Introduction
Throughout history of business practices, a warehouse is simply a large box whose primary use is to store surplus inventory for extended periods of time. It is evident that significant planning should take place somewhere between the development of strategic decision making and the actual start-up of the construction, usually regarding operational approaches. There are numerous warehouses that come up without this critical operational unit. Its importance is evident in the future trends of warehousing where majority will serve as distribution activity hubs. This practice helps add value by processing goods rather than storing them for extended periods. Such services significantly increase the labor intensity calling attention to the need of ensuring high levels of productivity and efficiency of operations. Strategic Warehouse Management, Inc. (SWM) will take into consideration the architectural design, construction methods, and operational skills in the plans to open a non-resident company that serves multiple businesses including those seeking management of flow of goods from Australia to US locations.
Requirements for the Warehouse Design and Organization Structure
SWM is a corporation that has served clients for over three decades. Therefore, the design of the structure should demonstrate our extensive knowledge on the needs of the businesses we serve. There are multiple factors that the firm should address in the construction of the warehouse. The various types of spaces may include for use as computer centers, light industrial, office, storage, and loading docks (Lao, Hansen, Nitschke, Hanson-Easey, & Pisaniello, 2016). The structure should also ensure appropriate configuration to base the design on current and future needs of the organization, achieve maximum utilization of space, optimization of the layout to ensure efficient circulation of material handling and storage of the goods (Zhong, Xu, & Wang, 2017). It is important that the structure also considers the issues such as wind, snow, and seismic loads to boost durability and functions of the storage. Energy efficiency is another essential factor to incorporate in fixtures, appliances, and systems of the warehouse wherever feasible (Lao et al., 2016). The design should also ensure the safety of workers according to OSHA standards while guaranteeing security of the stored produce of the various businesses served. Health and comfort is also essential as it looks into issues of ventilation, air quality, and use of equipment and furniture that portrays a healthy work environment.
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The organization structure in the management of the warehouse will take into consideration the complexity and amount of work that the structure will require. There are three factors used to characterize a warehouse including process, resource, and organization. The materials received at the storage area undertake numerous steps called processes before designating them to a particular section of the firm (Lao et al., 2016). The resources perspective refers to the various means, equipment, and personnel required in achieving optimal efficiency in the operation of the warehouse. Organization structure identifies the various planning and control procedures for running the system per the demands of the numerous clients (Zhong, Xu, & Wang, 2017). I will inform the CEO that the operational personnel as well as the design and construction team should come together in making an agreement on the various structural factors to include and those that should be excluded (Lao et al., 2016). The practice will involve identifying the many phases of designing including concept, data acquisition, planning and control policies, functional and technical specifications, means and equipment, and layout.
Considerations for Workforce Management
In the establishment of a warehouse that can achieve high levels of performance, it is important to take keen consideration of the workforce. The goods arriving or leaving the storage area do not flow on their own as they require skillful and motivated employees. I am well aware of SWM’s focus on maintaining the high levels of motivation among employees hence it will be a primary concern in the establishment of effective workforce management. One of the means of ensuring high levels of morale among workers is through keeping them fresh and ready to work at all times. In this case, the Australian national government introduced legislation for fatigue management among employees (Lao et al., 2016). Due to the operation of heavy machinery and possibility of accidents taking place, the policy is intended to provide a safe workplace and systems of work according to the Occupation Health and Safety (OHS) legislation (Lao et al., 2016). Fatigue management of employees looks into the working time period particularly for those involved in logistics services such as, drivers. In this regard, a review of driver scheduling practices is essential. Additionally, warehouses similar to the one SWM will build should incorporate fatigue management strategies (Zhong, Xu, & Wang, 2017). Some of the practices include, fatigue training, monitoring work hours, sleeping disorders, staff medicals, alcohol and drug testing, and secondary employment.
As mentioned earlier, a well-trained workforce is essential in ensuring competitive advantage over rivals. In this case, workers demonstrate an understanding of their objective tasks and how to do it right. The supervisors and management personnel may also measure performance and reward employees who exceed expectations as an effective means of boosting morale (Coronel & Morris, 2016). However, before providing training to employees, it is critical that the organization clearly defines the type of work taking place and the expectations of the different roles. I will advice the CEO to develop standard operating procedures to guide workers on the ways they should conduct themselves and perform various tasks (OSHA, 2004). Training may take various forms including creating instructional manuals that are used by trainers in the company, creating a syllabus and use of trainers from consultation companies, or production of interactive and computer-based modules that workers use to learn individually. It is evident that formal training by skilled trainer or via computer ensures consistent training (Lao et al., 2016). The alternative, “buddy training”, where a new worker learns from an experienced one creates variation in practice as one employee may work differently when trained by two different experienced ones (Lao et al., 2016).
Key Regulations and Issues of Managing a Warehouse in Australia as a Foreign Entity
When one seeks to establish a business in Australia, it is important to consider whether the operations will require registration with relevant authorities in the country. Some of the key registration requirements include Direct and Indirect Tax Registration with the Australian Taxation Office (ATO) and Legal Registration with Australian Securities and Investment Commission (ASIC) (Myerson, 2012). The corporation experiences significant liability to taxable presence as the activities of the structure result in Australian sourced income (Coronel & Morris, 2016). Additionally, due to the permanency of the operations that the company seeks to participate in, the Income Tax Assessment Act 1936 and 1997, Double Tax Agreements and relevant case laws will be used to identify tax liability. Registration with the ATO leads to the provision of an Australian Business Number (ABN) (Myerson, 2012). The organization will also complete registration of various categories of tax. Registration with ASIC is essential to demonstrate the legal presence of the industry as per section 21 of the Corporations Act 2001. Warehouses are licensed under section 79 of the Customs Act 1901.
The regulations governing the operation of the warehouse include numerous practices clearly identified by the Customs and Border Protection. SWM will take up the General Warehouse license as the storage facility is intended for other owners. The activities that may be performed within a warehouse are also limited to guarantee the safety of products and protecting the revenue payable to the Commonwealth (Myerson, 2012). Other than the approved storage, repacking, blending, unpacking, and packaging of various types of products, activities involving adding value are not permitted. Even as a foreign entity, the organization will enjoy the benefits of warehouse lien and storage act of 1990 for individual clients who fail to pay debt owed to the company (Zhong, Xu, & Wang, 2017). The firm should ensure that the warehouse is a safe and healthy working environment for workers as per the Occupational Health and Safety Act of 2004.
Export and Import Procedures in the US
Numerous clients have identified their desire to allow SWM to manage the flow of goods from Australia to various locations in the US. As a result, our firm will encounter both the Australian and US Customs and Border Protection authorities during their operations. There are various procedural practices that we should adhere to to prevent legal altercation with the authorities of either country. The Australian customs and border protection service helps control trade practices across national borders (Emmert, 2005). The legal authority strictly prohibits the exportation of protected wildlife, variations of weapons, dangerous goods, and some heritage items (Zhong, Xu, & Wang, 2017). There are particular goods that are only conditionally prohibited meaning that in order to export them the firm should receive export permits from the relevant agency issuing them. An Export Declaration Number (EDN) may be essential to ensure loading of goods on a ship or aircraft for export and approval from customs (Emmert, 2005). The different carriers should receive a Certificate of clearance before departing from Australia.
Some of the procedures that SWM should expect when encountering the US customs and border protection service may be similar to those in Australia. However, there are numerous differences including the agency executes restrictions that other US government agencies may impose on particular import of goods into the country (Zhong, Xu, & Wang, 2017). The CBP authorities have a mandate to detect, interdict, and investigate activities that are deemed fraudulent undertaken to avoid paying duties, taxes, or fees (Emmert, 2005). In this way, SWM should ensure that it adheres to the full extent of international traffic and trade requirements by paying duty and customs fees to prevent conflict with the authorities. The agency is also responsible in identifying contents of the imported goods to prevent illegal trafficking of arms, currency, munitions, and activities that are perceived as terrorism at the US ports. The organization has an obligation to conduct extensive background checks on corporations they associate with to prevent such occurrences of illegal activities.
Supply Chain Risks and Possible Mitigations
Similar to any other form of business practice, warehouse management and operation of storage practices on behalf of other companies is subject to numerous risks. Therefore, the organization should develop measures of mitigating them. These risks may be either external or internal depending level of control by the firm. The external risks are those beyond the control of a company and usually occur due to events taking place upstream or downstream in the supply chain (Emmert, 2005). They include demand, supply, environmental, business, and physical plant risks. For instance, environmental related risks may be associated with climate such as, earthquakes affecting a particular location resulting in the destruction of merchandise (Coronel & Morris, 2016). If the firm’s storage facility is located in an area prone to seismic the structure should be built in such a way preventing high levels of damage on goods and materials. The organization may also take up insurance cover incase of social environmental effects such as theft or threats of terrorism.
The warehouse management company may also encounter internal risks that may significantly affect the overall performance. These threats include business risks, failure to plan or control, and cultural issues (Zhong, Xu, & Wang, 2017). It is evident that conducting operations in a foreign land may result in significant threats to the performance of the plant (Emmert, 2005). For instance, poor measures of improving the motivation and morale of employees may result in high turnover rates. According to the Bureau of Labor Statistics, the current rate is at 36% which could result in organizations seeking to fill up nearly 1.4 million jobs or 270,000 annually (Faber, De Koster, & Smidts, 2013). The significant shortage of workers to undertake various roles in the facility could create a non-intended risk by causing significant harm on workers. There are numerous roles in the warehouse that require collaborative effort among employees. However, a shortage of labor could force many of them to work on their own which may be contrary to the OSHA regulations (OSHA, 2004). The firm will employ quality management personnel to mitigate this risk and ensure high retentions rates as opposed to industry standards.
Operations SWM would Outsource and those SWM would Directly Manage
SWM will directly manage various operations including inventory management, storage, labor costs, freight management, consultation services, 3PL logistics, cross docking, tracing and tracking, shipping, and value-added services. The above services fall within the expertise of the company as they prove to be profitable in the operations of the company (Emmert, 2005). For instance, the consultation services will be an integral provision where the organization can provide experts who will clients advice on options to undertake in the supply chain depending on the industry and performance of the company (Faber, De Koster, & Smidts, 2013). In accordance with the laws and legislations governing the warehouse industry in Australia, the organization will refrain from providing value-added services for the various products listed in the prohibition. The firm through smart storage and inventory management systems will be able to store and retrieve the goods of the clients to ensure ultimate flexibility and saving of money. Cross docking is another important practice that will minimize use of available space by unloading materials from one carrier to another without periodic storage.
The numerous operations that the organization can outsource include marketing, systems and technology management, and maintenance of the storage equipment and machinery. The above mentioned operations are important in the process of storing goods, but are beyond the practices that SWM is willing to undertake (Coronel & Morris, 2016). In an effort to enable clients to monitor their products and materials, the firm will enable real time tracing and tracking of goods. However, the company will not provide the systems as it will instead outsource to technology infrastructure providers (Faber, De Koster, & Smidts, 2013). This practice alleviates the burden of undertaking excessive tasks some of which are not in line with the primary practices of the firm.
Budget Consideration
There are a number of items that the members of a firm should take into considerations as they plan to establish a warehouse in Australia. One should identify whether it is cheaper to lease an empty storage facility or build one altogether so as to ensure all features of the design are in place (Faber, De Koster, & Smidts, 2013). Though the latter is more expensive, it may prove to be an effective means as it guarantees the company will operate according to the plan. Another cause for concern will include operating expenses including electricity, wages and salaries, insurance, and maintenance costs. In an effort to keep business running on a daily basis, the organization will incur various costs that are integral to realizing profits (Coronel & Morris, 2016). The organization will consider these expenses when setting a price to the services offered.
Metrics to Measure Success
The annual sales of the firm are an effective measure to measure the success of the warehouse management services. In this case, the ability of the company to sell its array of services at a significant profit to the costs incurred in the daily operations is a clear indicator of success (Coronel & Morris, 2016). The organization may also identify successful operation of business by identifying the level of waste incurred. In this case, due to improper handling of materials during storage and loading, the goods could succumb to significant damage (Faber, De Koster, & Smidts, 2013). The organization will incorporate industry standards in gauging the level of damage caused and the significant cost to the profits. Though the company could incur higher profits by providing 3PL services to telecommunications, chemicals, and garments organizations, significant damage to the materials may cause high level of loss.
Conclusion
Australia serves as an attractive market to provide 3PL services for various organizations in the region. However, before constructing a warehouse plant in one of the cities in the country, it is important to develop a plan that looks deeply into warehouse design and organization structure, workforce management, legal considerations, export and import procedures, supply chain risks and mitigation to implement, operations to perform and those to outsource, budget, and metrics of measuring success. Through this report it is evident that the plans in place will result in the development of a successful company. The organization has taken keen consideration on the risks it may encounter as a foreign entity and established strategies to mitigate the threats.
References
Coronel, C., & Morris, S. (2016). Database systems: design, implementation, & management . Boston, MA: Cengage Learning.
Emmert, S. (2005) Excellence in Warehouse Management: How to Minimise Costs and Maximise Value . West Sussex, England: John Wiley & Sons.
Faber, N., De Koster, M. B. M., & Smidts, A. (2013). Organizing warehouse management. International Journal of Operations & Production Management, 33 (9), 1230-1256.
Lao, J., Hansen, A., Nitschke, M., Hanson-Easey, S., & Pisaniello, D. (2016). Working smart: an exploration of council workers’ experiences and perceptions of heat in Adelaide, South Australia. Safety Science, 82 , 228-235.
Myerson, P. (2012). Lean supply chain and logistics management . New York: McGraw-Hill.
OSHA (2004) Worker Safety Series: Warehousing . Retrieved from https://www.osha.gov/Publications/3220_Warehouse.pdf
Zhong, R., Xu, X., & Wang, L. (2017). Food supply chain management: systems, implementations, and future research. Industrial Management & Data Systems, 117 (9), 2085-2114.
