Managing operations and Supplies are business processes that ensure adequate supply of materials in a company at the right time at an appropriate competitive cost. Visy, being in the business of packaging, paper manufacture and recycling requires a constant supply of materials for its production.
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When the company has adequate supply of materials, it is able to produce goods in the right time at an affordable and competitive price.
To understand and know areas of improvement of the company’s supply chain management, this report will take an analysis of current supply chain situation in the company and give recommendations on value-adding services that the company can implement in the context of logistics operations.
To get the information required for the report, the researcher will use internal information from the company’s website, take a research on consumer preferences and their attitude and finally take a competitive analysis where products of other similar companies will be considered (Visy official website, 2011).
Having a good supply chain management makes a company have continuous production. It ensures that there are adequate supplies at an appropriate price and time. When this is attained, a company gains competitive advantage (Khoo, Bainbridge, spedding and Taplin, 2001).
Visy is in the business of collecting waste paper and manufacturing packaging products, the company’s operation are favored by environment conservations in the world; since the company plays a crucial part in maintain a clean environment. On the other hand, the products from the company are recyclable thus; it gets favor from international and national communities.
A second strength of the company is a strong brand name in the highly competitive advantage; the name assists the company tap opportunities brought about by globalization.
One threat facing the company is high competition and the situation of world economies, there are increasing entrants in the industry and the world economic growth rate has been hampered by global financial crisis of 2007 (Hsu, Tan, Kannan and Keong, 2009).
To remain competitive, the company needs to have strategic business operation strategies with among them having an effective and reliable supply chain (both inwards and outwards logistics).
Analysis of the existing situation
From the analysis of the current situation I the organization, the supply chain management can be commended for their effective supply chain management however the system is likely to be faced by a number of issues. The following are the areas that can be looked into:
- Expand to international supply of waste paper for the company law materials
- Adopt a ‘just in time’ supply system
- Have an integrated supply chain management that connects all the 110 sites in a way that they can share resources
- Outsourcing some logistic services to reliable providers and
- Undertake massive research on the trend in different economies that it can make products that are responsive to consumers needs.
- Develop a value addition strategy
Other than using recycling processes alone to conserve and preserve the environment, the company should diversify in other business that still respect the company’s motto of conservation(Goold and Campbell, 2002).
Globalization has made it possible for companies to procure from differently countries, in their efforts to seek for quality products; this offers Visy and opportunity to sell its products globally and is affected indirectly by the increase in international trade.
The company strategy supports green supply chain systems that have increasingly being advocated for in the world, in green supply chain, the effects on environment are crucial component of a supply. Other than having, the physical goods there should be of the right quality and quantity.
Companies that adopt a green supply chain enjoys a wider customers base; it is facilitated further by customer enlighten on issues pertaining environmental conservation. The increased presence of goods form international market has resulted to an increase in demand for environmentally friendly production.
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Those companies who have focused on producing goods, which are environmentally friendly, have secured larger markets than those companies who have not. They are gaining more customer royalty than those whose products and mode of production is not environmentally friendly (Fugate, Mentzer and Stank, 2010).
When value is added to the company products, customer will get a higher utility form the company and will be willing to buy the products. The company on the other hand will benefit a direct and indirect increase in sales resulting from its customer value increase.
Although Visy can be commended for being; leader in the recycling business, the company should not relax it value additions; it should invest further in technology and develop other ways of doing business. The company has been in the business for more than 62 years, thus it has a developed a pool of knowledge that it can depend on to improves its products and value they give to customers further.
With the leadership in the industry and its strong brand name, the company has the opportunity to use brand extension strategies to increase its sales further. It can easily penetrate other markets as a buyer of recyclable waste material/semi-recycled materials and as a seller of its variable commodity.
The global situation is offering an opportunity to the company as it has embarked on massive campaigns to advocate for the use of environmentally friendly products; this has created a demand for the company’s products. With the current situation, the company is on a better platform to increase and diversify its operation through creating value in its customers and adding value to its products (Creswell, 1998).
Visy to tap the increasing demand for its products, then it has to develop quality, quantitative, price and logistic objectives. Supply chain management is a strategic management process that ensures that a company has the right goods at the right time and at a competitive cost. It should ensure that at any one time there are adequate materials for production of goods and services.
Visy raw materials are mostly recycled paper products that need to be fetched and ensured they are of the right quality and quantity.
Proper supplies of the materials from suppliers working for the company as contractors to collect the material and from companies established for that business (Arntzen, Brown, Harrison and Trafton, 1995). The following are the improvements that the company can make for better logistics eventually leading to an improved business:
Value determination mechanisms
Value in supplies for manufacture of good translates to value in finished goods. Though the company deals with wastes, not all wastes can be of the right quality. For an efficient supply chain management, there should be value determination mechanism set by the company (Simchi-Levi, Kaminsky and Simchi-levi, 2007). All goods getting in the company should be vetted for quality.
Other than raw materials, there should be vetting of output in different stages of production to ensure that there is quality in the final output (Cooper, Lambert and Pagh, 1997).
Different industries require different packaging’s; the company should aim at developing a strong research team that analysis the different industries in the world so as it can advice the company effectively on the right material to fetch and use for products targeting certain industry.
Visy should develop a good business relationship with its suppliers, as this will assist in making sure that there is reliability in the supply of materials. Suppliers in the company fall in the category of contractors and those companies in the business of supplying raw materials and semi finished goods.
This will ensure that the company manufacturing is kept with the right materials always. On the other hand, it is easy to get goods at a better price and market data from suppliers whom the company has established good business relations (Mentzer,2001).
Just in time supply mechanism
The company should develop a ‘just in time’ supply management system; it creates mechanisms for efficiency and effectiveness in the system. The systems are structured in such a way that there is minimal supply in the store but the company has a constant and reliable supply of raw materials. It should undertake an internal analysis of its needs for production (Larson and Halldorsson, 2004).
There are times that the company requires more products (this is mostly times of high production) and sometimes pit requires low supplies. This should be documented and the system made in such a way there is always a just in time supply. A just in time supply means that at any one point in time, the company is has adequate supply (Ward & Glass, 2008).
Supplier base management and Procurement department/ team
There is more than one supplier capable of supplying the company with raw materials for its processes. However, they should be vetted to ensure that the best option has been selected (Ketchen and Hul,2006).
With the increased industries requiring packaging materials, the company should enforce its research and development department to be able to get the right supplier for different products. Procurement department is mandated with this task and considers factors like,
- Reliability: the company must be dependable thus it will not fail Visy, on the other hand it should be adjustable to demands of materials
- Capability: Visy being an international company, it requires suppliers who can meet its demand for raw materials.
- Price: the prices set by the supplying company should be set at the best price in the market at any one time.
- Past experiences: companies which the company has had a nice experience with the company should be used
Quality assurance and effectiveness: the suppliers contracted should assure quality in their deliveries (Haag,2006).
International logistics and integrated logistics
With globalization and massive campaigns in environmental conservations, the company can tap international markets to get its raw materials. To get the supplies from these countries, the company has to understand customs and trade laws that exist between the procured country and Australia.
When procuring internationally, to reduce transport costs, the company should get the products in semi-finished state like paper pulp. A contracted company in the country procured can do the semi manufacturing; this will increase raw materials and increase the base of material search.
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