Diesel Technic is an established name in the independent aftermarket of automotive spare part, the core business of the company is to develop branded spare parts in guaranteed quality for the varying demand of the market and to ensure a reliable supply of spare parts (Diesel technic, 2018e). The company is having branch offices Great Britain, Spain, Singapore, France, Italy, UAE, and Netherlands, The Singapore branch is set up with the purpose, to serve all the regional distributors and partners in Asia. This report is designed to understand the inventory management system, order fulfilling methods and logistic outsourcing of the company. The all three terms are the part of supply chain management. The supply chain of Diesel Technic includes various activities, which will help the company in maximise customer values, and to achieve a sustainable advantage over its competitors (Brandenburg, et.al. 2014).
Diesel Technic is one of the major suppliers of commercial vehicle spare parts in the Independent Aftermarket (IAM). Since 1972, Diesel technic has kept commercial vehicles moving throughout the world. The company offers spare parts for trucks, buses, and transporters, such as cooling systems, exhaust system, engines, fuel systems, clutches and pedals, gearboxes, propeller shafts, axles, brake system, hubs, wheels, suspensions, steering system, electrical systems, cabins, bodies and trailers (Diesel technic, 2018). Since May 2014, the company has opened its service centre and regional distribution in Singapore. The main motive behind establishing company in Singapore is to supply DT spare parts and spare parts in Asia Pacific (Diesel technic, 2018b).
To create a market share and to attract the customers towards the products of the company, Diesel Technic provides various offers. With two products Brands, the company offers its distributor’s associates and consumers a wide range of commercial automobile spare parts for diverse requirements. The product brand stands for trailers, transporters, buses, and trucks composed with forthcoming service solution and a 24 months assurance (Diesel technic, 2018m). Delivery associates and their consumers benefit from the wide range of spare parts for commercial automobiles in verified quality as a facility of the company.
To increase the demand of the product in the Aftermarket the company mainly focus on cost reduction and quality management. The information gained through knowledge of the market, many years of experience in product management and the technical knowhow in product development is help the management in cost reduction process and in managing cost (Diesel technic, 2018f). In addition, previously mentioned factors helps in maintaining quality of products at reasonable cost.
The Principle follow by Diesel technic is- ‘after all, you get everything from one source’ by following its principle the company purchase its raw material for only one supplier they do not relay on number of supplier. The company just trust the material supply by its one supplier.
For office, production, manufacturing, and warehousing Diesel Technic Asia Pacific Pte Ltd has total area of about 4700 m2, the area. The total storage area 4300 m2 were used to features over 1600 pallet spaces and 6300 stowage places at the two-tier mezzanine shelving system. At the available space of warehouse, more than 15000 ex stock spare parts permanently kept (Diesel technic, 2018e). The company deals in more than 35000 varieties of spare parts for transporters, trailers, buses, and trucks. The company’s branch office at Singapore is liable for distribution of spare parts at Asia Pacific reason. The company is responsible to provide full service support related to sales and marketing activities (Diesel technic, 2018c).
The warehouse divided into Storage, picking, shipping, receiving, and quality inception areas. The warehouse system is design to support and enhances warehouse or distribution centre management. The Warehouse management system of the company developed to provide best solution for receiving, put away, inventory management, order processing, replenishment, picking, packaging, loading and shipping of spare parts. The company is using wireless technology for faster picking and packing process. The technology used to get accurate data and information related to inventory for better decision making and for managing inventory (Diesel technic, 2018g). The Warehouse management system donates in refining the productivity, competence, and precision of the actions at warehouse and the workers of the company.
Automotive Spare part management shares many traits with standard inventory management but requires an additional coating of cost consideration. An effective and efficient stock management process is to making sure that company earn profits (Raviv, & Kolka, 2013). To walk through, how company will put together their own internal system for managing inventory. The key steps, which are require by the Automotive Spare part management company include Understanding existing consumption, estimating soft cost impact of out of stock, calculate costs(soft and hard) of expedited orders, calculating system failure costs, work with suppliers for cost reduction, and in stock improvement (Huang, & Mieghem, 2014). Steps further include thorough record of every new or returned goods as it arrives or leaves a point of sale or warehouse. Inventory management is the complex procedure mainly for large organisations. (Rouse, 2018).
To analyse the market and customers the company only focus on the excellence of the goods they feel if the quality is better than the product will get it position in the market. As per literature in Asian market to place the product and to increase the demand of the product with the quality, cost also matters (Diesel technic, 2018k).
To cut down the cost the prices of raw material plays very important role the literature says that the management need to find the suppliers who offer you a minimum cost but to maintain quality and to follow the principle, the company has decided that they will buy their raw material from one supplier always.
Main Strength of the Diesel Technic is its Product Management and development strategy, its proper knowledge over technical knowhow, and quality of its products maintain by the company in Independent Aftermarket. On other hand, the company also having few weaknesses like the company face problem in cost cutting or cost reduction. To manage the inventory the cost play very important role and to capture the Asian Market the company need to reduce its cost. To survive in the Asian market the company need to change its strategy, they should not just focus on the quality the price of the product is also matters in the market.
The current strategy used by Diesel Technic is helpful in maintain its inventory. The inventory management system of the company includes all desired steps, which used by almost every Automotive spare part company. There is only fault in the inventory management process of the company is reliability on the single supplier. Due to that, the company is losing its share of profit and market share. To survive in the Asian market the company need reduce down its prices. In Asian market, the company has many competitors and to get edge over the competitors the company need to reduce down its prices. The quality of the product matters but the price matters more in the Asian market.
The company consist of most progressive, decentralised warehousing, warehouse technology, and customised logistic solution, delivery associates available to supply products to the customers on a flexible and time optimised basis. Company deals in 35000 spare parts for buses, transporters, trailers, and trucks to fulfil the order company have warehouse management system (Diesel technic, 2018l).
To fulfil the order the company brought its raw materials from the single buyer. The company focus on quality and due to this reason the company has made a principle after all you get everything from one source. In addition, at Singapore branch the company having almost around area of 4700 m2 for production manufacturing and warehousing where the product manufactured and kept at the warehouse. The company has a total area of 4500m2 the total space is available for warehouse and office. The total storage area 4300 m2 were used to features over 1600 pallet places and 6300 storage places at the two-tier mezzanine shelving system. At the available space of warehouse, more than 15000 ex stock spare parts permanently kept. All the work is done through high tech machinery (Diesel technic, 2018e).
To enable faster packing and picking company use wireless technology. The technology provides accurate information in relation to stock management for improved decision-making. The system management take part in refining the competence, precision and efficiency of the warehouse actions and the workers of the company.
The company has its clients across 150 countries, and put their belief in quality made by the company. Business task is to offer the dependable goods that bring benefits and advantage to its suppliers and customers. The company is using software named Navision for the management of Warehouse system. The system is advantageous for the company to combine the software, which will help in delivering accurate report and optimise resources movement (Diesel technic, 2018n).
At Diesel Technic, they have appointed a single person for order picking of big sales, which involves lot of time in finishing the order picking of the goods. The system permits company to make quick variations and customisation in inventory management planning. The company use bar code scanners for tracking and tracing of the products and for order picking for the customers (Diesel technic, 2018o).
Order fulfilment involves various steps like processing, receiving, and delivering orders to end customers. The first step include in the order fulfilment is Inventory storage, once the inventory has been received, counted inspected labelled and added to the warehouse system management software now it time to be shelved (Reaidy, Gunasekaran, & Spalanzani, 2015). Next step used in order fulfilment is order processing, once order place by the customers the company will check its warehouse that particular amount of order is available or not. If available, the warehouse staff will transport the order to packing station. The packing station will go through various quality control checks, determine the best packing material, scan the item, add packing slip, seal the boxes, and move the product to shipping station (Lam, et.al. 2015). There are various technologies involved in picking and packing orders. The next step is shipping, now it is the responsibility of shipping station to weigh the boxes and determine the best ship method for the order. The last step of order fulfilment is returns processing, the company should provide the return policy to the customers if they are not satisfied with the product or product is in damaged condition
(Li, He, & Wu, 2016).
The order fulfilment system of the company is very effective and efficient but the single step that is slowing the speed of process is order picking. At Diesel Technic, the order picking done by a single person and this slow down the speed of order fulfilment. The company need to involve more than two people at order picking area. The literature also state that order picking is very important step as the demand and supply of the company totally depends on the order picking, so there should be sufficient number of staff need to be appointed (Bulger, 2013).
The company very familiar with the technology and always remain updated as per new technology available in the market. The company use very high tech technology in it product development process (Ishtiaq, 2016). In order fulfilment process, the company is using various technology and software, due to that policy of the company, the requirements of the costumers and distributors are get fulfilled on time.
To increase the process of order picking the company has to introduce new technology like RFID to replace the barcode system and to speed up the order picking. The company uses the RFID warrants to track the large number of products on pallets and cargo and save the time of labours. RFID implement in the company to improve the information management related to product flow. RFID is available to scan numerous things simultaneously like communicate and barcodes results in milliseconds. RFID benefits in providing precise evidence related to quality of products and movement of returned products and helps in reducing inventory level and handling costs (Piramuthu, & Zhou, 2013). The new technology, which the company is planning to incorporate in the business, will reduce the workload of the order picking staff as all the orders were easily managed by the RFID.
In the Automotive Industry, the good deliver by the transport company, because it includes schedule plan and high cost. Almost every business wishes to hire the transport company to reach the better performance, share the risk, and to reduce cost. Hence, the businesses can impartial concentrate on its manufacturing course and make the production schedule (Tradegecko, 2018). The typical transport companies are called freight forwarder transporter and so on.
As the company is dealing globally, it became tough for the company to supply its product all over the world, and if they focus on the transportation, they will loses their focus from the core business that is why the company has decided to outsource transport to other company, or to involve outsourcing company in its supply chain. The company has elected the option of partial outsourcing. In partial outsourcing service, the third party logistics providers is there to provider is there to provide solution their solutions and operations.
The company is using intermodal transport system. The intermodal transport system includes various modes of transportation like air, land, sea. For air transport, they use aircraft service, for sea, they use ships and for land they use trucks (Crotty, 2015).
The company is having most progressive decentralised warehousing, customized logistics solution, and warehouse technology with delivery associates, who are capable to supply products on a time optimized and flexible basis (Robinson, 2015). The support of delivery associates with customs clearance guarantees and transport is reliable and fast supply chain. This comprises the compulsory leading of compliance audits, as well as the processing of goods import and export in all nations all over the world (Diesel technic, 2018j).
The intermodal system is mostly depending on the consignment containers. The Consignment cargo is filled in containers, and the containers are carried to its sites. The system is secured and safe, requires less amount of handling and it is economical. The company has developed a tie up with Luftfahrt-Bundesamt (LBA) (Federal Aviation Authority) to transport its consignment by air to the desired place (Diesel technic, 2018i). The transportation by air is really quick and safe, so the company has decided to outsource transportation on partially bases to Luftfahrt-Bundesamt (LBA) (Federal Aviation Authority).
Logistic services are very important for every business as it involves the carriage of goods from one point to another. It is very complicating for the companies to manage entire set of operations on their own. The cost of carriage related to logistics is increasing every year, it is best for companies to outsource its logistic service requirements to a reliable company (Yang, et.al. 2016). Outsourcing of logistic services requirements to some external service providers is a wise decision for companies in long run. A logistic service provider mainly deals in services such as transportation, delivering, warehousing, and other related operations (Huo, et.al. 2015). The outsourcing business is growing rapidly, its offers transition plans at cost effective rates and superior outsourcing strategies. The outsourcers work hard for their clients and they make sure that they provide customised logistics services to their clients.
The outsourcing of logistic services allows company to instead of performing logistic services they can focus on critical operations. The third party outsourcing services have sufficient workers and desired system already placed. They can develop thousands of bills and audit them properly within short time (Azadian, Murat & Chinnam, 2015). The outsourcer know the field better than others and can come up with innovative strategies and ideas to reduce costs for their clients, as well as deliver better experience. This leads to enhanced customer satisfaction and builds partnerships, which can last a lifetime.
The company has elected an option to outsource its air transport and the company does rest operation by itself. The literature says that if company outsource the business of some part of the business it will allow company in focusing on core business activities. As the company has outsourced only air transport that means the ship, rail and truck transport are in the hand of the company. The work is not outsourced fully so the company need to focus on transport also and due to that, they are not fully focused on the core business that is manufacturing of spare parts. The main aim of company is to provide quality products to its distributors and customers and if they got involved, in the transportation of the products, they may lose their concentration and due to that, the product quality can get disturbed.
The Diesel technic, rely mainly on rails for transporting products with in Asian countries. The rails offer better value saving in comparison to other ways. The moving consignment through rail involves less cost of transportation and it is more energy efficient. The price is the main concerns for shipping. The air transport includes huge cost in comparison to rail and road transport.
The company has chosen the option to outsource the air transport because the freight include in the air transport is much more high then any option of transport. The high price is the main reason behind outsourcing the air transport facility to the Luftfahrt-Bundesamt (LBA) (Federal Aviation Authority). By building up a tie up with the company, Diesel Technic has benefited itself by transferring cost and risk on the third party.
The third party logistics service suppliers play a vital role in modern supply chain management. Evaluation and selection of the right logistic outsourcer is widely depends on range of qualitative and quantitative criteria rather than cost based factors. The company has outsources its air transport so that they can make the available their product to its customers on right time and in good conditions. This decision of company is good but the company also need to outsource its other ways of transport, it will make the company more focus on quality of product and other main operation of the company.
Conclusion
To conclude, Diesel Technic main aim to provide quality products to its suppliers, distributes and to its customers. To achieve the core competence the company has developed its supply chain Management system and each step of specify the qualities of products are maintained. In inventory management the company assure during product development, they use the best technology and material. In order fulfilment the company make sure the products, which are developed, will be picked, packed and place to fulfil the demand of its distributors and customers. Moreover, at logistic outsourcing the company assure that those parts, which are involving the huge cost and time will be, outsource to third party so the company can focus on the core business of the company. As the company has open its branch office in Singapore to make its products available in the Asian market, so beside quality the company need to focus on the price of the products.
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