Itroduction to the study
Operations management forms a core base for any organisation across all sectors. Operations management and logistics consist of several other fields, such as quality management, information system, logistics, product development and even human resource management. Operations cover performance, forecasting and delivery activities among others.
In addition, supply chain management and information system design also fall under logistics and operations management. In short, the mission of logistics and operations management is to “develop suitable goods and services in the right quality and supply them to the right destination and at the right time” (Heizer and Render, 2013). In this manner, operations and logistics management is a critical part of a company’s processes.
Organisations must focus on the design, implementation and management of operations for effectual utilisation of “human resources, raw materials, physical assets, intangible assets, inventory management, finished products, and information system management” (Heizer and Render, 2013).
It accounts for the entire supply chain management from “acquisition of raw materials to consumption of the finished products or services” (Heizer and Render, 2013). Thus, it is a complex management process, which requires experts with advanced knowledge in supply chain management.
In the United Arab Emirates, particularly in Dubai, logistics and operations management practices have grown significantly because Dubai is the transport hub for the Middle East region. Today, Dubai has become a key player in the global logistics industry. The growth of Dubai as a logistic hub originated from the effort of its government and independent companies. The government of Dubai understood the relevance of logistics and transport in the region.
The geographical position of Dubai has made it a global logistics and transport hub. In addition, the government’s reforms to create free trade zones as well as storage and shipment facilities have also played a critical role in establishing Dubai as a logistics and transport hub (Summers, 2014). Moreover, the UAE also offers the lowest costs of logistics and transport.
Consequently, it has attracted several foreign investors and new firms. In short, Dubai has a thriving logistics and transport system. Companies such as Reliance Freight Systems LLC, Avant Garde Logistics and Altenaiji Group Logistics among others have noted that Dubai is a suitable location for business.
This project focuses on Altenaiji Group Logistics in Dubai to explain the aspects of operations management in a logistics company.
Background of the Company
Established in 2014 in Dubai, Altenaiji Group Logistics is a freight-forwarding firm that provides various services related to operations and logistics management with all kinds of products. Today, the company has few branches in Dubai. However, the company can serve both its local and international clients with a full range of various services in logistics and operations management. In addition, Altenaiji Group Logistics offers supply chain management services to its customers.
It has over 50 highly trained and motivated employees. In the last four months, Altenaiji has achieved favourable development in terms of new customer acquisition.
The company’s vision is to become one of the most dependable and flexible firms in the freight and logistics industry in Dubai while its mission is to promote best values in the world freight industry and focus to develop the industry with customised services.
The company has adopted forecasting and competitive rates to facilitate its operations management in Dubai. In addition, it offers a range of high quality alternative services for clients and total logistics support among other advantages.
Industry in Which the Company Competes
Altenaiji Group Logistics operates in the highly competitive logistics freight and transport industry in Dubai and the wider Gulf region. The company must face well-established firms like DHL, Aramex, Agility, Gulf Agency, Trans Net LLC and Avant Garde Logistics among others. Some of these logistics firms have global presence while others are small and command low market shares. As a result, the industry is highly competitive, fragmented and difficult to understand.
Although Dubai has established itself as the region’s logistics hub, there is fierce competition in the region because many Gulf region states have copied its model of free zones and logistics hubs. This implies that many firms will scramble for the logistics and transport industry in the region. In addition, many firms will seek investment opportunities in neighbouring states (Arabian Supply Chain, 2014).
The position of Dubai has, however, provided better opportunities for logistics and transport companies in the region. It offers cost effective transport systems, hence significant savings in freight costs and time (Baluch, 2014).
Despite competition from other regions and companies, Altenaiji Group Logistics has continued to grow with impressive performance over the last four months. Dubai’s position as a logistics and transport hub has favoured the company’s growth strategies.
Logistics professionals have, however, observed that there are inherent challenges in Dubai’s logistic and transport industry. The most relevant issue is cargo security (Baluch, 2014). As threats to cargo security escalate, they affect the logistics and transport system in Dubai. This is therefore an issue which industry stakeholders must address to allow the growth of domestic firms and international commerce.
Altenaiji Group Logistics has strengthened its position by opening other small outlets in Dubai. In addition, the company is strategically located at Jebel Ali Free Zone, Dubai Cargo Village. Thus, it attracts most business opportunities in Dubai. In fact, all its offices are in the same location at Jebel Ali Free Zone to facilitate operations management.
Strategy of the Company
Altenaiji Group Logistics has pursued a low cost strategy, as reflected in its competitive rates and alternative options to clients.
A low cost strategy focuses on the company’s ability to produce quality goods and services at low costs relative to its competitors. This strategy goes beyond cost reduction. Instead, a low cost strategy must account for the company’s efficiency during strategic planning. The approach allows firms to guard their market shares and prevent other firms from making inroads into their markets. This could also be a reactive response to changes in the market.
Altenaiji Group Logistics has positioned itself as a low cost logistics and freight company. It aims to capture and increase market shares throughout the Gulf region by opening other branches across Gulf States. The company relies on highly trained lean staff to run its core operations with the aim of reducing operation costs. As a result, Altenaiji Group Logistics has been able to transfer cost advantages into low prices to its clients through competitive rates, thereby acquiring market shares (Heizer and Render, 2013).
The prospect of developing a large market base offers an incredible opportunity for an organisation to leverage on cheap production and reduce costs. In this sense, the company strives to establish regional offices in emerging logistics and transport hubs in the Gulf region to acquire market shares and reduce competition. Consequently, Altenaiji Group Logistics has been able to translate cost cutting into a cost advantage for its clients. In other words, Altenaiji is successfully competing in low rates to establish a cost leadership strategy.
Altenaiji Group Logistics strives to reduce costs of its customers. This creates an image of a competitive company in the market, which also provides low prices. Eventually, Altenaiji Group Logistics will improve market shares and increase its revenues further.
The company also strives to offer quality services through its highly trained employees. Economies of scale and efficiency therefore drive the strategic objectives of the company. For instance, Altenaiji Group Logistics must evaluate every activity within its value chain and assess competitors, such as Avant Garde Logistics, in order to surpass them. The company’s innovative approaches concentrate on process improvements. As a result, the company has several alternatives for its customers as it pursues all possible clients across various market segments, including mass market.
The company optimises its supply chain management activities to drive a low cost strategy in the market. This implies that the company must maintain the effective control of all inbound products and logistics activities. Eventually, the cost effectiveness approach emanates right from their clients until the product is used. This is a critical phase for the company because there are major costs associated with managing inbound products and services.
Operational areas
The company must focus on several operational areas in order to enhance its operational activities and outcomes.
Goods and service design
The company’s services influence the entire supply chain management. For instance, Altenaiji boasts of highly qualified staff to run its logistics and operations management. It can therefore control costs and quality of services it offers to its customers. In fact, the company asserts that it offers the best services and alternatives to customers at competitive rates.
Quality services
Altenaiji has acknowledged that its customers require high quality services.Its decision on operations management with regard to quality services must therefore adhere to strict standards and customer requirements. The company operates within its quality benchmark and must adjust its procedures to meet unique needs of its diverse customer base.
Process and capacity design
Although the company does not manufacture any products, it must focus on the process and design of its service delivery processes. During operations management, the company must make critical decisions on the human resource qualities, technology required, process management and the extent of reliance on technologies alongside a cost model.
Although making critical decisions on service processes might be simple relative to decisions on products, the company must identify customers in the entire process and show how to meet their specific needs. Service design is thereofre critical for the company because it influences other several processes in the supply chain management. This process also requires Altenaiji to evaluate its financial strengths as well as forecast future processes and possible changes in the market.
Location
Location is a critical aspect of logistics and transport systems. Altenaiji is strategically located at Jebel Ali Free Zone, Dubai Cargo Village. In addition, the company has few other offices spread across Dubai. The location facilitates the ease of providing services to customers.
Layout design
The company has determined its capacity needs in order to cater for its customers effectively. For instance, its logistics and distribution centres have various measurements to cater for customers’ needs. Moreover, these locations are designed for various products, including garments and heavy trucks.
Human resources
Altenaiji has over 50 employees, who are the integral part of managing the entire system. The company claims that it has highly trained employees to provide its customers with high quality services.
Supply chain management
Altenaiji offers supply chain management services, hence the company’s critical decisions regarding purchase, materials, location, costs, timely delivery to end users at the lowest cost possible, etc.
Inventory
The company must maintain inventory to avoid any possible disruption of service delivery to customers. Moreover, it must meet the number of employees required for such services. Thus, its logistics and distribution centres must have adequate space to cater for new customers’ demands.
Scheduling
Scheduling results in efficient allocation of resources, control and management of various aspects of operations management, human resource management and manufacturing of required services and products.
In other words, Altenaiji must develop a schedule to account for short-term, medium-term and long-term needs of its diverse customer base and demands. One major challenge is that customers’ demands are highly volatile and direct. The company must therefore have employees with right sets of skills, attitudes and knowledge to meet them.
Maintenance
Altenaiji strives to make critical decisions that enhance the level of reliability and stability that it requires to ensure maximum provision of services to customers.
Product and service design
Altenaiji Group Logistics must account for technological changes, economic and demographic characteristics of its customers and employees, threats, opportunities and competition when developing new services and products.
At Altenaiji, service design involves all activities that relate to employee planning, communication and process management to provide customers with high quality services. The company looks at its services, customers, their expectations or experiences with the services. In the process, the company focuses on the degree of variation based on the customers’ needs and the extent of customers’ contact to indicate the level of standardisation required.
Customer contact therefore enhances the chances of providing and selling services. The company must, however, capture all details that customers require to gain value.
One major approach that Altenaiji Group Logistics uses in service design is standardisation. The company has focused on developing standardised services to cater for the common market. This strategy helps it to maintain low prices or competitive rates. It can increase service delivery and maintain low costs.
In addition to low costs in providing standardised services to customers, Altenaiji Group Logistics has been able to develop a robust schedule of work and inventory controls. These are routine activities which have promoted the quality of services that it offers. Standardisation may, however, affect variety and decrease the company’s appeal in the competitive logistics market in Dubai. Consequently, Altenaiji Group Logistics has adopted mass customisation of services.
The company uses mass customisation alongside standardisation to meet diverse needs of customers. This strategy allows Altenaiji to offer various alternatives to customers and keep costs low. In most cases, customers must define their preferences and then the company uses such specifications to design and deliver services to them.
Although the company has introduced its services recently, it has started to experience growth in its service provision. The growth phase is a major characteristic in many logistics and transportation companies that operate in Dubai and the entire region.
The company has achieved positive reputation, which has facilitated the growth of its services in Dubai. Moreover, it engages in forecasting to determine future demands of its services in the region. In addition, Altenaiji Group Logistics continues to look for innovative ways to meet unique needs of customers. As a result, Altenaiji has developed several services and alternatives to cater for different needs of customers.
Given the importance of the company’s services, Altenaiji strives to satisfy the needs of its customers in order to increase sales and profitability, acquire market shares and be a successful company. As a result, the company focuses on developing sustainable services. It must improve existing services and products through continuous processes of research, design, production, user safety, reliability as well as meeting regulatory and legal requirements in all countries in which it operates.
It can assess sustainability through various means. Altenaiji conducts a value analysis to identify various processes and minimise costs at every stage of development and service provision. It also recycles some of the items used in packaging and product delivery for future use.
It saves costs and meets environmental concerns in the industry at the same time. The company also reviews performance quality of its services for improving them and creating excitement in customers. It believes that such improvements can change the customers’ perception of its services.
Altenaiji must also account for legal and ethical requirements when designing its services and products. Government agencies ensure that companies adhere to packing laws, deliver legal products and prevent any potential use of dangerous items in product development or service delivery. Any harm that results from the service usage should be the responsibility of the company. It must accept liability in case of defective services, products or non-delivery.
Altenaiji therefore aims to provide its services and products based on the customers’ specific needs in order to avoid any potential lawsuits, and its services tend to be successful.
Capacity
Altenaiji must strive to maintain optimum capacity in the process of managing its operations (Heizer and Render, 2013). As a result, it is able to meet demands in all situations. This process requires both short-term and long-term planning.
Altenaiji generates reports about its monthly activities across its offices, warehouse and distribution centres to determine future expected demands for capacity. It conducts a regular analysis of capacity against the delivery schedules in order to attain its delivery objectives.
In some cases, the company has lacked adequate capacity. Consequently, it conducts additional shifts, subcontracts other deliveries and engages in overtime deliveries in the affected distribution channels.
In short-term planning for capacity, the company aims to schedule and plan deliveries as well as balance the workload. It must ensure that all its vehicles and other means of deliveries are functioning to their maximum capacities. Thus, it strives to ensure uninterrupted workflow.
The company reviews its capacity requirements during the planning phase. It understands its current capacity and the optimal rate of operations.
Altenaiji focuses on the available capacity against actual demands rather than the content of the inventory.
It engages in a weekly analysis of its capacity to determine delivery schedules and demands. The company tracks all potential sources of bottleneck and operation activities. Altenaiji asserts that it does not want to have a long queue of non-delivered products. Thus, balancing its workflow has been the focus of the short-term planning of capacity.
Every month, Altenaiji conducts an analysis to determine its capacity on medium-term demands. The company aims to engage in short-term measures to reduce shortages and enhance deliveries. At the same time, the company also reviews its financial data and compares it with the demand capacity. It evaluates the decision to hire additional personnel, conduct overtime and subcontract services against costs and potential benefits.
In the long-term planning, Altenaiji focuses on acquiring new facilities to enhance capacity and service provision to customers. It evaluates costs against potential revenues. These are critical decisions which the company must evaluate carefully. Decisions to acquire new equipment or expand operations to other locations are, however, complex and could be extremely costly for the company.
Forecasting
Altenaiji uses a forecasting approach in its operations management, but the company does not provide further details.
Forecasting helps the company in developing “effective business plans and reducing uncertainties of unknown outcomes in the future” (Heizer and Render, 2013). It can therefore relate deliveries with demands. Thereby, it is necessary for Altenaiji to forecast and determine the capacity required to meet its obligations to customers.
Forecasting Approaches
There are three major categories of forecasting approaches used in operations management. Judgemental forecast depends on “subjective opinions and inputs from different sources” (Heizer and Render, 2013). Time-Series forecast relies on historical data to identify patterns for predicting the future. Finally, associative models use equations to “determine the impact of predictor variables, which determine specific values of interests to users” (Heizer and Render, 2013).
Forecasting at Altenaiji
The company hardly refers to any meaningful data in its forecasting techniques. It is therefore assumed that Altenaiji depends on judgemental forecasting techniques to determine future demands for its services. This qualitative method is, however, highly subjective and prone to errors.
This method serves the company on a short-term basis. In most cases, data used could be unreliable or unavailable. The approach helps the company to forecast demands for its services and maintain adequate space and inventory. By using the forecasting technique, the company can schedule its operations and plan short-term usages of available resources.
There is a lack of historical data to assist the company in conducting robust forecasting techniques. Consequently, it relies on management team’s opinions, sales representatives’ inputs and customers’ declarations for forecasting purposes. When considering executives’ opinions, the company relies on a small team of senior managers to predict demands for its services across the Gulf region. At the same time, it also evaluates sales teams’ inputs and customers’ promises to forecast future demands.
This forecasting approach is, however, not effective, but rather subjective. The company should therefore adopt highly reliable approaches, like Time-Series and associate models.
Process Selection and Facility Layout
Altenaiji uses process selection and facility layout to enhance its operations management.
In the process selection, Altenaiji aims to enhance its methods of delivering goods. The company has noted that process selection affects many elements of its operations, including capacity planning, logistics equipment, technology required as well as logistics and distribution centre designs.
The company uses process selection when it intends to venture into a new market and deploy advanced technologies in operations management. It enhances reporting and differentiation. Process selection, however, depends on the firm’s process strategy (Heizer and Render, 2013). The company aims to maximise capital intensity to accomplish its tasks by relying on equipment and highly trained employees. At the same time, Altenaiji focuses on process flexibility.
In other words, the company strives to adjust its processes as a way of meeting unique customers’ demands. In some cases, it applies process flexibility without depending on other factors like technology or service design, particularly in short-term deliveries.
In facility layout, the company aims to enhance efficiency and effectiveness in order to achieve its core strategic objectives. For instance, Altenaiji has few facilities across Dubai. In every work centre, distribution unit, and loading bay, the company understands all the measurements and capacity. Every regional office has adequate staff to handle all tasks as required.
Location
Altenaiji Group Logistics is strategically located at the prime location of Dubai City, Jebel Ali Free Zone, Dubai Cargo Village. The offices control key areas related to entire operations of sea imports, sales, accounts, and all other offices. These are mainly duty free zones. This approach aims to save costs and maximise returns (Hitt, Ireland and Hoskisson, 2008).
The location of the head office at Jebel Ali Free Zone has positioned Altenaiji strategically in the market. When one focuses on the location and looks at Dubai, it is clear that Altenaiji leverages on Dubai’s foremost advantage in terms of a strategic location that can serve the world.
Dubai is located in “the middle of the Far East and Europe and sits at the crossroad of international trade and commerce between the Eastern and Western worlds” (Baluch, 2014).Dubai is therefore considered the route to the world’s emerging economies, such as China, Africa and India (Baluch, 2014). As a result, logistics and transport companies in Dubai have realised steady growth as these economies continue to thrive.
The location of Dubai has strengthened its place as a leading transport hub with sea-air means. Moreover, this is a cost-effective means of transportation for many firms compared to pure sea freight or air freight methods (Baluch, 2014). As a result, such firms as Altenaiji Group Logistics and other logistics and transport companies in Dubai make significant savings in terms of costs and time.
Baluch observes that, “Sea-air allows transit time of only 15 to 17 days from origin port to a destination airport and savings on cost of as much as 50% compared to pure airfreight” (Baluch, 2014).
In addition, analysts have noted that Dubai, as an international logistics hub, will continue to grow as many firms seek for logistics and transportation services.
The location of Altenaiji Group Logistics in Dubai therefore provides opportunities for further growth and cost saving.
Conclusion
This essay has explored the elements of operations management in a logistics and transportation company. It shows that firms must adopt best practices in operations management in order to run their processes efficiently and effectively.
Altenaiji Group Logistics shows that operations management can create value for firms in terms of services or products. The goal of providing effective operations management is to ensure efficiency in supply and demand.
The essay also demonstrates that operations management focuses on enhancing outputs through value addition. It therefore differentiates between input costs and product costs.
It is imperative to note that operations management accounts for many activities and responsibilities in a company. For instance, at Altenaiji Group Logistics, one can observe service designs and efficiency in all processes for maximum delivery of services to customers. The company must ensure effective selection of employees, capacity planning, delivery schedules, controlling logistics and distribution centres, quality services and making decisions on expansion strategies, etc.to run in an efficient and effective manner.
It is recommended that the company should focus on using robust methods of forecasting to generate valuable insights for decision-making. In addition, the company must promote its low cost strategy alongside quality services delivered by highly qualified and trained employees. The Gulf region will provide better growth opportunities for the company, as international markets continue to expand and Dubai prepares to host 2020 Expo.
References
Arabian Supply Chain. (2014). Emerging threat to the UAE’s logistics hubs. Web.
Baluch, I. (2014). Dubai logistics: growth and challenges. Web.
Heizer, J., and Render, B. (2013). Principles of Operations Management (9th ed.). New York: Prentice Hall.
Hitt, M., Ireland, D. and Hoskisson, R. (2008). Strategic Management: Competitiveness and Globalization : Concepts & Cases. New York: Cengage Learning.
Summers, R. (2014). Dubai: The Primary Logistics and Freight Forwarding Hub of UAE. Web.