Describe about the Report for Supply Chain Management of HG Metals Manufacturing Limited.
HG Metals Manufacturing Limited is a manufacturer of Steel Products. HG Metals is a Singapore based Company. MR. Ching Chiat Kwong is the chairman of the company and MR. Foo Sevliang is the Executive Director of the company. HG Metals provides a large variety of steel products manufactured in various shapes and sizes used in different fields. Today, the HG Metals is growing so fast which lead to a large number of customers added to the company. The products which are being produced by the company are used in various fields and engineering applications. Company’s business is divided into three different parts or we can say into three different sections, which are HG Construction Steel, HG Industrial Steel & Services, and the third one is HG Distribution. On 21 of March, 2002 the company was listed in Singapore Exchanges former junior board, SESDAQ and then further in 2004, it was upgraded to the Mainboard. Some of the various projects done by the company are Wak Hassan Project, T2 silo in Jurong Port, Downtown Line 3 C933 MRT etc. Company has a vast network across the world and it includes steel mills in various Eastern European countries. Headquarter of the company is in Singapore (Bloomberg Markets, 2015). The company provides nearly about 3000 products for a wide range of tasks. Products of the company are divided into various categories like Angles, Beams, Caging, Channels, Chequered Plates, Circular section, Cold Rolled Steel, Cut & Bend, Electro Galvanised Steel, Flat Bars etc. which are further available in different specifications, sizes, thickness and lengths. The company provides various types of services under the three different platforms which are HG Construction steel, HG Distribution and HG industrial Steel & Services. Therefore HG Metal is the largest steel stockist and manufacturer in Singapore.
The Purpose of this report is to analyze the Supply Chain Management of the company. The main task behind the process is to observe the making process of the particular product and the supply chain forecasting and by applying the concepts as found in the supply chain process, the improvements and the modifications have to be done. As we know that if a company wants to achieve their goals, than it has to do a strategy and to work hard on their plans, so that they can complete all the requirements of their customers. Supply chain management manages the complete task of the product, i.e. from the manufacturing to the consumer each and every step comes under this management. According to the supply chain management, the product moves step by step, i.e. Suppliers (Manufacturer) sends the product to the whole seller and further, the whole seller delivers it to retailers and from retailers, it reaches to the consumers. The main motive to follow the supply chain management is that it lowers the risk of the shortage of the products in the market at the time of their requirement.
The Key Flows in Supply Chain
An example of the Supply Chain Management is shown below with the help of a diagram
(Business Case Studies LLP, 2015)
The above diagram shows that first of all, the raw material is collected by the manufacturer company for manufacturing the products. Then, the distribution step is shown which tells us that after the production of the product, the manufacturer supplies it to the whole sellers, retailers and further to the customer .
Supply Chain Management is mainly classified into following Categories:-
The Manufacturing Process: -
As the name specifies that in the make process, the procedure of manufacturing of the product is attained in the particular specifications and manner as per their requirements. In the make process, it is decided that which product is to be manufactured, in which specifications and in which quantity. In HG Metal make process, nearly 2000 types of metal products are being prepared as they have a long range of products and their services like galvanising, cutting, coating and rental of plates and beams. A major part of developing process is the production of ship plates, bars, beams, pipes, etc. For the production of the products, company covers an area approximately of 800,000 sq. ft. including a huge network of suppliers consisting of various countries like China, Japan, Korea, Russia and many other Eastern European Countries. The company is having storage capacity of 200,000 tonnes.
The Product Flow: -
In the product flow step, the flow of the product comes into consideration, i.e. in this step, the supplier supplies the product to the whole seller and further it is supplied to the retailers and then from a retailer the product reaches to the consumers (Wagner). This is the only step in which the customer returns are also considered and the various services are being provided to them. For the year 2015, the product flow of the HG Metal was according to the mentioned below: -
- Plates/ Ship plates – 19%
- Bars – 30%
- Beams – 18%
- Pipes – 2%
- Others – 31%
The Information Flow: -
In this step, the information related to the product and the information of the customer is maintained to which that product belongs to. In this step, the status of the product is kept updated that when the product is out for the delivery, where the product has reached, by which transport or carrier the product is being carried and finally when the product will be delivered to the consumer. The HG Metal information process is having an international network of suppliers and consumers (Singapore Exchange Limited, 2016). The company main motive is to make good quality of products and the company deals directly with the customers, those who are having bulk requirements of their product or the customers those who are having any manufacturing projects on a large scale.
The Cash Flow: -
In this step, the payment process is being done. This step consists of the documents of the product to which it belongs. Further in this step, the consumer of the product pays the payment to the manufacturer. Therefore, we can say that this is the only phase in which title ownership details are maintained. HG Metals, is having a good cash position, i.e. nearly S$50.5 million on 31 December 2015. This good cash position shows a bright future for the company to carry their business. For the Year 2015 below is the data: -
- Operating cash flow of the company – 1.67
- Cash Flow from investing – 2.49
- Free Cash Flow – 4.16
The Return Flow: -
In the return flow step, if sometimes when the customer is not satisfied with the product delivered to them or we can say if the consumer is facing some sort of problem with the product, than according to the return policies of the company, the consumer can return that product to the company and the company returns the payment to the consumer as per the rules as regulations (Rouse, 2010). Returns are not considered to be good for a successful company, because it leaves a bad impact on the customer’s mind as the customer is not satisfied with their product and it furthers leaves a bad impact for the company, if it is not taken seriously.
The Make Process
SESDAQ is the Singapore Exchange former junior board on which the HG Metal was listed on 21 March 2002 and it was upgraded to the Mainboard in year 2004. The Make Process of the company includes various steps like they have to study the manufacturing engineering discipline, then the next step is metal processing and manufacturing. In present time, we know that a large variety of material is available. The company has attained, the process of converting raw materials into finished parts or we can say the semi-finished materials into finished ones. The company has a large range of metals, plastics and other composite material. Therefore, it is difficult for the company to select the best material for manufacturing their products. Various types of materials used in manufacturing are Iron, Aluminium, Copper, Zinc, Lead, Nickel, Magnesium, Tin, Titanium, Polymers, etc. Solidification of the metal and the casting of that metal is also a part of the making process.
After this, manufacturing process occurs which is mainly classified into two categories or we can say into two processes i.e. Primary & Secondary Process. In the primary process, the raw material is converted into metallic materials and in the secondary process, metallic material is converted into the final product (SIM Professional Development, 2015). The manufacturing process in which the raw material is passed through both the phases, i.e. primary and secondary phase is processed with the help of blast furnaces. The making process is possible or we can say that the complete make process depends upon various techniques used by the metal company. Some of the various techniques are as mentioned below:-
- Blast Furnace Technique
- Open Hearth steel converter etc.
Material Requirement Planning is also a part of the Make Process. Material Requirement planning is a technique which helps the company to calculate the requirements of the material which further helps to meet the requirements of the consumers. Material requirement planning depends upon some tasks which determines what material should be ordered and when to order. It helps in deciding the quantity of material required for that particular instance of time. The structure of the product or the information regarding the structure of the product can be attained from the bill of material. Therefore, we can say that the main objective or the main motive of the material requirement planning is to get the right thing at the right place at the right time. Generic model for the implementation of the material requirement planning is to set a time boundary for implementing the MRP. Cost is specified in terms of the percentage of the total effort and representing manpower.
The Supply Chain Forecasting
The forecasting method is important for a company for evaluating the performance metrics for future use in a systematic way. Most of the companies are not having the trained staff in the business cycles or in business based model. Due to lack of performances and the techniques used, a mismatch occurs between the demand of the product and the availability of that product which results in the overstocked and understocked items. After the items got overstocked, to decrease the number of overstocked items, these items have to be sold at discounted prices which results in the wastage of capacity and cost of the various resources used in the production of those items. The forecasting method is very important to the company because it helps in making good managerial decisions for the development of the products as well as making the decisions regarding service, design related to that product. It helps in less overstocking of the items which lowers the wastage of the raw material used in the production of the products. By using the forecasting method, a company can increase its supply performance (Waterloo, 2016). The company further provides effective customer services in almost all the fields. Forecasting analysis helps the company to analyze the best techniques which are easy for applying to the various products effectively.
Qualitative forecasting technique – This forecasting is mainly used when the data collected is not sufficient or no longer relevant. Common types of qualitative technique include sales force, personal insight.
Quantitative forecasting technique – In this forecasting technique, the study is done on the history of the demand of that item to make the plans for the future productions and sale of that item.
Graphical forecasting method – Graphical method is the one in which the visual information is used to predict the sales. Trend and patterns involve plotting information of the product in a graphical form.
The importance of the forecasting is thatit attains a huge data for a particular product, which helps a company with operations related to the products. Forecasting is an imperfect science, but on the other hand, it is necessary for almost all the companies. Proper forecasting helps to ensure a company to have enough supply on hand to satisfy demand. HG Metal uses the forecasting techniques to coordinate the demands of their products in the market. Companies like HG metal uses sophisticated software systems to forecast the demand for their product by the consumers (Christopher, 2011). If a good forecasting technique is not being used by the company, than it leads to increase the company labor and storage costs. If a company supplies perishable goods than a company might incur a loss due to deterioration of unsold inventory, which further tends to decrease the sale of the company, thus the income of the company decreases too. Forecasting is the only key to better supply chain performance.
Models of forecasting vary from company to company. The models of forecasting are automatic and user specified forecasting models, time trend models, data transformation customized models and the greatest strength of the time series forecasting is that it provides a wide range of forecasting methods depending on which a company can construct an appropriate supply chain forecasting.
Supply Chain management is the most exciting as well as an important part of the study. Supply Chain Management in the specialist companies is able to increase the growth of business globally in a large amount of money, time and effort by creating a great and effective Supply chain management (Mangan, Chandra, & Butcher, 2011). But, the value for money is not only a result of high quality designs or engineering, also is an effect of lean production. Supply Chain Management is responsible for the success of any manufacturer. This managements helps the company in selecting the best quality raw materials for the production of a large variety of products. An effective management is effective to avoid the shortage of the material, misplacements, loss of productivity, which may further affect the cost, time, labor etc. invested in the production. The research presented in this document aimed at designing an integrated approach for the manufacturer. An integrated approach for material gives a right and good decisions on what to order, how much to order and where to deliver. A fully integrated approach helps in providing a better communication and minimizes the gap too in the Information flow among all the parties, departments and consumers involved. Some important facts about the supply chain management are as mentioned below: -
- Supply Chain Management provides directions for the future research of the company.
- It helps in expanding the framework to include the various factors in the material management process.
- It provides the important recommendations for the benefits of the company.
Therefore, the supply chain management provides an effective planning to keep costs to minimum and to ensure the consumers that the material is on site when and where it is required. Thus, the Supply Chain Management helps to ensure the availability of the products on time while providing the services to the consumers.
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