Introduction and Company Background.

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Logistics Management Assignment 2

Introduction and Company Background

Our company is a manufacturer of female dolls.  The headquarters, factory and warehouse are located in Hong Kong and established since 1993.  Nowadays, our employees’ number is around 400 but at the beginning stage of running our business, there were only 50 employees.  We have been expanding our business because the number of customers is increasing.  Most of our customers are from North America and Europe where dolls are popular toys among kids.

At the present, we import raw materials from other countries: oil and refining oil into plastic pellets for dolls’ body from Malaysia, nylon hair from Japan and cotton cloth for dolls’ dresses from the mainland China.  The combinations of those parts and packing are done in Hong Kong.  And then, we export finished female dolls to our customers.  As the number of orders received is increasing that pushes us to expand our factory for faster manufacturing.  The cost of running a factory in Hong Kong is high mostly because of the cost of labour is so high which accounts for around 20% of our total operation cost.  Manufacturing of dolls is labour intensive.  So we suggest the factory and warehouses should be moved to a place where we can lower our operation cost for better profit.

Dongguan in Guandong Province, China is an ideal site for consideration.  After that, raw materials will be imported directly to Dongguan and finished female dolls will be exported to our customers via the Yantian Terminal and transported to and from our factory and warehouses via the transport network.  Dongguan is one of China’s largest manufacturing bases and the third largest exporting city in China.  Dongguan is home to over 13,800 manufacturers tapping into a well-organized and low-cost labor force of China that congregates in Dongguan.  It is an attractive place for manufacturers that require massive labor force.

Dongguan lies in the middle of the economic golden triangle between Guangzhou, Hong Kong and Macau, with extremely convenient land and water transportation and advanced facilities in energy resources and communications etc.  At present, Dongguan possesses a perfect railway network.  The arterial highways gather, with a 93-kilometer highway inside the territory of every one hundred square kilometers. The channels are unblocked in both directions, with 82 water passages, 194 wharf berths and a sea line of 53 kilometers.  We are now going to describe and evaluate the site, Dongguan in details in the following.

We also advise that we should use a third party logistics service.  We should outsource the transportation operations to reduce the operation cost.  We are based on the following criteria to make decision whether third party to be used or not.

  1. Experience.  The best logistics managers handle thousands of loads and shipments daily and weekly.  Naturally, the greater the market presence, the better a company should be at its trade.  Additionally, a professional transportation management provider has more buying power in the marketplace, especially when negotiating with a larger and sometimes specialized carrier base.

  1. Expenses.  We today face a challenge to utilize state-of-the-art tools in managing transportation spending.  New technology is useful and can be a great asset, but high-tech systems cost money to purchase, install, and run effectively.  It is often more economical to let the third part logistics provider invest the time and money in technology so that we can devote more time to our core business.

  1. Service.  The third-party logistics provider can handle the customer service side of our business and deliver the same level of specialized service that the company's in-house traffic department has offered over the years.  The transportation management professional's specialization provides more in terms of customer service.  For example, simply having a live person available 24 hours a day to deal with weather delays, production changes, re-routes, and breakdowns means more efficient response to inevitable problems.  Some third party logistics providers allow customers to access their management systems to track and trace shipments, freeing customer service personnel from routine, time-consuming practices.

  1. The intangibles.  By using a third-party logistics provider, freight bill audit, allocation, and payment costs can be dramatically reduced -- one itemized bill, one check -- and actual costs for both inbound and outbound transportation can be tracked, allocated, negotiated, and managed.  Service management is many times left to the carriers through their self-generated "service reports."  Many freight management firms employ their own tracking systems that verify on-time performance.  This tool can support "Quality Award Service" programs that encourage and recognize vendor support of the company's supply chain.
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Description of the Site

About Dongguan

Dongguan has a population of 6,000,000, a coverage of 2465 square kilometers, most of which is mountainous area and plain, and a coastline of 61.9 kilometers.

Dongguan, the mainland China's major export-processing center and third largest exporting city (after Shenzhen and Shanghai), is located between Guangzhou and Shenzhen on the east side of the Pearl River. In the recent 20 years, it makes full use of its location advantage, which changed it from an agricultural county to an economically powerful city. Today the city hosts 13,800 foreign-invested manufacturers including industry giants like ...

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