Provide a detailed overview of Somerset’s problems
Somerset started in 1957 as a company dealing with the manufacture of household furniture, which includes beds, sofas and cabinets. At its location in the Randolph County, Somerset had initially concentrated on manufacturing wood-ware, using local timber and labor. The company’s success lied in its strategy of a fast turnover of new products in the market, which appealed highly to the customers both in the American market and abroad. Facilitating this period of success was the company’s determination in the application of the QM principles that control the development and sale of furniture. With time, the company became a dominant manufacturer in the homeland market ( Jacobs, Chase & Chase, 2010) .
Despite the huge success that the Somerset enjoyed towards the end of the 20th century, the company began to experience production and marketing problems in the late 1990s. Somerset was facing an overwhelming competition from other international furniture manufacturers. These competitors were oversees companies and some other homeland competitors as well. As a result of this, the demand for Somerset’s products started to diminish, translating to low profits and financial restraints in maintaining the company’s internal affairs. The labor market was also shifting, leading to higher demands for worker compensation, which pushed the company further towards a financial crisis. In the face of low compensation, Somerset’s workers started to resign, and recruiting of new ones became quite difficult.
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To deal with these problems, Somerset opted to outsource its production to China. The company closed down most of its American production lines and opened new ones in China, which led to cheaper labor and more affordable running costs.
Determine the product lead time by developing a time line from the initiation of a purchase order to product delivery.
The processing of an order from China to Randolph is a complex procedure that takes a number of days if not months. The making of orders occurs once or twice every week. The processing of a purchase order from the home country of Somerset occurs in a period of between 12 to 25 calendar days. Within this time, the production request reaches the manufacture plants in China. The same procedure includes making estimates of the demand of the furniture that the branch oversees would manufacture within that specific timeframe. Dealing with a purchase order in China occurs within 10 to 20 days, after which the furniture is made within 60 days. Further 10 days are needed before the items get clearance for shipment to the United States ( Jacobs, Chase & Chase, 2010) .
Discuss the company's possible transportation modes and channels in China and to and within the USA.
Transportation of furniture from China to USA occurs through a number of modes. From the production plants in China, the transport of the items occurs via road or rail to the port. Once in the port, depending on the availability of empty containers and the rate of clearance of goods, the products delay by up to a week. From here, the furniture is transported via sea to the United States. When the products arrive in the USA coastline, transport occurs predominantly by road and rail, to Randolph, form where dispatching of orders by individual clients takes place ( Jacobs, Chase & Chase, 2010) .
Identify potential problems and solutions for problems in the channels.
Entirely depending on outsourcing of the production of furniture from China, Somerset experiences a number of challenges in the transport channels. Occasionally, congestion of containers occurs at the port, making it difficult to process and deliver orders in time. Exacerbating this problem is the competition from other companies that depend on freight services at the port. For instance, Big W Company, one of the largest oversees traders congests the port with the very many orders that this company makes ( Jacobs, Chase & Chase, 2010) .
There are also delays that occur at the port due to the extensive inspections that the containers belonging to Somerset undergo. This problem majorly affects the small companies but not large ones like Big W, which would incur massive losses if delays were to affect them. Additionally, the company loses a lot of space in the containers due to the odd shapes of the items, which makes it hard to pack the furniture to fill a container maximally ( Jacobs, Chase & Chase, 2010) .
To solve the problem of container congestion and lack of empty shipment containers, Somerset should establish a partnership with a specific freight company so that booking of space occurs in advance. The long delays that occur in the checks at the seaport are avoidable if a collaboration to fast track the process occurred between the government agencies and Somerset. Optimization of the utility of the container space could occur if Somerset devised a mechanism of transporting un-assembled furniture parts, which could allow for a more economical packing into the containers.
Identify and discuss how international trade specialists, trade logistics companies, and or internet exchanges could help Somerset reduce its product lead time and variability.
To reduce system variability, Somerset should put in place an organizational communication network that synchronizes placement of order and its delivery. This would prevent the delays that occur for up to 25 days between the times of placement of a purchase request to the time the finished items are given out from the Chinese end.
A workable real-time network connection would also allow easy classification of orders according to the urgency with which the customers want them. The network could also work in helping the company’s management to keep track of the stock available at the supply stores, the varieties of the furniture and the numbers that the retail outlets possess ( Mangan, Lalwani & Lalwani, 2016)
A collaboration between Somerset with a multinational logistics company like RFID could help solve the delays in purchase order processing, transportation of the cargo from china and distribution of the furniture to the retail shops.
References
Jacobs, F. R., Chase, R. B., & Chase, R. (2010). Operations and supply chain management . McGraw-Hill/Irwin.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain management . John Wiley & Sons.
