Operational and Supply Chain Management: Procurement and Warehousing

This report provides an in-depth analysis of operational activities and supply chain processes, with a specific focus on procurement and warehousing. It highlights the importance of supply chain management for operational efficiency, emphasizing the roles of procurement in acquiring goods and services and warehousing in storing raw materials and finished goods. The report explores lean management principles, tools, and frameworks applicable to procurement and warehousing, while also addressing challenges and issues related to their implementation. It identifies the impact of the 5S lean process and Kanban process on procurement and warehousing, and recommends strategies to overcome these issues, such as emphasizing management principles and frameworks. The report concludes by emphasizing the need for manufacturing firms to identify key issues and select alternative ways to enhance operational effectiveness and improve the supply chain process.

Managing Operations And
Supply Chain
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EXECUTIVE SUMMARY
In the present study the learning focuses on various factors that relates with operational
activities and supply chain process. It has been spotted that operation management deals with
overseeing, designing, and controlling the production process. On the other side, it can be said
that supply chain management is the main concept of operation management whose major aim is
to oversight materials, information and finances in the whole process of supply products from
supplier of raw material to the end consumers. Key purpose of current study was to understand
the concept and role of procurement and warehousing activities within the supply chain process.
It has been spotted in the report that supply chain management is described as an
essential element to operational efficiency. Warehousing plays a vital role in the process of
supply chain process. This is a process of keeping raw material and finished goods into storage
and to attain efficiency and effectiveness in supply chains however, suppliers face number of
challenges in warehousing.
Other than this, it has also been identified that there are number of issues which impacts
the application of procurement and warehousing in the supply chain process. It has also been
spotted that the 5s lean process also faces issues in effective accomplishment of procurement
process due to misunderstanding about concept among members. In addition to this, it has been
noticed that the Kanban process is not appropriate to eliminate variability within process which
also impacts overall warehousing process in negative manner. In this addition, it has also been
spotted that the business firm can use different lean principle tools for procurement and
warehousing process. It has been recommended that by emphasizing on management principles
and frameworks the management of business firm can overcome issues and lead business to
impressive success. It is necessary for the manufacturing firms to identify key reason behind
issues and then select alternative ways that can overcome issues. It boosts the operational
effectiveness and improves supply chain process.
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TABLE OF CONTENTS
1. INTRODUCTION.......................................................................................................................4
2. LITERATURE REVIEW............................................................................................................4
2.1 Procurement...........................................................................................................................4
2.1.1 Roles of procurement in supply chains...............................................................................4
2.1.2. Procurement process................................................................................................5
2.1.3.Profitability analysis.................................................................................................5
2.2. Warehousing.........................................................................................................................5
2.2.1. Roles of Warehousing in supply chains...................................................................5
2.2.2. Warehousing process...............................................................................................6
2.2.3. Profitability analysis................................................................................................6
3. Lean management....................................................................................................................6
3.1 Lean principle for procurement...................................................................................6
3.2 Tools and frameworks.................................................................................................6
3.3 Lean principles for procurement #1.............................................................................8
3.4 Lean principles for procurement #2.............................................................................8
3.5 Lean principle for warehousing...................................................................................8
3.6 Lean principles for warehousing #1............................................................................9
3.7 Lean principles for warehousing #1............................................................................9
4. PRACTICAL APPLICATION....................................................................................................9
4.1 Lean management tool issues for procurement #1................................................................9
4.2 Lean management tool issues for procurement #2..............................................................10
4.3 Lean management tool issues for warehousing #1..............................................................10
4.4 Lean management tool issues for warehousing #2..............................................................11
5. CONCLUSION..........................................................................................................................11
5.1 Procurement tool implementation difficulty #1...................................................................11
5.2 Procurement tool implementation difficulty #2...................................................................11
5.3 Warehousing tool implementation difficulty #1..................................................................12
5.4 Warehousing tool implementation difficulty #2..................................................................12
REFERENCES..............................................................................................................................13
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1. INTRODUCTION
Operation management deals with overseeing, designing, and controlling the production
process. Supply chain management (SCM) is a main concept of operation management whose
major aim is to oversight materials, information, and finances in the whole process of supply
products from supplier of raw material to the end consumers. It is important concept that helps
business enterprise in attaining operational efficiency (Vitoriano, 2011). The present report is
going to discuss about specific lean management principles and roles of procurement and
warehousing in supply chains. Furthermore, this report discusses about supply chain
improvements and the application of one or more of the lean management principles with
relevant real life examples (Overstreet, 2011). The major improvements into procurement and
warehousing processes through lean management principles are going to be presented in the
above report. At last, the potential difficulties or challenges are pointed out when implementing
the improvements into lean management in the organizations.
2. LITERATURE REVIEW
2.1 Procurement
2.1.1 Roles of procurement in supply chains
From the view point of Mohan (2013) Supply chain management is described to be an
essential element to operational efficiency. For number of organizations, supply chain
management is known to be a tool which impact customer service as by making use of improved
supply chain management the organizations can provide effective services in the form of
providing right product to the customers at the right time and at right prices (Mohan, 2013).
According to Zhen-shan (2011) there are two elements of supply chain management such as
Warehousing and procurement. In the support of above statement, Langat (2013) has stated that
with focusing on procurement the business firm can attain better perspective towards diverse
factors which can facilitate in overcoming various current and future challenges. These kinds of
improvements are also beneficial for improving supply chain management. Moreover, it is
evident that the business organizations can have continuous improvement in global factors by
focusing on procurement practice (Langat, 2013).
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2.1.2. Procurement process
As per the statement of (Ji, 2013), procurement is process in which effective buying of
goods, services can be accomplished. In other aspect, it can be said that procurement is
considered as a favourable process that provides appropriate cost and effective quality of service
in desired time period. It is also used to have better promotion of fair work conditions and
minimizing the exposure to fraud and collusion. Duran (2013) has also stated that the purchasing
decisions can also be taken into account with an assistance of diverse factors such as delivery,
handing, marginal benefit and price fluctuations (Duran, 2013).
2.1.3.Profitability analysis
In respect to this, it has been spotted that the cost of procurement is high as it requires
effective installation of various equipment so investment ratio of company will also be increased.
In addition to this, it can be said that the increase in cost of procurement process will initially
increase the overall cost and decrease the profitability but after some time the results will be
vice-versa.
2.2. Warehousing
2.2.1. Roles of Warehousing in supply chains
Warehousing plays a vital role in the process of supply chain process. This is a process of
keeping raw material and finished goods into storage and to attain efficiency and effectiveness in
supply chains however, suppliers face number of challenges in warehousing. To the view point
of Zhen-shan (2011) manufacturers want to reduce the expenses of warehousing of products so
they can provide low cost products to customers. From the investigations of Langat (2013) It has
been identified that Supply Chain Management is used so as to attain sustainable competitive
advantage. With the help of such tools the production company manufacturing firm can
effectively manage their productions, warehouse, and stores, so that final product can be
distributed to the end user at the right quantities, to the right locations, and at the right time. The
proper supply chain management help business organization in overcoming problem of over
stocking and under stocking that is usually faced by company (Zhen-shan, 2011).
Ioan (2013) has stated that number of globalization issues or challenges can be improved
in context of reverse logistics, environmental sustainability, information technology and overall
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supply chain process. It also promotes the integration within supply chain process by
emphasizing on strategies, roles, and responsibilities that relates with the warehouses.
2.2.2. Warehousing process
According to McFarlan (2014), warehousing is considered as key section of supply chain
management and its key main is to improve control on various actions that relates with material
storing and supply. In this respect, it can be said that the warehousing also include various other
actions such as shipping, primarily aim, picking, etc. Wu (2015) has also stated that with an
assistance of warehousing process the proper monitoring of products can also be taken into
account. It involves the physical warehouse infrastructure, tracking systems, and communication
between product stations (Wu, 2015).
2.2.3. Profitability analysis
It has been spotted that the cost of warehousing decreases means the overall cost will also
reduce which will have direct positive impact on the operations and profit margin ratio of
business. Improved level of focus on warehousing and effective resource allocation is also
beneficial for reduction in cost and improvement in profit margin ratio of firm.
3. Lean management
3.1 Lean principle for procurement
As per the view of Hedman (2003), in order to have effective supply chain and better
procurement or warehousing operations the management of business firm can also focus on lean
principle of management. It is considered as a procedure that assist in improving business
efficiency as well as effectiveness. It also plays a key role in cut down of wastage so that
business can have impressive level of success. It is also beneficial for improvement in
procurement and warehousing approach (Sirgy, 2008). This process also consist of proper
evaluation of diverse factors within procurement process so that effective strategies can be
designed to improve the operational activities success ratio in context of procurement.
3.2 Tools and frameworks
As per the view of Ioan (2013), another fact is that distribution center (DC) can also
boost the operational and supply chain effectiveness. It provides an appropriate representation
among wide range of activities that can modernize warehouse practice. It also facilitates in
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meeting needs and orders of customer and provides better value added services for better
improvements (Ioan, 2013). Other than this, Ji (2013) has also contended that procurement is an
activity that plays a key role in acquisition and purchase of goods so that services can be
improved in a better way. Procurement process is considered as the most favorable activity that
provides enhanced level of goods and services by providing appropriate assistance to supply
chain process (Ji, 2013).
According to Gärtner (2011) the logistics activities also plays a key role in effective
development of supply chain process as it helps in managing diverse factors. With an improved
focus on logistics activities the balance between key components can be maintained so that
quality of product and services can be improved (Gärtner, 2011). As per the structured study it
can be said that there are various procurement and warehousing activities which can be taken
into account by focusing on management principles, tools, concepts and frameworks. In this
respect, management can focus on effective selection of communication tool so that message can
be conveyed in the proper way. It will build better relationship with diverse external sources
which is beneficial for improving supply chain process (Duran, 2013).
Other than this, proper selection of location and transportation is also one of critical
aspect for supply chain process. In the support of this, it can be said that management of Jaguar
is using latest technological tools to have better transportation. It facilitates the firm to deliver
final products in an appropriate time and improve effectiveness of supply chain process
(Bangsow, 2016). Number of policies and standards can also adopted by business organisation
to ensure about effective development of supply chain management (Borghesi, 2013).
As per the view of McFarlan (2014), management can motivate morale of its suppliers to
bring innovative resources and methods that can enhance effectiveness of supply chain
management (McFarlan, 2014). It is also necessary for management to focus on wide range of
factors that relates with management operations (Wu, 2015). For example, Tesco Plc focuses on
various operations in context of procurement and warehousing. Management of Tesco Plc
ensures that the manufacturing, transportation and distribution channel is properly maintained so
that business can improve supply chain management. Hedman (2003) has said that to manage
and operate warehouse environmental factors the approved product lines is required. In this
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respect, the management of Coca-Cola has customized its supply contract which provides
integrated delivery system as per customers’ needs.
3.3 Lean principles for procurement #1
Prasanta (2013) has also asserted that the key principles of lean 5s also plays a key role
in transformation of operational activities. In the support of this, it can be said that the lean 5s is
a methodology that relies on diverse collective operations in order to enhance overall
performance of organisation (Prasanta, 2013).
Moreover, Sirgy (2008) has also asserted that 5s are classified as sort, set in order, shine,
standardize and sustain. With an improved focus on these factors the management of business
firm can attain better opportunities in context of supply chain process. Warhurst (2005) has
contended that the sort means the management can have elimination of uncertain or unnecessary
factors from the procurement and warehousing process in order to have improvement in
effectiveness. Set in order means proper arrangement of factors can also boost the operational
process in context of supply chain. In the support of this, company must focus on proper
establishment of warehouses in context of temperature and cleanliness so that resources can be
stored in effective manner. Other than this, Warhurst (2005) has also critically said that number
of standards can set out in order to meet the goals and maintain the sustainability in context of
procurement and warehousing.
3.4 Lean principles for procurement #2
Other than this, Hedman (2003) has also said that the lean six sigma roadmap is also one
of significant method that can be used by the business organisations for effective management of
procurement activities. It is consisted of various key steps that can be classified as define,
measure, analyse, improve and control (Hedman, 2003). Prasanta (2013) has also stated that it is
necessary for every business organisation to focus on effective identification of diverse values so
that key factors can be maintained in proper manner. (Prasanta, 2013). Proper implementation
and monitoring is also essential so that procurement activities can be accomplished as per the
needs of organisation.
3.5 Lean principle for warehousing
As per the statement of Prasanta (2013), it is also necessary for the management of
organisation to create trust among all members and improve coordination so that supply chain
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process can have better developed. Borghesi (2013) has also contended that improvement in
warehousing activities has positive impact on supply chain process. Other than this, Prasanta
(2013) has also stated that the warehousing lean process can be classified as Kanban process and
lean management model. Moreover, it is also necessary for management to understand various
measures in appropriate manner so that effectiveness of warehousing process can be boosted in
most suitable manner.
3.6 Lean principles for warehousing #1
As per the statement of Sirgy (2008), it can be asserted that the Kanban process is also
one of significant aspect of lean principle that can boost the effectiveness of warehousing
activities. It has been spotted that the kanban is considered as a scheduling system that provides
effective control over logistical chain. Improved level of focus on logistic chain is also
advantageous for advancement in warehousing process (Sirgy, 2008). It is a system that is used
to improve and maintain a high level of production. It also focuses on effective allocation of
inventory resources so that product can be deliver in most suitable manner. In the support of this,
Warhurst (2005) has also contended that it also improves the replenishment cycle in order to
improve the visibility as it has direct positive impact on the suppliers as well as buyers. This
system was firstly implemented at Toyota in order to improve its warehousing process
(Warhurst, 2005).
3.7 Lean principles for warehousing #1
Moreover, Warhurst (2005) has also asserted that the business organisations can also
focus on lean management model in order to have improvement in warehousing process. In this
respect, it can be said that the management of business organisation can focus on key steps that
can amend the operational effectiveness of warehousing division (Warhurst, 2005). As per the
view of Tiwari (2013), the activities are classified as methods to overcome issue, analysis,
alternative ways implementation, recycling activity and evaluation. It is all about redesigning of
activities in order to boost the effectiveness of warehousing division (Tiwari, 2013).
4. PRACTICAL APPLICATION
4.1 Lean management tool issues for procurement #1
5s Model
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In the support of 5s lean process, it has been identified that worker frustration is one of
key issue and it impacts overall procurement process of business organisation. Moreover, it has
also been spotted that the 5s lean process also faces issues in effective accomplishment of
procurement process due to misunderstanding about concept among members. It means it is
necessary for business firm to ensure that all members are having enhanced level of information
regarding lean principles (Sehgal, 2009). It has also been noticed that the lack of management
support is also one of critical issue for business firm as lack participation of management
influences the effectiveness of procurement process and 5s tool.
4.2 Lean management tool issues for procurement #2
Six Sigma
As per the structured study, it has been noticed that the six sigma process is mostly
implemented as per the consideration of all aspects that relates with production and planning
process. In other aspect, it can be said that the production is one of critical elements of
procurement process. Some time improper information and inappropriate application of six
sigma creates rigidity and bureaucracy within procurement process (Storey, 2005). It is also one
of critical task for management to have proper measurement of six sigma standards within
organisation. For example, improper measurement of risk may defect the accomplishment of six
sigma standards which will impact negatively on organisation profitability.
4.3 Lean management tool issues for warehousing #1
Kanban process
In respect to this, it can be said that Kanban process is one of less effective process that
share resourceful situations. In addition to this, it has also been spotted that the Kanban process
does not provide high ratio of stability in warehousing process so it may influences operational
activities in negative manner. Moreover, it doesn't eliminate variability within process which also
impacts overall warehousing process in negative manner (Sehgal, 2009). Other than this, it has
also been noticed that the breakdown in Kanban process can also result negatively on the
warehousing procedure. This process also requires long time of implementation which can also
increase the overall cost of operations.
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4.4 Lean management tool issues for warehousing #2
Waste minimization or lean management model
In respect to waste minimization or lean management model, it can be said that the
inaccuracy remains one of the biggest problems which are faced by all the warehouses. It has
also been spotted that mostly manufacturing organisations does not meet visibility to inventory
which may lead business to some critical problems (Petersen, 2011). For example, Jaguar
warehouses are not located near manufacturing plant which will increase the cost of
transportation and impact the supply chain process in a negative manner. It may also possible
that delivery time of goods or resources may also increase which can influence the operational
activities. Further, it can be said that the space utilization and warehouse layout is also one of the
critical issue for business organisation. If business organisation is not having proper space to
store resources and final goods then it may be possible that its supply chain process may get
affected in a diverse manner (Hedman, 2003). If members are not having proper information
regarding waste minimization model then it will influence warehousing process in negative
manner.
5. CONCLUSION
As per the above study, it can be concluded that managing operation and maintaining
balance in supply chain process is one of the critical aspects for every business organisation.
5.1 Procurement tool implementation difficulty #1
In this context, it has been spotted that the lack of management support is one of critical
issue for business firm as lack participation of management influences the effectiveness of
procurement process and 5s tool.
5.2 Procurement tool implementation difficulty #2
In this support, it has been spotted that the implementation of six sigma can face issues
due to improper measurement of risk may defect the accomplishment of six sigma standards
which will impact negatively on organisation profitability.
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5.3 Warehousing tool implementation difficulty #1
In addition to this, it has also been spotted that the Kanban process does not provide high
ratio of stability in warehousing process so it may influences operational activities in negative
manner. It means company needs to redesign whole process as per new needs and requirements.
5.4 Warehousing tool implementation difficulty #2
Further, it can be said that the space utilization and warehouse layout is also one of the
critical issue for business organisation. If organisation will not have effective focus on
warehousing structure then implementation process will also get influenced in negative manner.
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