Introduction
American Abyss Express (AEE) is a new company that is set to offer controlled temperature ground transportation services. The company which is to be based in the U.S. will serve clients around the world, mainly targeting the small-scale businesses. The ultimate goal of the new entity is to be the transporter of choice for small customers who wish to move their commodities globally. It is determined to give the best quality logistics and express services by taking into consideration the social and economic needs of different clients. This paper will discuss the operationalization of this marvelous business opportunity by detailing the preferred means of managing service quality, and by developing a work breakdown structure for the idea.
Overall Quality Approach
` The overall quality approach to be used by AAE will be Total Quality Management (TQM) which is a modern quality control philosophy (Mohammed, Tibek, & Endot, 2013). The TQM principles can be adopted by AAE to improve its overall performance so that it can achieve its strategic objectives. Total Quality is the evaluation of the expectations, needs, and requirements of persons; and compatibility of business through ongoing development efforts for the whole organization (Bielecki & Galinska, 2017). The rationale behind the selection of this strategy is that it will include all departments within the AAE in a combined plan for development that starts by listing the basic needs of customers, as well as forecasting future expectations so that comprehensive planning is done. This will ensure client satisfaction in line with standards set by the International Organization for Standardization (ISO) (Mohammed et al., 2013). The ISO 9000:2005 has specified the principles of TQM into seven categories which are leadership, customer centricity, the involvement of stakeholders, process approach, system approach, continual improvement, and decision making based on facts (Vijayavel, 2014).
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Specific Technological tool
AAE will be operating as a logistics service provider (LSP). As such, it will provide services such as transportation, inventory, distribution, procurement, and warehousing of controlled temperature products for small-scale businesses around the world. The quality of its functions will be subjected to a capability analysis to determine whether the resources and capabilities within AAE will give the organization a competitive advantage. Specifically, the capabilities of systems related to operations, planning, information technology, and innovation will be analyzed. To achieve this, the company’s performance is explored in the areas of innovation, operation, and financial results as recommended by PQ Systems (2018).
Potential Costs, Risks, and Benefits of Operationalizing the Business Idea
Projected Costs of starting the business
The cost of the company will be relatively higher at the beginning, and it is anticipated that the organization requires around $1 million for a start. Some of this vast sum will be used to set up the physical offices, with initially the company opting for a rental instead of purchasing the offices. Also, some of the money will be used to ensure that the business is legally compliant. Most importantly, most of the funds have been set for the purchase of assets such as Refrigerated trucks, temperature controlled vehicles, generic passive containers with coolant packs among others. For instance, the cost of one refrigerated truck is around $ 67,995(Commercial Truck Trader, 2018).
Potential Risks
According to the World Health Organization (2011), the most significant risk in the Temperature-controlled ground transport operations is the potential for improper handling of the delicate goods during process and service exchanges between various entities. These “touch-points” and “hand-offs” points pose a risk to AAE in that they may affect service delivery and consequently customer satisfaction will be low. Therefore, the company will consider them as the Critical Control Points (CCPs) in its logistics business.
Expected benefits
As an LSP, AAE will be offering a wide range of services that will benefit its clients. For instance, they will be involved in transportation, logistics, and some value addition such as packaging, for maximization of efficiency for their clients. The benefits of AAE to its clients will be immense since the company will ensure that temperature-sensitive goods are delivered to different places globally at a cheap cost to the consumer. In this regard, the company will be valuable in the transportation of perishable food and milk products, pharmaceuticals, electronics, and flowers among other sensitive goods.
Work Breakdown Structure
A Work Breakdown Structure (WBS) is a detailed illustration of all tasks needed for completion of a project. It is arranged hierarchically for clear and logical grouping of activities.
Narrative for justification of the Work Breakdown Structure
The WBS above is for American Abyss Express. It has been decomposed into five tasks with each having three sub-tasks. The first one is the planning stage, which is a crucial step in the establishment of the business since all other tasks will be based on it. The first subtask is to come up with a full corporate mission. The mission of AAE is to be the first temperature-controlled ground transporting company in the whole world that gives small businesses the opportunity to move their commodities across the globe. The second subtask is the setting of goals and objectives. According to Woodruff (2018) objectives are important guideposts in achieving long-term goals. Finally, there is a need for a business plan which is a strategic tool for entrepreneurs by guiding them to focus on specific steps for their ideas to succeed.
The second task entails budgeting and resource mobilization to actualize and operationalize the project. The duties here include the establishment of fixed costs and estimation of variable expenses so as to help in budgeting. Also, it is critical that contingencies are planned for in advance. As (Banks (2018) observed, budgeting is essential to an organization since it identifies available capital, gives an estimate of expenses, and predicts incoming revenue. Therefore, a budget can help in performance measurement to ensure that resources are well utilized for the growth of the company.
The third task relates to pricing by using competitor rates as the basis for estimating so that a proper strategy for setting prices is arrived at. AAE will align its pricing with corporate mission and market position so that it can be competitive. It has been found that prices in the industry are almost the same. Therefore, AAE will cut slightly lower its rates so that it can penetrate the market and compete with dominant firms which have already established themselves. Fair pricing will be part of the organization’s marketing strategy for attracting customers.
Fourthly, the WBS has identified the actual execution of the project through marketing, differentiation, and preparing for change. Marketing will be both internal and external. The internal marketing will target employees through a functional process of motivating and empowering them to ensure they are prepared to deliver the best services to customers. External marketing, on the other hand, will heavily rely on advertisements through the media. The differentiating factor is the best customer experience. This will be achieved by delivering items on time, and in their right condition. As Kherbach and Mocan (2016) observed, excellent logistics are instrumental in ensuring customer confidence. In line with this, the management of AAE will institute organizational changes as and when the need arises, so that the organization remains afloat in the dynamic business environment.
Finally, the WBS has a significant task of quality control. Total quality management philosophy will be used, with capabilities analysis being the specific tool of performance evaluation. The three capabilities to be assessed are operational, innovation, and information. Operational capabilities assessment will target the organization’s ability to offer logistics and transport services for temperature-controlled products across the world. Information capabilities relate to interconnectivity and real-time visibility. Innovation is the ability to develop new systems and processes for improvement of performance and enhancement of customer satisfaction.
Key Milestones
According to Parsons(2017), milestones are used to convert business tactics and strategy into action. In this project, three types of milestones will be used, which are plan review, assumptions validation, and implementation. The plan review to be used at AAE will set aside time for analysis of strategy, forecasts, budget, and tactics so that adjustments can be made. As such, a monthly plan review meeting will be conducted every first Monday of the month. The management team will come together for financial review, discussion of previous month’s report, and strategizing for the next one.
For the milestones of validating assumptions, it will be important for potential clients to be interviewed to ascertain if they need the services. This is because the early part of the project is based on guesses and assumptions about consumer needs. Therefore, the company will undertake to interview ten potential customers in its primary market segment of temperature-controlled transport. Secondly, pricing by competitors will be researched. Finally, a sample brochure will be created for the business to evaluate how potential customers react.
The third milestone is about implementing the set strategy once the assumptions have been validated. This is the actual execution of the business by setting up offices, purchasing assets, and offering transport services among others. Specifically, AAE will negotiate for a lease of office space, develop a website, come up with marketing strategy, and use lean planning to adjust as the business picks up.
Potential Obstacles and Risk Mitigation
Generally, the Temperature controlled transport and logistics business is faced with a number of challenges. They include stringent food safety regulations, complex refrigeration units, an increase in cargo values, and customer misperceptions about quality(Blue Tree Systems, 2018). Of more concern is the implication of rejected loads with evidence showing that up to 32% of transported cargo usually is at the wrong temperature, especially at the time of loading. Rejection of a load means that the carrier will compensate the customer through an insurance claim and that the cargo must be disposed of in the correct manner. All these may increase expenses incurred by the carrier. For American Abyss Express, five obstacles are anticipated, and they are discussed in the sections below together with proposed risk mitigation strategies.
The Obstacle of the Wrong Temperature
Poor loading practices lead to temperature changes since the product may be left unattended for too long at the loading dock. AAE runs the risk of such products being rejected by their clients, leading to loss of revenue. In temperature-controlled vehicles, the refrigeration units only maintain the loading temperature by cycling air around the cargo to prevent fluctuations.
To mitigate the risk of temperature fluctuations, advanced temperature monitoring will be instituted by AAE by using technologies such as Blue Tree System to detect hot loads. Once goods have been determined to be not in the correct temperature, the carrier is notified, and corrective measures are undertaken through immediate actions that include contacting the client and giving them direct evidence.
The Risk of Equipment Failure
Controlled- temperature units are complex electro-mechanical systems which can break down anytime. When they fail, the temperature-sensitive goods can be damaged. Should this happen, AAE is liable to compensate the client for damaged goods. To mitigate the risk, AAE will adopt a software technology that will notify the company immediately the machines break down, by sending an SMS to the office and the driver. This way, the driver can be advised on the best way of correcting the fault to protect the cargo.
The Risk of Driver Error
Although the driver is expected to perform basic configuration, sometimes the temperature-controlled units are complex and need expert handling. This is a big challenge to AAE in relation to training of drivers since they are exposed to mistakes in operating the delicate equipment. The best solution to this obstacle is the adoption of a technology that continuously updates drivers on the configuration status of the units and any changes that may be required.
The challenge of Complying with Regulations
In the United States, many regulations govern the transport of sensitive goods such as perishable food, laboratory reagents, and pharmaceuticals. The sector is significantly impacted by the continuous review of rules, regulations, and guidelines. For instance, temperature-sensitive goods carriers are expected to implement procedures that detail how they comply with temperature control provisions of the FDA Act(Blue Tree Systems, 2018). According to Sykes (2018), the transport of pharmaceutical products is riskier since any damage to the goods can have serious health repercussions. The challenges can be mitigated by ensuring that there is compliance, accountability, and standardization across the supply chain. Employees will be well trained on standards and regulations, and enough well-equiped vehicles will be used to minimize the chances of error.
Conclusion
American Abyss Express is a new logistics company that deals with the transport of temperature-sensitive goods. The company targets small businesses around the world. Its mission is to provide their services excellently and at a lower price to their clients, for it to penetrate the market that is already dominated by large companies. This paper has discussed the operationalization of this business opportunity. The thrust of the document has been about quality control and work breakdown structure as well as expected obstacles. The WBS is made up of five main tasks, each with three subtasks that comprise of deliverables, milestones, and resource requirements. Being a new company, AAE faces many challenges such as market penetration, delivery of quality services, rejected loads, as well as legal and regulatory hurdles. However, the mitigation strategies for these obstacles have been coherently explained in the paper.
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