supply chain management

Introduction:

Easy internet cafe is Europe's largest chain of Internet cafés and is the holder of the record for the world’s largest Internet café (as certified by Guinness World Records) with 800 terminals near New York's Times Square, opened by Carly Fiorina, CEO of Hewlett Packard (HP) in November 2000.The 75 outlets in the easy Internet café chain are managed by 28 franchises. There are 18 computer terminals and a credit vending machine, providing fully automated, fast, cheap Internet access. Easy Internet Café provides the cheapest way to get online for anyone. You do not need to own a PC or pay an expensive monthly fee for broadband access. You just need to go to any location and have 5p, £0.5 or €.05 in your pocket. You will then be able to access the Internet at very high speeds using a PC workstation with a familiar keyboard, mouse and state-of-the-art flat screen monitor.

There are some steps which are involved closely to establish an easy internet café business. The steps are as follows-

Steps Involve to Open an “EasyInternetCafe”

There are major steps involved to open an easy internet café. They are given below-

1)    Contract is signed with franchisee

2)    Space for café is contracted or existing space acquired

3)    Broadband internet connection

4)    Desks installed

5)    Server delivered and installed

6)    PCs delivered and installed

7)    CVM delivered and installed

8)    Signage delivered and installed

9)    Chairs delivered and installed

     10) Testing complete system

     11) Open for business

1) Contract is signed with franchisee

The first step involve to open an easy internet café is to sign a contract with the franchisee. Without signing contract the easy internet business is not began. However, the real process began once the franchise agreement was signed. it takes at least one week.

2) Space for café is contracted or existing space acquired

The second steps are to contract or exist space acquired for café. it is one of the most important considerable things that the space where the café will going to start. It takes at least four weeks.

3) Broadband internet connection

The broadband internet connection had to be installed by the local telecoms supplier. It takes approximately four weeks to install.

4) Desks installed

How the desks are installed in the café is decided by the easy internetcafé management by their procedures. It takes not more than one day.

5) Server delivered and installed

After that the server of easy internet café is delivered to the existing location and installed by the local telecom suppliers within two days.

6) PCs delivered and installed

When the server is delivered the next step is to deliver the pcs to the existing location and installed it properly within two days.

7) CVM delivered and installed

CVM means (Coherent Virtual Machine).when the CVM is delivered to the café location it will installed in hardware properly within one day.

8) Signage delivered and installed

After the CVM is installed to the café the next steps is to deliver the signage to the existing café location and install it.

9) Chairs delivered and installed

The next step is to deliver the chairs to the café location and install it to the decided sides at the café.

10) Testing complete system

When the previous installations were complete than the whole complete system is tested for any kind of fault during the installations.

11) Open for business

At last when the complete system is tested or checked the business become ready to start of its business procedures.

Are the steps same for each franchise?

   No the steps which are related to the easy internet café is not same for each franchise because Franchise is an agreement between a firm and another party in which the firm provides the other party with the right to use the firm's name and to sell or rent its products. Selling franchise rights is a method of expanding a business quickly with a minimum of capital. There are so many different company and so many differentiate with their business and systems. Some company product based and some are service based so we must say that the steps which involved with easy internet café business are different.

The significance of activities that have Predecessors on the plan

The significance of the activities that have predecessors on the plan is the major steps of the easy internet café business because except any of the following steps the café won’t do its work properly. Every steps of the franchisee business is co-related with each others.

Time should take to open the cafe once the

Contract is signed

Starting with the non-logistical activities, the negotiations, investigation and discussions with a potential franchisee could take days for a simple individual franchise to several months for some of the more complex deals those included multiple locations However, the real process began once the franchise agreement was signed. If the franchisee did not already have space for the café, eIc would assist in recommendations with locations. The broadband internet connection had to be installed by the local telecoms supplier. This unfortunately could take several months. One franchise dismay is given below-

Activity                                      Description	Average Duration	Immediate Predecessors
A                             Contract is signed with franchisee	1wk	-
B Space for café is contracted or existing space acquired	4wks	A
C                             Broadband internet connection	4wks	B
D                                        Desks installed	1day	B
E                             Server delivered and installed	2days	B,C
F                             PCs delivered and installed	2days	D,E
G                               CVM delivered and installed	1day	E
H                               Signage delivered and installed	1day	B
I                                Chairs delivered and installed	1day	F
J                                    Testing complete system	2days	F,G
K                                          Open for business	1day	H,I,J

Here we see that once the Contract is signed after that space for café is contracted at four weeks, broadband internet connection at four weeks, desks installed 1 day, server delivered and installed 2 days, pc”s delivered and installed at 2 days, CVM delivered and installed at 1 day, signage delivered and installed 1 day, chairs delivered and installed at 1 day, testing complete system at 2 days, open for business at 1 day. So we can say that it may takes at least sixty seven days to open the café once the contract is signed.

When we take the ordering lead times into Account

The total order cycle time, called order to delivery cycle, refers to the cycle time, refers to the time elapsed in between the receipt of customer order until the delivery of finished goods to the customer. The reduction in order cycle time leads to reduction in supply chain response time, and as such is an important performance measure and source of competitive advantage directly interacts with customer service in determining competitiveness. Two areas that managers focus on are the reduction of the replenishment lead time from suppliers and the variability of this lead time. The normal approximation of lead time demand distribution indicates that both actions reduce inventories for cycle service levels above 50%.safety stock is a function of the cycle service level, the demand uncertainty, the replenishment lead time, and the lead time uncertinity.For a fixed cycle service level, a manager thus has three levels that affect the safety stock-demand uncertainty, replacement lead time, and lead time uncertinity.A lead time uncertainty may the cause of following errors. They are-

1) The normal approximation method can lead time to large errors in contingency stock-greater than 25%.

2) they further conjecture that reducing the fill rate, the proportion of orders filled from stock “makes total systems costs less sensitive to normal theory misspecifications “since this will in turn reduce the required safety stock level and thus make the total holding costs a smaller percentage of total system cost. In this situation we follow three approximations-

1) For cycle service levels above 50%, reducing lead time variability reduces the reorder point and safety stock.

2) For cycle service levels above 50%reducing lead time variability is more effective than reducing lead times because it decreases the safety stock by a large amount.

3) Reducing the standard deviation of lead time increases the required safety stock from 20 to 22%.

Ans to the question number-2

Should eIc create a centralized warehouse where all equipment and furnishings are staged before forwarding onwards to the franchisees?

Yes EIC should creates a centralized warehouse where all equipment and furnishings are staged before forwarding onwards to the franchisees because of reducing cost .If they continued using their current in-house method eIc will have to spend approximately £1300 for all the logistics activities involved in opening a new store except the outbound transport to the franchisee. This includes eIc labor costs of £602 per store. In other words, the total annual logistics costs (excluding outbound transport costs which were eventually billed to the franchisee) are approximately £270,000, which includes annual labor costs of £125,250 (based on 208 stores opening per year). It was noted that if store openings were less, the labor costs were still considered fixed. There are so many advantages if EIC create a centralize warehouse where all equipment and furnishings are staged before forwarding onwards to the franchisees. They are given below-

 

Reduced Cost

·         One of the key advantages of a centralized warehouse is the savings it offers a business. Constructing, staffing, securing and managing a warehouse is a major expense, and multiple warehouses multiply this expense. If you run a manufacturing business, an on-site central warehouse can make use of existing land and put your production facility close to your inventory and distribution center, removing the need to transport goods from one to the other. A single warehouse can represent major savings, especially if you choose a location where land or existing warehouse space is inexpensive and one that is central to your customers for faster and easier shipping.

Staffing

·         A business with a central warehouse also sees an advantage in terms of staffing. Even if a centralized warehouse needs to be very large to replace multiple regional warehouses, it will still require fewer workers than needed when staffing multiple locations. This is true for security personnel, management, inventory control staff and workers who load, prepare and unload inventory. Fewer workers mean a slimmer payroll and additional cost savings. In addition, staffing a centralized warehouse allows you to target inventory managers with a greater degree of experience or expertise. Since you will need fewer inventory managers, you may be able to hire those that command a higher salary but promote greater efficiency.

Simplicity

·         Centralized warehouses simplify inventory management. Customers will know how long orders take to ship regardless of what they order. Company-wide inventory is also easier to track, with a single facility to examine rather than multiple inventory reports that you must compile, compounding the chance for error. Finally, you'll be able to implement new inventory management policies at the centralized warehouse without coordinating efforts throughout multiple warehouses in your supply chain.

Possible Drawbacks

·         Centralized warehouses are an alternative to local warehouses or distribution centers that place inventory closer to more customers. Local warehouses give local inventory managers more control based on local market conditions or special distribution needs that don't apply elsewhere, such as seasonal delays from bad weather. Local warehouses can shorten ship times since there's an increased chance that customers are geographically close to a warehouse. Finally, regional warehouses give businesses back-up options in case one warehouse is temporarily inaccessible or damaged.

Ans to the question no-3

The warehouse site selection decision is not merely the question of choosing sites. It involves the comparison of the spatial characteristics of a market with the overall corporate and marketing goals of the firm. Geographic information

System-aided process to the warehouse site selection decision is presented and the use of the presented process is demonstrated with a practical example. Various factors likely to affect customer service and costs are defined and subsequently integrated into an overall evaluation. The appropriate number and geographic sites of warehouses are determined by customer, manufacturing and competitor locations, product requirements, types of transportation, and sales level From a policy viewpoint, warehouses should be established in a logistical system if they can render service or cost advantages. Warehouse site location analysis, particularly with the increased availability of computer-based techniques, can provide invaluable information to assist warehouse and marketing management with their decision-making process.

Considering all of the definition and criteria my suggestion is that the EIC central warehouse should be located at France because France is the EIC’s nearest zone from UK.If the EIC group establish its central warehouse at France the outbound transport to the franchisee costs, labor costs and all other costs will be decreased from £450 per store to £300 per store.

Ans to the question number-4

Solution I recommend to the eIc management Team

If I was tan may I would suggest some processes that the EIC management team must follow to develop their café business. The processes are given below-

Business management and process improvements not a “one-off “activity, but should be treated as a “plan, do, check, act”cycle.The path to business improvement must be an ongoing series of radial adjustments; each followed by an assessment and a refinement to supporting processes.

1) Supply chain integration

Since the mid 1980’s it has been observed that many successful organizations are co-operating with partners in their supply chains. this co-operations and the related”outsourcing”of non-core competencies have created inter-organizational networks. This innovation allows rapid response to changing customer demands and eliminated the cost of holding “just in case “stock.

2) Integrating the supply chain

The concept of integration within the functions of a firm can be represented by porter’s value chain. Porter looked at the firm as a collection of key activities that could be separated and identified as primary activities (inbound logistics, operations, and outbound logistics marketing and sales).

3) Changing company structures

The most common organizational structure is matrix formation which is a compromise between functional focus and product focus. Members communicates with peers in the same function or peers in the same product line.EIC should continue to global supply chains this trends towards informal communications structures will inevitably increase. This approach is an integral part of supply chain integration.

4) Global business

Managing the supply chain’’ becomes a key focus as international operations    must be able to source equivalent supplies anywhere in the world. Motwani et al. (1998) believe that global supply chain management ``allows corporations to take advantage of diversity in the international environment by recognizing and exploiting regional differences’’. Business information, including order details, inventory levels, directives and product changes, must be communicated to the people who need it, when they need it, wherever they are. Similar arguments are

Advanced in applying systematic measurement to BPM (Armistead, 1996).Moss Kanter and Dretler (1998) present a different view, suggesting that global strategy is synonymous with holistic approaches.

5) Research methodology

Most of the research in the field of business process focused management and

Supply chain management has been by empirical observation and case study.

A number of surveys of businesses in local regions have also been undertaken,

Notably Hill and Collins (1998) in Northern Ireland and Tikkanen and PoÈloÈnen

(1996) in Finland.

The pros of the proposal

	1)Lower supply and storage costs
	2)Smooth flow of goods inwards and outwards
	3)Better inventory management
	4)Powerful delivery scheduling
	5)Lean and flexible operation
	6)End-to-end visibility of supply and demand
	7)A faster response to events in any part of the supply chain

The cons of the proposal

 

Disadvantages

·         The biggest disadvantage of global supply chain management is the heavy investment of time, money, and resources needed to implement and overlook the supply chain. The decision to outsource a production facility or call center lowers the cost of doing business for a company using global supply chain management, but the decision to outsource or not can lead to consumer backlash.

Investment

·         The investment of time and money starts with the formation of the supply chain; the company must understand the marketplace and business environment including customer needs and demands, supplier options, and competition. This requires research such as performing a SWOT analysis which indicates a company's internal strengths and weaknesses, and the external opportunities and threats in the marketplace. A company must also compare and negotiate with suppliers on the terms of price, consistency, and quality. Once the key players of the supply chain are chosen, a process map of the entire supply chain must be constructed.

Backlash

·         Outsourcing to foreign countries to save money can cause backlash from the media, current customers, as well as possible future customers. Most of the value in outsourcing is due to the cheaper labor in foreign countries; many companies are looked at negatively when Americans believe that the company is abusing the human capital of another country by either offering unfair wages or providing unsafe work conditions. For example, Nike ended up on the cover of the New York Times for its use of child labor and unsafe work conditions in a shoe plant in Vietnam. Furthermore, companies in a supply chain are not only responsible for their ethics, but also for the ethics and social responsibilities of all companies involved in the supply chain.

Other Disadvantages

·         Integrating the supply chain and choosing the correct suppliers is much more difficult than one can imagine. Not only do companies have to strongly consider price and quality, but they also have to make sure that all the organizations are willing to cooperate to benefit the group. Managerial styles, objectives, and goals must have a strategic fit between all companies involved and power must be evenly distributed throughout the supply chain or the businesses will not benefit from the advantages of global supply chain management.

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