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Supply Chain Management and Warehouse Design for Logistic Operations

Question:

Discuss about the Supply Chain Management of Sadafco.

The following report is based on the warehouse design and supply chain management of the organization Sadafco. The report discusses about how the deals with its supply chain network and import the products from another country. Sadafco is located in Saudi Arabia and the organization wishes to import milk products from New Zealand. The purpose of report is to derive an understanding about how supply chain management and warehouse design helps the organization to run its logistic operation. Supply chain management is the active management of supply chain activities to increase the customer value and accomplish sustainable competitive advantages. According to (Christopher 2016), it represents a conscious effort by supply chain organizations to improve and operate supply chain in the most efficient and effective manners possible.

Furthermore, supply chain activities cover everything from the product development, sourcing, production and the information systems required to coordinate the activities. Beske (2012), mentioned that the first is that practically every product that reaches an end-user represent a significant amount of effort of multiple firms and these organizations are referred to collectively as the supply chain. Hence, Best (2012) commented that whole supply chain activities have existed for long time and most of the organization have only paid attention to what were happening within the four walls. The following report discuses the purpose as well as the use of warehouse. A critical analysis has also been provided on the significant factors in warehouse designing.

Purpose of using warehouse:

Warehousing remains as the set of activities that are engaged in receiving as well as storing goods and preparing them for the reshipment. It has been identified that warehouse and the storage remains as an act of storing as well as assorting the finished  goods to generate highest time utility at lowest possible cost. Here, the need for storage arises for both raw materials and the finished goods. Therefore, when this storage is done on a large range in particular manner, it is called warehousing. Nonetheless, in this context, Fredendall and Hill (2016) commented that many private organizations are turning into distribution centre instead of constructing the warehouse. Such definition and concept of warehouse is the key part of the supply chain network. The aim of the warehouse management is to control the movement as well as the storage materials within a warehouse. In addition to this, it is also identified that such system of warehouse management directs and optimizes stock, with the help of real time information about the status. Such system involves the physical warehouse infrastructure, tracking systems as well as the communication between the product stations (Ahi and Searcy 2013). Moreover, it is also observed that warehouse is not only concerned with the storage facilities but also involved in different activities such as receiving, identifying, holding, assembling, and preparing to meet the growing demands. In addition, warehouse helps to store the surplus good as well with the help of which the business experts can focus in maintaining a balance between customers’supply and demands. Sadafco in order to maintain the entire supply chain management process properly has focused to store their product to warehouse so that customers can be delivered necessary products and services properly.

Purpose of Using Warehouse

Private warehouse:

It has been identified that the private warehouses are owned as well as operated by the large manufacturers to meet their own storage needs. In this context, commented that goods manufactured or purchased by the owner of the warehouses have a limited value or the utility because the businessmen generally might not be able to make use of them due to the large investment required in the construction of a warehouse. A large manufacturer might have a network of its own warehouses in different parts of the nation.

Public Warehouse:

Public warehouse is the form of specialized business establishment with the help of which people in general can store their products in certain charge. Generally a specific cooperative society tends to operate the entire process of public warehouse. People in general who do not have enough flexibility in maintaining and establishing a warehouse are the primary users of public warehouse. In order to run a particular public warehouse the operators have to maintain specific government regulations and acts. Especially, this kind of warehouse is used for maintaining and storing agricultural products.

Bonded Warehouse:

Bonded warehouses are used for the purpose of accepting imported goods for storage. I order to run and operate bonded warehouses the operators need to have license. In order to use bonded warehouse the operators have to follow a particular bond. In this particular bond goods cannot be removed without taking a specific consent of the custom authority. Therefore, the good cannot be withdrawn without taking the consent of custom authority. This particular warehouse is very much beneficial for both importer and exporter. If an importer and exporter is unable to pay the customs duty immediately even after the arrival of goods that individual can use bonded warehouse (Wisner, Tan and Leong 2014).

However, in case of Sadafco, the business authority prefers to use private warehouse so that they can maintain their entire logistic procedure without being dependent on the government regulation only. In addition, after maintaining the import system with New Zealand business organizations the business experts would be able to store, stabilize and regulate the products on their own way. As a result, as per the needs and demands of their target groupSadafco can deliver their products as well as services within the stipulated. As a result, the service users do not have to face difficulties in using the services of Sadafco.

Types of Warehouses

The business authority of Sadafco while designing the entire warehouse has focused on maintaining some of the major factors that are as follows:

  • Product:

Before designing the infrastructure of warehouse the operators have to focus on the necessary products. It is undeniable that warehouses are primarily used for the purpose of storage, stabilizing and departing the products. Therefore, before designing the entire infrastructure the business experts have to focus on the material of product first. Sadafcoprimarily focuses to import milk from New Zealand. Therefore, in order to store this kind of product the infrastructure of the warehouse should be designed in such a way that liquids caa be preserved by maintaining its quality.

  • Space:

As Sadafco has to deal with liquid products the materials cannot be stored within a heap. Therefore, the business experts have to invest large amount of money for making a spacious building, sufficient number of window, flexible workspace, numbers of columns, boxes and so on. In order to make a larger and spacious building the business experts would have to large amount of money that the business experts of Sadafco are unable to invest at the present scenario (Ross 2013).

  • Equipment:

            In order to design a specific warehouse the business experts needs sufficient space along with necessary equipments.Sadafco in order to preserve milks should have sufficient boxes along with racks for organizing the products by maintaining a chronological order. In order to maintain the entire product operation properly the operators should use advancement of technology so that the entire process of business can be run successfully. On the other hand, technological devices are successful enough in maintaining data and information systematically and gradually.

  • Circulation of goods:

In the designing of the warehouse, effective circulation of the items or the goods is important due to the reason that, it will determine the consumption of time and cost effectiveness in the warehouse (Barney 2012). In the current scenario, warehouses are being designed in such a way that it will initiate the effective process of inbound and outbound transportation. The ideal design of circulation of goods helps include inbound transportation of the goods from one side and the outflow of the goods from the other. The storage of the goods should also be designed in such a way that, the goods will be sorted according to their types and the day of dispatch. Sorting the goods according to the time of dispatch will help to drive the outbound process effectively. In addition, it will help in reducing the time being involved in dispatching the goods. The allocation of the items will be more effective and there will be less chance of error in dispatching due to the effective design of good circulation.

  • Appointed personnel:

Critical Factors in Warehouse Design

Employees are one of the key factors in enhancing the effectiveness of the warehouse. This is due to the reason that, the more effective and trained will be the employees, the more will be their effectiveness in the job and thus, the operation in the warehouse will be more effective. Providing effective training and development skill to the employees will help to drive the operation in the warehouse efficiently. The damage caused in handling of the goods along with occurrence of the error in allocation of the goods will be less if the employees are being effectively trained  On the other hand, selection and recruitment of the employees should be done in accordance of the warehouse recruitment. Selection of employees having experience in handing the operation in the warehouse will help to effectively drive the management in the warehouse.

The warehouse is a very important part for the organizations since the products that the organizations provide must be delivered to the customers from the warehouse itself and the warehouses has to be kept properly within the satisfactory measures for the customers (Richards, 2014). The organizations in the modern business environment mostly prefer to do their business in the online mode since it takes lesser time and the people are benefitted from this method.  There are certain ways by which the organizations can manage their warehouses in a particular way and these ways have to be maintained properly(Faber, De Koster&Smidts, (2013).  This ways are to organize the ways of the warehouse, begin the process with receiving the right things at the right time, apply a certain logic to pick up the processes, reorganizing the things when they are needed, use the method of quality control, keeping the warehouses safe, maintain proper lighting in the areas, providing proper training to the staffs, using the right software to do the things and make sure the delivery is done within the given time that would ensure a perfect customer service.

Once the items to be delivered to the shipping warehouse, the products should be checked properly and verified before they are actually packed (Mitra, 2016). The same thing goes with the selected organization as well. If they do not maintain the quality control and the product is not delivered at the right time there will be certain serious consequences for it.

A safe environment has to be kept at the warehouses since it is extremely important to take are of the products in a proper way. The employees who work at the warehouse should be kept safe and their interests should be served properly as well (Waters and Rinsler 2014). The certain requirements have to be followed.

Effective Circulation and Employee Training

Proper lighting arrangements have to be made in the warehouses as well so that the shipped products cannot be damaged in the warehouse. Brighter lights would always motivate the employees to perform their job roles better. The employees should be properly trained as well. This would be very helpful since the employees will have to do the jobs. The employees will have to be cross-trained so that they can share the loads of work with other employees.

Logistics is one of the most important things as the organizations need to send their products to the customers in a proper amount of time (Kim, An & Choi, 2017). The integrated logistics support is one of the most important things for the organization to maintain. Proper logistics support is one of the most important parts of the supply chain management for the organizations. The organizations have to make partnerships with the best logistics support organizations so that they can provide the best services to the customers as the customers satisfaction is the first priority in these cases.

The importance of logistics supply support is one very integral part in the case of the retailers and the wholesalers. These logistics support organizations can go beyond the inventory management and then transportation methods to include themselves in single point because it has become relatively one of the main factors in the organizational success (Fernie and Sparks 2014). The logistics concerns are one of the most relevant aspects of the business organizations since it involves many things in the process. The customers have to be delivered with their goods on time so that the brand reputation of the shipping organization will remain intact (Myerson, 2012).

The business environment is changing relatively fast and new things are coming into practice and the medium and small companies have to understand the significance of these matters. The approval of the government has to be sought because the government the regulations on which roads are to be used and which are to be not. The logistics companies use the best and shortest routes to deliver the products to the customers. There are certain measurement aspects that are aligned with the logistics norms on how the organizations can innovate new strategies and investigate them into their own system (Myerson, 2012). These are energy restrictions, technological advancements and the transportation system of the country. The selected organization Sadacfo deals with the milk transportation around the country. As milk is a very important product for the people of all ages, it should be transported to its destinations within time and the logistics support organizations should be providing these facilities to the organizations.

The management of the organizations often faces certain challenges and issues when they deal with the warehouse for shifting their products to the customers within a standard time. Some of the challenges that have been faced in this aspect are going to be described here (Sainathuni et al., 2014)

The warehousing process needs the employees to handle the same products for several times and this tendency of the process leads to the dissatisfaction of the employees in a huge way. Redundant process can be seen in the warehouses when the workers have to pass the same ticket through several other employees.

These redundant processes are very much time consuming and the works are delayed and it takes a longer time to deliver the goods to the shipping addresses. The barcode technology streamlines will help to find a solution for this problem. The resources are not utilized within a specified time limit and it creates grave problems for the organizations (Shahabi et al, 2013).

One of the main success factors for running a warehouse to take the advantage of a proper space. Some of the common problems in this case are the insufficient storage space and inefficient use of the storage that is available. Thus the poor facility layout is one big problem for the organizations.  The warehouses which are very poorly designed and not properly managed are big causes for worries for the organization management. The warehouses in which the storage space is properly designed must have a sufficient floor space and vertical space. When a good layout is designed for the organization, it is of maximum quality and the equipment and labor can be equally distributed among the labors of the warehouse.

Warehouse managers are often facing the troubles that are related with the productivity issues. The business environment in the warehouses is completely labor-intensive and the inventory management has to be properly handled in this context In the case of warehouse and inbound logistics operations for the company, almost 65% of the budget has to be kept aside for the same. Good warehouses very often employ a large workforce for their better performance and the equipments that are used are very expensive. This tends to discuss the fact the labor costs has to go up on a high since the organizations cannot compromise with the quality of the equipments (Beske 2012). There are many kinds of staffs within the warehouse management that ranges from cleaners, packers, administrative faculty and the senior managers.

Insufficient inventory management is also a very serious problem for the warehouse management as well. When the people handling the inventory management are not efficient enough, troubles arrive for the organizations in great many ways (Seuring and Glodbach 2013).

Various factors act as determining factor in influencing the cost effectiveness of the warehouse. The following section will discuss about the different factors.

  • One of the key determining factors that influence in the cost effectiveness of the warehouse is the use of suitable shipping mediums. Shipping is one of the factors that incur the major portion of the cost for the warehouse (Bottani et al. 2015). Thus, the medium of shipping should be suitable and effective enough in order to regulate the cost as much as possible. The choice of effective shipping medium should be made in accordance to the requirement, geographical location, available mode of transportation and available time for the transportation. The more effective and efficient will be the mode of shipping, the less cost will be incurred by the warehouse.
  • Involvement of the third party vendors in managing the warehouse or inducting outsourcing in the process of distribution network will help to reduce the cost of operation in the warehouse. This is due to the reason that, outsourced organizations are having more expertise in handling the operation in the warehouse. Moreover, the cost incurred by them is much less than that of the parent organizations (Winter and Knemeyer 2013). Thus, inducting the third party vendor will help to reduce the cost significantly.
  • Labor or employee cost is another area where a sound portion of cost is being involved. In this case, the geographic location of the warehouse is one of the key determining factors. This is due to the reason that in several countries, the cost of employees is lesser compared to some other countries. Employee cost in majority of the developing nations is much less compared to the employee cost in the developed nations. Thus, the employee cost should be regulatedin order to enhance the cost effectiveness of the warehouse

Warehouse is having different types based on their type of operation, ownership and utility. It is been seen that all types of warehouse is having their own advantages as well as disadvantages. Based on the requirement of the particular organization’s requirement, the warehouse should be selected. It will help them in enhancing the outcome and productivity of the organization from their warehouse. However, it is been observed Sadacfo will opt for private type of warehouse. It will help them in handling their distribution and supply network effectively. In addition, it will help them regulate the price of the distribution network by their own. The initiation of the network of distribution and supply chain management will help them in providing their products to their customers in time and in more number of sales points. It will further ensure the seamless supply of their products in the market throughout the year.

However, in the case of entering in the global market by Sadacfo, initiation of bonded warehouse will be beneficial for them. This is due to the reason that, bonded warehouse is being used for the storage of the imported items in the port. Moreover, these warehouses are being oversees by the custom bodies of the country. Thus, in the case of international business, they also have to initiate the bonded warehouse for the storage of their exporting items. In this case, the private warehouse will not be proved effective. Sadacfo have effectively implemented the various aspects of the warehouse design to enhance their inbound and outbound operations. The key product portfolio of them is the dairy products, which is perishable in nature and should be managed and stored accordingly.

The warehouse of them should be designed in such way that the dairy products of them can be effectively and properly. The warehouse should be air conditioned in order to regulate the temperature. Regulation of the temperature will help them in storing the dairy products properly and extending the usability of products. In addition, the geographical location of the warehouse is also important for them due to the reason that, strategically located warehouse will help them in reducing the cost of the transportation. Strategic location of the warehouse will also help in reducing the time being involved in the inbound and outbound operation. Strategic location of the warehouse enables the organization in having the convenient access of seaports and other mode of transportation. Initiation of the technology in the operation of the warehouse will also help them in effectively manage the operation in the warehouse. The time consumption as well as the cost will get reduced due to the use of technology. Moreover, the management of the warehouse will also be effective with the use of technology. This is due to the reason that the communication channel will get enhanced between the managerial levels and the employees due to the initiation of the technologies. Thus, the overall effectiveness of the warehouse will get increased.

Another determining factor for Sadacfo to enhance their efficiency in the warehouse is the training and skill development of the employees. Initiation of the training will help the employees in enhancing their effectiveness in the warehouse and it will eventually help the warehouse to effectively operate according to organizational policies. One of the key tools to reduce the cost involved in the management of warehouse is the involvement of the third party organizations. it will help Sadafco in concentrating more on their core activities rather than involving in supply and distribution network.

Conclusion

Thus, from the above discussion, it can be concluded that sadacfo is already having an effective mode of supply and distribution in their business process. However, few areshave been identified in this report, which need to be modified in order to enhance the effectiveness of the warehouse. This report has discussed about the types of warehouse and the type, which will be perfect and suitable for Sadacfofor their operation. Moreover, the different aspects that should be maintained by them in order to enhance the effectiveness of their warehouse are also been considered in this report. It is been concluded that, initiation of the above discussed factors will help them in enhancing the effectiveness of the supply and distribution network of them.

Various tools to reduce the cost involved in the operating the warehouse for them. Measures such as involvement of the third party vendors, initiation of the effective and strategic location for the ware3house and effective choice of the shipping modes according to the requirement are some of the important tools that can help them in reducing the cost involved in their operation. Thus, it is been expected that, effectively following the recommendations being discussed in this report will help them in enhancing the effectiveness of their warehouse operation.

Reference

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