Question

Locate a case study specific to some of the logistics problems that might arise when supply and demand for a product are not aligned properly. What are some of the methods used to soften the effects of this imbalance? Examine the case, and answer the questions associated with the case. If there are no questions associated with the case, create 3-5 questions of your own that are specific to that case, and answer them. The answer should be at least 500 words in length.

Answer 1

Case Study :

XYZ Ltd. was started in the year 1995 and earned grat success in only 25 years of its operations. It is a leading fast food processing company since 8 years now. It handles all kinds of fastfood not only of the region but also of the whole country and of other countries too. The idea of it to start selling the fast food from another countries of bothe vegetable and non-vegetable has been a great way for its success.It has suppliers of vegetables and chickens from the local markets mostly and some from other citiesbut its customer base is very large and has customers from many cities.The raw material are acquired from the help of transporters and are supplied also from them. and everything was going really well for the company.

But since the last year the company has started facing transportation shortage. to solve that company hired external tranporters. sometimes there was an excess of transportation that the company has to store enough of its inventory in the warehouses. when the company tried to solve this problem they started with lowering the amount of inventory produced but in addition invited another problem of low inventory levels.The company started facing inventory management problems. The top management of the company became restless when this problem persisted for more than few months.

The company has appointed you as the Logistics manager . As the logistics manager :

analyse the problems faced by the company

the main reason behind these problems.

Why the company is facing these problems ?

Is this increasing the cost of the company, if yes then how?

How can these problems be solved ? suggest some ways.

Answer :

The Company is facing logistics problems such as : problematic Inventory levels, shortage of transportation means, high inventory costs inadequate levels of production, wrong forecasting of inventory levels and faulty planning for inventory management.

The main reason behind these problems is - That the supply and demand for products are not aligned peoperly. .The company is facing all those problems because of this single reason. Sometimes the supply is forecasted to be more than it actually will and sometimes the demand is forcasted to be more. They end up being less than what value for them is forecasted. Due to this gliche , many problems like the ones stated above.

Often these logistics problems arise due to the improper alignment of demand and supply of a product in companies. Mismatch between demand and supply can cause problems like them. They are explained as :

1. Inventory levels : The production department is not successfull in producing the products according to the demand . Because of this , the inventory levels are disturbed and become either low or high. Both the cases are not good for the company as it asversely affects the normal operations of the company. If the inventory becomes exhausted , it would increase the burden on the production department. and if the inventory becomes full , then they have to stop the production which hampers the production process.

2. Inadequate production : In excess level of inventory the company woyld have to stop the production and in low inventory levels the company have to fasten the production process . In the first case the company would not be able to utilize the workers properly. and in the second case the burden on the workers would increase.

3.Unsatisfied workers : As stated in the two cases above the workers are affected greatly which results in their unsatisfaction. Also this would incrase the financial burden on the company. as they have to be paid wages whether the production process runs or not runs smoothly.

The quality of the products will also be affected an they might decline.which would result in poor customer base.

The ways that it can be corrected are :

Develp a channel bridge performanc measure and measure the performance done.This can be used to measure the success in accessing the customers.Develop a good logistics network according to the requirments of the end customers of the products.Company should appoint people who can properly and consistently do forecast for the company so that the production department can perform the operation smoothly and it does not hampers the production process.The company should focus on accumulatin the inventory and then deciding the inventory levels i.e. the inventory that is to be produced should be decided on the basis of the inventory already kept in the warehouses. The company should also focus on having proper transportation facilities. so that the outsoucing does not increase the cost.

The improper alignment also increases the cost as in the form of high inventory cost and would also increase the production cost as when the inventory levels would be low then the company would fasten the production process which would incrase the cost of production. By properly aligning the demand and supply of products the incrase in cost could be avoided.