Introduction
Woodmere Products is a large manufacturer of window furnishing that has a long history of successful operation, but now is facing a period of stagnation. The company is given a proposal from Home Help, a big box store chain, that wants to use time-based logistics to provide high-quality and low-cost services. The goal of this paper is to study the challenges of time-based logistics by taking a close look at the business models of Woodmere Products and Home Help and the details of their possible cooperation.
Benefits and Barriers for Woodmere Products
Woodmere Products has been working in the market for a long time and has a good reputation, but the declining position of their major customer negatively influences the current situation in the company leading it to stagnation. The main proposition for the company regarding the possibility of cooperation with Home Help is the advancement of the firm through the embracement of new approaches to logistics and production. In order to work with Home Help, Woodmere Products will need to significantly reorganize its business structure. One of the main barriers that come with this change is the difficulties associated with reducing the amount of time it takes to respond to new orders and manufacture goods. If they can upgrade their production process to meet the requirements, it will bring them new opportunities for growth. The company should accept the offer because it creates a possibility to avoid stagnation and a chance for modernization of the firm.
Reorganization of Woodmere Products
Home Help would like to get products within a period of time as short as 48 hours, which, given a wide range of product with a substantial amount of variation will require a high level of flexibility in the production process. It means that the production lines of Woodmere Products are faced with a necessity to be ready to rapidly respond to new orders and manufacture the ordered good almost immediately after receiving the information about it. Moreover, given a large variety of products that Home Help sells to its customer, Woodmere Products will have to switch among types of products with a constant need to be able to add variations to them. The company will be required to manufacture a big number of versions of goods in relatively small batches depending on the particular order they receive, which will make long-term planning and mass production much more difficult. It will also require to store a large number of materials of different types, so the production lines do not need to wait for the delivery and can start to work right away.
Benefits and Barriers for Home Help
For Home Help, the agreement with a major player in the market brings the proposition of further reducing inventories and development of a centralized time-based logistic system, but there are also some challenges. Choosing to work with one large manufacturer will bring about the need to deliver goods from Woodmere Products production sites to all locations across their extensive network, which requires a substantial transportation capacity. At the same time, it will allow centralized logistics and reduced complexity making time-based logistics much easier (Fabbe-Costes & Colin 2017). Compared to the situation when the company needs to work with multiple small manufacturers, cooperation with a large company will be beneficial in the long-term.
Possible Risks
Given the current state of the manufacturing process in the company, the cooperation with Woodmere Products will bring about risks of not meeting the delivery dates. Taking into account the large scale of the business and the fact the company does not have experience in time-based logistics, the risks that Woodmere Products fails to produce the required variety of goods in a short time might be quite high. At the same time, if Woodmere Products can successfully reorganize its business processes to meet the requirements of the agreement, cooperation with such a big manufacturer will bring Home Help long-term benefits.
Time-based logistics
Time-based logistics brings about multiple advantages and opportunities for businesses. It will allow Home Help to quickly respond to orders which will improve the quality of service, making sure the customers will receive the delivery of any version of product fast. The embarrassment of time-based logistics is beneficial for Woodmere Products because it will help to create a flexible and efficient production system and shorten the duration of the order cycle in the company. It will also allow using direct information from the customers instead of forecasts, which are much less accurate. Both companies will be able to save money, reducing inventories. Thus, time-based logistics is the right strategy for both companies.
Possible Suggestion for the Companies
In the face of a major reorganization, it is suggested for Woodmere to evaluate its capability for fast modernization and conduct research of the new approach to production, logistics, and inventories. It will allow the company to foresee and minimize potential barriers. For long-run viability, it is essential that the two companies cooperate in developing the strategy. It might also be suggested for Woodmere to invest in IT-technology and upgrade their information systems, which will increase the automatization and efficiency.
Conclusion
Woodmere is given a unique opportunity for growth and advancement in the market. If the company is ready to undergo the extensive reorganization and shift in its business model, taking this proposal might be the right direction to go for long-term development. Cooperation of the two companies, given the scale of the business and the use of time-based logistics, will require a detailed strategy and extensive research of different methods to apply its principles.
Reference List
Fabbe-Costes, N & Colin, J 2017, “Formulating logistics strategy”, in D Waters (ed), Global logistics and distribution planning, Routledge, Abingdon-on-Thames, pp. 83-104.
Woodmere Products case study n.d.