Forecasting
a). An appropriate forecasting confirms that organization has sufficient supply to meet the demands. The marketing executives and the businessperson implement supply chain management procedure as well as other relevant tools to anticipate the demands on monthly and weekly basis in advanced. Demand forecasting remains as the significant aspects in supply chain management. Demand Forecasting in supply chain helps to anticipate the demands required for the products and services of an organization. This forecasting helps to decide on facility capacity planning and capital budgeting. The forecasting in supply chain also helps to evaluate market opportunities worthy of future. Another significant reason, which increases the necessity of forecasting in supply chain, is the customer satisfaction. This means to keep the customers satisfied, the organization needs to provide them with the product they want. For example, the e-commerce giant Amazon.com stores huge number of products in each category during the festival season such as Christmas; hence, the based on the predicted demand, stocks is managed before the festival season.
Figure 1: Forecasting in Supply chain
(Source: Seuring 2013)
b).
Among different types of forecasting in supply chain, there are three basic kinds of supply chain such as demand forecasting, supply forecasting and price forecasting.
Demand Forecasting –This forecasting remains as the investigation of the organizational demand for the items, to involve present as well as the projected demand by sector and product end use.
Supply forecasting- This forecasting is the collection of data regarding the current procedures as well as suppliers & technological and political trends that could affect the supply.
Price Forecasting-This forecasting is based on the information collected as well as analyzed regarding demand and supply. This forecasting provides a prediction of short and long-term price as well as the underlying reasons for those trends.
c).
There are certain aspects that needed to be considered in forecasting such as the financial planning, inventory/ staffing planning and analysis of performance of employees and tracking results for future improvement. The financial planning in forecasting is a significant way for an organization to run into cash flow issues instead of managing their sales pipelines. The focus on staff planning helps to identify right inventory on hand as well as the right staffing in place to deal with the sales forecasting carefully.
a). A 3PL is a third party logistic provider of outsourced logistics services. The logistic services embed anything that includes management of the way resources are shifted to the areas where they are needed and this term usually comes from military. In addition, 3PL has a broad meaning that can be applied to any particular service contract that includes the shipping of goods. Using this third party logistics, the organization is able to provide outsourced logistics services to the client firms for part and all of the supply chain management function.
Figure 2: Third party Logistics (3PL)
(Source: Tezuka 2011)
b). Many retail and manufacturing operations that perform key supply chain functions in-house could suffer from the lack of resources to implement the significant activities properly due to the financial investments that are required . Hence, outsourcing supply chain services to third party logistics providers provides business with the ability to focus on the primary functions that are fundamental to their operation. In addition to this, paying attention to primary business functions may also allow 3PL consumers to expand the operation further where they otherwise might have missed out. In addition to this, it can be also be mentioned that 3PL also helps to maximize the annual revenue.
Figure 3: Humanitarian Logistics
(Source: Cozzolino 2012)
b). In order to implement Humanitarian Logistics, the regulatory body of the organization plays a significant role. Among the different bodies, the director of the organization plays the role of managing the entire operation at the time of natural disaster. Likewise, the operational manager of the organization also leads the operation communicating with other department heads of the organization. In addition to this, warehouse manager also plays the role of supervising the operation when the goods are shipped to the warehouse or they are moved to the host areas. The human resource manager of the firm supervises whether or not the organizational members are contributing to the situation or not. The production manager of the firm supervises and monitors the availability of goods transferred. The head of accountant department calculate the required budget for the initiatives.
Using Information Technology (IT) in Logistic and Supply Chain Management
Information Technology provides several opportunities for the organizations to reduce the cost and enhance the responsiveness to consumers’ needs. It is also observed that Information Technology is comparatively less capital intensive. The following are the ways to enhance supply chain management:
Computerized Shipping and Tracking-With the help of modern technologies as well as internet based software, The organization could simplify the technique as well as dramatically minimize the shipping errors.
Radio Frequency Identification (RFID)-Radio Frequency Identification remains as the significant aspect of technology that could provide numerous advantages to the business owners. (RIFD) is placed on every product as well as it provides a significant ways to business owners to easily track their inventory.
Social media to streamline the supply chain-Through the use of social media, the business could create more open communication with the customers and improve the visibility of the organization. It also helps to enhance the demand of the products.
Simplify your chain
It has been observed that the more links there are in the supply chain, the more complex the chain becomes. Thus, simplifying the supply chain as well as disposing of unnecessary links, the organization could enhance efficiency as well as reduce the cost.
Case Study 1
a) Four different activities that IKEA is using to ensure its supply chain is sustainable
Even though IKEA does not fall under a primary sector organization but it plays special attention to the raw materials to improve its products. The organization closely associates its operation with the suppliers in primary sector to observe a sustainable influence on people and the market where it operates. In the manufacturing process, the organization designs its own products and before receiving the finished products, the organization checks whether the products meet the necessary requirements.
The organization purchases the products from 1300 suppliers in over 50 nations and the nation uses a number of trading services provide across the nation. Hence, the firms negotiate the price with the suppliers, ensure the quality of the materials as well as examine the environmental influence that takes place through the supply chain. IKEA implement the tool-‘e-Wheel’ to assess the influence the products has on the environment. The “e-wheel” helps the firm to assess the four stages within the life of a product. This could also help the suppliers to enhance the understanding regarding the environmental influence of the products that suppliers are managing to supply. In addition to this, IKEA creates many designs based solution to minimize the use of materials; for instance, some particular tables are made out of recycled plastics and some rugs are manufactured of materials clipping, else that might goes to wastage.
Another significant aspect related to IKEA’s success is uninterrupted communication with materials’ suppliers as well as the manufacturers. In addition to this, IKEA design many of its products thereby, the smallest amount of resource could make a best product. In order to develop sustainable and effective partnership with the suppliers, the organization works with some other organizations. In addition to this, in the tertiary sector, the retail store of IKEA adds value to produced goods by delivering a form of shopping which are different to the usual high-street experience.
Describing the ways that IKEA is influencing all aspects of its supply chain to implement sustainable practices
Firstly, the organizations focus on the collection of raw materials in the primary sector. To build an effective and broad supply chain network, the firm buys products from more than 13000 suppliers in 50 nations. The organization takes help of number of trading service office across the world. In order to measure the environmental impact, IKEA take help of e-Wheel to analyze the stages in the life of product. In order to maintain environmental sustainability, the organization builds a strong relationship with the suppliers and during the process IKEA makes specification of its product to the manufacturers that waste needs to be avoided. In order to control the cost the wastage, IKEA asked its manufacturer to follow and implement the rules and guidelines that help the producers to minimize the impact of their activities on the environment.
b) Discussing the effect that IKEA’s sustainable sourcing and supply practices are having and likely to have upon the entire furniture industry now and into the future
Sustainable sourcing as well as the supply practices are likely to have a positive impact on the entire furniture industry. This is because IKEA puts a great focus on controlling wastage in the manufacturing process. Considering the environmental sustainability, IKEA encourages the suppliers to use it during the manufacturing of other products. This certainly increases the awareness of other organization in the sector. In addition to this, sustainable partnership with UNICEF to work on a community programs also inspires other organizations to implement the initiatives related to the environmental sustainability.
a). Describing some of the ways that IKEA uses its customers to enhance efficiency and effectiveness of its logistics and supply chain management
According to the case study, it can be mentioned that supply chain practices of IKEA is effective to maintain the sustainability of the environment. Firstly, the organization does not compromise with the quality and durability of the products but it asks the suppliers to re-use the wasted resource in the manufacturing of other products. In addition, by reducing the cost of operation and the cost of manufacturing, the organization focuses on the furniture that is designed and sold for the customers to assemble. The pieces are placed into convenient and efficient because they take up less place in the truck and it increases up the number of the products that can be easily shipped. The organization IKEA pays attention to the warehouse on the premise, where the customers could easily brows for the items. Therefore, it can be mentioned that the entire practice could minimize the cost of operation, where such cost can be spent on the research and development of products. In addition to this, by reducing the cost of operation such as using the wasted materials, carrying folded items to maximize the space in the truck, IKEA could investment on the technology. This will again enhance the quality of the products. Moreover, IKEA’s supply chain is its potential ability, which enables them to sell the products at low price. Thus, it is necessary for the organizations to focus on the sustainable relationship with the suppliers and manufacturers, so that those producers follow the guidelines of IKEA for manufacturing the goods.
b) Collaborating with its suppliers and logistics partners to ensure end-customer satisfaction with the products
The major principle of IKEA’s operation is high quality of products at low and affordable price. This means the organization will not come to any average level when it comes to the quality of products. IKEA builds an effective and long-term relationship with the suppliers and manufacturers and get into the long-term contacts with the suppliers. This increases the competition among the suppliers in terms of the quality materials. Any supplier in the sector will prefer to come into such long contract; thereby, the suppliers and the manufactures seek to develop the quality of product. On the other side, the organization buys huge bulk of the raw materials; thereby, the suppliers become profitable eventually as they could make long-term contract with the buyers. Thus, the suppliers and manufacturers agree to the code of conduct of IKEA in terms of the quality of the products.
References
Cozzolino, A., 2012. Humanitarian logistics and supply chain management. In Humanitarian Logistics (pp. 5-16). Springer Berlin Heidelberg.
Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), pp.1513-1520.
Tezuka, K., 2011. Rationale for utilizing 3PL in supply chain management: A shippers’ economic perspective. IATSS Research, 35(1), pp.24-29.
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