Table of Contents
TOC o “1-3” h z u 1. P:D Ratio of McDonalds PAGEREF _Toc93917646 h 11.1 Evaluation of the Current Production Strategy PAGEREF _Toc93917647 h 11.2 Impact of the JIT on Forecasting, Capacity and Inventory Management PAGEREF _Toc93917648 h 12. Fluctuating Demand Pattern PAGEREF _Toc93917649 h 22.1 Options The Company Has To Improve Its Ability To Meet This Demand PAGEREF _Toc93917650 h 32.2 Recommended Option PAGEREF _Toc93917651 h 43.0 Logistics & Operations Management PAGEREF _Toc93917652 h 43.1 Definition of Logistics PAGEREF _Toc93917653 h 53.1.1 Product Lifecycle PAGEREF _Toc93917654 h 53.1.2 Logistics Process PAGEREF _Toc93917655 h 53.2 Right Product PAGEREF _Toc93917656 h 64. Cloud ERP (Enterprise Resource Planning) PAGEREF _Toc93917657 h 64.1 Advantages of Cloud ERP PAGEREF _Toc93917658 h 74.2 Significant Actions to take to Ensure Success in Implementing the Cloud System PAGEREF _Toc93917659 h 8
1. P:D Ratio of McDonaldsThe P:D ration of any operation with respect to the organization is the demand time ratio obtained through considering the customer wait time between request and receiving the same. It also looks at the complete time production of the said activity. Therefore, it also considers the length of operation in terms of processing information and materials from customer to the organization and back. McDonald’s P-D ratio is relatively low, meaning that the company takes less time to produce compared to what the consumer demands. McDonald’s has a 1:1 P:D ratio classifying the organization as a just-in-time company.
1.1 Evaluation of the Current Production StrategyIn inventory management, the term “just-in-time” refers to a technique in which products are ordered and delivered at the precise moment they are required in the manufacturing process. Ultimately, the purpose of this strategy is to lower the amount of money spent on overhead inventory charges in order to reduce costs as much as possible. The ability of a company to accurately estimate demand for its products and services is critical to the success of the just-in-time strategy. If we’re talking about the manufacturing industry, the “pull” style of inventory management is what is referred to in the expression just-in-time inventory system (Rivera-Gómez et al., 2019). The inventory is “drawn” and fresh manufacturing supplies are purchased to match the demand when sales activity necessitates an increase in production output. In turn, manufacturing works more smoothly, resulting in an overall reduction in inventory expenses. This method is based on signals that are sent out at various stages throughout the manufacturing process to inform the manufacturer when to begin production on the next part, and it is used to determine when to begin production on the following part. As inventory levels begin to deplete, it becomes important to place orders for new parts. When a just-in-time inventory management system is implemented, cash that would have been spent on inventory expenditures may now be employed elsewhere, resulting in significant savings. To give an example, facilities that were formerly used only for inventory storage are now available for use in manufacturing or for a variety of other purposes within the organization. Increasing revenues for the company is achieved through the reduction of waste and the lowering of inventory expenses.
1.2 Impact of the JIT on Forecasting, Capacity and Inventory ManagementJust-in-time (JIT) inventory systems are a technology that allows suppliers to integrate raw-material orders directly with production schedules when it comes to inventory management, in particular. They are employed by businesses in an effort to boost efficiency and reduce waste by procuring products only as they are required for the manufacturing process, therefore decreasing inventories and the related expenses associated with storage. In order to reduce inventory while also improving overall efficiency, JIT inventory solutions are used. Inventory costs are reduced in JIT manufacturing systems because companies only purchase materials and parts when they are necessary for production and do not have to pay storage fees (Rivera-Gómez et al., 2019). This reduces the amount of money spent on inventory. Furthermore, if an order is canceled or a project does not end on time as anticipated, manufacturers are not left with unsold inventory.
In addition to providing manufacturers with the ability to keep production runs short and migrate quickly and easily to new commodities if the need arises, just-in-time (JIT) offers a number of other benefits. Because of the advent of just-in-time delivery, organizations no longer need to retain a large amount of warehouse space to hold excess goods. In addition to saving money on raw materials for manufacturing, a corporation can use its cash flow for other reasons rather than spending significant quantities of money on raw materials. Notably, just-in-time inventory management ensures that inventory arrives only when it is required for manufacturing or to fulfill consumer demand, and that it does not arrive any earlier than that. Finally, but certainly not least, you want to eliminate waste while also boosting the efficiency of your operational processes. In order to achieve just-in-time delivery, long-term agreements with trustworthy suppliers are sometimes required. This is because quality, rather than the lowest price, is often the primary goal. A lean management method is what is referred to as just-in-time (JIT) manufacturing in the manufacturing industry. Everyone involved in the production or service system that is just in time (JIT), including humans, are interconnected during the course of a JIT manufacturing or service system (Rivera-Gómez et al., 2019). They work together and rely on one another in order to achieve effective results.
Supply chain disruptions can occur as a result of just-in-time inventory levels, which are maintained at optimal levels. According to industry experts, a single supplier of raw materials experiencing a breakdown and being unable to produce the items on time is sufficient to bring a manufacturer’s entire manufacturing process to a grinding halt. A sudden and unexpected surge in client demand for items that surpasses the company’s expectations may result in a scarcity of parts, which can result in severe delays in the delivery of finished products to all customers.
2. Fluctuating Demand PatternDemand in any sector is described as fluctuating significantly where changes in the economy and changes in consumer spending habits emerge. When it comes to customer demand, the only thing that is constant is its unpredictability. The ability to effectively estimate customer demand is a difficult problem for many firms. There have been moments of extreme overcapacity and difficulties finding adequate employment for owners of all types of service-based firms (Brunner et al., 2020). Both of these circumstances might be extremely damaging for a company’s bottom line. The capacity of a company may force it to turn away additional business since it will be unable to satisfy the deadlines. It’s possible that this will result in a loss of revenue for you. When there is not enough work, resources that are compensated but do not generate money for the organization can readily be identified as the cost of inefficiency, which can be calculated. It is for this reason that when the popularity of a product fluctuates over time, it is referred to as “demand fluctuation.” Changes in demand, whether direct or indirect, have an effect on purchasing behavior in a variety of ways. The demand for goods and services is influenced by a variety of factors such as seasonality, taxation, availability of products, and pricing. This is in direct conflict with the fact that demand remains stable.
2.1 Options The Company Has To Improve Its Ability To Meet This DemandInventory management is made much easier with a little amount of trial and error on the part of the manager. This is especially true when it comes to businesses that deal with strong demand during peak seasons or throughout the year. Businesses, both online and offline, are affected by seasonal fluctuations in the same way. When a product is in season, the supply of that commodity may run out quickly. In contrast, when the season or holiday season draws to a close, demand may begin to decline quickly.
Determine and categorize seasonal inventory as the first step in boosting a company’s capacity to meet this demand in order to increase profitability. Inventory may be separated into two categories: seasonal products and perennial products. Seasonal products are sold all year long, however seasonal demand spikes occur during certain seasons, making it easier to distinguish between the two types of products (Kantari et al., 2021). Fresh cream sales are particularly brisk during the holidays and Thanksgiving, owing to the fact that it pairs well with sweets such as pavlova, trifle, and pumpkin pie. However, if every other business in the industry followed similar, it is possible that customer rivalry would expand. To begin, you must determine how long your busiest periods will last in order to manage your schedule accordingly. Throughout the season, you will be able to assess your ability to respond to product sales and make adjustments as needed. The shorter the seasons, the more probable it is that you’ll have all of the goods you need on hand at the same time. When it comes to Valentine’s Day, the demand for roses in the color red increases significantly. It is possible to replenish products such as sun hats, sunscreen, and ice cream more regularly during the course of the year if the season is not too short. To effectively manage your inventory, you must ensure that your online sales correspond to the amount of physical product you have on hand. Websites should not list an item as “out of stock” if it is not actually unavailable. Provide customers with information in the case that an item is temporarily out of stock, such as whether or not another shipment is on its way. When customers discover that things they’ve added to their shopping basket are no longer available, they’re more inclined to switch to a competitor’s website.
Another way for improving demand forecasting accuracy is to employ demand forecasting and delay tactics in conjunction with one another. Predicting demand for seasonal inventory control is the most difficult aspect of the process. Despite the great range of seasonal forecasting techniques that are available, the best a company can hope for is an educated guess as to how many sales it should expect over a specific period of time It is particularly effective for recognizing possible problems with year-round perennial product replenishment and then using that knowledge to define minimum stock levels because historical data and seasonal swings may be evaluated. By switching to ATO production, it is possible to postpone the start of Make-to-Order (Assemble-to-Order) manufacturing (Kantari et al., 2021). Smaller firms that retain inventory at the sub-assembly level and only create products in response to specific customer requests have greater flexibility than larger businesses. An acceptable use for this would be the construction of numerous finished things from a single sub-assembly (or a group of sub-assemblies). Firms that go through this transition will be better able to adapt to and respond to changes in the marketplace. A number of sectors have already begun to include this into their overall supply chain strategy as a result. It is possible that switching from MTS to ATO is not the best option for many businesses. Before deciding to implement a delay plan, it is critical to conduct a thorough analysis of the company’s supply chain characteristics, including the degree to which sub-assembled goods can be interchanged, the length of manufacturing cycle durations, and the expectations of customers regarding delivery times. The ability of a supply chain to respond swiftly to changes in demand may be improved as a result of such a strategy shift, but the cost of implementing it may be prohibitively expensive. Making the move to assemble products on demand may need a firm to invest a large amount of money in making modifications to its supply chain activities (such as manufacturing, shipping, and so on), as well as its supporting systems and processes, in order to be successful.
Other options include keeping a supply of the substance on hand in case of an emergency. According to some experts, unpredictability in demand can be managed by storing a substantial number of commodities. When you have a sufficient amount of inventory on hand, demand swings are absorbed by the inventory. When it came to ensuring that there was adequate merchandise on hand in advance, this had traditionally been the standard corporate practice. Overstocking, on the other hand, depletes supply chain resources and increases operating expenses to levels that are no longer economically sustainable in today’s market (Brunner et al., 2020). Products with short life cycles and high obsolescence costs, such as those found in the high-tech industry, make it more difficult to deal with this problem. It is possible that an organization’s bottom line will suffer significantly if it retains an excessive amount of goods on hand during these circumstances.
2.2 Recommended OptionCompanies should utilize strategies to shorten cycle times as a final step. It is vital to lower the entire supply chain cycle times in order to accelerate the flow of information throughout the supply chain. Companies with shorter supply chains can share information and respond to changes more quickly than those with longer supply networks, owing to the shorter cycle times. When a corporation has this skill, it can better accommodate the desires of its customers more quickly. The entire supply-chain cycle time is computed by adding together the manufacturing and transit time components. When seeking to reduce cycle time throughout the supply chain, both of these considerations should be taken into consideration. Lean manufacturing strategies have been found to assist organizations cut cycle times by decreasing the amount of non-value-added tasks in the manufacturing supply chain. Advanced systems, which incorporate automation and analytical skills, can assist planners in making timely decisions by shortening the planning period and making it easier for them to develop many plans at the same time. Modern planning systems incorporate constraint-based planning methodologies, which enable firms to predict and alleviate supply chain bottlenecks before they become a major problem. As a result, the overall cycle time is lowered.
3.0 Logistics & Operations ManagementLogistics is a term that used while discussing the management of commodities during their journey from their point of origin to their site of consumption in order to suit the needs of customers or enterprises (Cambridge Dictionary, 2018). Material resources such as food, raw materials, animals, and machinery, as well as more abstract concepts such as time, data, and energy, are all managed under the aegis of resource management. It also includes the administration of information technology resources. Because of the use of logistical tactics, it is possible to accomplish this. Logistics encompasses a wide range of operations that are involved in the movement of tangible commodities (Alkhatib, Darlington, & Nguyen, 2015). Information flow, material handling, manufacturing, packing, inventory management and shipping are just a few of the activities that fall under the category of logistics. Specialized simulation technologies can be used to simulate and assess logistic operations, as well as to visualize and optimize them, in order to increase overall efficiency and reduce costs. When it comes to import and export logistics, the goal of preserving as many resources as possible is always at the forefront of everyone’s mind. Supply chain managers are responsible for developing sourcing and supply management plans for their products throughout the product lifecycle, from launch to end of life, and for ensuring that these plans are followed. Furthermore, they have the responsibility of ensuring that their items are delivered on time, if not early. Employees gain important insight into the marketing, operational, and financial performance of their company as a result of the planning and decision-making processes involved with lifecycle management, as well as into their own personal growth and development prospects. Managing and minimising risks connected with the supply chain can be more easily accomplished when providers adhere to the same set of selection and management requirements throughout the supply chain.
3.1 Definition of LogisticsWhen the term logistics is used in a professional setting, it refers to the control of product flow from the point of origin to the point of consumption in order to suit the needs of customers or enterprises (Chartered Institute of Logistics and Transport (CILT), 2018). The name logistics is derived from the Latin word for “flow.” According to its original meaning, the term logistics derives from a Greek word that literally translates as flow (Cambridge Dictionary, 2018). On top of that, logistics is responsible for the transportation of intangible things such as time and knowledge, in addition to the transportation of actual commodities. In many cases, the components of physical item logistics are the same across all of them. These include information flow, material handling and handling of products throughout production and packaging, as well as inventories and shipping and storage, to name a few instances of common components.
3.1.1 Product LifecycleAccording to the product, product lifespans can range anywhere from a few months to several years, depending on the product. In general, the life expectancy of an industrial metering valve, variable-speed motor, or vacuum pump is two to three years, which is considered to be the industry norm. Consumer goods that are driven by technological breakthroughs, such as computer monitors, e-readers, and snowplows, are examples of commodities that are only available during specific seasons or that are driven by technological advancements. Over the course of the twentieth and twenty-first centuries, the importance of supply chain management and customer demand has expanded in parallel with the expansion of the global economy. As the global economy continues to grow, both customer needs and supply chain management are becoming increasingly important components.
3.1.2 Logistics ProcessIn recent years, the introduction of logistics management, which has only been around for a little more than two decades, has raised the possibility of things reaching or exceeding client demand to a greater extent than in the past. In order to reduce costs while simultaneously increasing production and efficiency, corporations concluded that handling logistics on a system-wide basis was the most effective strategy, which they implemented. It is possible to optimize the logistics of delivering items to customers through coordination with suppliers, shipping providers, and warehousers (Council of Supply Chain Management Professionals, 2013). These services can then be merged via automated methods, which will help to lower overall expenses. As a result, prices are decreased, and delivery times are shortened. When determining the quantity of resources that will be necessary, effective strategic planning is vital. If this is not done, the estimate will be incorrect. When it comes to meeting the needs of its clients on time, it is vital for the company to acquire supplies as soon as possible and adhere to strict manufacturing deadlines. A thorough understanding of the logistics process from start to finish is required. For the purpose of developing a workflow plan that reduces expenses while simultaneously increasing visibility and improving general understanding of business requirements, it is critical to streamline communication and services across multiple departments. This is especially true when it comes to large organizations. When designing a workflow plan for a large organization, this is very critical. Businesses can save money by improving inventory management, reducing storage costs, expediting delivery to the end user, and purchasing based on supply forecasts, to name a few of the cost-saving strategies available today.
3.2 Right ProductA significant increase in customer expectations for faster product delivery has arisen as a result of the power of the Internet and social media to connect the global economy, which has resulted in a significant increase in customer expectations. When developing logistics strategies, it is critical to consider the location of facilities as well as the use of contemporary software systems that allow firms to receive purchase orders in seconds rather than minutes or hours. A vital component of achieving the best possible balance between reducing shipping costs and assuring on-time delivery of products or services is selecting the most appropriate mode(s) of transportation, and this is especially true for international shipping (Alkhatib, Darlington, & Nguyen, 2015). In order to supply end-user products and provide exceptional customer service, a comprehensive logistics management system must emphasize the importance of warehousing and transportation in the supply chain. These procedures and methodologies, on the other hand, are essential to the operation of a successful logistics management system.
The logistics role of supply chain management is always evolving in order to meet the expectations of consumers. Consumers often place orders for goods using their iPods, iPhones, cellphones, and tablets, and they expect to get their purchases within 24 to 48 hours of placing the order. Customers anticipate fast order fulfillment and speedy delivery of their purchases, and supply chain logistics must be enhanced in order to match these expectations. The most dependable, cost-effective, and timely delivery methods must be utilized. By establishing a successful supply chain logistics strategy, you can ensure that each component of the design is focused, that expenses are reduced to a bare minimum, and that the supply chain runs swiftly and efficiently, eventually increasing consumer satisfaction with the product or service (Council of Supply Chain Management Professionals, 2013). In terms of understanding the core indications and operations of their supply chains, as well as determining how to deliver the suitable product to the appropriate location at the appropriate time, it is probable that supply chain logistics will prove highly advantageous for enterprises.
4. Cloud ERP (Enterprise Resource Planning)Cloud ERP (enterprise resource planning), which relies on a vendor’s cloud platform rather than on-premises networks, allows organizations to access data from any location at any time. An enterprise resource planning (ERP) system can be used to produce a single source of truth for all areas of a company’s financial and operational operations, such as inventory management and order and supply chain management, procurement, manufacturing, distribution, and fulfilment (Bhatt et al., 2021). It is also possible to automate and streamline financial and operational procedures using enterprise resource planning software. A web browser and an internet connection are required in order to use the software, which is due to the fact that it is a web-based application. The same or superior capabilities than traditional on-premises systems are provided by ERP software supplied as a service, which is hosted by the ERP provider. Specifically, when it comes to enterprise resource planning (ERP) software and solutions, the phrase cloud ERP refers to software and solutions that are hosted and managed in the cloud rather than on premise (Bibi, Katsaros, & Bozanis, 2010). It is true that all businesses face the same difficulty when it comes to competing effectively in today’s market: they must be able to innovate, scale, and develop quickly in order to remain relevant. They are looking for software tools and systems that will allow them to dedicate their time and resources to growth targets rather than to the day-to-day management of information technology infrastructure and infrastructure management.
4.1 Advantages of Cloud ERPWhen it comes to cloud ERP, one of the most significant advantages is its ability to be updated and upgraded in a relatively short amount of time. Because of the availability of cloud ERP, ERP software and tools may be updated and upgraded in real time, resulting in increased efficiency and productivity. This offers the advantage of removing any uncertainty regarding whether or not the business is implementing cutting-edge technology to achieve its objectives in a timely manner. An on-demand ERP system eliminates the need to spend significant time and money updating systems, or to contract a third party to perform these tasks for you.
Because of the lower initial and ongoing investment in cloud ERP, businesses can realize long-term savings, which is another advantage of the technology (Costan and Pascu, 2019). For cloud ERP solutions, the total cost of ownership is less expensive than the total cost of ownership for on-premise ERP systems. Aside from server acquisition and maintenance, other costs associated with software installation on a company’s premises include database creation and management, initial deployment costs (including IT staff), energy costs (including electricity), security and backup costs, and any other costs associated with the software installation process (including tapes). Therefore, implementing cloud ERP is less expensive than implementing traditional ERP because the service provider handles upgrades, maintenance, and data protection for the customer (Razzaq and Mohammed, 2020). In order to implement an in-house ERP solution in your firm, you must first purchase software, licenses, and hardware. These are all important steps in the process. A professional will also be required for the purposes of installation and maintenance, as will be explained further below. A large number of small and medium-sized businesses (SMBs) may be unable to maintain their current levels of information technology spending as a result of the increasing expenses. Cloud-based ERPs, on the other hand, are typically less expensive to implement than traditional ERP systems because they only require a monthly subscription fee. If the situation cannot be solved by one service provider, there may be a variety of other options. It is possible to reduce your total cost of ownership after aligning your operating expenses and revenue streams, but this is not always the case.
Furthermore, it has the ability to be implemented in a short period of time. A cloud-based enterprise resource planning system can be up and running in a fraction of the time it takes to implement a traditional on-premises system. Businesses that use on-premises ERP must take a number of factors into consideration, including equipment selection and acquisition, IT employee training, potential staff expansion, the implementation of new data-security policies, as well as ensuring that everyone on the team has consistent access to tools that will aid the company in its growth (Berić et al., 2018). The usage of ERP on-premises ERP Cloud ERP makes it feasible to set up and implement software in a shorter amount of time than is otherwise possible. Access to real-time data from anywhere is a big advantage in terms of cloud-based software dependability when it comes to the reliability of cloud-based software deployment. Because of this, everyone in the team is more equipped to collaborate and perform better in their individual tasks as a group.
Furthermore, companies reap the benefits of improved access, mobility, and usability for their consumers and employees. Cloud ERP offers a number of advantages over its traditional ERP competitors, including the ability to scale. The fact that your ERP system is cloud-based and international-ready allows your employees to access the resources they demand from any area they have access to a mobile phone and an Internet connection. It is possible to make critical business decisions in real time because information is readily available in real time. This eliminates the need to wait for everyone in the same room or to access your ERP system from the same location before taking action (AlBar and Hoque, 2019). When this is spoken instead of being said, it leads to the formation of a more adaptable group of people. Increased internal and external productivity have resulted as a result of the increased emphasis placed on quick accessibility and stronger collaboration.
Another advantage of cloud ERP is that it enhances system availability and disaster recovery in the case of a disaster, which is particularly important in the financial sector. Data security is now a must-have concern for any corporation that conducts business online in today’s world. In exchange for your decision to use their service, cloud ERP providers are responsible for protecting your system from potential threats or vulnerabilities that may arise (Costan and Pascu, 2019). Vendors invest in world-class infrastructure and security to protect your system and free up your time so that you can devote your attention to other aspects of your company’s business operations.
Finally, because cloud ERP is hosted on the internet, it is both secure and compliant with regulatory standards. The disadvantage of in-house ERP solutions is that they must be configured and maintained on a continuous basis in order to function properly. If even one of these steps is skipped, it is probable that performance will suffer as a result of this. If you opt for a cloud-based solution, the service provider is responsible for hosting the service on their servers, which you are not accountable for. The result is that your ERP will work at its best since you will be confident that it is being maintained by qualified personnel. The fact that cloud-based ERP businesses provide their customers with greater security support and protection has already been mentioned (Razzaq and Mohammed, 2020). The importance of end-to-end and all-encompassing security has been emphasized throughout Epicor’s development. Every tier of our enterprise resource planning software includes physical network interface cards, user passwords, and round-the-clock system monitoring as standard features. Because our comprehensive approach to security assists us in detecting and mitigating interruptions, customers benefit from better uptime and more peace of mind.
4.2 Significant Actions to take to Ensure Success in Implementing the Cloud SystemIdentifying the total cost of ownership, evaluating cloud options, developing a migration/transition plan, planning the data migration, and developing change management approaches are the most important actions that the company must take in order to successfully implement the cloud system. These actions are in addition to improving their current systems. Among the first phases in the process mapping process is a comparison of what is required and what is already available in the marketplace (Zaslavskaya et al., 2018). Almost every company has a set of policies and procedures, some of which have been defined in advance and written, and others which have formed organically over time. You should identify the most important business processes and map out the relevant configurations in accordance with industry best practices before shifting to the cloud, rather than replicating your on-premises methods. An Oracle partner can often assist you in completing this investment more quickly and efficiently, while also protecting your firm from being accused of “paving cow paths” and aligning your operations with industry standards and best practices, among other benefits.
The next stage is the