Logistics Business

INTRODUCTION TO LOGISTICS/SUPPLY CHAIN MANAGEMENT

Marion Black

Unit 3 Individual Project

Metrics to Assess Success

07/26/2017

1. INTRODUCTION

Shipping costs are one of the expenses of transporting goods and from one place to another especially if the goods make up a high freight. Heavy burdens take up most space and weight in a ship thus this is referred as a heavy or high freight. High freights cost a lot of transport costs and charges (Ballou, 2012).

On the other hand, less freight attracts fewer freight rates thus low transportation costs. In this case study, a problem emerges in that the organization in question is facing serious problems in the transportation costs of the goods it produces. The organization deals with production and distribution of small and medium sized coolers and which then sell them to customers who live in two places the east and the west. The production and distribution department is located on the east coast hence the people in the east coast buys the goods within a small period of time. On the other hand, people on the west coast have a challenge of paying high freight charges as because they are far away in terms of geographical location on (Ballou, 2012).

As a result the products which are produced on the east coast have to be transported by the ship to the west coast for the people to buy. Due to the low density and bigger size of the products they attract more freights rates thus the increase in transport costs makes the company increase more price on the products so to the obtain the compensation of increase in the freight charges. This is, therefore, a great disadvantage that makes the people on the western coast to develop a negative attitude in buying the products of the company.

In summary, the problems affecting the sales and purchase of the products of this company are highlighted below:

• There is more transport cost charged for transporting the products to the western coast

• The high transport cost result to increase in charges of freight rates

• The people of the western coast, therefore, have to pay more transportation costs

• The people in the western coast develop a negative attitude towards the purchase and distribution of the products from the east coast. This result to low demand hence low sales.

1. MANUFACTURING AND OPERATION FLOWS

The goods are produced and distributed from the east coast toward the west coast. This means that the production and distribution department is located here. The raw material for producing the goods and services are located in this area. The transport and distribution department is actively involved in the purchase and transportation of the raw materials to the organization premises. From the here trucks are unloaded, and the raw material is taken to the store where they will be retrieved for processing and manufacturing process (Ballou, 2012).

After the goods have been manufactured into finished products, they are then packed and distributed to the various places in the society of the east coast. This implies that the goods reach the people in the east coast at the fastest time possible hence the retailers are able to retrieve the coolers on time for resale to the final consumers. This minimizes time usage and also increases the time needed to do business (Jacobs & Chase, 2013).

However, on the other hand, the finished goods are packed and loaded into trucks to be transported to the coast where they are unloaded and packed on the ship. The ship then has to travel to the other part of the sea to the west coast to transport the coolers to the retailers in the western coast. The ship moves slowly thus this takes to take a lot of time before they reach the western coast. From there they unloaded and repacked to the trucks for transportation to the retailers ate various places where they are then sold to the final consumers. By the time the goods have reached the final consumers on the western coast, the retailers in the eastern coast have already finished selling and have gone to bring in more goods for sale. This increases more profit for the easterners while the westerners are disadvantaged. Customers in the east coast have a constant and regular supply of the coolers while those on the western side are not. This causes them to have a negative attitude, and sometimes even the quit the purchase of the cooler by substitution of the products with other goods (Ballou, 2012).

1. METRICS TO ASSESS SUCCESS

Customer satisfaction- the customers in the east coast are more satisfied with the purchase of the cooler from the company production unit as compared to those on the western side. This is due consistency in supply and also the cost of purchase (Jacobs & Chase, 2013).

Productivity – this is another great development of growth of the company on the east coast because the production and distribution plant is very close to the customers hence goods are readily available for purchase and also the transport cost is cheaper hence more economical.

Cash flow- there is high demand and sales of goods within the east coast as compared to the west coast which has low demand. Therefore the west coast is making loss thus should be closed.

Gross margin- sales and profit are more on the east coast than the west coast area.

References

Ballou, R. H. (2012). Business logistics/supply chain management: planning, organizing, and controlling the supply chain. Pearson Education India.

Waters, D. (2016). Supply chain management: an introduction to logistics. Palgrave Macmillan.

Jacobs, R., & Chase, R. (2013). Operations and supply chain management. McGraw-Hill Higher Education.