Steps and projects concerning supply chain optimization essay
The generation of further steps for reducing transportation cost can be based upon the previous analysis of the general situation with logistics management in the company. The first step is to find out possible projects or strategies for specific characteristics of the market and supply chain structure.
Transportation cost is possible to be reduced if the managers assign service requirements to actual and new low cost suppliers. Further effective cooperation with such companies should be based upon their availability and general service capacity. Thus, contacts should be initiated with several new suppliers which can offer sufficient capacity and experience. Another important issue is to determine if the current suppliers provide enough capacity to guarantee higher participation. In case these measures are taken the outcome will be potential cost saving of about 9.91 % of total cost for transportation.
The previous step was added by several recommendations on the reduction of the quantity of suppliers which compete for the company services. The main concept behind this strategy is to suggest a rate reduction in exchange for a higher and certain volume under longer term cooperation. As for modification of distribution patterns, several steps should be taken as well. The identification of better distribution patterns can be done with the help of a mathematical model (Goetschalckx 2011 569). This model is considered to be adequate for this situation. The aim is to assign optimally market share to current facilities, and to find out if the distribution centers are economically feasible to maintain. After the carried out analysis we can conclude that the elimination of Guadalajara distribution center is economically reasonable and will not have any negative impact on customer service. The elimination of inter-plant flows is technically executable by exchanging processing capacity. The re-assignments of client base to centers of distribution should be discussed between the CEO’s of the companies involved. The expected benefits 8.7% of total transportation cost is expected after all improvements have been put into practice.
The reduction of freight rates with the help of reducing the supplier base and engaging new less expensive suppliers can be achieved immediately. The projects concerning interplant flows eliminating and re-assignment of customers to plants and centers of distribution will take more time. To supplement the previous steps, it is also suggested to establish a centralized organizational unit to be constantly responsible for performance improving at the supply chain level.
Thus, we have generated several necessary steps concerning logistics management sphere of the company. To our mind, these improvements will lead to optimization of transportation costs and thus, to general business strategy improvement. We have identified several problems concerning supply chain strategy and have suggested a number of measures to solve them. The review of the company current state of affairs in the sphere of logistics revealed the following problematic issues. The company experiences the high transportation rate variability which is caused by a wide range of suppliers participating in transportation activities. Our constructive solution is to re-assign company services to low-price supplies and to reduce suppliers quantity by assigning them more certain and constant volume and long term cooperation. Wisner describes the same problems with real examples and explains the challenge of such solution to the problem (Wisner 2008 109). The problem of inefficient distribution patterns can be solved by initiating determining more optimal patterns and start working on their involvement. Inter-company transactions prevent the enterprise from effective functioning and provoke additional expenses. This situation can be improved by re-assigning processing capacity of the company units.
Our overview of the Aluminsa Company general business strategy and supply chain structure and strategy proves that successful business growth objectives achievement is closely connected with effective supply chain strategy. Current company business goals are possible to be achieved in case the supply chain is reasonably optimized. All the steps and projects suggested in our research are related to time or cost saving options for the company. In Aluminsa case wise approach to logistics management and particularly supply chain improvement allows the organization to save both cost and time. The suggested improvements in this sphere will contribute much into company business strategy and will give them an opportunity to develop further business plans and set more global goals for business growth.