Analysis of Prodval Logistic Process

...

The existing infrastructure is also inadequate for capacity expansion. This will be a huge problem when the demand increases for goods and service in the Global market. Prodval needs to look into plant upgrading or expansion to fit within its competitive strategy. However needs to do this in alignment with its SME status.

- HR Issues & Strategy

- Shortage of Skilled Labour

Skilled workers are a huge demand for SME’s. Skilled workers are more attracted to Brand companies due to better incentives and higher salaries. As part of Prodval HR Strategy they need to invest in up skilling and cross skilling of employees, as this is also important in ensuring that Prodval creates and retain a growing environment for its employees. In turn, this will foster job satisfaction, creativity and innovation amongst employees. Full time employees of the right calibre and skill level will positively impact the need for Prodval to retrain employees on basic skills for the job. They need to create an environment which attracts trains and develops its own best for positive impact on the sustainability of the company.

Prodval should also develop a student program to attract new graduates. This can be done through Colleges or Universities, set up a bursary program or sponsorship. Set up a road show to promote a career in Prodval.

- Rotation of outsourced workers

Prodval has a training process through interactive media to its outsourced skilled labour force. The rotation period for these workers is 6 months. This is too short as it takes time, money and resources to train, which is happening too frequently to be cost effective. Prodval needs to relook at this system and look at longer contract terms with their suppliers.

-

Question 3 - State your opinion of the strategy the company should adopt to handle suppliers in the supply chain management of Prodval

Prodval is one of many companies globally, that manufactures specialised components, that is supplied to its customers, who use it in their manufacturing of very specialised equipment and and/or products. The end products are very broad based and range from Water pumps, solar heaters to vehicle components and vehicles. It is understood that due to the global competitive nature of Prodval’s clients, Prodval itself had to align its supply chain strategies to meet the demands of its clients. However one of the failures in its approach to streamline its supply chain, was the uncertainty with its suppliers. Therefore in our opinion Strategic Fit was identified as the strategy to be adopted by Prodval to handle its suppliers.

Strategic Fit is made-up as follows…

- Competitive strategy (CS) (ref)

- A competitive strategy identifies the set of customer’s needs that it aims to satisfy through its products and services

- This can be achieved through keeping costs to the customer low, efficient delivery time, product variety and quality of goods.

- In Prodval’s case their competitive strategy is to ensure that product pricing has a competitive advantage, they ensure product is of the highest quality and delivered on time. This guarantees their competitive advantage in the global market, especially with competitors from South Africa & China.

- Supply Chain Strategy (SCS)

- The supply chain provides the basis of support for the CS.

- It is made up of sub category of strategies that drives the product from one side of the supply chain spectrum to the other. This includes but is not limited to strategies like Design, Procurement, Transportation, Product Development and Marketing.

“Strategic fit requires that both competitive & supply chain strategies of a company have aligned goals” Chopra Meindl (ref)

[pic 3]

The Strategic Fit is a combination of CS & SCS. Its aim is to satisfy the supply chain capabilities that the supply chain strategy aims to build. Prodval needs to analyse its supply chain capabilities in order to establish its ability to support its customers, Figure 3 shows a basic model of SF.

Prodval has aligned its supply chain strategy to meet the demands of its customers. In the same token, Prodval needs to get its suppliers, to align to its strategic fit.

- A more dedicated focus to ensure that quality of components supplied by the vendors is managed at source, which is at the Vendor. Prodval needs to introduce measures to manage quality at the Vendor, so as to reduce the needs to quality check every component that the vendor provides.

- Inventory surplus and the impact thereof, vs creating effective supply from vendors to eradicate the need for Prodval to carry excess stock just to ensure timely delivery as a result of the uncertainty of vendors.

Prodval builds to order (Pull) and has inventory to supply its orders versus an order it should have received from its suppliers.

The strategic fit the Vendors needs to adopt is as follows…

- Try and establish a closer relationship with its suppliers in order to figure out the issues with delivery.

- Engage with suppliers to try and work together.

- The poor delivery could stem from a result of different working methods, management styles and culture.

- Relook at all your suppliers and relook at their financial strengths, the logistics, geographical locations and security

- Contract back-up suppliers in the event suppliers cannot meet obligations.

- Research new suppliers who supply same goods and services to achieve a competitive edge instead of being held to ransom.

- Identify / Map the suppliers impact on customers, ie how does the suppliers product connect to the customers operations and process. This will root out the cause of poor profitability within the supply chain.

- Develop service level agreement with supplier in order to systematically measure the quality of product and delivery. In doing this you can identify weaknesses and improve efficiencies.

- Identify IT systems that can effectively