FEEDBACK TUTORIAL LETTER 1 ST SEMESTER 2017 ASSIGNMENT 2 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT ISM511S 1
ASSIGNMENT 2 Feedback Tutorial 2 Introduction to Supply Chain Management ISM511S Dear Student Thank you very much for submitting your 2 nd and final assignment. There are still students struggling with referencing, but in general I am happy with the work submitted this time around. All questions were answered satisfactory, a couple of you did very well in this 2 nd assignment e.g Ms Grobelaar, Mr Tawanda Zhuwao, Ms Justina Ndalelwa and Basson FV. Thank you for your work. Please start now with your exams preparations. Best regards Question 1 Integration depends on the sharing of information. Why should one company be willing to give its confidential information to another? [10 marks] Most of the student didn t not understand this question. The question was not on integration BUT on why should one company be willing to share confidential information to another company? According to Ms Justina all companies have secrets. Some are technical such as the detailed specification of a manufacturing process; some are business-related such as a list of customer names and addresses, which would be useful to a competitor. In recent years, many countries have introduced laws on the protection of confidential business information along the lines proposed by the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which states that for information to be legally protectable: (i) the information must be secret, i.e., not generally known more readily accessible to persons that normally deal with that kind of information; (ii) it must have commercial value because it is secret; (iii) The owner must have taken reasonable steps to keep it secret.
In a normal business it is sometimes necessary to share a secret with another company. A manufacturer may need to have specialised tests carried out on a prototype, and does not want competitors to know details of the new product. An assembly company may wish to know if a supplier can meet a new, tough specification which will give a quick market advantage, but does not want anyone else to use the same specification. In both of these examples the prototype and the new specification must pass out of the owner's hands, but the owner will of course wish to retain control. The solution is to get the company to which the confidential information is to be disclosed to sign a Confidentiality Agreement, sometimes called a Non-Disclosure Agreement (NDA). Information sharing in a supply chain may bring a number of benefits to enterprises. For example, the products match the consumer s demand more closely and changes in the marketplace may be anticipated. The broad use of advanced information technologies in supply chains, such as Electronic Data Interchange (EDI) and Web technologies demonstrate that organizations have come to substantiate the importance of integrating information. Actually, many supply-chain related issues arise due to lack of sharing information within the members in a supply chain. Question 2 Stock is always a waste of money. Do you think this is true? [14 marks] With this question student could have decided to go either way, (with Yes it s a waste of money or no its not a waste of money) please see a sample answers from Mr Tawanda Zhuwao, it is absolutely true that stock is a waste of money because of a number of negative reasons attached to holding stock to be discussed below. Stock refers to goods stored at warehouse which are available for further distribution. The purpose of supply chain management is to minimize costs associated with handling stock which means that holding stock is actually a waste of money. Increase costs Stock increases the expenses of a business which have a negative effect on the profit of a business. Stock is usually associated with costs that can be a challenge to a firm and these costs include; warehousing or storage costs, ordering costs, cost of
damaged or spoiled goods, storage space and labor and insurance. Stock must be insured against damage and pilferage; this requires a huge sum of money. All these costs are increased by stock and money is lost through these costs. Obsolete and deterioration of stock Stock can be obsolete and may deteriorate at a fast rate if the supplier fails to monitor the buying trends of the consumers. Goods quickly become obsolete as the demand of the customers vary accordingly. For example, there are goods that are seasonal such as water-heaters sell very fast in winter which implies that they must be sold during that selling. Stock water-heaters for the entire year will be a very bad idea since water-heaters would become obsolete in summer and consumers will be locking for goods that can cool them off. Stock also deteriorate in the shop which means that the goods will eventually lose their value. Some goods are perishable and they deteriorate quickly. When goods deteriorate, they will appear unappealing to the consumers who will not enjoy buying the goods. In a nutshell, this a waste of money. Promote discounts As a stock accumulates, it will force the seller to sell the stocked goods at discounted prices and money will be lost in the process which means that it will be a waste of money. The seller may want space to stock new goods leading to idea of wanting to sell the stocked items quickly to create space. Selling goods at discounted prices simply means there is an amount of money being lost. Exposed to pilferage and damage Stock is usually exposed to pilferage in the warehouse and items can be stolen and never be replaced. Damaged goods will be replaced at an additional cost. Stolen and damaged items will be counted as a loss, which means that money will be wasted in the process as goods will be exposed to pilferage. However, it is important to note that there are some stages in the supply chain process whereby stock is not a waste of money. If the supplier or seller is properly informed about the market trends, he can goods in stock and make money from the goods. It only ideal to have stock when it is anticipated as the right thing to do. For example, if the seller anticipates that the stocked items will increase their value at later stage then it will be logical to stock the goods and sell them at a time when they can be profitable. If a seller of blankets decides to stock blankets in summer to be sold in winter and make more money when the demand of the blankets is very high,
then this can be a very smart move. Just in case the country is hit by hyper-inflation, goods in stock will be sold at higher prices. Stock also offers protection against order delays. In conclusion, it is much safer to state stock is indeed a waste of money. Question 3 If free trade is such a good idea, why do countries not simply remove all their duties and tariffs on trade? [12 marks] With this question most students just copied from the internet. Here all you needed to understand was the following: First, answer the question whether free trade is a good idea or not? Secondly, you had to look at the advantages and disadvantages of free trade e.g According to Ms Justina the advantages of removing tariffs and duties are as follows: The removal of tariffs leads to lower prices for consumers. This fall in prices enables an increase in consumer surplus. Imports will increase The government will lose tax revenue Domestic firms producing this good will sell less and lose producer surplus However, overall there will be an increase in economic welfare. The magnitude of this increase depends upon the elasticity of supply and demand. If demand elastic consumers will have a big increase in welfare. Essentially, removing tariffs leads to lower prices for consumers so the price of imported food, clothes and computers will be lower. Question 4
If you were delivering truckload of materials through a series of international borders, what problems might you expect to meet. How could you reduce or avoid these? [14 marks] This sample answer was submitted by Mr Tawanda Zhuwao, this is how he attempted to answer question 4. Delivering goods through a series of international borders can be a huge challenge considering the numerous and frustrating burdens that have to be endured in order to successfully complete the supply chain process. If I was to deliver a truckload of materials through a series of international borders, I would expect to meet the following problems; Accidents and breakdowns Accidents can be very stressful and may result in the loss of lives and damage of the goods in transit. Trucks are getting involved in road accidents at a very alarming rate. Delivering goods through a series of international borders can involve driving for very long distances which can cause all types fatigues which may lead to road accidents. As the truck moves from one point to another; there will be friction between the wheels and the road as well friction between the truck engine parts. The intensity of the friction will cause the engine parts and wheels to overheat which may lead to vehicle breakdowns or tyre-bursts along the way. Tyre-bursts may be so severe that they may cause road accidents. Breakdowns on the other hand can be frustrating since the truck should be repaired first in order to proceed with the delivery. Hijacking Delivering a truckload of materials through a series of international borders can expose the materials to possible criminal activities such as hijacking. If adequate information regarding the crime rate in the target or destination country is not provided; the materials in transit will be exposed to hijacking. Hijacking can differ as per country and can be very high in other countries such as South Africa. If the truck is hijacked, then goods will be lost which is a problem to expect and safety of the goods must be considered. Customs Procedures Goods must pass through the relevant customs (immigration control) department of the target country before they can be permitted to enter into that particular country.
Such procedures can very lengthy and often characterized by long and frustrating queues which eventually results in delays in the delivery of the materials which can affect the whole supply chain process. Legal Requirements International borders are protected by different customs regulations which are set to control the entry of different classes of goods from one country to another. It is therefore important to have an expectation that the materials in transit may not be allowed to pass-through or enter into the targeted country. In some cases; legal documents may be required to permit the passage or entrance of the specified materials. Obtaining such legal documents can be a very lengthy process which may require the assistance of a third party or a customs agent which in the end can be very costly and time consuming. In a nutshell, it is important to deliver goods that are acceptable for customs. Traffic regulations may also differ per country which can make driving in a foreign country very frustrating. For example, some countries drive on the left-hand side of the road while other countries drive on the right-hand side of the road. Certain countries may also require all motorists to pay road charges such as toll fees or carbon tax such as in Zimbabwe. Finding Directions It is usually hard to find directions when driving through a foreign land and time can be consumed while trying to locate certain places. Language Barrier One of the most common problems I would expect to encounter in relation with the delivery of materials across international borders is language barrier which can make it very hard to communicate with the inhabitants of other foreign countries. The ability to talk to other people in foreign countries is very important especially when seeking valid information in connection with the delivery of the goods. In order to reduce or avoid the problems described above, I would implement the following measures; Regularly checking the truck Besides taking the truck for service before a trip, it is necessary to check the truck regularly and having adequate time to rest both the driver and the truck in order to avoid road accidents. It is also important have time to learn more about the routes that are going to be used during the entire trips in order to be mentally prepared for the journey.
Making use of convoys Driving as a convoy can help to protect the truck and materials in transit against hijacking. As a convoy, there are better chances of assisting one another during a breakdown and finding directions. It also helps to protect against hijacking. Acquiring the services of a customs agent In order to avoid delays, it can rather be a good idea to acquire the assistance of a customs agent who will take care of all the customs procedures on my behalf. However, this can increase operational costs. The customs agent can also assist with language translations and currency exchange. Using a GPS navigator When delivering materials through a series of international borders, it is important to have a GPS navigation system installed in the truck which can help to find directions and reduce delays. Learn about the target countries before the trip It is important to learn about other countries legal requirements, customs procedures and traffic regulations beforehand. This helps to understand what is legally required in different countries. In conclusion, it is safe to state that delivering truckload of materials through a series of international borders is usually associated with a number of challenges as mentioned above.