many companies with such a nature.
To secure supply purchasing staff frequently visit suppliers and sometimes need to make some speculative orders particularly for supplies that are often hard to source.
Inbound logistics
In the blending process, contamination problems usually occur when feedstock is blended right away without a blending test. In addition, some feedstock that is expensive and used for coloring is not tested because it is purchased as consignment stock, which will be allocated for the production of final products.
The purchasing staffs are in charge of making impromptu purchases resulting in a lot of feedstock in the company which fail in the blending test and thus have to be stored. In order for the feedstock to be stored, the logistic staffs have to move feedstock from one warehouse to another to create more spaces for the new feedstock which might not b used.
Thirdly the supply of the materials is quite unstable and sporadic. The inbound logistic is faced with over purchasing or feedstocks and incurring extra costs in storage (Dornier et al 104).
Assumptions in the case study
There are several assumptions that were taken into concern when making the case study. First, is that the company was a going concern and therefore, it will be in operation for the next ten years.
Secondly, the company provided accurate information which was used in the analysis of its information. Thirdly the company had the resources to implement the new changes in the logistics and supply chain as recommended.
Recommendations
There are several recommendations that the company can use in order to overcome the logistical and supply chain bottle necks in the purchases and inbound logistics departments. By solving the bottle necks in the company, it will achieve customer satisfaction and cut down on costs.
The company should ensure that the supply chain structure in the company has a respectable chain of authority and the company employs adhere to the codes of operations. Therefore there should be no uncoordinated management of plastic waste collection, machinery or flow of information.
Due to the complexities involved in the acquisition of materials, purchases and sale of the products, the company should install fixed points in the stages of the supply chain and group them according to the organizations that they serve in the process for example, primary or up stream manufacturer.
Secondly there should be analyzing the movement patterns along the supply chain of the plastic waste from the point of origin to that of consumption.
It therefore wishes to have a geographical map that clearly indicates the fixed point of collection of the raw materials and how they move to the pint of consumption. By so doing, potential transport systems may be discovered hence ensuring that there is a constant supply of raw materials (Taylor 2).
In addition, the company should identify the different transport problems in each geographical region and how to overcome them.
For the inbound logistics, the staff should know that customer demand dictates the number of orders and therefore should have a process that identifies the order and processes it down the supply chain; this is known as order processing information.
After this there should be demand forecasting information whereby the company is able forecast future demand and plan on its supply. Hence there will be need of crating unwanted storage spaces and moving feedstock from one warehouse to the other.
The company management should also have access to management information which they will be able to use in order to monitor how efficient the installed logistics systems are in the company. This information should be used to show the level of demand, plastic waste, warehouse capacity, and the supply available to satisfy the consumers.
The company staff is more reliant on the use of computers in it’s their operations. These computer should have constant assessment to ensure that they are in a position to supply and store accurate information to the staff and management (Waters 204).
Implementations
- Respectable chain of authority which should be implemented by the management immediately by having a defined hierarchy of chain of command.
- Fixed points in the stages of the supply chain which should be implemented by the purchases department after the pints have been identified.
- Analyzing the movement patterns along the supply chain by the purchases department by the purchase department.
- Identify the different transport problems in each geographical region by the management as soon as possible.
- Order processing information which should be done by the purchases manager.
- Access to management information by both the management and purchases department immediately.
- Use of computers by both the management and the staff immediately as all processes are controlled by them.
Works Cited
Christopher, Martin. Logistics and supply chain management: creating value-added networks. New York, NY: Prentice Hall, 2005. Print
Dornier, Philippe et al. Global Operations And Logistics: Text And Cases. Mumbai: Wiley India Pvt. Ltd., 2008. Print.
Taylor, David. The analysis of logistics and supply chain management cases. London: Thomson Business Press, 2005. Print.
Waters, Donald. Global logistics and distribution planning: strategies for management. London: Kogan Page Publishers, 2003. Print.