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ADVANCED WAREHOUSE SYSTEMS: INCREASING COMPETITIVENESS Introduction Advanced Warehouse Systems (AWS) are manufacturers of racking and storage systems...
ADVANCED WAREHOUSE SYSTEMS: INCREASING COMPETITIVENESSIntroductionAdvanced Warehouse Systems (AWS) are manufacturers of racking and storage systemsfor a range of industrial applications. Established in 1980, by a sales director andfinancial director from the then market leader, the company recognised the growthpotential of the logistics industry in relation to international supply and distribution andthe need for flexible-modular systems for warehousing requirements. The product rangeincludes bought-in items such as racking, shelving, and storage products, though the mainturnover comes from bespoke products, made at a manufacturing facility located in thenorth-east of England.This facility deals with special order projects, for applications in adverse environments(for example, chemical or bio-hazard) or where a high degree of automation is required(for example, mechanical picking operations).OperationsThe head office is located in central England, where the design, research anddevelopment, marketing, sales, finance and IT functions are housed. Each site isresponsible for its own purchasing and human resources.AWS provides turnkey (all inclusive) solutions directly to its customers. The turnkeysolutions are managed by regional project managers situated throughout the UK and2Europe. Alternatively, it supplies products to approved installation firms, which deal withsmaller contracts.The markets are predominantly UK and mainland Europe, with an increasing shifttowards Eastern Europe being noted due to increased industrialisation and consumeractivity. Transportation of the product is generally by road haulage and via ports whererequired.Information TechnologyAWS has introduced an intranet to share project information within the company. Thishas improved the transfer of data between the functions; but has it failed to deliver theexpected benefits of quality improvement (from better document control) or cost (fromimproved project planning). On-site data capture is shortly to be introduced which willmean time from site survey to design completion will be further reduced, if correctlyoperated.The Business EnvironmentCompetition has increased in the budget sector of the market due to accessibility andimproved quality of Far East sub-contract manufacturers. Additionally, margins havebeen squeezed due to the rising price of raw materials and the rising costs of paintfinishing due to environmental control pressures.With increased outsourcing of warehousing and distribution there has been a rise inspecialist logistics companies, which are now gaining buyer power due to their increasedsize.The Objectives of the BusinessAWS has identified three key objectives for the next three to five years:• development of the mainland European presence and the establishment of a permanentoperations office in Germany• a reduction in costs of 2.5% year-on-year to protect margins• expansion of the bespoke services provision, where differentiation by technical ability islikely to protect margins3Supply Chain ConcernsAt a meeting of the board of directors the managing director expressed the followingconcerns for AWS:1. Regulatory requirements of the industry are more demanding. There is moreemphasis on health and safety, and the financial implications of employingsub-contracted labour. Differential legislative practices across Europe areproving difficult to manage with regard to these factors.2. The current manufacturing sites are operating close to capacity.3. Contracts have started late due to delays in distribution of the product; thesedelays have been experienced due to incidents of industrial action at portsand increased customs’ controls.4. Supply disruptions to certain raw materials have disturbed productionschedules raising a requirement for overtime working and associatedadditional cost.5. The transport fleet costs of operation are steadily rising due to fuel, wage,maintenance, licensing and insurance costs.6. The diversity of projects being undertaken (from a technical perspective) hasincreased the supply base substantially.The managing director has asked the functional directors of the organisation to reportback on aspects of the above with their recommendations on how to address.
Discuss any identifiable key performance indicators in the above case and explain
how they can be applied to improve organizational performance (25 marks)
