iv) Qualifying for the customer
This might be touching the flexibility objective; however, certain customers have their own level of standard in order to be able to do logistics and operations for them. These levels of standard could vary from measuring variables, for example, speed, flexibility, or operations costs.
Implementation
To achieve a certain level of quality in warehouses, steps taken by CCN:-
i) Supervisors
The hiring and implementation of supervisors to supervise operation processes is essential to achieving a high level of quality in warehouses. Without supervisors, coordinators and the receiving clerks’ quality of work will not be up to standard and this has been proven from time to time at the warehouse. For example, the receiving clerk at times could not make a decision by himself/herself in terms of putaway locations as there is not enough locations at the designated areas for certain category of items. Supervisors’ in-charge for the shift has to take responsibility in making decisions such as these in order to maintain quality and not allowing warehouse workers to take matters into their own hands.
ii) Re-weighing items
Another issue that was addressed is to re-weigh wet items in order to cut down irregularities in terms of weight differences before and after transfer from the farm.
iii) Assignment of teams by shifts
In CCN warehousing operations, usually there is one team leader who has 3 workers to coordinate which is the receiving clerk, the coordinator, and the ridge truck driver. In one particular shift, there is one shift leader who is responsible to ensure everything runs smoothly during the shift. Team leaders will report to him regarding issues such as irregularities in quantity whether over-receive or short-receive and etc.
iv) Designated areas for customers
In order to make customers feel appreciated and important, locations or racking locations within the warehouse are designated specifically for them when contracts are signed. In CCN, we even have different temperatures to cater for different types of foodstuffs. For example, Room C has temperatures as low as -30 Celsius for frozen food where else Room B is only at 10 Celsius to cater for vegetables. This is done so that Tesco Frozen can have their own area where else MAFC will be able to have their own rooms for their vegetables.
Impact on organizations’ competitiveness
In significantly improving quality, CCN has been able to win over customers by the services they provide compared to other competitors in the market.
i) Quality improves, KPI improves
With quality standards we have at CCN, KPI measurements will increase thus increasing the service standards within the warehouse market. Customers will tend to require our services and expect us to provide whatever requirements they need sufficiently.
ii) Reduces costs
The main objective with CCN operations is to have minimum operations cost as every customer would want to pay less for operations costs. In this case, customers will basically compare between operations cost and also quality. Quality can be measured by operations cost, in CCN, we believe operations cost do not have to increase just because we want quality. Quality IS by having less operations costs.
Measuring KPI for Quality
In CCN, measuring quality could be from certain angles:-
- Measuring cleanliness
Cleanliness can be measured by QC department on certain levels of cleanliness. In this case, MAFC who is in charge of QC will measure its cleanliness levels in the warehouse.
ii) Measuring defects
Defects often happen during transition and mishandling of stocks. In order to measure, the number of defects can be compared to the number of stocks that is available in the warehouse. A certain percentage must be set in order to fulfill KPI levels.
2. SPEED
Warehouse Management are slowly evolving towards the IT side where the old manual method which involves manual paper work are considered to be old fashioned and un-organized. With the availability of Warehouse Management Systems (WMS), it shows that warehousing operations are moving towards the fast and speedy operations whilst not sacrificing quality and costs.
Operations Strategies
Speed has been an important factor recently for CCN as the number of customers increase, which at the same time, increasing demand and expectation. There are a couple of strategies that is applied at the moment which is:-
i) Increasing number of employee accordance to requirements
As the number of clients increase, speed in dealing with orders and receiving shipments must be dealt with quickly as to cater for other orders. This requires a significant number of employees sufficient enough to handle these orders.
ii) Resource allocation
As operations manager, sufficient resource allocation is necessary to fully utilize resources that are available in terms of manpower. Proper manpower delegation is necessary for any warehouse that needs to fulfill certain KPI’s that is set by customers to meet standards.
iii) Priority customer
At CCN, the strategy to handle orders in terms of outbound orders is to start picking from racking locations for the trucks that travels to far location or outstation customers. For example, there are two trucks waiting at the docking bay to pickup items to send out to customers. One of the trucks is assigned to send to Johor, while the other one is assigned to send to Klang. The strategy is to make sure the truck that is supposed to send to Johor moves first as it will take more time to get there. We at CCN prioritise orders according to location and urgency thus speed is essential to the successful of warehouse operations.
iv) Putaway locations
We have different types of products such as slow moving items and fast moving items where for slow moving items, the items are usually requested not so often where else fast moving items move in and out so frequently. For fast moving items, it is agreed that it should be available for picking at a nearer location towards the loading bay to decrease the loading time to the truck.
Implementation
i) Resources
A sufficient number of resources is required not only in terms of manpower, but also the equipments as well, for example, ridge trucks, cold weather jackets for workers who needs to access cold rooms from time to time and even for the ridge truck drivers.
ii) Categorise Putaway locations
For fast moving items, my job as Operations Manager is to set certain locations nearer to the loading bay to accommodate those items so the loading time to the trucks can be decreased significantly. For example, MAFC items such as vegetables are so often requested until there is no buffer stock that is available in the warehouse. Trucks tend to arrive with the item, and then quickly transferred to another truck to be delivered to client places without actually being putaway in its desired locations.
iii) Structural Design
The warehouse at CCN is designed specifically to handle fast delivery orders by having easily accessible aisles. This allows ridge trucks to easily go through without needing to maneuver.
Impact on organizations’ competitiveness
The way warehouses handles operations is usually measured by its capability to operate at a certain amount of orders and how fast can it actually fulfill orders at one time. In CCN’s case, we are measured directly on speed as MAFC focuses on how fast can we fulfill its orders and be able to send it out on time.
i) More business opportunities
As a parent company, MAFC has the right to evaluate CCN’s capability in fulfilling or prioritizing its orders first then only other customers, however, MAFC has to also grow internally. In order for MAFC to grow as a company, it must be able to get more business and sell more products and services. CCN, as its subsidiary company, must be able to cater to MAFC’s needs in terms of demand and services. As both companies grow, MAFC will lead to giving more business income to CCN in terms of order handling, thus making speed in completing MAFC orders an important element in making more business opportunities.
ii) Cost reductions
In CCN, any orders that are not delivered on time will be rejected by MAFC customers, thus making it a cost that needs to be bared by CCN. If CCN is able to complete all orders on time, no extra costs that needs to be bared by CCN and even handling costs and resources costs. For manpower, if all the orders can be completed in one particular shift, it can further save on using the workers for other things.
Measuring KPI for Speed
For Speed, KPI can be easily measured by using the WMS (Warehouse Management System) in terms of picking time and loading time. Speed is an important element as an Operations Manager’s guide to estimate the time it will need to finish and order against the number of quantity that needs to be picked.
i) Picking time & Loading Time
Picking time and loading time can be measured and averaged on how fast a worker can complete the picking and when did the worker start. From there, the operations manager can fairly assume the time to finish the job.
3. DEPENDABILITY
Since CCN has been around the warehousing market for quite some time, we have constantly taking care of our regular customers and ensuring them good and consistent service throughout our contract with them. This allows the customer to be reliant and consider CCN as a reliable source of distribution centre for them and giving them no reason to actually change to another competitor.
Operations Strategies
CCN has applied a couple of known-strategies to keep its current regular customers which shows how well we appreciate our customers that helped built the early foundation of CCN.
i) Ensure on-time delivery
By giving customers the security needed when it comes to on-time deliveries, customers will tend to increase their dependability to having their orders delivered. They will then keep relying on CCN to fulfill orders for long-term.
Implementation
For long term customers at CCN, we have designated trucks that are ready to be assigned for delivery. The case for delays at times is because of trucks not being available to send to customers.
i) Availability of buffer stock
The availability of buffer/inventory stock in the warehouse is crucial to having orders fulfilled. For example, MAFC requires Tomatoes 1 tan to be sent to Johor today. We at CCN must make sure that there is 1 tan tomato available in the warehouse or else we will not be able to fulfill the order.
Impact on organizations’ competitiveness
Customers who depended on CCN usually consider us reliable in terms of delivery on time. The impact of this is a positive one for the company.
i) Labeled as reliable
Throughout the years, CCN has been growing and the list of customers has been growing thus not losing regular ones even after acquiring new ones.
Measuring KPI for Dependability
For dependability, it can be measured by:-
- The number of on-time deliveries to regular customers
- Customers leaving and acquired throughout the years
4. FLEXIBILITY
For flexibility, we at CCN have been very flexible with how MAFC wants us to operate and handle their products. CCN is very much flexible and will cater to all needs of customers from all levels of product types and services as long as we could.
Operations Strategies
i) Volume Flexibility
CCN warehouses are huge enough to cater for customers needs so far. Any customers that would want extra locations and space would of course be charged more in lieu we will provide them with the necessary space.
ii) Mix Flexibility
For mixing, CCN are well enough equipped to cater to different temperatures and from wet to dry products. Wide ranges of products are currently being catered for all sorts of customers for example Mydin, which sells to its customers from pencils to electronic devices and even food items wet and dry.
iii) Product Flexibility
At CCN, we learn to deal with what customers want as long as they pay for the services which they require and is within our jurisdiction. For example is packing, for customers who would want us to do extra by packing their items, the service is there to be utilized.
iv) Delivery Flexibility
Since CCN is a 24 hours 7 days a week operational warehouse, the delivery can be done at any time depending on client requests.
Implementation
At CCN, flexibility has always been its bread and butter throughout the years as to provide what customers want and how do them want it. We achieved it through:-
i) 24x7 operation hours
By running fully operational 365 days a year, we would have a substantial advantage over our competitors who only runs warehouse operations from 9 am to 6 pm.
ii) Multiple temperatures and huge space
At CCN, there multiple temperatures cold rooms to cater for all sorts of items that requires different temperatures. There are also space for dry items and etc.
Impact on organizations’ competitiveness
i) Innovative products and services
ii) Wide range of products and services
iii) Ability to change the timing or quantity of products and services
Measuring KPI for Flexibility
For flexibility, measuring KPI would be for:-
- the number of different product types CCN is able to cater
- number of volume / quantity increase
- timing of delivery
- types of customers
5. COSTS
Costs play a major role in decision making at CCN. A single activity made possible will firstly involve the costs. The first question would be “How much would that cost to make it possible?” will be asked by the customer in order to allow CCN handle their products. Other costs would involve operational costs, handling costs, equipment costs and etc.
Operations Strategies
i) Quality costs
As an operations manager, decisions must be made according to these five factors as it affects costs. High quality operations do not waste time or effort having to re-do things, thus making customers not influenced to do mistakes. By providing quality services, costs must also go down at the same time vice versa.
ii) Speed costs
Speed significantly reduces overhead costs of administration as delays and complaints by customers can be eliminated. Fast operations in the warehouse reduces stock holding and inventories thus also cutting on rejected deliveries as orders will be delivered on time.
iii) Dependability costs
CCN can significantly reduce customer’s costs as being a reliable distributor for them. CCN can be relied on to deliver exactly as planned. This eliminates wasteful disruption and allows the other micro operations to operate efficiently.
iv) Flexibility costs
Flexible operations at CCN can adapt to changing circumstances quickly and without disrupting the rest of the operation. For example, MAFC will not receive stock until after 8 pm at night, however, there are trucks already arriving at 10 pm which is 2 hours away. Operations at CCN will have to make do with in-transit stocks which by right operates better with buffer stocks however CCN’s flexibility policy allows the operation to continue in order to fulfill orders for MAFC.
Implementation
Implementations for costs are to be able to accommodate enough resources to actually fulfill the 5 objectives of operations management without wasting resources with over-spending.
Inside the operation, therefore, one important way to improve cost performance is to improve the performance of the other operations objectives.
Impact on organizations’ competitiveness
At CCN, we currently run on minimal costs as in my opinion as the Operations Manager at CCN, the utilization of resources up to the optimal level allows this to happen. We are allowed to be extremely competitive in the market as we are able to offer:-
i) Low Price
All customers are looking for the best service and cheapest solution to their warehousing issues. We at CCN are able to offer them just that by giving them what they require by being flexible as well.
ii) “Quality Services at Affordable Prices”
With this motto as our company objective, we are able to keep the prices low on all fronts thus being able to beat our competitors if we were to go direct competition with them.
Measuring KPI for Costs
Measuring KPI based on costs:-
- Operational Costs by quantity, duration, location
- Handling Costs by quantity, duration, location
CONCLUSION
A Brief summary
Operations Management plays an important role in determining the direction of an organisation. By researching each of the five management objectives, a conclusion can be made that a balance must be reached by the organisation in order to be able to satisfy customer’s needs and requests. The operations manager or the person who is in charge of warehouse operations plays an important figure in fully optimizing the resources available to him/her. A properly managed operations can indirectly and directly affect an organizations competitiveness and effectiveness in the eyes of competitors and also potential customers. At CCN, we try our best to accommodate and make each customer feel secure with their products when we are handling them. We also must show the clients that we can actually manage our resources accordingly in terms of quality level, speed in fulfilling orders, reliability by being consistent with our services, flexible with requests from customers and also cost management. With being all 5 fulfilling each other’s cause, operations will then be able to run smoothly and successfully.
References
Web Resources
1. Nigel Slack, Stuart Chambers, Robert Johnston (2008) Operations Management 4th Edition, l, Date accessed 25/02/2009.
2. C.Jarvis (2005) BOLA : Operations Strategy, , Date accessed 24/02/2009.
Books
Nigel Slack, Stuart Chambers, Christine Harland, Alan Harrison, Robert Johnston. (1998) Operations Management 2nd Edition, Great Britain: Pitman Publishing.
