Importance of effective ordering system at Sapphire Energy Company

Discuss About The Logistics For Sustained Economic Development.

The current ordering system being used by Sapphire Energy Company is based on saving time of acquiring the cables to be used for energy production. The current ordering system has been designed in a way that the period between ordering and supply of the cables is reduced.  Time is a very crucial factor in any company therefore it has to be managed properly to ensure that maximum results are obtained[management]. In that case, Sapphire energy ordering system is effective as it helps the company to spare more time so that it can enhance its energy production processes. The more time the company dedicates to production the higher the output thus increasing the level of its productivity. It is therefore important to note that the company’s ordering system serves the company right as it provides the company with an opportunity to maximize its production and invent ways to improve on quality production[2].

Another effectiveness that is derived from the current ordering system at Sapphire Energy is that is s assured of enough supply of cables all-round the year .  The monthly agreement between the supplier and the storeroom which is part of Sapphire contract ensures that materials are available and supplies are made monthly. This aspect of the ordering system is important to the continuous running of operations within the company hence it does not suffer periods of lack of productivity or periods of excessive productivity.   A constant supply of cables ensures that activities in the company are running smoothly without interruptions or distractions hence promoting the productivity and operational levels of the company. When the levels of operations are boosted by constant supply of raw materials, the company attains its success timely.

The current system being used at the company saves time but not cost of operation.  For any company to run effectively and efficiently, it must come up with systems that are aimed at reducing time for production and save cost of operation. To improve the current processes the company should sub contract other warehousing companies to increase the storage space thus increasing its ability to purchase in bulk. It is important to note that when a company is able to purchase products in bulk, it enjoys huge discounts otherwise known as economies of scale. The discounts are a huge source of saving on cost of acquiring goods thus reducing operation cost. The finances saved can be used to increase the productivity of the company[3]. The strategy of subcontracting more storage establishments will ensure that the company reduces the numerous purchases hence reducing the amount of taxes being imposed on the goods. In that view, the resources that will be saved will be used to increase the operations of the company thus increasing the profit levels of the company.  The cost of shipment and taxes imposed by the government and storage fees increases the cost of the products and the operation cost.  To reduce the cost the system of ordering in the company must be improved[4]. Therefore the use of the strategy of buying raw materials in bulk will ensure that the company will reduce the shipment cost associated with transporting the materials.  It is therefore important to note that the current system can be improved through the involvement of more establishments of more storage entities in bid to help save on cost in line with time being saved by the system.  

The benefits of constant supply of cables in Sapphire Energy Company

The EOQ formulae related to ordering and holding cost will appear below the answers of questions related to Sapphire energy. i.e.

Q1. Based on your knowledge of the global business environment and the positioning of AusCotton with regard to its markets and supply sources, what do you think are some of the major global issues that will be relevant to the area of strategic sourcing?

The global business environment in the line of clothing is highly competitive however Auscotton has managed to be at the top of the list of companies in this industry because of the supply strategies it uses. However for it to continue soaring high in the industry it has to deal with some global issues that will help it attain a perfect strategic sourcing. One of the main global issues relevant to strategic sourcing by the company is consumer habits. The clothing industry is a very sensitive venture and success in this industry attributes their success to the behavior of the consumers. For instance, a consumer may enter the shop with definite specifications of the cloth they prefer to purchase. If the preferred cloth id available the consumer will buy it but if the product is not available the consumer is left with two choices based on the response by the seller. A seller may decide to find an alternative source so that he or she can make the cloth available to the consumer. On the other hand the seller might decide that they do not have an alternative source and as a result the consumer seeks the product from another outlet because the main aim of the consumer is to purchase their preferred product.  The second issue relevant to the approach of receiving information to ensure supply is knowledge of the inventory. The inventory knowledge will enable the company to closely follow the purchasing trends of the consumers for different products at specific times of the year. This analysis will help the company not to over stock leading to surplus into a different season and not to under stock leading to decrease in supply of the products.

Q2. What are the impacts of less-than-perfect demand forecasts for AusCotton products and of volatility in the length and cost of transport services used to move its products from contract manufacturers to distribution centres? What should be done to mitigate these problem areas?

Less than perfect products by the company are disastrous to its performance in the industry because they will lead to customers losing trust in the products the company is offering[5]. When the trust of consumers is altered their loyalty decreases hence decreasing the interest to purchase the products of the company and as a result the operation levels decreases reducing the profit margins. Also, such products do not provide customers with the satisfaction they seek therefore decreasing their purchasing habits for the products provided by the company. The long periods taken for transportation of the good in conjunction with the high transportation costs acts as barriers to the fast expansion of the company in many regions or countries[6]. long periods of transportation and high cost utilize most of the company’s financial resources and time that could have otherwise be used in increasing the level of operations so that the profit levels can increase leading to growth and expansion of the company. To evade the problems brought about by low quality production the company ought to come up with a strategy aimed at training the workers. When a company trains its employees on the best methods it needs its operations run, the possibility of less than perfect products is reduced. On the other hand, the problems faced by the company due to long periods of transportation and high costs can be mitigated when the company comes up with a strategy of subcontracting other transportations and storage companies. The act of subcontracting distributes the risks that are associated to storage and transportation. Also, it reduces the amount of financial burden and the time used during transportation of goods[7].

Improving the cost-saving strategies in Sapphire Energy Company

Q3. What elements of the strategic sourcing process do you feel are the top candidates for improvement at AusCotton, and why?

Elements of strategic sourcing are important as they provide the company with an opportunity to realize its strengths and find ways to build on them so that the performance of the company can improve.  These elements ensure that the company gets correct information about the processes taking place in and out of its premises. One of the elements that the company should consider for its improvement is have a better understanding of its engagement practices[8]. For any company to improve its performance, it has to create a good communication and relation network with its employees and its customers. Workers and clients are the major sources of success of a company as they provide honest feedbacks and concerns regarding the level of operations of a company. The second element that the company should consider is its ability understands its outsourcing processes. Outsourcing ensures that a company subcontracts some of its activities to other companies so that the risk of negative occurrences can be distributed. Outsourcing also ensures that a company does not spend too much time on operations that can be carried out by other entities hence saving on time and resources that can prove useful in increasing the productivity levels of the company. Another element is based on the broadcast of information from the entity. Information is very vital for the growth of any business venture because it can be based on the best markets to venture into. It can also provide insight on the highly qualified potential workers for the organization. In that case, the pass of information can help the company improve as relevant feedbacks works as a source of insight to the administration of the company[9].

Q4.  How would you respond to the assertion that some of your contract manufacturers are involved in producing illegal merchandise that ends up competing with the branded merchandise of AusCotton?

 Counterfeit goods are a nuisance in ant business venture because they are offered at lower prices that the genuine products therefore forming a stiff competition in the market thus these products can result to the failure of performance of a good company[10]. The initial step that I would take is to hire the contractors on a permanent basis. A permanent hiring process will ensure that the workers gain a sense of job security hence they will not feel a further need to produce counterfeit products.  The hiring process will be done on the basis of professionalism and etiquette of an individual therefore meaning that they would not work against the will of the company or against the objections of the institution[11]. This is because they are sure that when the company succeeds they are the main beneficiaries of the company’s success. Secondly, I would ensure that every cloth manufactured genuinely has the company’s logo embedded in the materials used thus acting as its trademark. The logo would be widely used by consumers to tell apart the products produced by the company and the ones produced by other people outside the entity.  Afterwards I would start a sensitization campaign informing our clients about the appearance and the location of the logo to mark a genuine product. Whereas it is difficult to correctly copy a company’s logo, the counterfeit products will be easily recognized thus face a rejection in the market. It is important to note that these approaches will help reduce the competition the genuine clothes are receiving from the counterfeit products hence increasing the sale scales of the company thus increasing its revenue[12].

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