TEP Delivery and Distribution
TEP is facing delivery reliability is declining, along with its falling productivity and increase in the number of finished goods in warehouses. Overall, the TEP delivery mechanism is being challenged with several distributors complaining about several deliveries of one order, ranging for several weeks. Clearly, TEP needs to re-evaluate their re-order levels and ensure they can match distributor needs. Distributors suffer due to the current levels of delivery failures as they need to fulfill their orders on time. Due to the current delivery system utilized by TEP, distributors are faced with an increase in handling and administrative expenses and the TEP’s haulage costs. This sort of in efficient delivery mechanism not only impacts TEP’s relationship with its distributors; it also gives them an opportunity to search for alternatives (Slack, Chambers & Johnston, 2010, p. 369-370).
As per the table on 20 product samples, it is clear that TEP needs to re-evaluate their production process to meet the need of distributors and reduce their haulage costs. End of year production numbers reveal the re-order quantities exist in case of all products that have been sampled. Some of the re-order quantities are small and manageable, but in case of 10 litre buckets the re-order quantity is around 600,000 units which is above 25 percent of the total 10 litre buckets sold in the last 12 months (2,200,000 units). Due to such numbers it is advisable that the production schedule includes the re-order numbers and damaged goods on a weekly basis. This move will help TEP for making their operation and planning systems more efficient and reduce the increasing number of re-orders and distributor’s frustration with the current delivery system.
Planning and Operations Evaluation
In terms of their planning system, TEP has built a routine and well-organized operation based on batch production and weekly production schedules. This system helps TEP to identify the quantity and sequence of each batch they produce and manage the production run timing. The current system is designed to help TEP achieve their pre-set production targets and ability to evaluate their performance in terms of the sequence and size of each batch and overall delivery. The organization’s operating system is an area of concern for the TEP as the warehouse is always full with products and significant damage is caused due to double handling and use of forklifts. Upon inspection, TEP learned that several products lying on the factory floor are damaged during operation (Colledani & Tolio, 2009, p. 348-367). Therefore, TEP has planned to invest one 1 million Euros on an extension that would help them to improve the efficiency of operation system (Slack, Chambers & Johnston, 2010, p. 369-370).
Post evaluation of the current planning process reveals that there are changes that should be made in the current planning system, especially with the increased number of re-orders and damage caused in their warehouse. Re-orders is one area that has become a matter of concern for the company as the sample revealed that the company has witnessed an increase in the re-order numbers due to the TEP delivering one order to distributors over a period of time. Planning system needs to include the number of re-orders on a weekly basis, just like the production schedule and include it in the total production needed. Another area of change needed to be included in the TEP planning system is the need of extension to the warehouse facilities, which should help them reduce double handling and forklift damages (Slack, Chambers & Johnston, 2010, p. 369-370). The products damaged would be reduced by the extension, but it might not be eliminated. The damaged products also need to be added to the planning schedule weekly.
Colledani, M., & Tolio, T. (2009). Performance evaluation of production systems monitored by statistical process control and off-line inspections. International Journal of Production Economics, 120(2), 348-367. doi:10.1016/j.ijpe.2007.07.011
Dooley, A. R. (1964). Operations planning and control. New York, NY: Wiley.
Slack, N., Chambers, S., & Johnston, R. (2010). Operations Management (6th ed.). Harlow, England: Financial Times Prentice Hall.