Introduction
The rapid development of market relations, the globalization of the economy, and the dominance of the consumer market create the need for the use of effective management technologies. In transport activities, the issue of assessing the services provided is relevant since analysis and, if necessary, subsequent reengineering will improve the efficiency of transportation. It is no coincidence that in recent years, in addition to the balanced scorecard and the Supply Chain Operations Reference (SCOR) model, more and more companies evaluate their activities using key KPIs.
In the most general terms, KPIs mean key performance indicators of economic activities, which are a necessary and sufficient series of relatively easily applicable performance and performance indicators that allow one to link the implementation of the plan with the main functions and results of product flow management and thus determine the need for corrective action.
It is important to understand that the main point is the key performance indicators of transportation. If at this stage, most experts agree on the understanding of the idea and principle of KPI, then the question of the number and composition of indicators is still arguable.
Despite significant theoretical developments in the field of formation, for most companies, the issue of performance evaluation is debatable. In most developed countries, a system of indicators has been formed in general terms, assessing efficiency and effectiveness. These usually include total costs, quality of service, duration of transportation, productivity, and return on investment in infrastructure. These indicators are considered to be key or complex performance indicators. The most important parameter of the supply chain – time, one way or another, is represented in each of the specified KPIs.
It seems that focusing on preferential treatment of supply chain transportation issues can become a key link on the path to economic growth and increased efficiency of enterprises. Hence, given the importance of the transport component in supply chains, it becomes obvious the need for the further development of modern management methods that will allow linking the modes of transport, infrastructure, and warehouse complexes into a single whole. In addition to the direct impact on the supply chain, transportation has an indirect effect on the final cost of the goods, as it allows one to get added value.
To take into account the added value from performing transportation in the total cost model in supply chains, an additional variable can be introduced, including the added value in the price of products from previously performed operations and functions, in particular transportation.
In this situation, when problems are obvious, there are prospects and development plans, it is important to focus on solving the issues of optimizing transport activities and increasing the level of service in the medium and long term. One of the priority areas is the development and widespread introduction of information technologies. This is not only about optimizing processes at the operational or tactical management level. It is important to propose ideas for software development at the level of strategic management of the country’s transport system since most decisions are made based on the experience and opinion of experts, which does not always mean the accuracy of the assessment.
Therefore, one of the most promising ways to enhance the efficiency of supply chain management is associated with digitalization. The task comes down to the development of analytical models and methods aimed at supporting the adoption of managerial decisions, which will later become the basis for writing certain software products. This is because the analytical approach to the assessment of performance indicators improves the accuracy of the evaluation and, unlike the heuristic approach, is devoid of subjectivity. The numerically expressed results of operations research will allow managers to correctly justify management decisions.
Transportation is a core supply chain strategy that enhances the time and place utilities of goods and services. According to Fisher Ke et al. (2015), transportation connects business activities between distributors and customers across regions. Therefore, transport means determine customer satisfaction, cash flows, supply chain effectiveness, and logistic costs, among other benefits. Most of We are the Best’s customers are located in Spain with some from Paris (France) and Porto (Portugal).
The most likely modes of delivery of manufactured goods are air freight for distant clients such as those in Paris and Porto, and road for local customers. Computer screens are delicate, which is why delivery by air is more appropriate. The distribution of the four warehouses across the country promotes customers’ accessibility from every direction (see Appendix 1). Hence, the firm can minimize distribution costs.
The warehouses are fully stocked with finished goods that can be shipped on demand. This distribution of warehouses minimizes the shipment time and distribution costs incurred to deliver goods within the agreed duration. The maintenance of an inventory of finished goods also promotes time and place utilities at any particular moment. The company is proactive enough to stock manufactured goods which is sufficiently supplied for twenty days. This further enhances customer satisfaction since they receive what they order without extreme delays. One shortcoming of the transport strategy is on delivery time. It takes four labor days for ordered goods to be delivered regardless of customer and warehouse location. Since the company does not operate on weekends, it poses a great disadvantage to clients who need the products. The following are some recommendations on how to improve the transport strategy of We are the Best:
- We are the Best can incorporate ocean freight into their transportation strategy since it is a low-cost mode of shipping goods. It is appropriate for transporting large volumes of commodities and in situations when time is not a priority (Fisher Ke et al., 2015). For example, products can be conveyed by the Mediterranean Sea from the central warehouse in Barcelona to customers in and around the port of Valencia (see Appendix 1).
- The company should consider slotting over the weekends and holidays to carry out assembly and supply of items. This will create more time to manufacture and deliver more goods hence increasing profits from sales. In the event a company which deals in a similar product arises, we are the Best will be better inclined to the competition.
Supply Optimization
Optimization of the supply range is intended to improve efficiency in the process. That being the case, the current supply range of We are the Best has some discrepancies that make it non-optimal. The company is privy to the existence of potential customers in parts of Lisbon (Portugal), yet no substantive efforts are being made to acquire these clients. This makes it more costly to maintain an inventory that could otherwise be sold. We are the Best is the only local firm dealing with computer screens, four warehouses to serve customers in the three countries is underwhelming.
Assuming there were more warehouses in every part of the country, the company would be required to manufacture sufficient products to serve the customers and more to be supplied in more than twenty days. It takes too long (two days) to assemble a single model, a task that automation would solve in a matter of hours, leaving the firm with the option of producing more and therefore distributing more. This would increase sales volume to a great extent. Some of the changes or improvements that would help in optimizing the supply chain management are outlined below:
- We are the Best and should consider making project plans that would enable them to operate more orderly and efficiently. For example, marketing plans will help them reach more customers, both locally and internationally. When carried out effectively, these plans would reward the organization with increased market and sales and a reduction of unnecessary costs.
- We are the Best should contemplate outsourcing the supply of raw materials, manufacturing, or assembly jobs to foreign companies since there are no local companies selling computer screens. Outsourcing will help We are the Best to reduce manufacturing costs and, at the same time, remain competitive. If they minimize expenses incurred in production, they are likely to boost their profit margins.
- The company can consider automation of its manufacturing processes. What it takes is the acquisition of relevant equipment and sensitizing the staff of their appropriate handling and use. Automation reduces costs related to manual manufacturing, the time is taken to produce the screen models, and improves product quality.
- We are the Best Company that should open up more warehouses throughout the country and also contemplate engaging more distribution partners and other intermediaries. Alternatively, they could earn more income by improving the efficiency of already existing distribution channels. This initiative will increase their supply chain visibility. However, the company must select distributors that are more or less compatible with We are the Best based on business prototypes and objectives. Intermediaries can help the company increase sales and decrease costs.
Marketing or Sales Strategy
There is no well-known marketing strategy at We are the Best, judging from how Rafael and Raul fervently discredit the idea of commencing marketing. It is clear from their arguments and excuses that they do not understand the importance of marketing their products. Furthermore, the company management is aware that they have prospective customers in certain parts of Portugal, yet they cannot put in more effort to seize the opportunity.
Rafael and Raul are not comfortable with the idea of showcasing their assembly processes and warehousing facilities to the customers. Surely, there is no better way to inspire customer interest in purchasing products than educating them. In this company, part of the workforce does not see the need for a sales and marketing department, which is rather astonishing. Some of the workers think that marketing is left to the manager who sees this as a joint responsibility. To start them off, the management should consider marketing strategies such as social media marketing, Search Engine Organization (SEO), email marketing, and content marketing.
Internal Organization of the Company
Borrowing from an article by Business Case Studies (2019), the internal organization of We are the Best is defined as how it is structured to perform its functions. This company structure can be determined by function, product line, organizational processes, physical location, and target market. Function refers to the component departments into which an organization, in this case, We are the Best Company, is composed of some notable departments, including sales and marketing, manufacturing and purchasing, logistics, and finance departments, among others.
To build an efficient supply chain, these departments should be fully functional. They need to be service-oriented if they are going to spearhead a better supply chain in the company. They are required to be more sensitive to customers and employees. Alternatively, the management should set up a customer service department to handle client needs, problems, and concerns professionally. However, the point that the sales department is not important in the company will only hamper the progress to attaining an effective supply chain.
The physical location of an organization refers to the geographical location of its premises. We are the Best Company has a total of four warehouses across Spain. It has the main branch in Barcelona and others in Madrid, Sevilla, and Zaragoza. The role of the main branch is to coordinate operations in the other warehouses. It may also offer training of staff before dispatching them to different destinations. The central office also provides policies that govern the distribution of goods from the main factory to the market and other warehouses on demand. The establishment of branches helps the firm to target and acquire more markets hence boosting sales volume. Consequently, the company’s bid to establish an efficient supply chain would not be far from being achieved since access to a wider market is a determining factor.
Summary of the Actions to Achieve Efficient Supply Chain
Development of a robust and agile supply chain. In the present dynamic world of uncertainty brought by the ever-changing technology, companies are now interested in their adaptability, speed, and risk minimization to keep them in business as technology changes (Stiles, 2020). Similarly, We are the Best should strive to be as flexible as possible so far as adapting to new technology is concerned. When outsourcing, they should contact local vendors to minimize shipping costs. The company should embrace the use of technology in running its operations. Such include virtual monitoring of workers in other warehouses, the introduction of ordering over the internet, and blockchain.
Spearheading for business planning. It would make the company invent ways of arranging their sales and other business operations. Considering the technological world people dwell in today, We are the Best should supplement their planning processes with contemporary technologies such as data mining, Artificial Intelligence, automatic intelligence, predictive intelligence, and machine learning, among others (Liu, Zhu, and Seuring, 2020). The forecasts can be incorporated in planning to provide recommendations and solutions on ways to improve supply chains.
Scalability and innovativeness. We are the Best Company and should prioritize leveraging information technology in solving customer problems. In addition to this, they should endeavor to scale up their software solutions. This speedy innovation and agile manufacturing can help the company embrace new technologies such as the Enterprise Resource Planning software to manage business processes which include purchases, sales, and accounting.
Gaining visibility and trust in the market. We are the Best should be tactical enough to take advantage of opportunities that present themselves. To do this, the company should prompt access to information that the management requirements for decision making in sophisticated business conditions.
Strategic Recommendation
We are the Best Company should contemplate 3D printing, which is a digital technology used in most modern businesses to make cheaper and faster prototypes. This technology would help the company cut certain manufacturing costs and thus enjoy bigger profit margins. The technology would also enable the designers to troubleshoot and test products. The commodities produced are also in great demand. Therefore, the company will enjoy a bigger sales volume and competitive advantage over its competitors.
Reference List
Business Case Studies (2019) Internal organization. Web.
Fisher Ke, J. et al. (2015) ‘Aligning supply chain transportation strategy with industry characteristics – evidence from the US-Asia supply chain’, International Journal of Physical Distribution & Logistics Management, 45(9/10), pp. 837−860. Web.
Liu, Y., Zhu, Q. and Seuring, S. (2020) ‘New technologies in operations and supply chain: implications for sustainability’, International Journal of Production Economics, 229, 107889. Web.
Stiles, J. (2020) 5 Strategies for building a resilient supply chain in turbulent times. Web.