Reference no: EM133506503

The boxes containing the raw materials belonging to PaL Company, just arrived at the premises of the company in Kumasi in the two containers, a whole week late. Issah, the operations manager is furious and says to Ussif, the procurement manager; 'is this the best you can do? I expect you to do better.' Issah continued; we are an organization with all the capabilities. We have some of the best trained drivers, none of whom has had any accident in the past eight years. Our facilities, equipment and machines are well maintained, and our staff are always battle ready to give off their best. How could you cause a two-day break in production? You decided to engage the services of a Third-party Logistics Company to move these raw materials instead of engaging our efficient transport unit, now look at what happened. Ussif apologizes and says, sir, what happened reminds me of the difference between the practical and the theoretical or academic approaches to management and is a test case for our strategic direction. Management had been thinking of outsourcing the transport function to SLik Logistics Limited, the company I engaged to bring in this consignment. At the last management meeting, which you had permission to be absent from because you were on leave, the performance of our transport unit was called into question. Management complained that they were inefficient because it took them an average three days to move to Accra and bring in our raw materials when those materials are cleared from the port. This according to management was not good enough. The general manager indicated that he had benchmarked the performance of our transport unit with that of SLiK Logistics Limited and they are able to bring in materials from Accra in a day. This makes our transport unit inefficient. We all know that if one group of similar elements can achieve more than another group, they are more efficient than them: simple. I reminded them that the way they were thinking is what is referred to as the theoretical or academic approach to managing affairs. Then I told them that our drivers had speed limits, overtaking rules and compulsory rest-stops and that could account for the time they take. I also reminded them that at least we can boast of having an accident-free record of eight years and we have never gone beyond three days. The safety stock is always able to keep production going till our materials arrive. For the past eight years, production has never halted because of delays in the arrival of raw materials. Taking all that into account in judging the performance of a unit is what is referred to as the practical approach to management. The general manager still insisted that they were inefficient and so all I said was ignored. The transport manager was also absent and therefore I was alone trying to defend the transport unit. At the end, it was decided that as part of the strategic shift in the organization's operations, the transport function was to be outsourced to SLiK Logistics Limited. In line with this intended strategic move, I was practically ordered to contract SLiK Logistics Limited to transport this consignment and I had no choice than to carry out the order. SLiK dedicated two flatbed trucks to bring the two 40ft containers to us. One had a jammed crutch at Sekyere and the other had an accident at Asankare when an on-coming saloon car run into its path and caused it to fall into a ditch. SLiK sent their maintenance staff to repair the spoilt truck and another truck to take over the load from the accident truck. Given that the truck fell into a ditch, the container cut open and the boxes containing the materials fell off, it took the loading staff three whole days to transfer the boxes onto the new truck. The repair of the spoilt truck also took longer than expected. I had to visit both scenes to ascertain what was going on. I reported the situation to management. You perhaps did not hear about it because you had just returned from leave.

Questions 

1. Discuss the strategic decision made by management to outsource the transport function to SLiK Logistics Limited. Analyze the factors considered by management and the potential benefits and drawbacks of outsourcing in this scenario.

2. Evaluate the performance of the in-house transport unit compared to SLiK Logistics Limited in terms of efficiency and effectiveness. Consider factors such as delivery time, safety record, and adherence to regulations. Support your analysis with relevant examples from the case study.

3. Assess the impact of the delayed arrival of raw materials on the production process of PaL Company. Discuss the importance of reliable transportation and timely delivery in maintaining uninterrupted production. Suggest strategies that could have been implemented to mitigate such delays.

4. Examine the challenges faced by SLiK Logistics Limited during the transportation of the raw material containers. Analyze the specific incidents that occurred and their impact on the overall supply chain. Propose preventive measures that could have been taken to avoid or minimize these challenges.

5. Discuss the role of effective communication and coordination between different stakeholders, such as procurement, operations, and management, in ensuring smooth transportation and distribution processes. Evaluate the communication gaps and coordination issues highlighted in the case study and provide recommendations for improvement.

6. Investigate the potential risks and benefits associated with outsourcing the transport function to a third-party logistics company. Discuss the key factors that should be considered when making the decision to outsource, including cost, reliability, and overall performance. Provide insights on how PaL Company could have conducted a comprehensive analysis before making the outsourcing decision.