Supply Chain Management
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Supply Chain Management - Exel PLC Case Study
The supply chain management and logistics operations are very important for any form of big business organization towards realization of its business missions and goals. This paper talks in deeper details about outsourcing as one of the ways through which businesses have improved their performances, something that has been done by incorporating the third party logistics companies. There is an analysis and description of a case study that was done on Exel PLC, which is a company in Northern America able to achieve better operations and performance by adopting a very convenient and workable business model.
General Discussions on Supply Chain Outsourcing:
In any given business, supply chain management is something very important because it is what guarantees the success of the business. In that case, there has to be the involvement of logistics which govern all the operations within the organization, and especially when there is the need for chain operations and effective management. In this kind of management, there is the long term planning as well as the short term planning execution. In that case, there have to be a number of operations or activities, which are very important within the chain management. To begin with, the short terms execution involves the current day-to-day activities, which involve logistics (Hertz & Monica 141). This ensures materials have been properly lined up all the way from the supplier of raw materials to the production, and eventual delivery to the consumer or the customer. This short term executions become complex and frequent so that they end up becoming long-term operations. The long term hence, involve sourcing, the processes of procurement and the conversion of materials, which is the role of the business.
In terms of business operations, the issue of outsourcing is very important since it helps a company or business is able to achieve greater performances, which might have been hard to achieve on their own. Some of the activities that might be outsourced to third party logistics can include the transportation and conversion elements, which are strong parts of logistics and chain management operations (Hertz & Monica 143). Pick and pack operations can be provided to the third party logistics, the 3 PLs. In that case, these third parties will only accomplish the finale approach in chain supply management and logistics, which is the transportation aspect.
In real sense, it will be noted that there are unavoidable reasons why majority of business and organization always opt to outsource some of these operations to the third party logistic companies. To begin with, there may be high costs in acquiring similar freight facilities, and hence the only true approach can only be in hiring or engaging in collaborating with such companies to help promote business performance, while paying them some amount of cash. In addition, while a given business might be having an established business, chances are high of having the business not able to reach far away consumers and hence the best way is through outsourcing. This basically will also improve delivery of products and successfully be able to give the client and consumer what he or she deserves while being able to successfully complete the chain and supply management procedure (Hertz & Monica 143).
Another important thing that can be noted is that there is a great deal of risks, which tend to be associated with outsourcing generally. These risks will take both sides since the third party logistics companies will be affecting while at the same time affecting the users of the outsourcing practice. To begin with, in the event of any accident or damage of the materials being ferried, it has to be noted that the party will be responsible for the damages and losses, which have to be paid. This means that, the occurrence of such misfortunes can greatly affect the business (Hertz & Monica 145). This has been noted to be the greatest risk. The issue of accountability might also be faced when the recruiting companies fail to commit themselves in honoring contracts, this posing a great threat to the business.
On the other hand, the users of outsourcing, while being able to benefit from this kind of service towards fast delivery of materials and successful completion of the logistical operations, a number of risks are also possible. For example, failed performance by the company outsourced might end up causing a great deal of delays for this company, which might as well affect its business operations. As well, the future planning in the business becomes more risky since they are supposed to play the game of the 3PLs if there is the need to have their operations being done for them. Just as it is well known, any kind of business operation will only be effective when there is commitment from all the parties involved in the business operations (Burke 16).
Whenever selecting a three PL company, there are issues and measures that have to be put into consideration. To begin with, there should be the integration of policy making which incorporates all business players and associates. While doing so, the need for an outsourcing is weighted and compared with the resources at the organization’s disposal. If there is the need for an outsourcing, the possible companies have to be outlined, their terms of operations reviewed, and then consulted to strike a deal towards the outsourcing procedure. This ensures that the very best and suitable third party company is sourced hence making it possible for the organization to realize its goals and performances (Hertz & Monica 147).
Exel PLC’s Business Model: The Benefits and Risks
Exel PLC has been able to emerge on top of its business in not only the continent but also being able to achieve better performance in the whole world, and by so doing, it has been currently providing services and logistics management in over a hundred and twenty countries globally. In order to be able to achieve this dream and better performance, this outsourcing company has been able to come up with adequate operations and means through which it has been able to come up with means of adding value in terms of its chain execution. The first approach has been in coming up with an effective business model, which has been followed in all the operations and procedures in the business (Burke 19). This model has been able to integrate the appropriate personnel who have the necessary qualification and competence in aiding the operations in the business and execution of its operations. There has also been the need of having a ground-based approach, which ensures that the alliance companies have been provided with quality services thus making it possible for them to achieve better relations with their clients and customers. There has been the need to deliver materials and products at the exact time thus being able to add value to its supply chain execution, something that has been seeing an increase in client base in different parts of the world.
There has been the adoption of an effective model as described above which integrates all competent individuals and proper communication within the operations. Such a model is capable of ensuring that goods have been obtained from the company, packaged properly, and then made ready for transportation to reach their destination within the specified time. This integrates the use of warehouses and combined transportations through air and roads or rail, depending on the nature of logistical operations (Pakhare 27). This kind of a model have been promoting management in the operations of the company while being able to provide the promised services to the clients of the business, who are the companies which have come up with an outsourcing plan. This has been helping in attracting more customers hence making the greatest volumes of profits and being able to advance into other nations. Generally, Exel’s management and business model has been able to come up with airfreight as well as ocean freight logistics, customs brokerages, as well as multimodal services.
Over the past few years, EXEL has been able to show an outstanding performance in its operations and financial standings. This has been achieved due to adoption of a proper business model, which has been promoting the realization of goals in the business. For instance, the profits of the company did go up by sixteen percentages in the business year of 2008-2009, and still showing better performance as the business year of 2009-2010 ends. There has also been proliferation of operations, which has seen the company being able to attract a great deal of business for their service provision, and hence being able to provide their services in over one hundred and twenty nations presently (Burke 45).
The current developments have been in moving into a joint planning of Exel and HM perspective. This will increase their performance while being able to provide a great deal of services, which will be much better than their separate performances. This will improve expertise hence making the companies to share commonplace resources hence promoting their business (Pakhare 63). On the contrary, such an integrated planning might as well end up having detrimental impacts on the performance. Such risks include the fact that one of the businesses might lose in the game, and improving some form of laxity, which might damage the outstanding impression and performances in the business operations. However, should this be done in a much relevant manner and through sound decision-making, it will be possible to have growth and greater achievements? In conclusion, it will be necessary to employ the necessary measures and commitments guided by agreements towards the merger if positive results are to be obtained.
Burke, Robert E. Corporate Community Relations: The Principle of the Neighbor of Choice. New York: Greenwood Publishing Group, 2009.
Hertz, Susanne. & Monica, Alfredsson. ‘Strategic development of third party logistics providers.’ Industrial Marketing Management Journal. 32(2): 139–149.
Pakhare, Joel. Management concepts: The four functions of management. Oxford: Oxford University Press, 2007.