N210 Logistics Management 2 Essay

Question:

Select a manufacturer, determine the areas in whichblogistics and the core functional areas (like production, marketing, finance and accounting) might interface and analyse the effectiveness of the current order cycle and inventory management base on the analysis, recommend improvements by applying the theories and concepts found in logistic management.

Answer:

Introduction

Heineken Asia Pacific, formally known as Asia Pacific Breweries (APB) is an Aisan Brewery firm established as Malayan Breweries ltd in the year 1931, as a joint venture amid Heineken International and Fraser & Neave and was later renamed as APB in 1989. The firm presently controls 45 breweries in the some 19 nations in Asia Pacific region, selling more than 50 brands of beer and variants. Heineken is a wholly owned business by parent firm Heineken International. The firm has the widest presence of all its global brewers and the credit goes to its international network of distribution and 115 beers in above 65 nations. Heineken brands are well established in profitable, beneficial, mature markets, whist the popularity of firm’ s beer is growing with each day in emerging markets of beer like China, Russia, and Latin America. It is the biggest distributor as well as brewer within Europe. The firm’s international coverage is attained via a mix of wholly owned firms and license agreements, affiliates as well as strategic partnerships plus alliances. Generally, the firm’s wholesalers even distribute and sell wine, soft rinks and spirits. Heineken’s global export functions sell and ship beer to some beneficial as well as vast markets throughout the globe. Constant expansion within productions as well as sales has actually led the firm to emerge as biggest brewer in Europe, and 3rd largest international beer manufacturer, following closely behind two international leaders within beer industry. Heineken even makes and sells local, regional, as well as exclusive beers, soft drinks, ciders, and also wines to buyers throughout the world (Miller, 2013).

The report analyses the logistics management of the firm Heineken Asia Pacific. There are several functional areas within the firm, which interfaces the logistics management within the firm; all these areas are analyzed in this study. The study determines areas in which the firm’s logistics management takes place and also studies the major functional areas such as finance, marketing, production, and accounting. The study evaluates efficiency of present order cycle as well as inventory management and on this basis the study also recommends some steps towards improvements that can implement within the firm.

The interfaces

Production- the firm has emphasized on a pure brand strategy. It was used to build the brand as a premium one and popular as well within the market. The firm’s strategy of marketing aims to attain highest volume of sales through:

  1. Paying proper attention in every stage of production, via choosing good quality materials from optimal sources along with vast fermentation of composition of beer.
  2. Making the taste of the beer standardized and supplying a good quality of the same.
  3. The firm targets memory of the buyers and also the forthcoming targets via several media channels like radio, newspaper, television etc.

Regarding the distribution, logistic management and marketing of Heineken, the firm is thought to be one of the top ranking firms around the globe.

Marketing- facing the alcohol pressure in the market, the firm carries a strategy to make and sell the beers in a way, which leaves an optimistic impact on the society at a large scale. Through this tactic, Heineken motivates and ensures awareness about the pros and cons of alcohol amongst people and even encourages the informed buyers to be responsible for their actions. For instance, in the year 2006 launch of a campaign named “Enjoy Heineken Responsibly” was launched. Thus the firm got additionally engaged towards promoting responsible use and consumption of beer along with partnership with the buyers. Use of such strategies as an aim to attain better market share requires proper management of logistics within the firm and maintenance of stocks as well as use of appropriate channels to communicate with customers. As an outcome this would result in the firm getting optimistic facets for production within the organization.

Accounting- For solving issues of currency risk and also problems within global market instability in exchange of money, the firm has a proper strategy towards hedging transactional risks, which also postposes the affect of firm’s financial results. Management of logistics and supply chain within the firm helps it to attain a forecast of market and thereby enables the firm to get better market share and attain good profits. Transactions are entered into with a limited number of counterparties.

Finance- Return on firm’s investment changed from the year 2005 to year 2007. In the year 2006 ROI had a vital improvement as compared to the year 2005. Enhancing ROI shows efficiency which the firm attained profit from its growing technological investment. Main reason for enhancing ROI of the firm can be the businesses’ development. Heineken offers its sales force immediate access towards pricing strategy, promotions and availability as well as data of accounts which helps the sales force to better understand the needs and wants of business (Nandi & Ganapathi, 2015).

Recommendation- The firm must opt for marketing differentiation through which different messages can be used within advertising in different market attaining better market share.

The firm can opt for well-maintained logistics management through which it can use different channels and medium for communication with consumers thereby leading to better sales and attainment of additional profit. This might carry strengths within Heineken. While majority of advertisers within the industry are targeting basically the beer market with Heineken can try to differentiate its buyers of beer through using a sequence of ads involving funniness. Because buyers’ needs and tastes are different, the firm can decide new market strategy to be adopted for the local people and one that can satisfy local needs and wants.

Order cycle

The firm uses heat brewing and thus 41% of the heat generated by the firm comes from natural gas within its own site. Sites of Heineken sues all the waste heat that is supplied the industrial plants nearby the firm. The company also gets its biogas from anaerobic treatment of the water, which is waste. It also controls 19 plants of anaerobic treatment and it is the 7th largest firm to use biogas as an energy source.

The firm purchases most of its power. The one that is not purchased by the firm is generated within the firm’s site through mixing heat plus power system, and then even using the diesel generators. Approximately 66% of the firm’s sites are actually not linked to systems of urban electricity and thus entire use of electricity on the sites is generated then and there.

Raw materials of Heineken are attained through taking part in the projects of joint development and growth with all malting firms in the nation where it functions. In the year 2009 Heineken in United Kingdom launched a novel supply chain code for conduct to enhance the performance of its supply chain. The firm functions few of its own regional projects of Agriculture with an aim to attain its raw materials.

System of data synchronization provider could manage data behind firewall whilst benefiting from one point of access to International network of data synchronization. This system also might help the firm to minimize disruption in the firm’s day-to-day functions. Such integration is the first in a sequence of initiatives that the firm has till date been planning towards accelerating its actions aimed towards synchronization of data via sole connection point. As an outcome, the system might also help implementation technological strategies within the firm. Enhancing amount of the raw material; sourced regionally would permit the firm to decrease both costs of distribution as well as carbon emission linked with the firm. It would also help then firm enhance the value that firm gives to society nearby its functional areas.

In fact, Heineken is performing a very good job within the international market; nonetheless they incline to pursue merely safer way towards marketing their goods. Thus, the firm is suggested with few ways to enhance its state in global market, which actually is getting competitive with each passing day.

Initially, the firm is recommended to grow within the market in U.S. Although several markets of some other developing nations like BRICs, are also arising, market in U.S. is yet one amongst few major markets throughout he globe. Thus, it might be good for beer selling firm Heineken to enter U.S. optimistically.

Also, Heineken might feel it important to withstand as well as extend its supply chain internationally. The firm must never stop growing its number of breweries globally and also should work towards building reputation and maintaining the same in every country.

Lastly, very aggressive as well as groundbreaking ads regarding the goods might also help Heineken in improving its sales as well as position within the industry (Nilsson, 2006).

Inventory management

Planning of production at Heineken like any other manufacturing firm is a complex task. Especially because the firm wants to try new recopies and novel markets its difficult of the firm to maintain production and supply chain globally. Because craft beer is becoming famous day by day, Heineken being into this industry must try several recipes with mixed ingredients.

Software for inventory management makes the managing task simpler. The firm involves new software within its system in order to attain better control over inventories and maintain good consistency in production. All novel materials could easily be tracked by the software right from the time of ordering to place of ordering till the due date for delivery and also the assignment of a specific schedule for production. In this way managers are just capable of adjusting the production to find appropriate recipes for every single flavor, and then differ the levels of result to produce additional beers, which also become very famous.

As raw materials required for the process of brewing the beer like hops plus grains are generally affected by ecological factors, it also is precarious for a firm like Heineken which is a brewer of beer to remain on the top of supply of such inputs. At times the firm might lack raw materials due to environmental issues, for which the firm needs to maintain a good warehouse and inventory where it can store products for such situations. Few buyers choose to contract for years, whilst others favor a short run order for better flexibility and gain. Whatever might be the situation strategy of the firm for management of inventory has to be substantial enough to handle the condition and deliver within the desired time frame. Trends of sales as well as capacity of production could also be analyzed with the software with an aim to recognize best quality and appropriate quantity of raw materials to get into a long-run relation with consumers. If the orders are made more reactively, real-time data on inventory as well as result levels would also help the managers make most well-versed selection possible. Such management of inventory would help the firm deal with elements such as seasonality of demand, which could make it hard for the firm to forecast exact level of inventory or stock.

The firms major function is brewing the beer and thus the firm carries out check of its good’s quality and also keep a control over it at each single step within its labs. Heineken functions in above 170 nations. It is the biggest beer as well as beverage distributor within Europe.

Within each marketplace where the firm is active, it struggles for complete share via associations with self-regulating distributors or even through the companies own wholesalers. Generally, wholesalers of Heineken also deliver spirits, wine and several forms of soft drinks. Heineken even has brewer factories all through the globe with an aim to ship or manufacture the final products to regional locations to minimalize cost of shipping.

Globalization of the market and expansion of networks of production has allowed the firm to increase global integration of marketing as well as production. This has also permitted the firm to spread classy marketing technologies intended towards producing the beer and other beverages quickly throughout the globe. The firm has even formed a minor group of gigantic businesses that are proficient towards promoting their viewpoints competently in international platform, like WHO and WTO.

Heineken has even launched a proper tactical initiative towards reducing volatility in the supply cost which is cause by the fluctuations in the price of commodities like Wheat, barley, fuel, maize, bunker fuel, diesel and also natural gas. The firm needs an appropriate solution, which is market-oriented for its international procurement with an aim to diminish exposure risk for goods. Heineken can opt for a Triple Point’s SPP as it is the only procurement solution which provides a real time scenario analysis towards decreasing overall expenses on the production (Persson, 1991).

Conclusion

Heineken’s goods are now sold throughout the globe. Nevertheless the firm still leaves a gap in expanding its business and management of its supply chain. Majority of buyers are worried about the green ecology. The firm needs to launch a new beer with new taste and with an eco friendly packaging with an aim to target people and contribute towards environmental protection errands. Furthermore, science & technology has also advanced as compared to past times. Heineken could use modern technology within its supply chain and inventory management department to deal with real time situations and to avoid errors in its actions. With exceptional management of business, Heineken could build better-known brand name globally and earn additional profits.

References

Miller, S. (2013). Logistics management. New Delhi: Random Exports.

Nandi, S., & Ganapathi, S. (2015). Logistics management. New York: Oxford Univ. Pr.

Nilsson, F. (2006). Logistics management in practice – towards theories of complex logistics. The International Journal Of Logistics Management, 17(1), 38-54. doi: 10.1108/09574090610663428

Persson, G. (1991). Achieving Competitiveness Through Logistics. The International Journal Of Logistics Management, 2(1), 1-11. doi: 10.1108/09574099110804625

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