ADVANCED SUPLY CHAIN MANAGEMENT

ANSWER 1.

3PL stands for “Third-Party logistics”. A 3PL is a service that allows you to outsource
operational logistics from warehousing, all the way through to delivery, and ultimately
enables you to focus on other parts of your business. Third-party logistics companies
provide ‘n’ number of services having to do with the logistics of the supply chain.

3PL companies that give logistics services use route optimization software to
produce the most effective delivery plan in terms of cost and time. This is true
whether they serve businesses or shipping carriers. Many 3PL companies have the
necessary resources to make both simple and complex shipments possible.

In a way, 3PL companies are an effective and multipurpose link in the modern supply
chain. Still, they give any company an important boost toward meeting its supply
chain objects, if they meet conditions from warehousing and fulfillment to courier
operation service. These are some of the implicit issues that help companies meet
supply chain pretensions: -

• Inventory can increase without the need for significant capital funding or
expansion.
• Average shipping times are faster.
• Delivery accuracy and tracking both improve.
• Order fulfillment times are shorter.
• Sourcing needs may be reduced.

Below mentioned are some of the important roles played by a 3PL logistics provider
in the successful management of every business’s supply chain.

• Concentrating on core competencies- Using a 3PL will enable the

management to fully be indulged with the key components of the business
and not to be bothered by the tasks which are not really the competencies of
the company. In this way the company will benefit from the 3PL logistics
expertise and will not have to use the internal staff of the company on pity
problems like Transportation, warehousing space etc.

• Access to highly skilled experts in the industry- if you are thinking of

expanding your business internationally, then the 3PL company will help you
by all means necessary, they will literally be holding your hand and guiding
you to make the best decisions for expanding internationally. This is because
they have high level of experts in their team who knows how the international
market works. They have knowledge in areas like international compliance
and economic regulations, freight information, import and export. The 3PL will
assess all the phases in the supply chain of the company, identify recurring
mistakes, avoid costly problems and make everything better. In a sense they
make everything go smooth during the entry to the international market.
 • Ability to adapt and adjust to decreases and increases in sales- Third-
party logistics providers enable your company to acclimate and either expand
or contract if there happens to be a drop or increase in the request prices.
They give you with the industry’s stylish practices according to what the
request is saying. You'll be suitable to make use of supply and demand
resources so no huge loss is incurred if there's a drop in prices, nor would you
lag before when there’s an inflow of demand. Utmost 3PL companies always
make investments in technologies. This allows them to acclimate and modify
their operations according to the rearmost tech advancements in the field of
logistics.

• Saves you time and money- Outsourcing order fulfillment to a third-party

logistics helps to cut down on cost and save valuable time. Rather than
making use of a limited network of your company’s internal logistics operation
and services, a third-party logistics will help you minimize the cost of your
supply chain management and even can get a discount along the way. 3PL
helps you save money through various helps like saving cost on making huge
infrastructural investments like building a warehouse, purchasing transport of
transportation services, tracking technologies and much more. Hopefully, the
business can use the savings made by the 3PL in the core activities of the
business.

• Widens your market reach and grows your business- As the company
was able to save costs, the company will be able to expand the business
opportunities to a greater extent by using 3PL logistics. The company have to
realize that working together with a 3PL grants you the ability to expand your
market reach, explore and use the resources that the company would never
be able to possess. This will result in a mind-blowing increase in the
performance of the company’s productivity.

A Third- Party logistics is an important link in the force chain because the Third-
party logistics providers can offer moxie, help streamline supply chains, and save
time and money. Trusting 3PL experts with your shipping logistics can really make a
difference in the way your business functions and allow you to concentrate on adding
your overall value to the core competencies.
ANSWER 2.

Aggregate planning is a method for developing an overall manufacturing plan that

ensures uninterrupted production at a facility. Basically, it’s how management figures
out how to operate at peak efficiency by adjusting capacity when demand falls and
rises, or influencing demand so the company doesn’t have to change capacity.
Aggregate production planning is typically applied to a 3-18-month period.

There are techniques for implementing aggregate planning which are mentioned
below: -

• Determine the demand for each period.

• Determine the capacity for each period.
• Identify company policy that are pertinent.
• Determine unit costs for unit produced.
• Develop alternative plans and compute cost for each.
• If satisfactory plan emerges, select the best one. Mostly, this is the plan with
the least cost. Otherwise, return to step 5.

6 types of aggregate planning: -

1. Price differentials and promotions: Managers use promotions and price

differentials to increase the demand to meet the available capacity. This thing
ensures that the business uses all the capacity available to dispose of the
waste. Business based on seasonal demand frequently use this strategy to
make the customers buy even after the demand drops from the peak.
For example: - A hotel in a popular summer place experiences a drop in demand
during the fall of the year. The hotel addresses this issue by discounting the prices
by a big margin, and marketing it as a low-cost getaway vacation alternative, The
hotel takes loss on the rooms they would have filled anyway, but management uses
aggregate planning to determine the revenue from the rooms that would have gone
not booked will make up for the loss.

2. Back ordering: Back ordering is an aggregate product planning that

detainment the delivery of orders until the demand shifts to times of lower
capacity. By spreading out demand through back ordering, a company
efficiently uses its capacity throughout the time without offering expensive
discounts or offers.
For example: - An electronics store has vended out of a popular brand of TV boxes.
Rather of turning guests down, the store allows guests to back order the Television.
Guests are dissatisfied at having to stay, but the brand is so popular, they place an
order anyway. The store wouldn't vend relatively as numerous as if they simply had
a glut of stock, but after doing total planning, operation has determined the cost of
this redundant capacity would be lesser than the cost of misplaced guests due to
back ordering.
 3. Generating new demand: Rather than ramp down capacity, some companies
will try to use the capacity to induce demand by creating a new product. This
is parlous, as guests may not respond to the new product, but generally any
new product is related to the old product as the same product processes must
produce it to minimize costs and reduce threat.
For example: - An ice cream shop on the walk uses the off-season to package and
vend ice cream to grocery stores, using utmost of their available capacity. The gains
aren't as high as if they vended ice cream to individual guests on the walk due to a
lower luxury, but they make up some losses they would dodge if they shut down
altogether.

4. Seasonal hiring: Now, let’s look at conforming capacity rather of demand.

Seasonal hiring is a strategy to acclimate capacity to match demand rather of
the other way around. By hiring workers for temporary positions with an
expiration date, companies can ramp down capacity to anticipated deals
volume in order to avoid overpaying for labor they do not need.
For example: - A ski resort gets utmost of its profit over a six-month period that
features the coldest rainfall, and they would operate at a loss if they were open for
the other six months. Rather of operating like most time- round businesses, they've
only many operation workers working time- round. They hire the rest of the workers
on a seasonal base, easily spelling out in job advertisements that work begins in
mid-October and ends in mid-April.

5. Subcontracting: Subcontracting is seductive to companies looking to

acclimate capacity because it's basically on- demand labor. The strike is that
it's precious compared to in- house labor.
For example: - A construction establishment that specializes in domestic casing has
a full- time crew of workers to make the bulk of the house, but brings in electricians
and plumbers as subcontractors when necessary. The establishment could hire full-
time electricians and plumbers, but because that work takes up only a small chance
of the time spent erecting the house, not enough work would be available and the
establishment would have redundant worker capacity.

6. Building up inventory: For companies that do not deal with issues like
perishable products (meat producers, for illustration) or static supply (like a
hostel), erecting up redundant inventory during slow times allows the
establishment to manage redundant capacity.
For example: - A fireworks manufacturer confidently produces mass amounts of
sparklers, Roman candles, and other firecrackers in the spring despite low demand.
Operation knows that when the 4th of July rolls around and also New Year's Eve
after that, they'll be suitable to discharge redundant force grounded on deals
numbers from former times. Because fireworks are non-perishable, the company can
pasture them in a storehouse and distribute them throughout the time.
There are several problems faced in aggregate planning which are mentioned
below:-

• It may have extra cost: If the business is not fully developed, planning can
lead to extra expenses.

• Somewhat inefficient when demand is not stable: The aggregate product plan
directly contemplates the demand for the product. When the demand for a
product/ service is far from the established parameters, inefficiency is
incurred, which could lead to losses, whether the demand is advanced or
lower. In fact, it's one of the reasons why raw material and product costs
increase.

• The nature if the establishment should be analyzed: This isn't duly a

disadvantage, still, the nature of the business must be taken into account. In
variable or complex marketable demesne, it can represent a great difficulty for
aggregate product plans

In our organization only price differential and promotions will work as we

manufacture premium product and have fluctuating demand so, this method will be
the best use for our organization.

ANSWER 3(A).

The optimal level of inventory describes the stock level that is most economical for a
business, which leads to minimum costs.

The formula to calculate optimal level of inventory is as follows:

Inventory= (maximum usage rate – average usage rate) X Lead time

So according to the question,

Given,

MAXIMUM USAGE RATE = 15 UNITS

AVERAGE USAGE RATE = 7 UNITS
LEAD TIME = 23 DAYS
So, according to the formula,

Inventory= (maximum usage rate – average usage rate) X Lead time

Inventory= (15-7) X 23
Inventory= 8 X 23
Inventory= 184 UNITS

So, the optimal level of inventory for the Maxx is 184 units.

ANSWER 3(B).

The steps that the Maxx needs to take to manage its inventory for multiple-items in
multiple locations are mention as follows: -

• Track inventory accurately: It’s easy for errors to creep into our business’s
inventory counts. There are numerous openings for workers to miscount our
products, and errors may be inadvertently be made during entering or during
order fulfillment. Products that are damaged or lost but not removed from our
inventory can also lead to crimes in your counts. Of course, theft can also play
a part. When these types of crimes be at multiple locales, our company’s
inventory counts may be veritably inaccurate. To ensure delicacy, we should
check our inventory on an ongoing base. Doing a little bit every day can help
our counts stay accurate.

• Track inventory at each location: When we have inventory spread between

multiple locations, like storages and services, it’s important to know how
numerous of each item are in each location. However, we could order too
much or too little, if we don’t have a clear idea of our product volume at each
position. We could also waste precious time trying to find the products we
need to send our clients. Tracking inventory at each of our locations is
essential. With a cloud-based ERP system, we can input the inventory we
have in each position, and fluently track which locations have the products we
need. This makes it easier for us to manage our overall inventory and transfer
products between locations.

• Use inventory analytics: To make strategic decisions about The Maxx, we

need timely, high- quality data. This applies to all aspects of our business,
including inventory operation. With a cloud- based ERP system, we can
pierce analytics that help you make the stylish decisions regarding your
inventory. For illustration, the system can track data like your turnover rate.
This rate shows you how numerous times your company turned over its stock
throughout the year. However, for illustration, we may decide to order lower
going forward, If we discover the rate is low and we’ve held onto inventory for
a long time.
 • Integrate with suppliers: Maintaining the right inventory position at each of our
locations can be grueling. Integrating with our suppliers can make it easier to
maintain an applicable inventory position. This allows us to view information
about price, availability, lead times, and back orders from within our ERP
system. This makes our ordering process much more effective. Integrating
with our suppliers also ensures they've product available when we need it.
Our suppliers can use the system to see when our inventory situations drop,
which warns them that we’ll need further products. When we place our order,
our supplier is more likely to have what we need right down.

• Backup your inventory data: Losing our inventory data when we only have
one position is bad enough, but when we lose data from all of our locations, it
can be devastating. It takes time to recover data, and orders can be lost in the
meantime, so we need to cover your business from these losses. When we
use a cloud- based ERP system for inventory management, all our data is
stored in the cloud. Since the data is on the ERP seller’s servers, it'll remain
safe, indeed if we have computer or server problems at our location.

In my opinion The Maxx needs follow these steps to accurately manage its huge
inventory in multiple locations.