Discuss about the Evaluating VAPC Warehouse Facility.
In this topic, we will be discussing and evaluating VAPC warehouse facility. The warehouse facility is located in North West of Singapore. The current function of this warehouse is to handle incoming material from suppliers and customers, processing of parts, as a storage area for receive parts and stocks, packaging area and finished goods area for delivery to the customer. The warehouse is an important part of the supply chain operations. A warehouse can help to store goods to be used in manufacturing and transform into the finished product to meet customer demand. Moreover, storage in the warehouse is considered as a backup of the company, which can help the company in meeting demand supply ration of the products (Genin, Lamouri & Thomas, 2008).
The warehouse is considered as a significant component of the Vallourec because it offers innovative global solutions to its customers to meet the advanced level energy challenges of the contemporary world. The warehouse further comprises a varied range of products such as seamless tubes, acquaintances for drilling operations and line pipes. VAPC use Just-In-Time approach to manage the functionality of its warehouse. The warehouse incorporates a customized system for order processing and receiving. However, material movement and inventory management are carried using manual tracking practices through excel. Furthermore, VAPC also uses web-based ERP system running on NIX, Mac or Windows platform (Genin, Lamouri & Thomas, 2008). Considerations of inventory are highly influenced by the lead time from the customers. Therefore, MOQ for raw materials is controlled using JIT approach. Most of VAPC inventories and stock movement that are used as parts of the finished good components are managed by excel manual tracking. Conversely, SQL Ledger is only used for managing the purchase and receiving of components or parts. In the simple context, type of system used in VAPC strictly depends on the type of product purchased or received by the warehouse (Vieira, Requena, de OP Junior & de Araújo, 2010).
The evolving technology within the company is centrally aligned to offer a variety of tubes for petrochemical installations in refineries, for automotive industries, for construction of stadiums, complexes, buildings and structures and for mechanical engineering applications such as hydraulic cylinders, machining tools, etc. Even more, the company is also functioning to support the growth in the energy markets by availing new production facilities to Brazil, the USA, China and the Middle East. These assisted the organization in providing a close solution to the customers and advance its competitiveness in the market (Act & Arabia, 2011).
The transportation of Vallourec is quite complex due to the variety of products and services. For instance, tubes of large size will be dispatched accordingly, however; tubes of smaller size can be transported through any mode. The majorly used transport modes are land transport, sea transport, and air freight. Product type, size and weight play a crucial role in determining the mode of transport for the vehicle. Bulky items will have an impact on the cost and lead time to customers, whereas, small and lightweight articles are contented to transport in any part of the world (Brasil, 2013).
As the business is expanded to a great level having a huge customer database, Vallourec undertakes various transport choices such as intermodal and multimodal transportation. In Intermodal transportation, the cargo is elated from the origin to destination by using different means of transportation, which all have different transport carrier responsibilities. The contracts and liability of transportation also vary for every separate transport carrier due to multiple transport bills of lading. However, the Multimodal choice is defined as transportation of cargo from initial to final position by multiple modes of transport having different carrier responsibilities under a common bill of lading. In the simple context, it can be inferred that both modes of transport are imperative for Vallourec. The only factor differentiating the two is the centralization of transport carrier responsibility and bill of lading (Zhong, 2015).
Thus, transportation of the Vallourec can be considered as an adaptable practice of improved technology. The company has entertained all sorts of transport modes and choices. Flexibility in the transportation of goods as per their qualities makes it more cost efficient for the company. It exclusively depends on the type of products deliver to the customer. For instance, pipe with 40-43ft length will differ with shorter parts; therefore, its packaging and transportation will also differ (Bernardi de Souza & Pires, 2010).
The warehouse of the Vallourec is considered as a moral fiber of their business due to its contribution to the overall business practices. The warehouse is potentially used to store raw materials, which will facilitate the requirements of the company in the future engagements. Along with this, it also stores finished products of the company to meet the market and customer requirements in the upcoming future. Overall, the role of a warehouse is highly conscientious in the execution of the overall business practices and inventory management of the company (Grijalva, Perozo, Holzmann, Paz & Oppelt, 2017).
Along with this, the inventory and transportation of the goods is relatively associated to the warehouse management practices. The administration of the Vallourec’s warehouse is sternly commanded to scrutinize the inventory management, warehouse practices and intermodal/multimodal transport choice. Moreover, the flexibility of the operational practices in Vallourec’s warehouse can be estimated by the consideration of various transportation and inventory management policies, solely on the basis of types of products and services (Binmore, 2015).
Such implications for the management of the organization potentially present the organizational perspective for the overall and sustainable development of the company. The objectives of the management heads towards warehouse management and inventory management are centrally surrounded to provide better customer service and gain competitiveness in the market. Moreover, the transportation facility of Vallourec is also intended to enhance the overall efficiency of the company. Consideration of land transport, sea transport, air transport, intermodal and multimodal choice contributes to providing quality service to the customer as per their compatibility. Overall, the strategies and orientation of Vallourec have justified the associations of warehouse, inventory, and transport in all perspectives (Campbell, Butler & Raiborn, 2014).
Vallourec Tube-Alloy, a parental association of the Vallourec subsidiary, which is into the business of producing and repairing the components of Oil & Gas well started a new industry known as ‘Vallourec Tube-Alloy Asia-Pacific’ in the region of northern Singapore. The new venture is projected to support the OCTG activities of the group by escalating the market venture of Vallourec Tube-Alloy, which was limited to only 4 production facilities in the USA till now. This part of northern Singapore is a specialized plant to thread VAM premium connections on wellhead and completion equipment. It also manufactures turnkey OCTG accessories with an annual capacity of approximately 25,000 threads (Sun, Huang, Liu & Liu, 2016).
The location of the company is justified by the fact that this unit is fully qualified to perform the actions of VAM premium connections. The associated manpower of 50 engineers and technicians are positioned to facilitate the business of Oil and Gas industry of Singapore, which necessitate high added-value tubular solutions. After the successful accomplishment of the strategic importance in the market of Asia, Olivier Mathley, Vice President of Vallourec Tube-Alloy Asia Pacific has targeted the market of Singapore due to emergence as a major Oil and Gas hub. Vallourec is ready to develop its policies and practices in order to meet the market standards and customer expectations of Singapore (Gardner, 2012).
In Asia-Pacific, there are approximately 2000 employees allied to Vallourec to provide a full range of service and products of oil, gas and electricity market. The production is accomplished by Valinox Nuclear Guangzhou, Vallourec Changzhou and VAM Changzhou plants in China, 2 plants in Indonesia, Vallourec Tube-Alloy in Singapore, a Malaysian plant for Serimax tube welding and many other sales and marketing offices in Vietnam, Korea, Perth, Jakarta, Ho Chi Minh and Beijing-Shanghai (Bullinger, 2012).
There is no denying the fact that the modern era is a world of Asian economies. Emerging financial system of India, China, and Asian countries clearly indicate towards the movement of multinational companies to this region in order to take advantage of large domestic markets, available resources, cheap labor and advancing infrastructure. Considering the similar influence, Vallourec also moved to Singapore with an objective to expand business in emerging and profitable market. Excellent connectivity to the world is the most crucial factor in the location decision process. Strategic location in the heart of South-East Asia near the emerging economies of India and China facilitates the business ventures in making more connections and easy transportation of goods across the borders (Willard, 2012).
Along with this, due to established bank regulations of Singapore, the country has always sustained the start-up businesses, which is also an imperative factor in deciding the location to Singapore. Surrounded by the environment, which nurtures start-ups and business-friendly ecosystem considerably facilitates the organization in gaining overall and sustainable development for the future. Moreover, the country has also provided the advantage of attractive tax frameworks and extensive trade agreements for the business organizations to make the market more profitable (David, 2011).
Another vital factor, which contributed to the location decision process, is the availability of strong judicial regulations. This ensures a high degree of personal safety and other benefits by the legal system of Singapore. In South-East Asia, Singapore has the most stable judicial system to assist the sense of security and comfort for the entrepreneurs and investors, which further leads to enlargement of market opportunities and competency in the market. Even more, it also facilitates the organization to access the local talent pool of highly skilled labors, which will be cost-efficient for the company. Singapore is considered as a giant competitor in terms of the labor force for the industries. Effective policies of the multinational companies, attractive living conditions, and adaptable working environment have made the employees motivated to work (Lee & Lings, 2008).
On the basis of discussions made above, it can be inferred that Vallourec has chosen Singapore as their business location after a certain investigation on the market conditions. The company has made a crucial understanding of the opportunities from the market of Singapore along with the strategies for future expansion. In case, Vallourec expands their business venture in Singapore, it will experience various benefits from the market, such as easiness of starting a venture due to Singapore’s unique position in the global economy and its pivotal contribution as a business epicenter in the competent market of Asia (Piekkari, Welch & Welch, 2014).
Various economist and economic forums have explored that Singapore presents a great market for the emerging business organization. The policies and attributes of the country engender a business-friendly ecosystem, which supports start-ups as well as expansion policies. Thus, future expansion of Vallourec in Singapore will make the parental organization profitable and more competent. Along with this, the air connectivity of Singapore is a crucial factor justifying the future expansion plan of Vallourec to Singapore. The extensive air services from Changi International Airport serves approximately 100 airlines to 320 cities of around 80 countries and territories. This will provide a worldwide connectivity and transportation of goods to Vallourec (Ahmad & Kitchen, 2008).
The regulations of Singapore also afford people with the best IP protection around the world. According to the World Economic Forum’s Global Competitiveness Report 2015 – 2016, Singapore offers great services to comprehensive intellectual property protection, which further authorizes the location decision of Vallourec. In addition to this, the Economic Development Board (EDB) of Singapore also offers incentives to the organization that relocates their regional headquarters (RHQ) and international headquarters (IHQ) to Singapore. Thus, future expansion of Vallourec in Singapore will possess the likelihood of getting incentives for headquarter setup (Gabrielsson & Pelkonen, 2008).
References
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