(PDF) Understanding Operations Logistic And Supply Chain

UNDERSTANDING
OPERATIONS, LOGISTIC
AND SUPPLY CHAIN

Table of Contents
INTRODUCTION...........................................................................................................................1
Company overview and chosen areas of operational management, logistic and supply chain.......1
New product development and process...........................................................................................2
JIT, Lean and Agility.......................................................................................................................4
Triple bottom line ...........................................................................................................................6
Recommendations ...........................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Operational management is defined as the strategies and management process which aims
at controlling the designing and production process in the manufacturing of good and services. It
is important for the organisations to manage their routine production and manufacturing
activities so that raw material, labour, funds and other business related resources can be utilised
in an optimised way. It is essential for the manufacturers that after creation of useful product it is
delivered to the end service users safely (Christopher, 2016). For this purpose the logistic
operations and activities manages the movement of products and services from their production
to the end user.
These operational activities cannot be accomplished with accuracy and desired level of
quality without an effective supply chain. The supply chain of company involves human
resources, processes, resources and information so that products can be distributed from
suppliers to the final customers. The supply chain management (SCM) includes variety of
processes such as storage, inventory management, warehousing and moving finished products to
end users. The report will discuss the theories and concepts related to two different areas of
logistic and SCM such as new product development and lean approach using the case example of
an organisation (Coyle and et.al., 2016).
Company overview and chosen areas of operational management, logistic and supply chain
Morgan motor company Ltd is manufacturer company producing motor cars. The
organisation is based in UK and is well recognised name. The organisation is famous for its
products because it uses wood for construction of its cars especially in their body shell. The
regular innovations are the key success strategy used by the company. In order to meet the
business objectives Morgan Ltd ensures that its product are developed as per the changing needs
of its consumers and are reached to them with the same quality through which they are
manufactured. The operational and logistic areas such as new product development and
processes such as Lean, Agility and Just-in-Time (JIT) manufacturing process plays critical role
in sustaining the success and profitability in business.
The concept of JIT and Lean approaches enhances the productivity and profitability by
reducing the wastage of resources and accomplishing the operational tasks on time so that quality
can be maximized and risks can be mitigated (Rushton, Croucher and Baker, 2014). The aim of
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agility approach is to enhance the efficiency of product functionality using market research,
feedbacks and analysis of more efficient processes for production. The implementation of these
approaches makes the supply chain more accountable and qualitative. It also ensures that the
logistic functions are performed with accuracy. The report will discuss the impact of these
concepts on performance of Morgan Ltd. It will also analyse that how these logistic practices can
help organisation to build more efficient supply chain along with the significant impact on
environment, society and economy (Jacobs, Chase and Lummus, 2014).
New product development and process
The development of new products will help Morgan Ltd to sustain its growth for long
term. The process of developing new products can be made more effective by integrating the
supply chain characteristics and aspects of supply chain. The innovations in product can enhance
profitability and implementation only by equal participation of the SCM. One of the most
effective approach which can be used by Morgan Ltd to support product development is the
stage gate model.
Stage gate model:
This model works on the principle that irrespective of the source of new product it must
meet the possible risks and resource availability before reaching to the next development phase
(Touboulic and Walker, 2015). The involvement of supply chain specialists in new product
development process (NPD) ensures that the development process. Resources meet the
organisational objectives related to profitability and competitive advantage over other
organisations. Morgan Ltd can engage its partners, investors and other distributors for every
phase of stage-gate process.
It leads to the more accurate and innovative strategies which can enhance the success rate
of the proposed product. If instead of involving these elements of supply chain elements if
company only depends upon the internal resources then it is possible that they may fail to
analyse the realistic risks which are observed or which may emerged during exposure of the
product to market. Supply chain members are well aware of such hidden risks and thus can
suggest the possible mitigation strategies which make the NPD process more successful (Wisner,
Tan and Leong, 2014).
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The goal of integrating new product development process with SCM is that it can identify
the risk associated with quality, manufacturing errors, cost, quality and difficulties which may
rise during supply to final consumer. For instance if Morgan Ltd develops a new product after
market research without consulting supply chain members and launches the product. However,
during the logistic processes it is found that the packaging cost of the product is very high and
does not match the sustainability goals of the company (Supply Chain Processes in New Product
Development). In such case the organisation will have to drop the idea of NPD and there will be
loss of time and resources which was invested during the process. However instead of this
approach if supply chain aspects are involved in the initial phases then this fact could have been
analysed and resolved. During supply chain analysis of the NPD process following
considerations are evaluated:
 The role of supply chain in managing inaccuracies which may evolve during production
and launching process.
 Flexibility of the suppliers to give suitable response to demand change.
 SCM also analyse that if the new products can be developed in the existing infrastructure
of the organisation or it requires additional approaches.
 Service related expectations of the customers and how distribution network can meet
those requirements (Zhao, Cavusgil and Cavusgil, 2014).
 Implementation of supply chain matrix for evaluating cost, quality and product
specification and their suitability to the needs of consumers.
The SCM plays a vital role in NPD. It drives the flow of resources and investment into final
process of production and supply along with the determination of critical paths which can
provide suitable market launching dates. Along with the supply chain various departments such
as marketing, sales, research, quality, technical and legal regulatory teams also provide their
contribution in successfully launching new products. The characteristics such as raw materials,
methods, storage, inventory management and distribution system also affects the NPD process.
The SCM can address these issues with required accuracy and effectiveness (Prajogo, Oke and
Olhager, 2016).
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JIT, Lean and Agility
For improving the productivity and quality of logistic and operational management
Morgan Ltd can use various approaches. The key approaches which can be used by the
organisation are as follows:
Just-in-Time (JIT) approach : The delay in launching new product or supply existing products
and services can affect the response of consumers towards the services. It can also influence the
cost of the product. The JIT methodology aims at reducing the time factor involved in
manufacturing and supplying. This process will help Morgan Ltd to bring variations in the
processes so that the operational costs can be reduced and productivity can be enhanced. For
supporting this manufacturing approach the organisation can use following suggested methods.
 The company can use multifunctional workers so that diversified skills can help in
introducing more qualitative products.
 The changeover processes must be flexible and lot sizes must be small so that the errors
can be detected easily and smaller modules can easily undergo into manufacturing
process (Just in Time (JIT) Production, 2018). Morgan Ltd can also streamline the movement of its goods so that time involved in error
detection and controlling resources can be saved.
Benefits of JIT: By implementing this approach Morgan Ltd can achieve following benefits.
 It will reduce the cost involved in inventory and labour.
 This approach also minimize the work in process and space which is required for
operational activities.
 Due to efficient monitoring and streamlining the defective product rate of Morgan Ltd is
reduced and hence quality is improved. Number of shipments can be increased.
Risk associated with JIT approach: Apart from the benefits its implementation can also bring
several risks. Though cost reduction, decrease in cycle times are key attractive benefits of this
approach but it is required that Morgan Ltd must consider the views of its suppliers (Wahdiat,
2016). The participation of suppliers can help organisation to achieve the desired objectives with
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profitability because it is also possible that suppliers may not prefer smaller quantities of
products.
Lean approach:
This logistic and manufacturing technology aims at reducing the waste of resources so
that the production process can be made cost effective. Its main concern is to establish a balance
between the minimum resource consumption or waste prevention without neglecting the quality
aspects of the project. According to this theory the waste generation can be the result of work
overload or non-uniformity in the work process. By focusing on these aspects the business
organisations can achieve the objective of this methodology. Another key principle of this
method is that it prefers to accomplish the operational activities accurately so that waste will
reduce naturally and quality concerns will also achieve (Luzzini and et.al., 2015). It also
emphasis that the ultimate goal of the production and manufacturing process is to meet the
requirements of the customers thus the values which are not meeting the perspective of
consumers must be eliminated on urgent basis so that the efficiency and effectiveness can be
improved without putting efforts on unnecessary areas. Morgan Ltd can use following strategies
to implement lean in its process:
 The organisation must aim at reducing the waste. For this purpose the suppliers as well as
team involved in manufacturing process must be trained.
 The unnecessary inventory and over stocking of the raw materials can lead to quality
issues if not used within time frame. It can lead to wastage of resources and investment.
Thus, Morgan Ltd must develop proper plan to store only sufficient amount of the
material.
 The reduction in production cycle can improve the productivity. The organisation can
achieve this by using advanced technologies or work methodologies.
 It is also analysed that the slower and delayed response towards the market changes can
cause loss to the organisation. Thus, Morgan Ltd must develop a system which provide
quick response to the market changes and develops product according to the market
requirement before the needs of customers changes (Dubey and Singh, 2015).
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 The organisation must ensure that quality tests are performed at several check points so
that the defects can be identified at the earlier stages before converting them into final
defective products (Christopher, 2016). The feedbacks from consumers is also an effective way to implement lean approach. The
feedbacks will help organisation to develop only suitable products.
Agility:
The timely respond provided to the consumers is a critical factor which must be
employed by the Morgan Ltd. Through this approach company must use different tools, process
and technologies which quickly identify the needs of its consumers and changing market
behaviour so that quality and cost attributes can be adjusted for meeting these requirements
(Touboulic and Walker, 2015). One of the best tool for this is to conduct market research or
social media tools. Morgan Ltd can analyse the strategies followed by its competitors so that it
can evaluate the essential trends. With the agile approach organisation will also able to innovate
new products which can enhance its profitability. This approach can also make supply chain and
distribution network flexible so that the final service users can easily use the services of the
organisation (Cooper, 2016).
Triple bottom line
The SCM and logistic approaches of Morgan Ltd are also influenced by the economic,
social and sustainability factors. The interrelations with these factors can be analysed as follows:
Environmental:
For promoting the sustainability and to fulfil the corporate social responsibility Morgan
Ltd regularly innovate new products and techniques in its logistic process. Through these
approach organisation is aiming to use process which causes less harm to environment. The
organisation is producing cars which have higher fuel efficiency so that pollution can be reduced.
The significant changes in packaging and transportation mode has introduced significant changes
in cost benefits and sustainability (Pinto and et.al., 2018). For example the reusable packaging
and degradable packaging helps Morgan Ltd to meet the environmental concerns.
Economic:
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The economic factors directly affect the operational cost and expenses required to
manage the supply chain. The cost of raw material, human resources and technologies can vary
from one location to other. Thus, when products are supplied to end users these cost variations
affect the final price of goods delivered to the customers. Hence, before adopting any new
product development process these factors must be analysed and compared. The agility approach
is the best way to evaluate these factors.
Social:
The supply chain management of Morgan Ltd is also influenced by the social factors. The
end service users, suppliers and operational processes are part of social infrastructure which must
be followed. For instance when most of the societies are shifting towards sustainability if
company will not adopt these approaches then it is possible that people may not choose company
over other car manufacturers (Touboulic and Walker, 2015).
For achieving the long term business goals Morgan Ltd must analyse and bring these attributes
into consideration in its supply chain management.
Recommendations
For implementing successful SCM and other approaches of logistics it is recommended
that for enhancing the benefits Morgan Ltd must use Lean concept so that it will be able to use
its resources effectively. The efficient use of resources can reduce wastage which is beneficial
from both financial and environmental perspective. The cars manufactured by the organisation
includes excessive use of woods. Thus, the uncontrolled utilisation of this can create significant
impact on environment. This is also harmful for its sustainable goals and brand image of
responsible organisation.
It is also recommended to company that while implementing JIT approach the quality
must not be taken as a secondary attribute (Christopher, 2016). The customers are the key
elements in SCM and their key requirement is the quality products and services. Hence, in order
to complete the production on time or to save cost through efficient use of resources quality must
not be neglected.
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CONCLUSION
From the report it can be concluded that for assuring the success in manufacturing
industry it is vital for the companies to make their logistic and SCM very strong and efficient.
This can be achieved by improving the operational management through JIT approach, Lean and
agility methodology. It is also analysed from the report that for sustaining the competitive market
the new product development process must be an integral part of the operations. The process
helps business companies to create their unique position among other service providers in the
same industry. Thus, it can also be concluded that logistic improvements and effective SCM can
build long term customer relations which is beneficial for the business and hence it must be
planned and implemented with care.
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REFERENCES
Books and Journals
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Cooper, R.G., 2016. Agile–Stage-Gate Hybrids: The Next Stage for Product Development
Blending Agile and Stage-Gate methods can provide flexibility, speed, and improved
communication in new-product development. Research-Technology Management, 59(1),
pp.21-29.
Coyle, J.J., Langley, C.J., and et.al., 2016.Supply chain management: a logistics perspective.
Nelson Education.
Dubey, R. and Singh, T., 2015. Understanding complex relationship among JIT, lean behaviour,
TQM and their antecedents using interpretive structural modelling and fuzzy MICMAC
analysis. The TQM Journal, 27(1), pp.42-62.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014.Operations and supply chain
management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Luzzini, D., Amann, M., and et.al., 2015. The path of innovation: purchasing and supplier
involvement into new product development. Industrial Marketing Management, 47,
pp.109-120.
Pinto, J.L.Q., Matias, J.C.O., and et.al., 2018. Introduction to Lean and Just-in-Time
Manufacturing. In Just in Time Factory (pp. 1-4). Springer, Cham.
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.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Touboulic, A. and Walker, H., 2015. Theories in sustainable supply chain management: a
structured literature review.International Journal of Physical Distribution & Logistics
Management, 45(1/2), pp.16-42.
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Wahdiat, I.S., 2016. Analysis Of Lean Accounting, JIT And Balance Scorecard In The
Company's Lean Manufacturing.International Journal of Scientific & Technology
Research,5(2), pp.213-220.
Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.
Zhao, Y., Cavusgil, E. and Cavusgil, S.T., 2014. An investigation of the black-box supplier
integration in new product development. Journal of Business Research, 67(6), pp.1058-
1064.
Online
Just in Time (JIT) Production, 2018 [Online] Accessed through
<http://leanmanufacturingtools.org/just-in-time-jit-production/>
Supply Chain Processes in New Product Development, 2007 [Online] Accessed through
<http://www.kongandallan.com/en/us_pdf/SCPNPD0707U.pdf>
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