Business Operations in Your Organization: A Systems View
For this paper the writer has to pay attention to details and use the template that is provided. The paper contains three sections and the writer must clearly respond to all the three sections. The writer will have to chose a company to use for this paper. APA 6th edition will be require for this paper and the writer must properly format the paper. Another very important aspect is that the writer must read carefully the entire requirement before attempting the responds so as to properly understand the requirements of the assignment. Use subheadings as indicated in the template and also harmoniously link all sections together. As mentioned earlier, the writer must use the provided template to complete this assignment.
Business Operations in Your Organization: A Systems View
For this paper, you will develop a systems perspective of business operations in your organization, or the organization you have chosen to use as an appropriate subject for analysis, as a whole.
Your task is to show how the business operations in your organization, or the organization you have chosen as an exemplar, can be brought into harmony, generating the smooth flow of information and materials throughout the value network for the benefit of customers and the competitive success of the organization. A key element of the Praxis Paper is the identification and framing of an organizational problem that relates to the course topics such as
– Inventory, Transportation, and Warehousing.
– Trends in Supply Management
– Developing Market Specific Supply Chain Strategies
– Outsourcing and the Extended Organization
– Innovation and Change.
Your research should lead you to identify possible solutions to the problem(s) you identify. You will apply knowledge gained in the course in order to present advantages and disadvantages of various approaches to the problem(s) with the goal of generating the smooth flow of information and materials throughout the value network in order to increase the organization’s competitive success.
SECTION A of the paper
Focus on discussing the importance of effective logistics management in smoothing the flow of materials, reducing inventory costs and enabling responsiveness throughout the supply chain.
You will complete an analysis of the outsourcing of capabilities to achieve optimal coordination of inter-functional operational processes and inter-organizational collaboration across the whole value chain and consider the need for new kinds of relationships with suppliers.
You will conclude the paper by developing and presenting a strategy for implementing change in the organization with the objective of bringing about a transformation that will secure competitive advantage through improved performance, coordination, and innovation.
This systems perspective will allow you to formulate a strategy for the management of operational issues relevant to your chosen organization such as demand, supply, production, inventory, and logistics with a view to assessing how processes can be managed to bring about integration, coordination, and harmonization throughout the supply chain.
The Praxis Paper, will comprise 8 pages in APA format. One to three diagrams and presentation slides may be included, but they will be additional to the required length of the paper. You are required to include research from at least two first-person interviews and at least two peer-reviewed practitioner or scholarly journals ( not more than 5 years old ) in addition to your resources. Please remember to include the doi is all cited materials.
• Wallin, C., Rungtusanatham, M. J., & Rabinovich, E. (2006). What is the “right” inventory management approach for a purchased item? International Journal of Operations & Production Management, 26(1/2). Retrieved from ABI/INFORM Global database.
This article explores four basic approaches to the problem of inventory management and shows their application to different circumstances.
• Pokharel, S. (2005). Perception on information and communication technology perspectives in logistics: A study of transportation and warehouses sectors in Singapore. Journal of Enterprise Information Management, 18(1/2). Retrieved from ABI/INFORM Global database.
This survey analyzes perceptions of logistics companies in Singapore concerning the benefits of ICT applications for their industry.
• Varila, M., Seppänen, M., & Suomala, P. (2007). Detailed cost modelling: A case study in warehouse logistics. International Journal of Physical Distribution & Logistics Management, 37(3). Retrieved from ABI/INFORM Global database.
This study considers the various drivers for assigning activity costs to products in warehouse logistics and concludes that the accuracy of accounting can be significantly increased by measuring the actual duration of transactions.
• Timme, S. G. (2003). The real cost of holding inventory. Supply Chain Management Review: Top 50 PLs, 7(4), 30-37. Retrieved from ABI/INFORM Global database.
This article examines the total costs involved with holding inventory. The author also presents a solution to valuing inventory and how it can lead to better management decisions.
• Phillips, W., Lamming, R., Bessant, J., & Noke, H. (2006). Discontinuous innovation and supply relationships: Strategic dalliances. R&D Management, 36(4). Retrieved from Business Source Premier database.
This article explores the need for supply relationships to generate, support, and respond to discontinuous innovation.
• Simpson, D. F., & Power, D. J. (2005). Use the supply relationship to develop lean and green suppliers. Supply Chain Management, 10(1). Retrieved from ABI/INFORM Global database.
This doctoral research paper presents a conceptual framework for investigating the relationship between a supplier firm’s level of environmental management and the structure of the customer-supplier manufacturing relationship.
Christopher, M., & Towill, D. R. (2002). Developing market specific supply chain strategies. International Journal of Logistics Management, 13(1). Retrieved from ABI/INFORM Global database.
• Trent, R. & Monczka, R. (1998). Purchasing and supply management: Trends and changes throughout the 1990s. Journal of Supply Chain Management, 34(4), 2-12. Retrieved from ABI/INFORM Database.
This article details the real and projected changes and trends that have affected and will continue to affect purchasing and sourcing professionals.
Harland, C. M., Lamming, R. C., & Cousins, P. D. (1999). Developing the concept of supply strategy. International Journal of Operations & Production Management, 19(7), 650-674. Retrieved from ABI/INFORM Global database.
This article provides experienced lean practitioners with information to expand their scope in order to better address multiple-tiered value streams.
• Phillips, W., Noke, H., Bessant, J., & Lamming, R. (2006). Beyond the steady state: Managing discontinuous product and process innovation. International Journal of Innovation Management, 10(2). Retrieved from Business Source Premier database.
This article argues that in a world of rapid change and technological revolution companies must deal proactively with the challenge of discontinuity.
• Kontoghiorghes, C., Awbre, S. M., & Feurig, P. L. (2005). Examining the relationship between learning organization characteristics and change adaptation, innovation, and organizational performance. Human Resource Development Quarterly, 16(2). Retrieved from ABI/INFORM Global database.
This article suggests that the structural, cultural, and information systems of a learning organization determines its success with adaptation to change, quick product or service introduction, and bottom-line organizational performance.
Organizational change that produces results: The linkage approach. Academy of Management Executive, 18(3) by Goodman, P. S., & Rousseau, D. M. Copyright 2004 by ACADEMY OF MANAGEMENT (NY). Reprinted by permission of THE ACADEMY via the Copyright Clearance Center.
Business Operations in Your Organization: A Systems View
Nowadays, the fiscal environment is typified by rising costs of raw materials, high inflation risk, and even strong volatility. These factors have an impact on the strategies of firms that operate in the very competitive manufacturing and transport logistics sectors. This paper is focused on Avon Corporation; the scope of logistics spans the entire company. This paper has 3 sections. Section A provides a discussion of the significance of effective logistics management in smoothing the flow of materials, lowering the costs of inventory, and facilitating responsiveness in the supply chain. Section B covers an analysis of the outsourcing of capabilities to realize optimal coordination of inter-functional operational processes as well as inter-organizational collaboration across the entire value chain. In Section C, a strategy is developed and presented for executing change within Avon Corporation in order to bring a transformation that would secure competitive advantage through improved performance, coordination, as well as innovation.
Avon Corporation is the selected organization. Avon is a major global beauty corporation and one of the biggest direct sellers worldwide and makes almost $10 billion in yearly revenue (Avon, 2015). Avon’s product line consists of home products, fashion products, as well as beauty products. The company has several famous brand names including Advance Techniques, ANEW, mark, Skin-So-Soft, Avon Color, and Avon Naturals (Avon, 2015). Avon is an international corporation which is entrenched in tradition with a vision of being a corporation which best knows and meets the service, product, as well as self-fulfillment requirements of ladies all over the world (Avon, 2015).
Section A: Importance of effective logistics management
Logistics management basically entails controlling and supervising the movement of goods. Logistics management is understood as that component of supply chain management which is involved with planning, implementing, and controlling the effective, efficient reverse and forward flow and storage of services and goods between the points of origin and consumption so as to satisfy the wants and requirements of customers (Christopher, 2008). The subject of logistics management involves many dissimilar factors. Effective logistics management is vital in smoothing the flow of materials, reducing costs of inventory, and enabling responsiveness throughout the supply chain.
The scope of logistics spans the whole company. Through logistics management, customers are satisfied through the coordination of material as well as information flow (Aitken, 2008). Some of the factors that have to be taken into account in logistics management include materials handling, transportation management, order fulfillment, as well as inventory and freight management (Christopher, 2008). Effective logistics management operations have to yield four main results: improve customer service; decrease the overall costs of transportation; improve the operating cost structure; and raise revenue. Effective management of business logistics is of great importance in meeting customer expectations and keeping costs low. According to Wallin, Rungtusanatham and Rabinovich (2006), effective logistics management offers a vital opportunity for companies to achieve cost savings since a lot of organizations mention transportation and logistics as key generators of production-related costs.
The present fiscal environment is typified by mounting costs of raw materials, high inflation risk, and strong volatility. These factors have a direct impact on the corporate strategies of business organizations that operate in this very competitive sector. This implies that efficient logistics becomes a key element of ensuring the competitiveness of these companies through: (i) reducing the levels of stock to achieve more efficiency. (ii) Effective coordination all through the supply chain: in essence, communication between the sales department and procurement department is vital to pass on all the increases in production and purchase costs. (iii) Guarantee of tailor-made, quick, and quality services in order to attain competitive advantage over the competitors (Varila, Seppänen & Suomala, 2007).
Effective logistics management entails managing the flow of materials including the movement of raw materials from various suppliers of the company, in-process within the company, as well as movement of finished products to consumers. One way in which costs of inventory are reduced is through quickening the flow of the various raw-materials used, work-in-progress, as well as finished goods (Christopher, 2008). Improving the effectiveness of logistics management encompasses 5 key pillars. These are information; logistical network; materials handling, warehousing, and packaging; transport; and inventory. Logistical network: this comprises various facilities including retail stores, warehouse, manufacturing, and dealers. The bigger the geographical stretch, the more intricate an organization’s logistical network will be (Varila, Seppänen & Suomala, 2007). For Avon Corporation, superior logistical network that is based upon methodical analysis and determination of the number of facilities, their exact work allocations, and geographical position could be an important competitive tool.
Transport: dependability, speed, and cost are vital determinants of the effectiveness. Given that time is crucial, the quality of transport performance is a critical factor. In addition, since cost and speed are interconnected, it is important to carefully select the transport since this is vital for optimal cost. For instance, quicker transport is costly but reduces inventories and improves customer service (Christopher, 2008). Information: correct prediction and proper order management are vital for the systematic inventory management Just-In-Time and Contingency Replenishment as well as quick response to the client (Simpson & Power, 2005). As such, timely information is essential to logistical performance. At Avon, deficiencies in information are removed by using email, faxes, phones, and Enterprise Resource Planning Software. Inventory management: a proper inventory management system has to be deployed in order to attain the desired level of customer service with least inventory investment. Products should be delivered timely and fast (Aitken, 2008). Avon should be committed to consistent and rapid delivery to gain customer service advantage. Materials handling, warehousing, and packaging: warehouses should be located in a site where the company can be nearer to its main clientele. Materials handling in the warehouse must be planned to ensure quick and safe receiving, movement, storage, as well as packaging of client’s requirements (Christopher, 2008).
Section B: Analysis of the outsourcing of capabilities
For Avon Corporation, the outsourcing of capabilities can help to attain optimal coordination of inter-functional operational processes and inter-organizational collaboration across the entire value chain. By outsourcing logistics for instance, the transportation logistics company can act as Avon’s logistics department and handle the following functions: procurement – the transportation logistics firm can engage in carrier rate negotiations as well as selection (Christopher, 2008). Execution: the logistics firm will handle Avon’s daily movement of cargo, including consignment tender, performance management, exception resolution, and service monitoring; planning: the transport logistics firm will handle Avon’s strategic network evaluation and optimization; and administration – the transport logistics company will also handle claims management, contract administration, invoicing, reporting, as well as freight bill audit and payment. A third party logistics company can provide a wide range of modes for the manufacturer – Avon Corporation – ranging from ocean and air to rail and over-the-road intermodal (Landstar, 2015). Through this kind of outsourcing, Avon Corporation can easily attain optimal coordination of inter-functional operational processes and inter-organizational collaboration across the entire value chain.
According to Aitken (2008), outsourcing of capabilities could enable workforce reduction, operational flexibility, cost reduction, reduced cycle times, freedom from restraining labor environments, expanded geographical coverage, improved responsiveness, as well as logistics management and technology issues. Outsourcing of capabilities is basically an important measure for cutting costs. Nonetheless, by outsourcing capabilities, Avon can gain capabilities it currently lacks in-house or it can strengthen the capabilities it currently has, for everything from introducing new women’s products into the marketplace faster to developing top-notch talent and enabling business model innovation (Varila, Seppänen & Suomala, 2007).
Outsourcing of capabilities helps in improving the competitive position of an organization since it ensures that functions and processes are obtained at the right cost and from the right source. Business organizations can leverage outsourcing for more processes and attain various objectives such as improved quality, costs, or capabilities (Landstar, 2015). Through the strategic use of outsourcing of capabilities, Avon can attain a long-term competitive advantage that may not only improve quality and lower costs and, but also drive innovation, improve productivity, open-up new markets for its women products, provide new revenue sources, and deliver a sustainable cost advantage. Equally important, outsourcing of capabilities will help Avon Corporation in optimizing the performance of its several manufacturing facilities. For a manufacturer such as Avon Corporation, the following outsourcing solutions can considerably help it to attain optimal coordination of inter-functional operational processes and inter-organizational collaboration across the entire value chain: supply chain planning and execution, after sales and support, marketing and order management, new product development, and operations (Aitken, 2008).
Business organizations generally profit when they are focused on their core business and the area of their best proficiency, for instance manufacturing of goods, importing, and/or sale of their merchandise. A small number of business organizations are actually proficient in distribution and warehousing as Third Party Logistics companies or 3PL are (Simpson & Power, 2005). Manufacturers like Avon Corporation who create a strong relationship with reliable Third Party Logistics companies are able to lower their transportation costs, simplify their supply chain management, and improve their capability of delivering products to their clients when required.
As companies seek increased competitiveness as well as success in the current international marketplace, many of them are in fact pursuing the tendency of increased outsourcing of capabilities and have seen the necessity for new types of relationships with suppliers (Landstar, 2015). Establishing new relationships with cheaper and better suppliers and suppliers who provide high quality materials will allow Avon to save costs of materials and develop products that are actually of higher quality. Companies establish their outsourcing relationship needs and their needs for new suppliers, and then find and select the right suppliers and vendors. Outsourcing of capabilities is essentially a management tool which alters a company’s organizational structure and a business transformation process which could provide an important opportunity for improved performance (Christopher, 2008).
Section C: Strategy for implementing change in the organization – Implement lean logistics
The strategy for implementing change in Avon Corporation to bring about a transformation that would secure competitive advantage by means of improved performance, coordination, as well as innovation entails adopting the lean approach in logistics and supply chain. Lean logistics helps in identifying and eliminating the wasteful activities in the supply chain so as to increase speed and flow of materials. Lean logistics, as Simpson and Power (2005) reported, is a method of driving the costs down considerably while allowing the company to increase its output as well as sales.
The rationale of adopting a lean supply chain is basically to meet the 4Rs: inventory which is in fact: the right merchandise, at the right place, in the right condition, and lastly in the right quantity. The activities which support the aforementioned 4Rs add value and this is applicable both to the movement of information and product. On the other hand, activities which add no value are considered as waste. Lean is the way that an appropriately designed and operated supply chain has to function (Simpson & Power, 2005). A lean supply chain is simplified to decrease and eradicate waste or the non-value added activities to the entire supply chain flow and also to the products that move in the supply chain. This in turn smoothes the flow of materials, reduces inventory costs, and facilitates responsiveness throughout the supply the chain. Wastes could be measured in inventory, time, and needless costs. Generally, value added activities contribute to efficiently bringing the finished product to the client. The supply chain and the inventory therein must flow; any activities that stop the flow must create value (Simpson & Power, 2005).
Landstar (2015) pointed out that business organizations are in a continuous cycle which drives them to improve their business to maintain their competitive advantage. The bottom line is that every company wants to reduce its costs, reduce time consumption, and reduce inventory. Although there are several techniques of achieving this, lean logistics is one method which has demonstrated over the years to significantly improve a company’s efficiency (Landstar, 2015). For business organizations such as Avon Corporation that work to decrease costs whilst improving their performance, the lean approach is suitable to them. By applying the lean approach, Avon can achieve efficient and smooth flow of materials throughout the supply chain.
Lean logistics will provides Avon Corporation with the capacity to decrease inventory carrying costs, free up cash, and get rid of substantial indirect costs that are associated with supplies, materials, as well as assets logistics. Lean logistics is of major importance in reducing inventory costs (Aitken, 2008). It is notable that inventory service costs, storage costs, capital costs, as well as risk costs all serve to reduce Avon’s profitability. Through lean logistics, the company can reduce all these costs. In essence, lean logistics results in greater efficiencies given that transportation efficiencies allow an increase in cargos managed and cargo density. There is also reduced inventory, improved lead-time dependability, and increased turns (Aitken, 2008).
In lean logistics approach, the main factors include the following: defining the focus areas and core competencies in logistics; absolute integration of the supply chain levels; and optimizing the logistics process interfaces and integration of logistics processes. Other factors are system approach; continuous application of the lean system to the back-to-back logistics chain; as well as continuous standardization and restructuring of the IT structures basing upon the lean/system approach (Aitken, 2008). For Avon Corporation, the benefits will include reduced costs of supply chain and making supply chain more flexible; increased process stability and transparency; as well as increased flexibility and responsiveness of the company’s supply chain. By being efficient, Avon Corporation will respond to the market requirements adequately (O’Reilly, 2010).
In conclusion, effective logistics management operations improve customer service, decrease the overall costs of transportation, improve the operating cost structure, and improve the company’s revenue. Effective management of business logistics is of great importance in reducing the levels of stock to achieve more efficiency and improve the flow of materials. Outsourcing of capabilities could aid in labor force reduction, operational flexibility, cost reduction, reduced cycle times, expanded geographical coverage, and improved responsiveness. Avon Corporation can adopt lean logistics to gain competitive advantage.
Aitken, J., (2008). Supply Chain Integration within the Context of a Supplier Association”, Cranfield University PHD Thesis. Cited in Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London.
Avon. (2015). Avon: The Company for Women. Retrieved from http://www.avoncompany.com/aboutavon/index.html
Christopher, M., (2008), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London
Landstar. (2015). Outsourced Logistics. Retrieved from http://www.landstar.com/Solutions/Outsourced-Logistics
O’Reilly, J. (2010). Managing Inventory: From Fat to Lean. Madison, WI: Aberdeen Group.
Simpson, D. F., & Power, D. J. (2005). Use the supply relationship to develop lean and green suppliers. Supply Chain Management, 10(1). Retrieved from ABI/INFORM Global database.
Varila, M., Seppänen, M., & Suomala, P. (2007). Detailed cost modelling: A case study in warehouse logistics. International Journal of Physical Distribution & Logistics Management, 37(3). Retrieved from ABI/INFORM Global database.
Wallin, C., Rungtusanatham, M. J., & Rabinovich, E. (2006). What is the “right” inventory management approach for a purchased item? International Journal of Operations & Production Management, 26(1/2). Retrieved from ABI/INFORM Global database.
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