Task:To help address some of the procurement and supply chain issues facing AusCotton, you have recently been hired as the new Senior Vice President of Supply Chain. You have taken time so far to visit the company’s global facilities and to become aware of the situation, problems, and concerns that are faced by the company. You are asked to address the following questions:
This laburnum group supply chain management introduces the Laburnum group of companies and its component companies Sapphire Energy and AusCotton which are the power and textile based companies respectively. It provides an evaluation of the current ordering system in Sapphire Energy and also provides steps to improve them. This laburnum group supply chain management also discusses the major global issues that the company is facing and offers suitable strategies to address them. Additionally, this laburnum group supply chain management also examines the strategic sourcing processes that would be ideal to the AusCotton and also asserts steps to mitigate the problem of counterfeiting.
Laburnum group management report
The current ordering system of Sapphire Energy within Laburnum group is quite capable. The cost of cable for installation in the Eastern Power is 1.35 dollars per metre. The Eastern Power Company partakes one-twelfth of its annual needs each month in order to reduce the lead time by assuring a regular spot in the supplier production schedule for Sapphire Energy. The agreement between Sapphire and Eastern will enable the company to save the lead time by eleven weeks (Fayezi and Zomorrodi, 2016). This reduction in the lead time and discounts not being given will generate indirect revenue for the company guaranteeing customer satisfaction. The cost of each cable shipment associated with ordering of the product is 50 dollars including cost of making, procurement request among others which provides the company with the upper hand to integrate the additional cost with the loss of minimum 4500 metres of cable having a minimum threshold for order of the cable and additional cost will help sapphire to bear no other costs as eastern will making the payments for all the expenses (Lee, Padmanabhan, and Whang, 1997). This move will profit the company and thus making its ordering system useful.
There is much scope to improve the current system within Sapphire, however as discussed in this laburnum group supply chain management. The company can integrate the demand of the cable seamlessly through order management system technology which will communicate smoothly between the suppliers and the company's systems. The technology can also enable real time feedback to the suppliers and make the supply chain visible to other competitors. Basically, the system and the supplier should both be able to access the same inventory, catalogue, and process regarding order fulfilment. This will help the company to see what items are available in the inventory, their quantities and the locations of the products (Stank, Autry, Daugherty, and Closs, 2015). The company can automate the shipping process to reduce the lead time even further and instil a sense of brand loyalty and likelihood for its customer for recurring purchases. The warehouses for storing products must be well located ensuring the reduction in main distance market for the company's product and save time to ship the product to the customer. This will increase brand reputation and also increase revenue in the process (Lee, Padmanabhan and Whang 1997). The company should be able to accept returns for the damaged products and refund its customer for upholding the integrity of the organisation.
The major global matters relevant to AusCotton in the area of strategic sourcing are –
Inaccurate demand forecasts and unexpected variations are leading the company to manufacture more products than required; this is resulting in stockouts of the products in the retail stores and unnecessary expenses being made to the manufacturers. This also impacts the expenses of the company which it needs to make on developing new products. Since the number of products is already high in the retail stores, therefore, the products are not selling entirely and have to be sold in clearance sales or take unnecessary space in the company’s inventory (Fisher, 1997). Also in some cases due to inaccurate forecasts of the market, the previously manufactured styles go out of trend and then a company has to discard all the previous stock affecting the economy of the organisation.
In order to address the inaccurate demand forecast issue in this laburnum group supply chain management, it is required to find the right inventory optimisation solution. Inventory optimisation solution uses the disparity between the forecasts and the orders for restocking the inventory and uses the previous inventory data to create a new forecast of the upcoming market trend (Christopher, Peck and Towill, 2006). AusCotton needs to forecast at the customer level meaning it should adequately analyse the current market conditions and based on that it must forecast the demand for the existing product or creation of a new one. It also needs the right management to create forecast data for demand. Inaccuracy can often happen due to human errors or negligence. Therefore right people must be hired to do the job of forecasting.
The elements for strategic sourcing process includes –
The company needs to find ways to cope with illegal merchandising by some contract manufacturers. The following steps can be taken to cope with illegal merchandising –
This laburnum group supply chain management concludes that the current ordering system of Sapphire Energy within the Laburnum group of companies is mildly effective and needs to improve the system through advanced management technologies and automate the supply chain of the company. It also provides insights on some of the global issues that AusCotton is facing and proper strategic sources to deal with them. Additionally, this laburnum group supply chain management also discusses the impacts of inaccurate demand forecast, counterfeit products by some manufacturing suppliers on the company's overall performance. Laburnum Group supply chain management assignments are being prepared by our scm assignment help experts from top universities which let us to provide you a reliable assignment help australia service.
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