How Supply Chain Management and Logistics Can Help to Strengthen The Business Operation

Abstract

Supply chain management and logistics are activities that are central to the operations of any organization. This is because they control how the main product of an organization is treated from the time it is an input to the time it serves the consumer’s needs. Aero Marine Logistics is an international company that partners with other companies to attain residency in new markets. Fresh Foods, is a company partnering with Aero Logistics so as to deliver mushrooms to India from Amsterdam. The supply chain of the partnership thereby consists of the joint operations of the two companies. The expansion however presents new costs such as labor, costs of mushrooms and acquisition of shipping containers to facilitate the expansion. The unpopularity of mushrooms as a delicacy in India is however a major risk to the expansion. The company thereby has to share the logistical costs and risks that come with expanding a small business.

Question: Participants of the aero marine logistics’ supply chain.

Supply chains are the connections between all the stakeholders in a given business. For the complete supply chain to be drafted, all the participants in an organization’s business activities must be identified (Inman, 2010). This list includes, but is not limited to, drivers, warehouse coordinators and workers, distributors, suppliers, retailers, wholesalers and customers and clients. In the specific case of Aero Marine Logistics, the same rule applies. The organization is involved in imports and consolidation services all around the world. The part of Aero Marine Logistics discussed in the case entails the distribution of mushrooms around Amsterdam (Wood, 2011). Thereby, the supply chain includes the distributors themselves, the Fresh Food vendors of the mushrooms, the workers of Aero Marine Logistics who are involved in the company’s paperwork and the advisors to the company about the flow of the mushrooms. Moreover, the chain also consists of services such as finalization of imports, front-to-front activities, transport activities and the customers themselves. Also important are flight cargo and ship freight coordinators.

Question: Logistics partnerships and how the partners share risks and costs

Aero Marine Logistics are in a year-long contract. Thereby, they are partners in sharing of risks and costs. There are several costs that they will incur. They include:

• Cost of acquiring Mushrooms to Fresh Foods
• The cost of acquiring 10 twenty-foot utility items to help in expansion
• The cost of acquiring 10 new twenty-foot shipping containers to help in expansion
• The cost of an alternative 5 new forty-foot cans to also help in expansion
• The cost of transportation via land
• The cost of transportation via water
• The cost of transportation via air
• Cost of paying for returned unfilled containers
• Cost of refrigeration of mushrooms and the power equipment to assist the endeavor
• The cost of energy used to run power equipment
• Import taxes for air and water mediums

Moreover, there are additional expenses tied to the cost of importation. Costs pertaining acquisition and maintenance of labor should also be factored in. in addition to that, there are other costs surrounding the handling of mushroom prices that can’t be identified in the sum total due to their miscellaneous nature.

The mushrooms will cost $360 000 per year. This cost will be shared among Mr. Singh, Mr. Maan, who is Fresh Foods Chief, and Mr. Kumar, who is a partner to Mr. Singh in Aero Marine Logistics (Wood, 2011). Containers will cost the three partners $157,762 while freight charges will amount to $ 29,850. The forty foot containers to be used for innovation will cost them $23,000. The power equipment will require an investment of $19,998 while energy needed to sustain the equipment will amount to $26,664. The new twenty foot shipping containers will amount to $263,160 while old ones will go for $214,276. Since Fresh Foods has a capability of paying only $360,000, Mr. Singh should invest in the forty foot containers due to their superior shelf-life of 10 years when compared to five years for the ten foot containers (Inman, 2010). The major risk involved in the venture is that since India does not have a huge demand for mushrooms, Fresh Foods will not dispose of its volume of mushrooms and there will be a surplus (Moon, Do Ngoc, & Hur, 2010). With regards to sharing of the above costs and risks, Aero Marine Logistics should acquire all of the shares from Fresh Foods should Fresh Foods fail its expansion due to issues like failure of bonds.

Conclusion

The supply chain of the discussed part of Aero Marine Logistics is composed of Fresh Foods operations, from the time they receive the mushrooms cargo from Amsterdam to the time the product is delivered to India. This list contains workers such as drivers, distributors, advisors, freight coordinators and shipping clerks. Costs such as acquisition of mushrooms are to be shared in the relationship between Mr. Singh, Mr. Maan and Mr. Kumar since each one of them represents the companies who are stakeholders in this expansion venture. The premise of sharing the cost and risks thereby lies in the fact the expansion may fail due to issues such as bond failures. Its fairness is rooted in the fact that everyone in the partner relationship should bear responsibility so as to reduce the effect of possible loss.