SQA4013 Supply Chain And Logistics in a Global Context

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1. Complete the title page with all necessary student details and ensure that the student declaration is 
2. All assignments must be submitted as an electronic document in MS Word to the LMS(Use 12 Times New Roman script).
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6. Students can refer to Wikipedia as a source of information, but the references cited in Wikipedia must be mentioned.
7. Submit the assignment in an MS Word document with the file name being: First Name Last Name_ abbreviation of the 

Example: John Smith_SLGC. 

You MUST follow the Project Report format, which should contain the following sections:

Introduction

You have recently been assigned the position of Vice President of procurement of a reputable Middle Eastern airline called Flycloud. The organization was established in 1973 where it operated only 5 aircraft and two routes within the region. In those days, the competition was limited and so, they were able to make significant profits despite some operational challenges. Looking forty-plus years ahead, the organization has grown significantly with over 2000 employees and an aircraft fleet size of 300 states of the art of aircraft. The market has now changed with several non-middle eastern airlines running the route with low-budget airfare options. Consumers are particular with their choice of airline and have exercised “price-conscious” attitudes by seeking advantages from current market competitive scenarios. The reporting and data transfer lines are not linked between flying hours of rotating spares, supplier schedules, and the supply chain shipping plans. The organization has also lost favor with many of its strategic suppliers, Super Turbines and North Star Aircraft limited, mainly for engine, landing gear, and other power plant supplies. This has led to delays in major overhauls, coupled with limited supplier concessions. Flycloud has also recently diversified its business model, converting two of its older 777 aircraft into freighters to support its Flycloud Global Caterers subsidiary. Just two years running, their Oman, and Saudi-based airlines have complained that their Dubai location does not allow for the fastest delivery, although FGC thinks otherwise. Management now considers dissolving this new entity, but some board members believe that the new Procurement VP can devise a distribution plan to save the subsidiary. These realities, unfortunately, have been compounded by some major procurement-related shortcomings that have weakened the entire company, soon to the point of closure.

Procurement turnaround

You have been given a three-month mandate to turn around the organization, reversing much of its losses, often caused by poor sourcing decisions, a lack of understanding of the market’s cultural dynamics and to now present to the board, a strategic course of action in the form of a comprehensive report. The report must also address their failure to manage outsourcing contracts effectively. A report done by an external auditing body, hired by the board, concluded that there were several weaknesses that would have contributed to significant operational & financial losses every year and if not addressed quickly, is likely to lead to a collapse of the operations and an insolvent outcome, just as the board predicted. The board requires, that any further and future recommendations presented, shall be supported by validated academic research, which should present both financial and non-financial market data. Credible web sources (Forbes, Consulting Firms, Big 4 Accounting Firms, Industry Reports, Procurement indices) could also be considered to support your contributions. You are also encouraged to use examples of the successes and challenges of other organizations to support your critical examination of functional and competitive benchmarking. A summary of some key issues are as follows :

• Cultural and ethical challenges in sourcing consumables from the Asian 
• OutsourcedIT and catering contracts that have contributed to check-in glitches and delayed arrival of food to the 
• Unsuccessfulfuture contracts, put in place in 2020 to manage fuel 
• Slow turn around of rotating 
• Operational challenges associated with defective OEM spares with a global sourcing 
• Uneconomicsea freighted transshipment routes from Europe to the Middle East for bulk category COEMS.
• Cases of expired and surplus spares, costing the operations 5 million USD per lack of vendor cooperation and support

TASK 1 - 1^st Case Scenario.

Supply Chain Challenges and Operation. 

a)

As VP of Procurement, you are asked to discuss current issues facing global supply chains with in-depth

assessment of the market environment in the airline and aviation industry. This must also involve an in-depth assessment of the market environment, considering cultural and ethical implications. You must present reputable and industry-related researched data to the board of directors, needed for procurement and corporate decision making later on. The board is also seeking confirmation that you are truly the right person for the job. Critically review cross-functional/ global drivers facing Flycloud, in the context of globalization trends should also be explored since they are likely to influence the organization in becoming, once again, a regional market leader. At the end of this analysis, you must ensure to critically analyze a range of procurement and logistics theories and concepts that could impact the supply chain sourcing strategies in the context of the sector case. The student could also explore various business/supply chain models for the company such as leasing over buying or refurbishing existing fleets to curtail spend, or exploring backward integration strategies.

The current outsourcing strategy must not ignore common outsourcing strategy issues. You must evaluate outsourcing strategies and develop original and creative responses to the issues surrounding outsourcing strategies at Flycloud. A revamping plan of the strategy must be recommended, exploring contract management methods to address the problem. Any procurement strategies discussed, must be relevant to the industry with examples given, where other organizations have implemented them. In other words, they must be workable and tested within the industry. Based on the potential and current global issues known through research discoveries and considering the supply chain challenges listed above, you must then recommend workable supply chain strategies that can help turn the organization around.

Summary of focus:

• The current issues that face global supply chains
• Cultural and ethical considerations when sourcing globally
• Arrange procurement strategies and concepts
• Alternative business models
• Exploringglobal trends
• Workable,case-related solutions
• Outsourcinginsight and outsourcing strategy improvement
• Industry-related data with in-depth research
• Demonstrate an understanding in the specialism/subject area

b)

Looking ahead of the strategic plan and market review, experience reminds you that vendor management must be integrated into any proposals prior to implementation. Your years of experience have taught that if suppliers are not part and parcel of your plans then it’s useless without them taking center stage. A critical and informed discussion on supplier relationship management and its role in transforming the current supplier concerns must be done. Supplier relationship management must be applied rationally, avoiding the temptation to build a close relationship with all its suppliers. The Kraljic Matrix should be applied to help organize the relationship distribution for Flycloud The supplier's perspective on the reasons why the collaboration has collapsed must also be reviewed where you will apply the Supplier Preferencing model to determine other operational and strategic reasons for the failure.

Summary of focus:

• Supplier relationship management insight
• Supply base rationalization
• KraljicMatrix application
• Supplierpreferencing model (also called supplier perception matrix)
• Industry-related data with in-depth research
• Demonstrate an understanding in the specialism/subject area

c)

Implement an operational project that will address international logistics challenges at Flycloud. The proposal would consider a range of route options and strategies for faster delivery and reverse logistics efforts, considering that most import and export shipments for rotating spares shipment are done out of North America and Europe. This happens to be where the strategic vendors, Super Turbines and North Star Aircraft limited operates so a well-thought-out plan must be presented. Critically evaluate multi-model systems and shipping strategies that can be applied globally. In other words, some comparisons must be made between air and sea freight cost, dependability, and flexibility, operating from the Middle East to the western hemisphere. The issue of Flycloud Global Caterers has become a logistics and distribution bugbear. Therefore, a critical review and extensive knowledge for the selection of distribution hub and network choices must be evaluated from a geographical and business perspective. You should also critically review the different approaches for selecting logistics modes and also choosing the best physical distribution strategies for the organization. Real solutions must be explored, making mention of the best geographical options available as well.

Summary of focus:

• Reverse logistics insight
• International logistics challenges
• Shipping route planning and investigation of route options
• Multimodal systems insight
• Physical distribution strategies
• important export shipment concerns
• Exploringgeographical shipping options
• Industry-related data with in-depth research
• Evidence with numerical and graphical source
• Demonstrate an understanding in the specialism/subject area

d)

Considering the summary of key issues highlighted above, the VP of procurement must also explore modern developments in IT ICT/ IT, arguing through continued secondary referrals, ways in which they can advance many of the solutions put forward. You must critically analyze a wide range of ICT applications to support and enhance CPFR techniques for faster material delivery at the organization. You believe that CPFR techniques will also impact the cost constraints, bring much-needed savings while ICT, on the whole, will bring a sense of accountability between all users. One such technology is the advent of AI and data analytics software which might better manage flying hours and readiness to receive unserviceable spares. You must also discuss at least two supply chain system models and their influence on advance planning and scheduling strategies.

Summary of focus:

• AI and ICT insights
• Demandplanning systems (CPFR)
• SCORmodel applications

In presenting all strategies to the board, arguments should be justified, using PESTEL, Porter’s 5 forces, Porter’s Value Chain or any other contemporary management techniques.

[40 Marks]

Addressing the financial impact.

As the new VP, you have been briefed about several financial and cost-related issues that have plagued the enterprise. The Director - Finance, Annie Windsor presented financial data (See figure 1.1 below), arguing that suppliers’ financial assessments are often mismanaged, contributing to the last two catering vendors going into receivership or defaults, while in continued operations within the firm. This had led to uncompromising delays and eroded supplier relationships, coupled with high switching costs, associated with acquiring a replacement caterer. To add further, suppliers have not honored delivery contracts as originally agreed. There is the current challenge of deliveries slipping into the lagged performance of 2 months, after their committed date. The Director of Finance has also shared that the current position of asset management acquisitions included in purchasing a significant fleet of 777 aircraft, commissioned 10 years ago, ignored the concept of a total cost strategy (whole life costing analysis). Each purchase resulted in the burdening of the company in the tune of an extra 5 billion USD, adding to the 2 billion USD purchase price. There also exist working capital management issues of vendors not being paid on time and a case where one vendor has received advance payments without delivery of million-dollar shipment. High inventories have also been plaguing the enterprise, increasing holding costs and with greater financial concern, depleting the financial liquidity of the organization. This has also impacted the supply chain’s global reach with restricted budgets from finance. It was also noted by Annie, that many of the current ordering systems are outdated with disconnection from vendor’s schedules and no internal communication between the warehouse team, other users and the procurement team. They are operating in ‘silos’ she claims. But the problem doesn’t end there. Many stock postings have now been linked to human error. This must be addressed with urgency. The management team now requires that the VP strategize to devise a workable policy to alleviate the problems mentioned and has been asked for a detailed report and short presentation to the board.

TASK 2 - 2^nd Case Scenario.

Supply Chain Challenges Impacting Financial issues

a)

You are now faced with another mammoth task, involving the review of some financial and operational challenges that need your urgent attention. One such issue is the payment methods and poor accountability of receipt and order placements. You must then critically review the impact of digital payment methods on supply chain and logistics, making mention of their features, boundaries, and terminology. This approach should bring out credible source references, for the use of blockchain payment strategy at the organisation. Other digital forms of payment can be explored. The success or failure of other organizations must be critically reviewed, where this new strategy has been implemented. As an add-on assignment, she has asked that the VP delegate some responsibility of having his procurement lead, critically assess the financial results in a recent supplier appraisal of Rack Aircraft Bearing limited. Using techniques such as supplier appraisal, a critical stage of the supply chain cycle, evaluate the commercial and operational financial statement presented. They must determine realistic assumptions on the possible causes of the results, propose solutions to address them and the impact it may have on supplier relationships later on. Students will refer to the financial appraisal results in figure 1.1 below.

Summary of focus:

• Digital payment methods
• Supplier financial appraisals
• The procurement cycle
• Assessing the data presented in the table
• Blockchain insights

b)

Conduct an in-depth analysis of the problems and issues in warehousing and inventory management at Flycloud. This must be followed by the preparation of a comprehensive action plan to address these problems and issues identified. The inventory management shortcomings the organization now faces should be tackled with a detailed plan to correct inventory levels. The student must also distinguish between dependent and independent demand while discussing what other ordering techniques might be fitting for the airline industry. These arguments must be well justified. For example, EOQ ordering concepts and periodic review replenishment systems could be reviewed. Some other warehousing and inventory management solutions should be explored such as VMI and Demand-Pull strategies for rotating spare parts. For the moment, your assumption is that the airline has not accurately matched supply with demand conditions and has therefore linked this issue with working capital management, cost planning, capital expenditure investment allocation issues, and current cash flow constraints.

To add, the matter regarding a poorly integrated ordering and scheduling system must also be addressed simultaneously. While addressing this issue, you must also critically analyze the relationship between CPFR models and AI strategies, exploring its benefits to Flycloud and its affiliated organizations. An in-depth understanding of AI must be discussed, demonstrating ways in which a human-less system can improve the current replenishment techniques.

The technological solutions should be suggested & recommended, but not without highlighting the possible risks, challenges, and opportunities that you would face if implemented. You should also present financial and statistical data, arguing the success of advance planning strategies in the airline industry while drawing learnings from other sectors. These secondary and quantitative sources can help convince the board on the recommendations put forward.

Summary of focus:

• Warehouse and inventory management insights
• Matching demand with supply
• Pulls vs Push systems
• CPFRmodels working with AI strategies
• Financial and statistical data evidence for CPFR success
• Dependents independent stock

c)

Finally, assess the impact of hidden costs to procurement in the acquisition of capital equipment, similar to the last 777 fleet and develop whole life costing model for future purchases. In doing so, you must develop a total cost strategy for the acquisition of capital equipment for the organization, considering the implications of decommissioning, pricing and revenue management. You must conduct some research, presenting estimated figures on the cost of training, operations and so on.

Summary of focus:

• Whole life costing strategy insights
• DesigningWLC model
• Impact of hidden cost
• Revenue and asset management insights

[40 Marks]

Figure 1.1 Financial results of Rack Bearing Limited

B: The whole report should be presented in a well-written, structured format, and which makes correct use of the Harvard Referencing System. If not followed, such is likely to affect the student’s score.

Assignment Task 3

PowerPoint Presentation – [20 Marks]

GRADING AND RULES: PPT

7-10 slides on PPT 10 minutes to present.

5 minutes for a Q and A session 

You are required to plan and present a logistics report to the board by answering several of the questions they have posed below. Your proposal might consider a range of route options and strategies for faster delivery and reverse logistics efforts, considering that most import and export shipments for rotating spares shipment are done out of North America and Europe. This happens to be where the strategic vendors, Super Turbines and North Star Aircraft limited operates so a well thought out plan must be presented. Incoterms and transport modes would also be assessed. The issue of Flycloud Global Caterers has become a logistics and distribution bugbear for the board, so they are looking forward to workable solutions. The following must be addressed in a live PowerPoint presentation. Note that higher marks will be awarded for content where students are able to draw from real-life examples:

• Why is reverse logistics an important supply chain function to the airline industry?
• Provide examples where this function is applied within the sector or other sectors, highlighting the successes and challenges 
• How would the VP improve reverse logistics at Flycloud?
• Presenting summary form, workable solutions to address delays that might be linked to the location of the key suppliers mentioned above?
• With the Catering subsidiary being accused of having an unsuitable location hub, do you think such a reason is justified? Give reasons for answer given.
• What factors might the VP consider before she plans her relocation?

You will be scored out of 20 with the marks distributed as follows: