1.0 Introduction
The assignment under discussion is based on the case study of Air miles for food and flowers to discuss the management strategies of logistics with the subject of the issue. There are five main parts of the assignment which plays an effective role to discuss the main issue of the study along with the suitable recommendation. The first part is based on the reasons for the change in existing procedure with respect to the logistics management. Moreover, the second part is comprised of the application of sustainability in the logistics industry. The third phase of this work is based on the supply chain challenges faced by companies during demand fluctuation. Other than that, an author of this work has also discussed supply chain’s role of investment over customer service as well as resource utilization objectives. Furthermore, the 2013 horse meat scandal has also been discussed in the last part of case study solution. At last but not the least, the summary of an overall case study is also described in order to conclude the case.
2.0 Reasons for Change in Existing Procedures
The management at Air Mills realized that to enable its business to achieve greater heights and counter the challenges of the modern day business environment. For this purpose, the decision makers at the organization decided to bring about changes to their existing method of carrying out their activities. As the case has indicated that the policy makers at Air Mills were under commercial pressures; therefore, it is seen as one of the major reasons behind the changes that were brought about in their practices. In the view of Brammer, Hoejmose and Marchant, (2012) commercial pressures refer to the challenges in the business environment which have influential impact on overall profitability of company. One of fundamental reasons behind the increasing commercial pressures is the remote sourcing that Air Mills had to undertake that to procure and deliver different goods from one destination to other. The remote destination resulted in an increase in overall logistics and supply chain cost of the organization which had a negative impact on the profitability. In the view of Esteves, Barclay, Brereton and Samson, (2011) sourcing through remote areas requires efficiently designed communication and co-ordination strategies. It has also been suggested that the strategic leaders play an important role to manage the resources of companies in order to achieve competitive advantages within cut-throat competition but, it is only achievable when the strategic leaders make changes in their strategies and procedures with respect to the modifications an external environment. The requirements for suppliers and customers are continuously changing as well as they need to prefer products and services which satisfied them and their requirements. Therefore, it is essential enough to make changes in the existing procedure of the companies. At last, the changes need to be aligned with the organizational objectives.
The other primary reason behind the changes in the existing procedure at Air Mills is the increasing threat of carbon emission from their activities. As it has been highlighted in the case study that the route of procurement and sourcing of Air Mills was complex; therefore, they were forced to use more vehicles to deliver their goods from one destination to other. In the view of Hsiao, Van der Vorst, Kemp, and Omta, (2010) remote and complex means of sourcing increases the overall logistics cost of the organization. Moreover, it has also been analyzed through the findings of Farahani Asgari, and Davarzani (2009) that increasing level of complexities reduces the overall visibility of the goods that are to be delivered to the desired destination. Therefore, considering these issues, the management had to come up with effective policies, rules and procedures to counter the threat posed by these challenges. The challenges posed by the stakeholders of the organization such as the customers and the government prompted a change in policy and demanded that the administration takes the appropriate actions to counter the threats to its business policy. In accordance with the research conducted by Brammer, Hoejmose, and Marchant (2012), the natural environment and maintenance of environment is important enough for companies to attain the interest of customers because, in the recent years; the customer are concerned about the natural environment and they use to support the companies which formulate and implement the green strategies in order to protect the natural environment. In a nutshell, the companies can gain competitive edges by diverting their interest and need towards the green based strategies for the protection of environment and to sustain the potential and profitable customers towards the company.
3.0 Application of sustainability in the logistics industry
In the view of Petrini and Pozzebon (2009), the concept of sustainability refers to the process through which an organization pursues its financial objectives as well as performs its economical responsibilities. These days more and more organizations are adopting increasing amount of sustainability measures to make sure that they fulfill the needs and wants of their stakeholders with respect to their environmental responsibilities (Kuckertz and Wagner, 2010). One of the primary reasons behind business organizations around the globe so keen to implement environmental practices within their process is the increasing amount of consumer awareness with respect to environmental sustainability (Tahir and Darton, 2010). Furthermore, it is highlighted that the observance of the environmental sustainability measures is a significant source of advantage that is competitive for the organization considering importance for sustainability for the business. Furthermore, it has been indicated in the literature of Bernon, and Cullen, (2007) that increasing the sustainability of logistics also helps in increasing the overall goodwill of the firm.
The importance of the application of sustainability within the logistics industry has also arisen due to the increase in the strategic importance of logistics. According to Huge Brodin and Aronsson, (2006), department for logistics has gained significant importance particularly due to the increasing trend of globalization of business. As in the process of globalization, goods are needed to be delivered from point on production to the point of consumption; therefore, need for increasing the overall efficiency of logistics has also increased significantly.
In the view of Sanchez-Rodrigues, Potter and Naim (2010) like in other industries, the process of sustainability are also important for the organizations that are operating in the logistics industry. As stated by Dey, LaGuardia and Srinivasan, (2011) the implementation of the measure of sustainability within the process of logistics, helps the decision makers to reduce the carbon footprint of their activities and minimize the carbon emission from the process of their logistics. Halldórsson, Kotzab, and Skjøtt-Larsen (2009) stated that the implementation of sustainability into the process of logistics requires a huge amount of capital investment which is directed towards improvement of the equipment that is employed in the logistic system of an organization. In the view of Wolf and Seuring, (2010) top management commitment is also instrumental in ensuring that the process of sustainability is applied in an effective manner. It is the responsibility of the top management to incorporate the concept of sustainability into the mission and vision of the organization to encourage the sub-ordinates to adopt sustainability measures. According to Presley, Meade and Sarkis (2007) identification of the needs and wants of the stakeholders is also an important factor which determines the extent to which the element of sustainability is applied within the process of logistics.
According to the findings of Dekker, Bloemhof, and Mallidis (2012), one of the ways in which sustainability is applicable to the logistics industry is the application of the green logistics. In the view of Ubeda, Arcelus and Faulin (2011) the process of green logistics refers to the process through which organizations limit the carbon emission from their logistic processes.
4.0 The supply chain challenges faced by companies during demand fluctuation
As per the given case, the local sourcing is one of the main challenges faced by companies during the demand fluctuation because; the local sources are fixed by the companies and it is difficult enough to balance the local source during the fluctuation of customers demand. In simple words, the local sourcing area receives some kind of disturbance due to the demand fluctuation of customers. Apart from this, the there is a high impact of demand fluctuation on air freight because it carries a huge investment. When the companies face demand fluctuation then the strategic leaders face high difficulty in management of air freight. In accordance with the research conducted by Aronsson and Huge Brodin, (2006), the increased volatility in customer demand is one of the basic reasons behind frequent logistic challenges the main reasons behind this fluctuation are based on the emerging downturn, shifting priorities, increased risks and issues in tradeoffs.
It has been observed that the high pressure of global competition has enhanced the fluctuation in customer demand which affects towards the changes in the supply chain and logistics process. These specific problems have left the managers and strategic leaders with none of the choice but just to manage their resources and supply chain process as per the changes in an external environment. In accordance with the research conducted by Juttner, Christopher and Godsell (2010), the strategic leaders of the companies are highly concerned about the amendments and shifts in customers demand and to align the supply chain process with respect to the shifts in customer demands. Therefore, it is essential enough to continuously assess the external environment in order to make changes in logistics management and supply chain process.
As per the given case, the carbon emission is another main problem raised by the logistic process by the company because the supermarkets and food procedures are diverting their interest towards the transferring products through huge journeys instead of eliminating the issue of carbon emission. As Dangelico and Pujari, (2010) have described that the green companies are plating an active role to eliminate the problems with respect to the carbon emission and to create a pollution-free supply chain and logistics process.
5.0 The role of Supply chain investment on customer service and resource utilization objectives
In the view of Li, Ragu-Nathan, Ragu-Nathan and Rao (2006) supply chain management is an integral element of the operations of an organization which involves movement of goods from the point of production to the point of consumption. In the view of Melo, Nickel and Saldanha-Da-Gama (2009) investment in supply chain refers to undertaking expenditures for the purpose of enhancing the overall quality and the procedures that are adopted by an organization to improve the procedures of its supply chain.
Therefore the overall increase in the efficiency of supply chain of an organization is essential in the fulfillment of needs and wants of the customers (Flynn, Huo and Zhao, 2010) Considering the importance that supply chain has in the modern business environment, the policy makers of several organizations across different countries have taken substantial measures for increasing the efficiency of their supply chain process (Green Jr, Zelbst, Meacham and Bhadauria, 2012). In the view of Braunscheidel and Suresh (2009) the increase in the investment made in the supply chain of an organization increases the overall competitive advantage that an organization has over its rivals. In the view of Thun and Hoenig (2011) the role of supply chain has also increased primarily due to the increase in the trend of globalization. Organizations have enhanced the scope of their business in different countries of the world in search of new markets to enhance their overall market share and revenue.
According to the findings of the literature of Sun, Hsu, and Hwang, (2009) the investment made by the organization in supply chain also plays an important role in utilization of resources in an effective manner. In the view of Zheng, Yang and McLean, (2010) resource utilization refers to the use of resource of an organization in an efficient manner. An organization benefits from the utilization of its resources if it is able to use them in a cost- effective manner. One of the ways in which the process of resource utilization in an organization in increased through increase in supply chain is by effective usage of warehouses (Melo, Nickel and Saldanha-Da-Gama, 2009). According to Hugos (2011) warehouse management is an important component of the supply chain of an organization. In the view of Prajogo and Olhager (2012) the management of warehouses plays an important part in reduction of the overall cost and increasing the overall efficiency of the process of delivering the goods to the consumers. In the view of Prajogo and Olhager (2012) one of the ways in which the quality of logistics is enhanced is by means of using information technology. Through the use of information technology an organization can expedite the delivery of its products and service towards its customers which increases the overall rate of customer service of a particular firm (Liang, You, and Liu, 2010).Moreover, it has been analyzed that the process of resource utilization is one of the major sources of sustaining the efficiency of the logistics as well as other components of supply chain (Borges, Hoppen and Luce, 2009).
Keeping in view the importance of enhancing the overall process of logistics and supply chain, Air Mills has also been involved in undertaking measures to make sure that they can respond to the increasing competition in the market. Along with that, the issue of sourcing from remote and far flung areas is also a major cause of concern for the management of the organization.
In accordance with the research conducted by Farahani, Asgari, and Davarzani, (2009), the supply chain process is a backbone of the company because the operation if supply chain has a greater impact on the effectiveness and efficiency of outcomes. The effective supply chain process helps the company to retain the customers towards the company and to create barriers and hurdles for competitors to reach the customers. Therefore, the slight delay in supply chain process has a major influence on customer services. In agreement to previous view Sanchez-Rodrigues, Potter and Naim, (2010) have declared that the companies should invest on their supply chain process so that they can have the efficient results and to maintain the customer trafficking. Consequently, the supply chain investment, customer service and resource utilization are highly correlated. The change in one variabke creates the changes in other variable.
6.0 2013 Horse meat scandal
The Horse meat scandal was based on the undeclared horse meat offered by the Europe-based companies. The food advertisers containing beef were actually declared by the horse meat. This specific issue was enhanced on 15th January 2013. It was reported that the companies sell horse meat instead of frozen beef burgers. Therefore, various Irish and British markets faced numerous issues and high customer losses. In accordance with the research conducted by von Bargen, Brockmeyer and Humpf (2014), the horse meat is not unhygienic and it is not the harmful health of human body. In fact, most of the people use to prefer horse meat over beef and mutton. On the other hand, it has also been observed that the consumption of horse meat comes under the taboo in various countries which includes; the United Kingdom and Ireland. The Tesco and Sainsbury faced numerous issues and threats due to the high hype on horse meat scandal. Other than that, the Burger King also lost its potential and loyal customers due to the horse meat scandal. Most of the customers moved towards other burger companies after 2013. Other than that, the supply chain process of these specific brands was affected badly and the companies lost their investments.
The analysis on horse meat scandal shows that 23 out of 27 samples of beef burgers were comprised of the pig DNA. On the other hand, pork is considered as the forbidden and taboo in the Muslim countries. Therefore, it is essential for companies to consider all factors while the formulation and implementation of strategies in order to create and offer products for different markets. As per the information provided by Bargen, Brockmeyer and Humpf (2014), the Horse meat scandal 2013 revealed a major breakdown with respect to the traceability in a supply chain of food. This specific scandal was spread among 13 more countries. The European authorities played a vital role to resolve this issue and to create an EU-wide solution for the companies.
In a nutshell, the Horse meat scandal 2013 was based on major risk factors for losing customers and share of companies because the customers started to lose their interest towards the beef burgers when they came across with this specific example. Other than that, this specific scandal affected on the supply chain process of the company and the strategic leaders face various difficulties in surviving the company’s brand and to save the supply chain investment of the company. Therefore, the loss of potential customers is one of the most highlighted risks obtained in this specific case.
7.0 Conclusion
After discussing the given case, it has been concluded that the logistics and supply chain process plays an essential role in every business and it can be easily affected by the various issues. Therefore, it is important for strategic leaders to create a contingency plan for saving the supply chain process while the formulation and implementation of diversified strategies. Moreover, the case of Air Mills has been discussed in the assignment which explains the reason behind the amendments in existing procedure of the company. The commercial pressure is the main reason behind the changes in existing procedure of the company. At last, the Horse meat scandal was comprised of the implicated horse meat offered by the Europe-based companies. This specific issue was enhanced on 15th January 2013 and it ended in the end of 2014. It was reported that the companies sell horse meat instead of frozen beef burgers. Therefore, various Irish and British markets faced numerous issues and high customer losses.
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