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Discussing the inventory stage of the logistics process.

The concept of international business consists of all the commercial activities that help in the promotion of transferring of goods, services along with resources, people, ideas and technology across national boundaries. It helps a business to enhance its growth and expand its business operations in an optimal manner. The following report is based on the organization of CERAMICOSA which is a Spanish manufacturing company of plates, tiles and various ceramic structures for housing. The strategic direction of the company has decided to export its products to Western European countries as the demand from them is high and can meet the decorative trends of the regions. The business has signed an exclusive agreement with Furniturest which is a chain of luxury department stores dedicated to exclusive sales of accessories, furniture and home installations. The organization has the primary sale point based on its supplying of material to its customers in less than 24 hours. This has forced CERAMICOSA to be very clear about its logistics process in order to avoid stock ruptures at the time of peak demand along with monetary fines as stated in their agreement. The organization is entering a new export stage and has to consider the restrictive exclusive contract. The following report will discuss inventor control along with actions that can prevent disruption of the production process ensuring proper inventor management. In addition to this, it will highlight variables that need to be taken into account for proper product coordination along with good management of the client. Moreover, it will locate geographically the ideal spot for the warehouses along with proposing a route from the central warehouse. Furthermore, it will evaluate the Just in Time philosophy and choice based on incoterms. At last, it will provide an effective route planning systems that are best suited for the organization.

Importance of Inventory control:   The concept of inventory control which is also known as stock control refers to the process of ensuring that the right amount of supplies is available in an organization along with appropriate internal and production controls. The practice of inventory control allows an organization to meet the demands of its customers and attain delivery of products in a flexible manner. In order to have successful inventor control it is crucial for an organization to attain data relative to purchases, reorder, shipping, warehousing along with storage, receiving and customer satisfaction. This helps in ensuring reduced loss prevention along with turnover (Patterson, 2021). In context to CERAMICOSA, it is crucial for the organization to have optimal inventory control relative to its exporting stage as it will help the business to maximize the amount of profit from the least amount of investment in stock without affecting the client satisfaction. In addition to this, the organization will be able to assess the current state of its assets along with account balance and financial reports. It is also important for the business as it can help in avoiding problems such as out-of-stock events. This can be a major issue for the business and its agreement with Furniturest which is based on providing products in a specific time frame (Smith, 2019). The inventor control will allow the organization of CERAMICOSA to ensure it is able to deliver products as well the contract with Furniturest and enhance its expanding business operations. Given below are a few advantages that inventory control will provide CERAMICOSA:

  • It will allow the organization to attain real-time inventory levels and will provide the business with a clear idea of the productions levels and can help the business to optimize its inventory operations (Achoroi, 2019).
  • It can also allow the organization to attain both short-term and long-term inventory forecasting that can help the business to enhance its logistics operations by making them highly efficient.
  • The practice of inventory control will provide the organization advantage related to optimizing its logistic workflow by making it more efficient and productive. It will also help in optimizing its inventory control systems and will impact its overall logistic workflow in improving the satisfaction of its client (Abd Karim, Nawawi & Salin, 2018).
  • It will also help the business to strengthen its relations with Furniturest as it will be able to develop real-time reports in an accurate manner and develop plans based on future purchase ordersand production lines which will help in eliminating delays or shortages of inventory (Vochozka & et. al. 2018).

Proposed actions to prevent disruption of the production process that results in poor inventory management.

There are various actions that can be taken in order to prevent the disruption of the production process and enhance inventory management. In context to CERAMICOSA, the proposed plan given below will allow the organization to eliminate any form of hindrance in its production process which will help the business in optimizing its inventory management. Given below are prosed actions:

  • Analyze current workflow: It is important to analyze the current workflow within the prediction process consisting of personnel, processes tools and technology in order to identify any gaps (Park, Huh & Kim, 2021).In context to CERAMICOSA, it will allow the business to identify inefficiency within its production process can be resolved and positively impact the inventory management of the business.
  • Modernize process and technologies: In order to prevent disruption in the production process,it is crucial to have optimized processes as well as technology relative to production operations as they help in improving inventory management (Siek & Guswanto, 2021). In context to CERAMICOSA, this action will allow the business to make its production process highlight efficiency and maximize the operations of its inventory management.
  • Attention to planned maintenance: The primary cause of the poor performing production process is the lack of planned maintenance. The neglect of maintenanceleads to broken or work-out machinery which results in increased cost (Chakraborty, 2019). In context to CERAMICOSA, the organization this action will help the business to maintain all its technological processes in order as well as effective. This will lead in the enhancement of its inventory management.
  • Training staff: It is vital to have highly skilled as well as trained staff in order to avoid any disturbance in the production process. In addition to this, it allows a business to ensure that its inventory management systems areoptimized (Shenoy & Rosas, 2018). In context to CERAMICOSA, this action will help the business to ensure that all its employees within its production process are highlighted as skilled and talented. This will help the business to ensure that its inventory management system is structured as well as systematic in nature and performance at a high level.
  • Keeping warehouse well-stocked: In order to keep the process of producinghighly effective as well as avoid disruption, it is vital that an organization keeps its warehouse well-stocked as it will help in ensuring the products are available to the business as well as a client at all times (Calichman, 2019). In context to CERAMICOSA, the action of keeping its warehouse well stocked will help in developing a proper production process as well as help in forecasting inventory for a high level of efficiency.

There are various variables that are crucial to be accounted for by an organization is order to have proper product coordination. In context to CERAMICOSA, these various variables will enable the organization to enhance its overall business operations in an effective manner through proper product coordination. Some of these variables are elaborated below:

Product innovation: Innovation is a crucial variable that impacts the overall coordination of products. It is vital for a business to have the variable of innovation in order to make its products more effective as well as efficient. In context to CERAMICOSA, this variable will allow the business to enhance product coordination and achieve optimal efficiency (Liu, Chen & Yang, 2018).

Product development: The variable of development is also important in order to keep product coordination optimal as it allows for developing products relative to the demand in the market. In context to CERAMICOSA, this variable is important as it will help in keeping a steady supply of new products to its clients which will improve product coordination.

Product quantity: The overall quantities of the products also impact the proper coordination of products as it influences its efficiency as well as productivity. In the context of CERAMICOSA, the overall quantity of the products is a crucial variable for its product coordination as high output of products can cause hindrance and product quality which will reduce the efficiency of the organization and its supply operations (Liu, Xu & Liu, 2020).

In order to ensure these variables, it is important for the organization of CERAMICOSA to focus on establishing a structured and systematic product analyses strategy that will allow them to analyse the market as well as the overall need for their products. This will allow the business to understand what kind of innovation can be introduced within their products in order to attain maximum effectiveness. In addition to this, it will also allow the business to develop products based on the analysis in order to ensure its success in the market as well as acceptance by its client. Moreover, it will assist the business to understand the overall need of products relative to the quantity which will help in saving cost and attaining productivity in product coordination (Gao & et. al. 2020). This is vital for the organization as it will provide a crucial opportunity to the organization of CERAMICOSA to keep its product operations in check which will further help in developing strong relations with Furniturest as well as attaining a higher level of market competitiveness which will lead to improved organizational growth and supply operations.

Discussing what variables need to be taken into account for proper product coordination.

There are various actions that can help an organization to ensure that it is able to establish effective management towards its clients as well as to attain proper product coordination. In context to CERAMICOSA, the business can utilize various actions that will help in developing good management relative to clients along with making the business competitive in the market. Given below are some of these actions:

Establish proper communication: It is important for an organization to establish proper communication channels in order to communicate vital information with clients in an effective manner. In context to CERAMICOSA, this action can help in developing proper and structured relations with Furniturest as it will be able to establish better management through proper communication of information able to improve its organizational performance in an efficient manner (Bushuev, 2018).

Manage client’s expectations: In order to develop good management with the clients, it is vital that an organization focuses on understanding as well as meeting the expectations of the clients. In context to CERAMICOSA,  by meeting the expectations of its client Furniturest it will be able to ensure good management as well as to attain competitiveness in the market by developing a positive brand image in the market which meets the expectations of its clients in an optimal manner.

Keep clients informed: It is crucial to keep the clients informed about all the activities that are linked with them and the organization in order to have proper management. In context to CERAMICOSA, it would need to ensure that the organization of Furniturest is kept well informed about all the operations related to the aspects such as quality of the products, exporting information as well as how the products will be supplied in order to save cost and time. This will help the organization to develop effective management with its client and gain a competitive advantage through strong mutual industry relations (Aysha & Athira, 2020).

Schedule client management tasks: It is important for an organization to not only keep the clients of the business well informed but have specific tasks scheduled for them such as meeting in order to help develop strategies based on how the process can be refined (Torabizadeh & et. al. 2020). In context to CERAMICOSA, the business can develop effective management with its clients Furniturest through periodic meetings and discussing how their relationship can be strengthened in order to attain both relative to both organizations. This will help in developing enhanced relations which will help in market competitiveness.

Actions to ensure variables:

As the logistics director of the organization, the proposal of intermediate and/or final warehouses is correct as it will be able to provide the organization with an effective ability to meet the constricted delivery timings and fulfil the commitment made to Furniturest. There are various benefits to the utilization of warehouses that was taken into consideration in order to accept the proposal. Some of these benefits are elaborated below:

Provide consistency: The acquisition of a warehouse will allow the organization to keep its supply chain consistent which is vital for the business. This is crucial in order to uphold the commitment made to Furniturest on supplying products on time (Faber, De Koster & Smidts, 2018). This is a phase where the warehouses will help the organization to ensure that all its supplying operations are efficient which will help in building strong relations with Furniturest and help the business attain competitive advantage as well as growth

Minimizes risk of damaged goods: The proposal of the intermediate warehouse will help the organization of CERAMICOSA in minimizing the overall risk of damaging its goods before they are supplied to Furniturest. This will help the business to keep its supply operation consistent as well as ensure cost-saving relative to damage to goods (Lototsky & et. al. 2019). 

Storage: The warehouse will allow the organization its primary purpose to store a large number of products as backups in order to meet sudden demand surges. This will allow the business to stay proactive and be efficient in supplying any products that are required by Furniturest in an efficient manner. This will help the business save costs on frequent transportation and keep its supplying operations smooth (Kamali, 2019).

It is crucial for any business to have its warehouses strategically located in the region in order to optimize its supplying operations as well as save huge costs on aspects such as transportation of goods. Ti allows an organization to ensure that it will be able to deliver its goods on time and provide consistency which is highly important in order to establish strong relationships with clients. Given below are some ideal geographical spots for CERAMICOSA relative to its warehouse which will help in supplying to regions of Stockholm, Palermo and Vienna as well as considering the supply to these counties of Sweden, Italy and Austria since Furniturest’s customers can make purchases online:

Stockholm: It is crucial for the organization of CERAMICOSA to rent and/or purchase in a warehouse in the Västberga industriområde areas it is an industrial area with access to multiple routes which will help the organization to supply its products in an effective manner (Morana, 2018). Although the location is distant from the main Stockholm it will be appropriate for the business as the cost of the warehouse will be low and provide facilities that are necessary for supplying products. This will also help the business to supply all its products across Sweden in an effective manner due to multiple channels of distribution (Phogat & Gupta, 2019).

Actions that ensure good management towards clients and provide competitiveness to the organization.

Palermo: The ideal location for a warehouse in Palermo will be situated near the Port of Palermo as it is appropriate due to its close proximity to various channels of distribution such as roadways as well as through ships which will help the organization to supply its products in an effective and cost-efficient manner not only in Palermo but to Italy as well through both road and sea transportations (Sadowski,  Wojciechowski & Engelseth, 2021).

Vienna: The geographical ideal spot for CERAMICOSA to establish a warehouse in Vienna is Guntramsdorf as it is situated near the highway that links Vienna and Austria. This will help the organization to supply its products to both regions in an efficient manner as both are in relatively close proximity. This will help the business to ensure that is able to save time as well as cost in its supply operations which will enhance its overall productivity.

Stockholm: The location selected for this route is Västberga industriområde due to it being situated in an industrial area and its ability to provide facilitates transportation and effective storage in order to supply through various mediums which will help the business save crucial cost in its supplying operations (Sai Chitti Subrahmanyam & et. al. 2021).

Palermo: The route selected for this region is suitable for the organization as it is situated near the Port of Palermo and will allow the business to utilize both land and water transportation in an efficient manner which will help in supplying products to both Palermo and Italy.

Vienna: The route selected for the location of Vienna is Guntramsdorf as it is relatively located in the middle of Vienna and Austria. This will help the organization to supply its products in a consistent manner to both regions which will enhance its productivity relative to its supplying operations (Sapul & et. al. 2020).

The Just in Time philosophy is based on management and focuses on the calls for production based on the wants of the customers and when they want it along with the quantity requested. In addition to this the management philosophy of Just in Time also emphasises where they want the products without it being delayed in inventory. Instead of building a huge stock of what the organization thinks the customer might want and helps in only maintaining exactly what the customers actually ask for when they ask for (Lu & Bodek, 2018). In context to the warehouses of CERAMICOSA, THE APPLICATION OF Just In Time philosophy can all the business to concentrate on its resource that will only fulfil what is going to pay rather than building a huge stock as it focuses on each process and will only produce what the next process in the sequence is called for. Given below are reasons why the application of the Just in Time philosophy is appropriate relative to the new warehouses:

Reduction in order to payment timeline: The application of the Just in Time philosophy will help the organization and its new warehouses to reduce the overall order to payment timeline and help in the establishment of enhanced cash flow. Through the application of the philosophy, the organization will be able to reduce this time period considerably and achieve a high level of productivity within its warehouses (Ani, Kamaruddin & Azid, 2018).

Reduction in inventory cost: The primary aim of the implementation of the Just in Time philosophy is to reduce the cost of inventory. The application of this within the organization will help in improving the stock turnover and the amount of stock being held. This will enhance the inventory management of the business as well as provide various benefits associated with a reduction in inventory cost.

Reduction in space requirement: The application of the Just in Time philosophy within the organization of CERAMICOSA and its warehouses will allow the business to remove a large amount of stock from its systems and move them closer together which will significantly reduce the amount of floor space being utilized. This will help the business in achieving efficiency as well as productivity in its warehousing operations (Sharma & Singla, 2019).

Reduction in handling equipment and other costs: The application of this philosophy will help CERAMICOSA in evaluating the need to handle and moving or large batches and understand the need for complex machinery to move them along with all the associated labour and training. This will help the business to save costs through effective management strategies.

Lead time reduction: The application of the Just in Time philosophy will help the business to enhance the overall time taken for the products to flow through its various processes. This will help the business to enhance its warehousing operations and ensure that its supplying abilities are highly efficient in nature (Cakmakci & et. al. 2019).

Reduced planning complexity: The overall application of the philosophy and the use of systems such as Kanban which is effective in tracing products will allow the business to reduce the overall complexity of its operations. This will help the business to keep its planning simple and allow it to keep supplying operations smooth relative to their functioning.

Improved quality: As the application of the Just in time philosophy helps the organization to eliminate the need to keep large stocks of products it will be able to enhance its ability to provide better quality service. This will help the supplying operations of the business to be efficient as well as minimize costs (Kim, 2022).

Increased productivity: The application of the Just in Time philosophy will help CERAMICOSA relative to its warehouse to enhance its overall productivity by reducing cost and enhancing the operations related to supplying products. This will not only help the business to improve its output but gain the ability to be proactive related to a sudden surge in demand by its client.

Problems are highlighted quickly: The overall application of the Just in Time philosophy will assist the organization of CERAMICOSA to identify problems within its warehousing as well as supply operations in an effective manner. This will allow the business to take immediate steps in order to rectify the identified issues and resume its operations as early as possible and at minimum cost. In addition to this, it will help in refining the whole warehousing and supplying process as it is a perfect way to ensure that problems are highlighted and solved immediately when they occur.

Employee empowerment: Although this benefit of applying the Just in Time philosophy may seem less important for the organization of CERAMICOSA in its warehousing and supplying operations, it should be evaluated as the application of the philosophy will help in making the employee more efficient through better planning as they are heavily involved the in designing and application of the system.

There are two key parties involved in an Incoterm which is an international trade transaction which is the buyer and the seller. As both the parties are entering into mutually-benefitting sale contacts, there are conditions under which that contract may take place in order to determine the roles and responsibilities of each party and their cost. There are various Incoterms that can be utilized by the organization of CERAMICOSA in order to free their client Furniturest from all the responsibilities as well as management. Given below are some incoterms in order to select an appropriate one for the organization and its specific purpose:

CER-CIF (Cost and Freight - Cost, insurance and Freight): This Incoterm is generally a good option for the seller as it allows them to be completive and does not involve much risk as within this the seller has control over the international shipping cost relative to the final destination port. This allows the seller to have a high level of flexibility and opt for more cost-effective shipping options such as the most suitable routes, rates as well as transit timings (Stojanovi? & Iveti?, 2020).

DDP-DAP (Delivered Duty Paid - Delivered at Place): In this Incoterm, the seller is responsible for delivering the goods to the buyers within the specified region on delivery (Srivastava, 2020). It allows the seller to have control over a large part of the shipping process which included what activities take place at the specified destination and involves evaluating the laws and regulations. This incoterm allows to attain more control and competitiveness but also increase the responsibilities and risk for the seller (Pazniakou, 2020).

FOB (Freight on Board): This is one of the most common Incoterms that is utilised in international sales. Within this Incoterm, the seller is responsible until the goods are loaded onto the transportation means at the port of origin. This provides the seller with very little control over shipping times and cost. Although this can be for suppliers who prefer not to negotiate freight rates with their clients (de Sousa, 2021).

From the above mentioned Incoterms, it is recommended that the organization of CERAMICOSA should utilize CER-CIF (Cost and Freight - Cost, insurance and Freight) as it will allow the business to take control over all the costs related to shipping while attaining the most amount of flexibility relative to cost-effective shipping and selecting bet routes, rates and transit times which will help in reducing the management and responsibility activates of Furniturest (COCCIARINI, 2019).

The given situation is bases on CERAMICOSA implementing a service for Furniturest to collect the merchandise from its warehouses as well as offering a 10% discount on the retail price. According to the scenario, the most suitable Incoterm for the business is FOB (Freight on Board) as it is the most commonly utilized Incoterm and the organization will only be responsible for the products until they are loaded on the vessels at the port of origin (Majed & Nazaal, 2019). In addition to this, it is suitable as the organization will not have to negotiate changes rated to freight as well as allow the business to have less responsibility making it an appropriate choice for the given situation.

The route planning system consists of identifying the most cost-efficient route in order to minimize the distance between the pickup point and the final destination of the products with the least amount of stopovers along the way. This is important as ensuing on-time delivery is one of the most highly prioritized aspects for suppliers. One of the most common reasons for inefficiency in supplying operations is failure to deliver shipments on time due to ineffective route planning (Gitz-Johansen & et. al. 2019). This makes it vital for a supplier to evaluate various aspects such as accidents, traffic jams, and vehicle breakdowns along with inclement weather. Given below are the importance of route planning systems:

Effective route planning helps in saving fuel: The utilization of efficient route planning systems helps the organization to identify a route that is the quickest and will result in delivering the products in the least amount of time. This allows the organization to save costs relative to fuel. In the context of CERAMICOSA, route planning can help the organization to save extra costs in an efficient manner and ensure it is able to deliver the products on time to its client and establish positive relations (Dai,  Chen & Zhou, 2021).

Efficient route planning means increased safety: When an organization utilized suitable route planning systems within the organization it is able to ensure the safety of its drivers. This helps in keeping not only the employee but the goods safe as well by identifying the safest route option in order to maintain a higher level of efficiency. In the context of CERAMICOSA, the route planning system will help the business to keep its employees and products safe until they are delivered to its clients and ensure the highest level of productivity (Liu & et. al. 2018).

There are various route planning systems that can be utilized by the organization of CERAMICOSA which can allow the organization to attain regular updates from drivers and gain real-time insights to reroute vehicles as it can detect heavy traffic and other aspects which can reduce the efficiency of supplying operations. Given below are some route planning systems that can be utilized by the organization:

Dynamic route planning: In this specific route planning system the team planning the overall route is able to easily identify as well as re-route assets as dynamic route planning allows the managers to determine the overall locations of available vehicles at a given time. This allows a business to evaluate various aspects such as the breakdown of vehicles or drivers getting stuck in traffic. This helps the fleet manager to redirect the available vehicles to the location of the destination. This system helps the organization to reroute vehicles and consider all the factors such as delivery time, the window provided by the client and the working hours of drivers (Haaker & et. al. 2021).

Plan versus actual route comparison: This system of route planning allows the route planning team to draw various comparisons between the planned route and telematics data. The comparison of the planned routes with the actual routes can help the manager of the organization to develop an effective as well as a deep understanding of reasons relative to the changes in the planned routes. The managers of the organization can utilize this system to gain insight and build intelligence into their route planning systems which ensures the creation of more accurate scheduling in the future.

Multi-stop route planning: This route planning system is utilized for trips with multiple stops as once the fleet manager is able to allocate stops to a vehicle as they are able to draw data in order to determine the most suitable route. This system allows the organization to predict the estimated arrival time of delivery which helps in attaining the highest level of efficiency as well as productivity (Studenikin, Kondratev & Javuktsyan, 2019).

In context to CERAMICOSA, Plan versus actual route comparison systems is the most suitable for the activities of the organization as its operations are in various regions such as Stockholm, Palermo and Vienna. The utilization of these route planning systems will allow the organization to identify the most suitable route for its supplying operations by drawing a comparison between the planned routes and telematics data. This will help the business to compare the planned routes with the set actual routes that will provide immense support to the manager of the organization in developing effective route plans that are systematic as well as structured. Moreover, it will also allow the business to gain insight as well as understanding relative to the various factors which can make the supplying operations inefficient (Lin & Chang, 2018). This is vital for the business as the warehouse is in various regions and this route planning system will help in evaluating the environmental and other aspects of each specific reason in order to take suitable steps and create an accurate schedule to enhance delivery operations. Given below are the various benefits the route planning systems will provide CERAMICOSA relative to its activities:

  • It will help the organization to save time as well as money by identifying the shortest possible route.
  • It will help the business to reduce the cost of vehicle maintenance.
  • It will help in increasing the number of deliveries in an effective manner.
  • It will allow the business to ensure the overall satisfaction of its client.

Conclusion

From the above report, it has been concluded that it is crucial for an organization to have optimal inventory control in order to keep its operations highly effective and provide them with the ability to be productive. In addition to this, it is vital that the business develops specific action in order to prevent any form of disruptions within in production process which can lead to poor management of inventory and reduce its efficiency. The report was also able to conclude that various variables are required in order to have proper product coordination as well as various actions in order to ensure good management relative to the clients which will also help the business to stay competitive. Moreover, the report provides an evaluation of how the decision to rent intermediate or final warehousing is suitable for the organization as it will help in making its supplying operations effective. Furthermore, the report also provides suable geographical locations for the warehouse as well as a proposed route from the central warehouse to the final customer. In addition to this, the report also evaluates the Just in Time philosophy and concluded that it will provide the organization with immense benefits and will allow it to improve its overall functioning. The report also concluded that the most suitable Incoterm for the organization will allow it to free its client from all management and responsibilities along with a suitable answer for the given scenario. At last, the report concluded a suitable route planning system for the organization and its operations which are suited for its activities.

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