Revise

Instructions, current paper, sample paper attached

Surname

Part 2

How issues raised tie in with the various organizational and managerial issues in logistics

The conception of logistics has no connection with organization, which is contrary to supply chain, which is made up of various organizations which are usually companies. A key issue in supply chain management is that firms will look into ways of reducing cost to increase profit at the expense of their partners in supply chain. Usually they tend to make the supply chain wholly more competitive. Due to the widespread research ranges in operations organisation of logistics and supply chain administration, we cannot conceivably make a comprehensive analysis and review, in our research we point out critical issue.

The organization administration still largely emphases on the conventional domain, that is, the inventory which consists of production scheduling and transportation supervision. For instance, inventory management of deteriorating goods is rather a conventional area in logistic and supply chain management, the company has spent a huge sum of money which takes a larger percentage in its operating expenses in ensuring the company has products in the warehouse. As the necessity arouse for other warehouses, the senior administration at that point adopts a fairly new idea. The sites work is done by local operators at each independent site. These contractors follow basic LUML, which is third party logistics which further increases the overall company operating expenses. The transportation through shipments have a tendency to be comparatively similar over all the sites. A typical consignment has one to three fixtures. The consignment from Melbourne suit this model due to the specialty nature of utmost fixtures and as expected most consignment from Melbourne are outbound customers. Present management feature and acquire new managerial insights. Usually, two kinds of loss, that is loss in quality and quantity may occur for perishable goods. In this regard the company should implement a stochastic model to examine the distributor of a supply chain who procures the product, during the conveyance process the distributor has to take appropriate actions to preserve the quality of goods, and towards his achievement in this regard affects quality and quantity of the products.

The fast fluctuating market place due to consumer behaviour which is caused by values and beliefs, social, psychology among other causes, that are fast being affected by technology and globalization. Social networks are forming new pressures for product consumers to conform with while also pressuring entities to use these sources of data to respond to fluctuating tastes and preferences in order to remain interesting and relevant. It is important to streamline the supply chain activities to reduce disruptions on the flow of products such as raw materials and other areas to ensure demand by customer is met on a timely basis, to avoid negative publicity, financial loss and any possible litigation. The management should continuous assess and plan adequately by deploying effective personnel, business process and management of the reporting structures to communicate with suppliers and customers. The firm should identify areas that tend to be riskier, assess them and come up with an execution plan and develop a contingency strategy in cases where a natural calamity strikes, terrorism, non-compliance, political and economic changes and communication failures among the company, suppliers and customers.

There is pressing issues arising in respect to product quality, thus the entity marketing department are under ever increasingly pressure to develop high quality products to boost sales and create them constantly. The organisation need to come up with a strategy of addressing raw materials procurement, engineering, packaging and branding, logistics and how to handle a product. To achieve quality of a product it’s important to comply and firm needs to ensure that the products meet local and global regulation criteria in engineering, packaging, handling of a product and consignment. Apart from conforming with quality control and safety the company should comply with permits, licences and all certifications. In order to create a global robust supply chains organization must be keen on building and strengthening relationship with suppliers. Formed relationships between the firm and its suppliers is beneficial and improves the performance of the firm, thus increasing on the profits.

The need for better information management and integration system is important. The company is faced with international operations, market place developments and severer quality and regulation standards and the entity need to comply given that they are getting massive amount of information and data coming from various suppliers and consumers in diverse environmental locations and there is need to wisely manage. This entails data from single phase of logistic and supply chain management which includes pricing of materials, that are purchased directly or indirectly, labour contracts, rental agreements, tax compliance, freight charges and compliance documents.

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MGT5052-IU-SP2018 case3 overview & supply chain – BETA

Florida Institute of Technology

Department of Extended Studies

Virtual Site

Dr. Paul Battaglia

MGT5062-IU-SP2018 Logistics Policy

Case number 3 WORKING (BETA)

Overview of Logistics and Supply Chain

35 percent of the course grade

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Individual work.

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How submitted.

*** Post your answer to the Canvas assignment box. Do NOT send to the rest of the class.

*** Your answers are due according to the class schedule & the policy on self-selected late submissions.

It is usually possible to include
ALL your answers in one file. That includes the memo.

*** Be sure to label each answer with the correct question number (or otherwise indicate which question is being answered) so that the CEO (or other reader such as the grader!) can easily find the answer.

*** For essay- or narrative-type questions use MS Word or compatible. There is usually no need to go to a universal format such as PDF. But you can use PDF if you desire with no penalty.

*** Be sure to show your work. For more complex calculations you can use Excel or compatible; or manual and scan the pages into your answer file. Just be sure that the CEO or other reader can find and interpret the answers.

You can use basically any file name that you want EXCEPT please include your last name (a) somewhere in the file name; and (b) at the top of the first page inside each file. That helps me identify whose work I am looking at grading, etc.

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Copyright 2018 as adapted. Dr. Paul Battaglia and Florida Institute of Technology for use ONLY in MGT5062-IU-SP18 for the Virtual Site. Other use requires explicit written permission.

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Note: As noted earlier, the basic LUML scenario is used throughout the course for the cases. Additional information is provided for each case as needed.

There are
THREE parts to this case.

Be sure to submit the answers for ALL THREE parts!

Case 3

Light Up My Light, Inc.

The basic scenario for LUML continues.

Case 3, Part 1 (Warehouse/shipping performance)

In working cases, we typically want much more information than is presented in the case. Of course, even in the “real world” we do not always have all the information (and time) that we would like. Basically, stick to the information in the case. If you need to make any assumptions, then be sure to make these clear in your answers.

It is now mid-2017.

During the last weekly review, the CEO (still Elise Ennis) expressed some concerns about the warehousing operations. She has no real feel for the efficiency of the warehouses. The operations “strike her” as being somewhat expensive. And her impression is that “the cost for each warehouse is sort of all over the place.”

The CEO asked if it would be possible to do a quick analysis of the warehousing function. [Of course, that was a rhetorical question. As you might expect, the answer from Tom Perkins the VP/head of logistics was “sure we can do an analysis for you”.]

The CEO said that she would send over some more specific questions after the meeting.

As a logistician for the company you are to play a key role in doing the analysis and reporting the results to the CEO.

In preparation for the analysis you asked the Comptroller for some financial information. The Comptroller provided the financial statements (income statement & balance sheet) for 2017, the most recent complete year. These are attached.

You also asked the VP who oversees warehousing operations for some data. The manager of warehouse operations sent over the most recent data that was available. The VP explained that LUML has been using the number of shipments as a key metric for warehousing. No distinction is made between an incoming shipment or an outgoing shipment. They believe that the work effort for either type of shipment is about the same. The shipment information is also attached.

You ask if there is any other information that you should know — any peculiarities of warehousing operations for LUML? The VP mentions a few things that he says are not so obvious.

#1. The Melbourne warehouse is co-located with the Melbourne manufacturing plant & the company’s headquarters.

#2. All manufacturing is done in-house in Melbourne.

#3. All the warehousing facilities are in leased buildings (including the one in Melbourne). So that aspect is standard for all 8 warehouses.

#4. The Melbourne facility is “company operated”. As the original warehouse, the warehouse staff are all employees of LUML.

#5. As the need arouse for other warehouses/shipping centers, the VP at that time decided to try what was then a relatively new concept. The work at these other sites was contracted out to local operators at each site. The contractors follow basic LUML policies, etc. These operations are what was to become known as 3PL (third party logistics). [Note: If you want to read more on 3PL in our book, then check in the index. However, for this case all that you basically need to realize is that these warehouses are each operated by a separate local operator under contract to LUML.]

#6. Shipments tend to be relatively homogeneous over all the sites. A typical shipment has one to three fixtures. Even the shipments from Melbourne fit this model because of the specialty nature of most of the fixtures.

#7. As might be expected, most shipments form Melbourne are outgoing to customers or to the other warehouses.

You thank the VP and head back to your office.

When you arrive, you find a note on your desk from Tom Perkins. This is forwarding the questions that the CEO had promised to send over.

[Your name]
Here are the questions from the CEO.
Please prepare a written memo to reply. Mrs. Ennis is a “data freak” and so likes to look at the backup numbers and analysis. Be sure to include the basic work that was done. Simple calculations might be in the narrative; more complex might need to be in an attachment.

Thanks,

Tom

Tom Perkins
VP for Logistics

Tom Perkins
Logistics

Tom,

Ref the weekly briefing. Here are the things that jumped into my mind as the topic was being discussed and when I thought about it later in the day. Of course
, we are very interested in efficiency and effectiveness. I think that I also mentioned that it seems to me that we have a pretty wide range of warehousing costs over our 8 warehouses.

I’d like the memo per our schedule. Thanks.

Elise

#1. (100 pts) Comparing performance during the first five months of 2017 with 2016, which warehouse shows the best improvement in performance? What criteria did you use? Briefly explain why you used that criteria.

#2. (100 pts) Comparing performance during the first five months of 2017 with 2016, which warehouse shows the poorest change in performance? What criteria did you use? Briefly explain why you used that criteria.

#3. (100 pts) Comparing all eight warehouses, which warehouse is doing the “best job”? What criteria did you use? Briefly explain why you used that criteria.

#4. (50 pts) One possibility might be to terminate one of the current contracts and to engage a new contractor. Some have commented that this might offer the possibility for better performance and/or reduced cost at that location. Also, there may be a “spillover effect” to help “motivate” the other contractors to reduce costs.
If one contractor is to be changed, which one do you recommend? Briefly explain why.

#5. (100 pts) The year 2017 is close to being half over. How much is LUML likely to spend for warehousing for the rest of the year? How much for the full year? Is this better or worse than budgeted? I’d like to see this information for each warehouse; and, the total for all our warehousing operations). Briefly explain your work and answers. [Hint: did you make any assumptions that the CEO should know about?]

#6. (100 pts) Using the 2016 financial statement, what would our Strategic Profit Model (SPM) look like? Briefly interpret the results. Briefly interpret two of the key items that most relate to logistics.

#7. (100 pts) I’d like to reduce shipping costs. Holding all other information constant, what would be the effect on ROA if our warehousing/shipping costs declined 10 percent? Explain. [Hint: It should be obvious that the CEO is not looking for a simple answer — ROA increases/does not change/decreases. Best to compute and explain the actual change?]

#8. (50 pts) I do not expect the costs to be identical for all warehouses. But is there too great a range in costs per unit between the warehouses? Explain.

#9. (100 pts) What is your overall analysis and recommendation (or recommendations) to help us to achieve our objectives? Briefly explain.

#10. (50 pts) I have heard a bit about logistics and a logistics chain. How can warehouse operations be an activity in the logistics channel? Please provide a short explanation.

#11. (50 pts) The Comptroller told me that there is probably a bit of money that could be put into our information systems. How can IS/IT be applied in warehousing operations at LUML? [Hint: recall that we looked at many types of IS/IT. You might include whether each type likely has the potential to help meet the CEO’s goal to reduce warehousing expenses and reduce the range.]
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REMEMBER THAT THERE ARE OTHER GRADED ELEMENTS THAT ARE NOT SEPARATELY LISTED (e.g., on time; format and completeness; purpose).

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Your mission? Prepare a memo to the CEO with the answers to her questions. Remember that you also need to send your supporting analysis. The material should be organized as you would send to a senior official. And you should also be sure to cite any material used that is not your own.

The reason that we do this type of analysis is to help manage better, to solve problems, and the like. Interpreting the information in relation to the business situation is important.

****

Keep in mind

#1 the
answer to each question needs to be
easily identifiable. The CEO is almost certainly not going to remember the details of each question that she asked. There is at least a week between the question being asked and reply expected. And she is unlikely to “go looking” for the answer somewhere in a document. [On the other side of the coin, for your purposes, you want to make sure that you answered each of the questions.]

#2 in most cases the CEO has asked you to explain your answers. So, each answer needs to have the answer plus the supporting rationale. However, that does
not mean that each answer/explanation needs to be pages long! Some of the backup work might be a bit lengthy, but most of it is very brief. The answer itself and the rationale will usually only be a couple of sentences.

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Light Up My Light, Inc.

Income Statement 2016

Sales

$4,003,450

Cost of goods sold

$937,000

Gross margin

$3,066,450

Transportation cost

$657,322

Warehousing cost

$735,982

Inventory carrying cost

$567,987

Other operating cost

$345,876

Total operating costs

$2,307,167

Earnings before interest and taxes

$759,283

Interest

$110,000

Taxes

$69,000

Net income

$580,283

Light Up My Light, Inc.

Balance Sheet as of December 31, 2016

Assets

Cash

$706,034

Accounts receivable

355,450

Inventory

1,590,435

Total current assets

$2,651,919

Net fixed assets

803,056

Total assets

$3,454,975

Liabilities

Current liabilities

$1,678,589

Long term debt

398,060

Total liabilities

$2,076,649

Shareholders’ equity

1,378,326

Total liabilities and equity

$3,454,975

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Here is the information that you asked for. We have been using the number of shipments as a basic metric. That seems to have served us well over the years. At first blush, given the CEO’s questions and areas of interest, you may need to revise the metric being used.

Light Up My Light, Inc.

Warehouse operations performance data (special run)

2016

2017

Units shipped

Warehouse expense

Units shipped

Warehouse expense

Location

Actual
Jan-Dec

Actual
Jan-May

Actual
Jan-Dec

Actual
Jan-May

Projected
Jan-Dec

Actual
Jan-May

Budgeted
Jan-Dec

Actual
Jan-May

Akron

12,437

4,080

$156,803

$35,890

15,000

4,035

$178,000

$40,228

Buffalo

6,920

3,061

$63,417

$27,915

7,200

3,119

$73,000

$29,416

Melbourne

32,104

14,621

$246,315

$131,618

38,000

15,230

$305,000

$141,222

Detroit z

3,021

1,005z

$28,019

$8,600z

3,100

1,421

$31,000

$14,900

Cleveland

2,016

980

$16,411

$8,883

2,000

804

$17,000

$9,605

Los Sanna

12,491

11,431

$151,975

$109,690

17,000

9,444

$176,000

$93,280

Portland

8,333

4,028

$73,015

$36,021

9,000

4,600

$85,000

$42,616

St. Louis

5,921

2,331

$51,819

$23,232

8,000

2,116

$56,000

$19,191

Note z: In March 2016, the warehouse was closed for two weeks due to a strike.

Case 3, Part 2

(100 points) Given the analysis and results in part 1, how might the issues raised tie in with the various organizational and managerial issues in logistics?

You should be able to write a great deal about this. But I am targeting for very nice coverage in about 2 single spaced pages. Sometimes tables or figures can help, but they do need some basic explanation.

PS. Remember that we are targeting to use 12 pitch type. Not 10 or 8 (or, gulp, even smaller). Going the other way, not 16, 18, 20, 24, etc.!

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Case 3, Part 3

Light Up My Life, Inc.

During the weekly meeting, the topic of “Supply Chains” and “Supply Chain Management” came up.

The CEO asked if she could get some information on the following:

(100 points for each question. Remember that there are also other standard graded elements that are not separately listed.)

#1 What, indeed, is a supply chain?

#2 How does logistics fit into a supply chain model?

#3 In general, should LUML be looking at the possible use of Supply Chain Facilitators?

** If yes, then from a general management perspective, what types of facilitators might be considered?

** If yes, then from a logistics perspective, what types of facilitators might be considered?

** If yes, then what might be some key considerations on how a facilitator could be used?

Tom, our VP, says that he will have a memo sent to the CEO in a few days with the information. After the meeting he asks you to write up the memo.

[You are not restricted on the length, but a very nice answer can be prepared in — say — one page — or even less — per question. Remember that the CEO is asking this, so she must not be very familiar with these concepts.

Sometimes a good figure can help a great deal. But very few figures are “stand alone” in their own right. Most figures also need some explanation.]

Running head: CASE 3 ORGANIZATIONAL AND MANAGERIAL ANALYSIS 1

CASE 3 ORGANIZATIONAL AND MANAGERIAL ANALYSIS

Case 3 Organizational and Managerial Analysis of Light Up My Light, Inc.

Abstract

This paper will focus on the organizational and managerial issues of Case 3 of the Florida Institute of Technology Management (MGT) 5006 Course: Logistics Policy. Case 3 focused on analysis of Light Up My Light, Inc. (LUML) performance data in warehouses and financial data to include Strategic Profit Model. This paper will use Contemporary Logistics, Eleventh Edition as the basis for organizational and managerial issues. I will describe how LUML is a fragmented, decentralized and networked organization. I will also link my analysis in Case 3 to the managerial issues of Productivity and Complexity. Productivity of the company hinges on very vague terms of output. Warehouses use the metric of shipments as their basis of productivity with no real analysis of inputs (human capital). LUML is also slightly complex in that it has warehouses in 8 different locales with decisions seemingly made at each warehouse in regards to logistics functionality. The limited information available so far prevents a deeper dive into the issues of Quality, Risk, and Sustainability for the purpose of this project.

Case 3 Organizational and Managerial Analysis of Light Up My Light, Inc.

The purpose of this paper is to link my analysis in Case 3 of MGT 5006 to the various organizational and managerial issues in logistics. I will specifically look at the type of logistics organizational structure that Light Up My Light, Inc. (LUML) seems to have based on the limited amount of information in the 2 cases so far in this course. I will also attempt to describe what I believe to be LUML’s organizational design. I will then link my analysis to the managerial issues of productivity and complexity. For the purposes of this paper I am using the definitions and explanations used in Murphy & Knemeyer’s Contemporary Logistics Eleventh Edition.

Through the last two cases, but especially the information in Case 3, one can come to some conclusions of the type of organizational structure that LUML employs. LUML is a smaller company, but does have eight distribution warehouses across the nation that allows it to distribute its products. Throughout the cases I am writing memorandums on behalf of my boss, Tom Perkins, who is the Vice President for Logistics to the CEO, Mrs. Elise Ennis. All of this information points to the organizational structure. It indicates that the company operates a more unified structure being that there is a dedicated logistics department in which we work. All of the CEO’s questions about logistics in the company seem to go to Tom Perkins, and by extension, us. If the company were using fragmented structure, the CEO would more likely be going straight to a particular department head for logistics information. Without more information to contradict, I also believe that LUML operates a centralized structure as opposed to decentralized. I do not find that decisions about logistics are made independently across division or product group level.

The organizational design of LUML is a little harder to decipher. The evidence I had was the questions asked of me so far from the CEO and my boss Tom Perkins. The particular questions concerning the operation and proficiency of the warehouses across the company lead me to believe that the organizational design is probably a network in which the company empowers its warehouse managers to make decisions for their warehouses independent of the main office in Melbourne. If decisions were being made in Melbourne (i.e. hierarchical/functional) and directed down we would probably not be receiving inquiries about analyzing and reporting on warehouse functions. On the same token, there is no evidence to suggest that a single employee has cross-functional responsibilities that would make it a matrix design. Overall the evidence from the cases indicate that LUML has a unified and centralized logistics structure and its design is that of a network. I think that this is the best possible structure and design for the company. The unified structure is also used by leading-edge logistics companies in the nation (Murphy & Knemeyer, 2015). The network design that LUML seems to employ, in my belief, is the best overall. This design allows a company to provide quicker customer response leading to increased customer satisfaction because it allows lower level leaders and managers in the company to make decisions quicker, such as at the warehouses of LUML.

Murphy & Knemeyer (2015) describe five overall managerial issues that span across all logistics functions. They are Productivity, Quality, Risk, Sustainability, and Complexity. In order to be more concise I will focus on two that I believe this case highlighted the most. These are productivity and complexity. The productivity of the warehouses seem to be of high concern for the CEO of LUML and will take up the bulk of my discussion.

As mentioned, productivity of the warehouses are of serious concern for the CEO of LUML, who may make a decision in reference to changing out the contract of one of the warehouses. Productivity is probably the most visible of the five because it is where money is made or lost for a company. In general terms productivity is found by dividing input from output (Murphy & Knemeyer, 2015). We don’t have a lot of information to go on in reference each warehouses inputs, but we do have their outputs from 2016 and 2017. The warehousing department uses shipments as their metric for productivity. While this is a good metric to use, it does not provide the full picture because it says nothing to the inputs of each warehouse, which means the true productivity of the warehouse cannot be found. This is why one of my recommendations to the CEO was to have each warehouse manager do a full productivity report of their respective warehouse. The CEO wants to find ways to have the warehouses become more productive and decrease overall costs. Murphy & Knemeyer (2015) describe the three ways to increase productivity. They are to decrease input while maintaining output, increasing output while maintaining input, and increasing output while decreasing input. Warehouse operations input deal with human capital, which means decreasing input in the company is not really logical. The warehouses would have to increase output in order to increase productivity. Another facet of productivity that is not specifically mentioned in the case, but is absolutely implied is the transportation of goods. Obviously, the goods that are made must make it the customer somehow. The cheapest method for a company to do that is through trucks. A robust trucking organization in a company is also expensive in fuel and maintenance costs of the fleet. Productivity is also where information systems (IS) upgrades can be beneficial for a company. The use of radio frequency identification (RFID) allows a warehouse to digitize its inventory. The use of global positioning systems (GPS) allows a company to track its truck fleet and allows drivers to utilize quicker route planning which saves in gas costs. Companies can also employ the tachograph in their truck fleet to allow continuous recording of the truck and hold drivers more accountable while they are on the road (Murphy & Knemeyer, 2015, p.59). When it comes to automation of warehouse functions the Defense Department, and more specifically the United States Army has transitioned to a digitized warehouse operation. The Army’s Supply Support Activity (SSA) has transitioned to the Global Combat Support System- Army (GCSS-A) which is a digital system for warehousing and distribution operations that utilizes the robust civilian logistics structure as well as RFID to facilitate warehouse operations. (United States Army, 2017). In my personal experience it seems to have made a positive impact on SSA operations in the last three years since its implementation.

The second managerial issue of concern with LUML is complexity. The company operates eight warehouses across the country which implies complexity because of the different nodes in which logistics takes place in the company. This is common across large companies across the globe and is not necessarily a bad thing. It would be incumbent on LUML on properly manage the warehouses and their productivity to limit the impact of the structure’s complexity. Being that LUML is a light fixture company and focuses its efforts to that end, it does not have to worry about range complexity. On the same token there is no evidence to suggest that LUML suffers from faulty processes, or process complexity. (Murphy & Knemeyer, 2015).

In this paper I have described the organizational structure and design of LUML as well as how the managerial issues of productivity and complexity relate to their operations. LUML seems to operate under a unified and centralized structure and a network design. The warehouses seem to lack basic productivity reporting measures as they do not take into account their input. LUML has a complex structure in that it operates eight warehouses across America, but does not have range or process complexity.

References

Murphy, Jr., Paul R.; Knemeyer, A. Michael (2015). Contemporary logistics eleventh edition. Saddle River, New Jersey: Pearson

United States Army (2017). Global Combat Support System- Army System Description. Retrieved from: http://www.gcss.army.mil/About/SystemDescription.aspx