Logistics And Operations Management Of Rolls Royce Limited, Essay.

According to Bozarth and Handfield (2016), the logistics management is defined as a component of supply chain management that is generally utilized for meeting the demands and the needs of the consumers through control, planning and incorporation of the efficient movement and storage of the associated products, services and information from the point of origin to the point of destination. Based on detailed study, it can be said that the logistics management is regarded as the part of all levels of execution and planning and these include – tactical, strategic and operational. On the other hand, the operations management is described as the management of the business practices for developing the probable highest level of efficiency within a firm (Schönsleben 2016). Therefore, in this report, the logistics and operations management of the United Kingdom based firm named Rolls Royce Limited (international organization) has been studied in detail. The objectives of this report are to evaluate the primary functions of the firm and to make justified recommendations on the best-suited methodology for placing the firm in the best possible location. On the other hand, the vision statement of Rolls-Royce Motor Cars Limited is to strive for the appropriateness in everything what is performed and to take the best among the existing ones for making it better and to design it, if it does not exist. The mission is to serve mobility along with comfort, speed and style anywhere, be it in water, air or land. The other mission is to delight the consumers through excellent sales and services after sales.           

Rolls Royce Limited was founded in the year 1904 by Henry Royce and Charles Rolls and it is headquartered at Derby in the United States (Rolls-roycemotorcars.com 2017). The particular firm belongs to the industry of motor vehicle and aerospace design and manufacturing. It has been found that that the specified organization has various subsidiaries like Bristol Aeroplane Company, Rolls-Royce Motor Cars Limited, Rolls-Royce Inc, Rolls-Royce Inc and many more. Among all, Rolls-Royce Motor Cars Limited has been highlighted here for preparing the report.

As per the annual report of Rolls-Royce Motor Cars Limited, it engineers, manufactures as well as distributes automobile parts and luxury automobiles worldwide (Rolls-roycemotorcars.com 2017). It was founded in the year 1998 and is headquartered in England. The main products of the organization include Phantom, Ghost, Dawn, Wraith, and Phantom Coupe (Rolls-roycemotorcars.com 2017).   

The particular firm Rolls-Royce Motor Cars Limited belongs to the manufacturing and distribution industry. It has been found that Rolls-Royce Motor Cars Limited is well known as an exclusive manufacturer of the Rolls-Royce branded motor cars and it is a manufacturer of this car since 2003 (Rolls-roycemotorcars.com 2017). It has been found that the automobile industry of U.S. grows constantly. In 2016, the U.S. automobile market sets a new record of sales and beats the mark of 2015 that is 17.5 million new trucks and cars (Karlsson 2016). The booming sales in automobile industry for several years encourages all the car manufacturing companies including Rolls-Royce Motor Cars Limited to extend their businesses across the world through application of location method. Moreover, with the decrease in the unemployment rate, the numbers of people who wish to buy cars to get to and from work have increased with the passage of time. Thus, the sales of the overall vehicles in U.S. have risen (Toth and Vigo 2014). Therefore, it can be said that the U.S. manufacturing companies of automobiles have booming financial situation.     

Industry Background

It has been found that in the present day business world, the particular company Rolls-Royce Motor Cars Limited mainly puts emphasis on the way by which the business is operated and not on the things that are made by people (Rolls-roycemotorcars.com 2017). Thus, the firm puts attention on the business operation that requires maximum cost incursion. At present, clients demand for high quality products and services, quicker deliveries and also at lower cost. Thus, operations have become an important factor for every business and this adds cross-functional decision-making skills. Therefore, the operations management of Rolls-Royce Motor Cars Limited includes the generation of customer value through effective management and control of the operational processes (Rolls-roycemotorcars.com 2017). Rolls-Royce Motor Cars Limited is being a motoring icon for more than 100 years, so it aims to set the pace continuously into the next century (Rushton, Croucher and Baker 2014).

The operations system of the particular firm helps in understanding the main functions of the organization that aligns with its performance objectives (Bozarth and Handfield 2016). The main functions of Rolls-Royce Motor Cars Limited include marketing, finance and accounting and the other supporting function include production. On the other hand, the performance objectives of the firm Rolls-Royce Motor Cars Limited are flexibility, cost, quality, speed and dependability (Rolls-roycemotorcars.com 2017). Based on detailed analysis, it has been found that the particular firm provides various facilities to its potential customers like quality service, both sales and after sales services. In addition, high quality products are manufactured by the firm, thus it attracts more new customers and retains the existing ones. Moreover, as high quality products are provided by the particular corporation, the cost as well as the price of the products is also high and thus, its worldwide target customers are comprised of the clients who belong to high income group. Therefore, it can be said that both the cost and quality performance objectives of Rolls-Royce Motor Cars Limited align with the marketing function of the organization. The reason behind this is that the cost, price and the quality of the services and the products help the firm to attract more customers (Walker et al. 2014). In addition to this, the flexibility to the customers is provided by the firm thus it also attracts to retain the existing customers. This flexibility relates to the adjustment of the demands of the customers and Just-in-Time and also includes the flexibility of the work arrangement and working schedules of the employees. Therefore, all these help in assisting the firm to become more popular from the perspective of both customers and employees (Johnson 2014). As, these performance objectives indirectly help in improving the finance and accounting functions of the organization by increasing the revenue generation through brand image, customer loyalty and brand equity. Moreover, the performance objective ‘speed’ helps in enriching the supporting function that is production, as speed of the cars makes it unique from other competitors and thus sales and production of the products of Rolls-Royce Motor Cars Limited increased.                      

Critical Reflection of the Main Functions of the Firm that aligns with its Performance Objectives

According to Mangan, Lalwani and Lalwani (2016), the location methods play a vital in the supply chain management of an organization. Moreover, it can be said that the locating fixed facilities of the supply chain network is a significant decision problem, which results into providing various forms, shape and structure to the overall system of supply chain. The following model describes the options with the help of investment levels and related costs that are utilized for operating the system.

Figure 1: Location Methods Model

(Source: Heizer and Barry 2013)

The decisions regarding location include detection of the number, size and location of the facilities to be utilized. Moreover, these involve – nodal points within the network as ports, plants, warehouses, vendors, service centers and retail outlets. The location methods include – Single Facility Location and Multiple Facility Location. Based on detailed analysis, it can be said that the Multiple Facility Location includes three location approaches and these include – optimization, heuristic method and simulation method (Heizer and Barry 2013). The study regarding the problems of facility location is termed as location analysis and it is a particular branch of operations research. This is mainly related with the optimal facilities placement for minimizing the transportation costs or expenses during the consideration of the factors like avoidance of keeping hazardous materials in front of the facilities of the competitors and housing. The single facility location is a simple approach that includes only two location factors that are the point volume and the transportation rate (Bozarth and Handfield 2016).

On the other hand, the multiple facility location is relatively more complex but it is more realistic in nature and thus it is more used by most of the firms for solving the location problem. This model is mainly used when two or more facilities are to be located concurrently or at the moment when additional facilities are required to be located, especially when minimum one exists already (Swink et al. 2014).   

Political – The political factors that affect the location decision of Rolls-Royce Motor Cars Limited include the record of the stability of the government, consistency of the policy of the government, structure of the government and the government’s attitude toward inward investment.

Cultural – Various customs and norms, language, culture and customer features are the main cultural factors that affect the decision making of the firm regarding location.    

Economic – The economic factors that affect Rolls-Royce Motor Cars Limited’s location decision include – tax incentives, tax structure, tariffs, custom duties, financial incentives, exchange rate of the currency, inflation and business climate. Moreover, the income per capital, GDP/ GNP growth interest rate and debt of the nation also influences the decision of the firm regarding location decision making.         

Different Kinds of Location Methods

Centre of Gravity Method – It helps in detecting the coordinates of a facility location and is considered as the load-distance technique.  

Transportation Model – It is a significant instrument that analyzes and modifies the present systems of transportation or the incorporation of the new ones.

Break-even analysis – It generally computes the quantity of the products that is required to sell for covering the cost. This can be utilized for location analysis, particularly if the cost of every location is known.

Factors Rating Method – It consists of 6 steps – a list of relevant factors are developed, weight to each is assigned for reflecting the relative significance of the company, development of rating scale for factors, scoring each on the basis of scale. Then the scores are multiplied with weights for every factor and weighted scores are totaled for every location. Lastly, depending on maximum score point, recommendation is made.                            

Based on the above detailed analysis, it can be said that the multiple facility location is the most suitable location method for the particular firm Rolls-Royce Motor Cars Limited. The reason behind this is that the particular method helps in controlling two or more facilities that have been located simultaneously (Stadtler 2015). Moreover, it has been found that the particular firm Rolls-Royce Motor Cars Limited has more than one facility in its logistics systems. Therefore, it can be said that it is justified for the particular organization to incorporate the multiple facility location method.             

Among the multiple facility location method, there are mainly three location approaches and these include – optimization, heuristic method and simulation method (Heaslip 2013). Based on detailed study, it can be said that the heuristic method is the most ideal one for the firm Rolls-Royce Motor Cars Limited as it belongs to manufacturing sector and is associated with warehouse. The heuristic method mainly refers to any kind of concepts or principles that generally contribute to the reduction of the average time for searching a solution to the problem within an organization (Fernie and Sparks 2014). Moreover, the heuristic method is considered as the “rule of thumb” for solving most of the problems. Therefore, it will be much easier for the organization Rolls-Royce Motor Cars Limited to incorporate the heuristic method for the welfare of the business. Moreover, this method helps in getting good solutions quickly and also from several options. In addition, the other benefits of incorporating heuristic methods in the warehouse location of the firm Rolls-Royce Motor Cars Limited include – the advantages of rational computer operating times, requirement of memory, good presentation of reality and the satisfactory quality of solution (Hübner, Holzapfel and Kuhn 2015).

Furthermore, this particular method is considered as the popular methodology especially for the problem of warehouse location, thus, the particular firm should implement this method. Generally, the location problem includes trading off the expenses that are relevant to the location. These include – production costs and purchase costs, warehouse fixed costs, warehouse storage costs and handling costs, costs for carrying the inventory, warehouse outbound and inbound costs for transportation and many more (Prajogo, Oke and Olhager 2016). It has been found that each of these expenses reflect the geographic differences, shipping features, volume, economies of scale and policy variations. Therefore, it can be said that heuristic method is the justified one for the better running of the business organization Rolls-Royce Motor Cars Limited.               

Conclusion

Therefore, it can be concluded that for the firm Rolls-Royce Motor Cars Limited, the multiple facility location method is the most suitable one among all its location approaches, heuristic method is the most suitable one. The reason behind this is that its characteristics or features align with the nature of the manufacturing business of the firm as it also deals with warehouses.

Thus, it can be recommended that the particular firm Rolls-Royce Motor Cars Limited should implement the multiple facility location method. Moreover, in details, it can be said that the specified firm should incorporate the heuristic methods for better logistics and operation management. In addition, this method will help the corporation in understanding the nature of the trade-offs of the costs through the help of graphical location. Furthermore, the company will be able to trade-off the fixed costs, storage and inventory of the firm directly with both outbound and inbound transportation expenses.    

References

Bozarth, C.B. and Handfield, R.B., 2016. Introduction to operations and supply chain management. Pearson Higher Ed.

Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan Page Publishers.

Heaslip, G., 2013. Services operations management and humanitarian logistics. Journal of Humanitarian Logistics and Supply Chain Management, 3(1), pp.37-51.

Heizer, R. and Barry, R., 2013. Operation Management, Sustainability and Supply Chain management (Vol. 11). Pearson, UK.

Hübner, A., Holzapfel, A. and Kuhn, H., 2015. Operations management in multi-channel retailing: an exploratory study. Operations Management Research, 8(3-4), pp.84-100.

Johnson, P.F., 2014. Purchasing and supply management. McGraw-Hill Higher Education.

Karlsson, C. ed., 2016. Research Methods for Operations Management. Routledge.

Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley & Sons.

Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes: Linking supply logistics integration, supply performance, lean processes and competitive performance. International Journal of Operations & Production Management, 36(2), pp.220-238.

Rolls-roycemotorcars.com. (2017). House of Rolls-Royce. [online] Available at: https://www.rolls-roycemotorcars.com/en-GB/house-of-rolls-royce.html# [Accessed 28 Feb. 2017].

Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Schönsleben, P., 2016. Integral logistics management: operations and supply chain management within and across companies. CRC Press.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Swink, M., Melnyk, S.A., Cooper, M.B. and Hartley, J.L., 2014. Managing Operations: Across the Supply Chain (pp. 248-249). New York, NY: McGraw-Hill/Irwin.

Toth, P. and Vigo, D. eds., 2014. Vehicle routing: problems, methods, and applications. Society for Industrial and Applied Mathematics.

Walker, H.L., Seuring, S., Sarkis, J. and Klassesn, R., 2014. Sustainable operations management: recent trends and future directions [Editorial]. International Journal of Operations and Production Management, 34(5).