Importance of Transport Management in Supply Chain

Question: Discuss about the Importance of Transport Management in Supply Chain. Answer: Introduction During the last few years, supply chain management is an important part in the operations of the organizations. There are many organizations that are using supply chain management to maintain its competitive position in the market. There is the strong competition in the market in terms of products, goods and services. Customers are now more concerned about what they are buying. Supply chain management plays important role in the competitive market. Many big companies such as Zara, Dell, Nokia and Nike are using and implementing the supply chain management in their business to stay competitive in the market (Assey, 2012). There is the competition among the companies to make innovative products to attract more and more customers in the market. Along with this, cost and prices are one more issues in the market. Every organization wants to develop and sell the innovative products at the lower cost. Further, companies also want to provide the products and services to the customers as quic k as possible (Cetinkaya, 2011). So, they use transport as the medium in the supply chain management. This report will describe use the transportation in the supply chain management of a company. For the discussion, McDonald has been taken. Importance of Transport in the Supply Chain of McDonald The analysis of McDonald will indicate the supply chain management in the food industry in Singapore. This company is operating across the entire world and it is famous as the worlds largest chain of fast food restaurants. There are various food products such as burger, soft drinks, French fries, pizza and many more. The company is operating at the larger level in present time so, the management of the supply chain is very important in the company. By the effective management of supply chain, the company is able t meet the needs and requirements of food items of the customers. The requirements of the customers are fulfilled by the efficient supply chain management which is managed by the company properly (Beske Seuring, 2014). One of the main important factors in the supply chain management of McDonalds is the material management. The company is able to provide the best food products because it has all the material on the right time. The company is offering breakfasts, salads, burgers, sandwiches, beverages, deserts and shakes to the many customers at one point. It has been observed that the large material is required to fulfill the needs of the customers and that are being operated from central location to different branches. Every distribution centre is accountable to meet out the material requirements of 250 to 700 restaurants. The McDonalds branches are getting required material through distribution centers. In all this process, transportation is very important to manage the supply chain of material (Connor, 2016). It is important in the process in which the inventory and raw material is moving from one place to another place. For moving the inventory, refrigerated vans are used by the company. Along w ith this, the company maintains the good fleet for containers having 20 ft and 40 ft. The containers are used to move the material from port to warehouse. The vans are used to provide all the goods and materials of the company from port to warehouse and after that suppliers are accountable to provide retail outlets. Along with this, trucks are also used to provide those materials which do not need the refrigeration. Inventory The supply chain of raw material in the McDonalds includes raw material, work in progress and finished goods. In the vans, distributors mainly keep the stock of 1 month and 45 days. They basically keep the supply o McDonalds chilled, frozen and dry rooms as the need by the product. The inventory and raw material of the McDonalds is maintained on the basis of first out. In the other words, they are used in the order they receive. So, the stocks in the vans of McDonalds are fresh. Facilities Facilities can be described as the physical locations in the network of supply chain management where the products are materials are stored. In the case of McDonalds, there are two main facilities in the company i.e. production sites and storage sites. Along with this, company always has two warehouses in every country. The company always has generators at every location to provide the required temperature to the product material (Kersten, Blecker, Jahn, 2011). Staff Strength McDonalds has different level of staff for the operations. The company has restaurant manager, assistant manager, shift manager, area manager, crew trainer and crew member. The success of the McDonalds depends upon the hard work and sincerity of the staff and employees of the company. There are so many customers who visit daily in the centre of McDonalds and the staff attends their demand with full of patient. The McDonalds staff has good customer service skills. They provide quick and accurate customer service to the customers. before they start, they identify the specific needs of the individual. Routing Approaches In case of McDonalds, the supply chain of the products is a wide network which includes the flow of material from suppliers and their upstream suppliers at different level, transformation of material to finished or semi-finished goods. So, the flow of raw material is as follows: suppliers- distributors- retailer- customers and the flow of money are in reverse direction. The franchise of McDonalds has strict policies of suppliers and the suppliers are accountable to provide safe, quality and consistency products while delivering. The company uses pull and push process. In this process, the product such as Big Mac will be pushed in the restaurants and then the customers will automatically demand for the product and pull will be created. Every distribution centre is accountable to meet out the material requirements of 250 to 700 restaurants. The vans are used to provide all the goods and materials of the company from port to warehouse and after that suppliers are accountable to provide retail outlets (Ou, Liu, Hung, Yen, 2010). The distribution in supply chain process is shown in figure: Figure 1: Supply Chain. (Source: Ou, Liu, Hung, Yen, 2010) Cluster Delivery McDonalds uses cluster delivery system in its supply chain management. Basically, cluster logistics means delivering the value and driving growth in the market. The logistic cluster is related to business activities which is helpful for McDonalds to address current economic fluctuation in the market because the company is seeking for business growth. McDonalds is using cluster delivery to attract government investments, workers and suppliers. The business model of the McDonalds is based on Three-legged stool model to manage the suppliers and franchisee. The company uses various transportations such as cars and vans for providing products and services. Challenges Faced by McDonalds in Order Fulfillment and Last Mile Delivery Due to many successes and advantages, McDonalds is very confident with its business operations. But there are some challenges that can be faced by McDonalds while maintaining the supply chain in the business operations. The disruption in the supply chain can be happen due to many reasons and it can impact on the financial performance and reputation of the company (Chopra Meindl, 2013). The company faced challenges due to port slowdown and supplier closure which raised the concern regarding food safety across the world. Because of this, the company faced the issue related to supply shortage and it directly impacted the sales of fast food of the company. Along with this, there are some general challenges such as rising food prices, natural disasters, security issues and violations that the company has faced. The company is facing challenges due to new innovations in the market. There is also fluctuation in the demand of the customers. There is variation in demands so; the company has a challenge to maintain greater safety stock. Along with this, McDonalds has decentralized structure, so it creates new challenges from franchise (Foodlogistics, 2016). Solutions to overcome from Challenges It is impossible to eliminate the risk related to supply chain completely but with some precautions and maintenance, the company can minimize the impact of these issues. McDonalds can use e-commerce on a regular basis by which the team and staff can establish a clear view about product, prices and suppliers. By the e-commerce and e-sourcing, the company will be able to find out new sources of supply at the time of disruption and challenges. Along with this, the company can establish the supplier relationship by the proper communication which will be helpful to discuss the issue with them (Sweeney, 2013). Conclusion This report is basically discussed about the supply chain management of the company McDonalds. From the discussion, it has been observed that Supply chain management plays important role in the competitive market. There is the competition among the companies to make innovative products to attract more and more customers in the market so; supply chain management is an important part in the operations of the organizations. It has been observed that the large material is required to fulfill the needs of the customers and that are being operated from central location to different branches so, refrigerated vans are used by the company. By adopting some precautions and maintenance, the company can minimize the impact of these issues. References Assey, J.J.M. (2012). A New Introduction to Supply Chains and Supply Chain Management: Definitions and Theories Perspective, Journal of Business and Economic. 5 (1). pp. 194-207 Beske, P. and Seuring, S. (2014). Putting sustainability into supply chain management, Supply Chain Management: An International Journal. 19 (3). pp. 324-333. Cetinkaya, B. (2011). Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice. Springer Science Business Media Chopra, S. Meindl, P. (2013). Supply Chain Management: Strategy, Planning, and Operation (5th ed.). US: Pearson, Global Edition Connor, T. (2016). McDonald's. Retrieved on 8th February 2017 from https://www.tlimagazine.com/sections/packaging-and-warehousing/2364-mcdonalds Foodlogistics, (2016). Supply Chain Disruptions; What McDonald's Supplier Closure Can Teach Us. Retrieved on 8th February 2017 from https://www.foodlogistics.com/news/12045536/supply-chain-disruptions-what-mcdonalds-supplier-closure-can-teach-us Kersten, W., Blecker, T. Jahn, C. (2011). International Supply Chain Management and Collaboration Practices. UK: Books on Demand Ou, C.S., Liu, F.C., Hung, Y.C., Yen, D.C. (2010). A structural model of supply chain management on firm performance, International Journal of Operations Production Management. 30 (5). pp. 526-545 Sweeney, E (2013). The people dimension in logistics and supply chain management its role and importance, Supply Chain Management: Perspectives. Issues and Cases. McGraw-Hill: Milan, pp. 73-82.