ascm assignment 1

8/7/2019 ascm assignment 1

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Executive summary

This case is talking about how the Queensland Rail will change its operations to meet

the new market competitive and requirements, which change to a for-profit business.

The major operation department is supply division and the main methodology they

used is called BEF (Business Excellence Framework) system with seven categories:

leadership, strategy and planning process, information and knowledge, people,

customer and market focus, process management, improvement and innovation, and

success and sustainability.

Although QR achieved successes in each aspect of BEF system, the strategies which

developed by supply division are lack of sustainability for the long term operations.

Also QR is still facing challenges in each means of the BEF system in the future

operations.

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Table of Content

Case Summary ............................................................................................................... 5

Issues identify .................................................................................................................6

Answer questions ...........................................................................................................7

References ....................................................................................................................16

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List of Tables and Figures

Table cs5.2..12

Figure cs5.2..8

Figure cs5.4..9

Figure cs5.9....10

Figure cs5.5....12

Figure cs5.10..13

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Case SummaryQR is one of the largest and most modern transport providers in Australia. QR

changed the regime from government owned to commercial manner, so the supply

division changed its strategies, HR structure, and process and managementmethodology to adopt the new market. The BEF theory is used by QR for changing its

structure.

The BEF system is consisting with seven, interconnected aspects: leadership, strategy

and planning process, information and knowledge, people, customer and market

focus, process management, improvement and innovation, and success and

sustainability.

According to the BEF, supply division changed its leadership from strong hierarchical

control to egalitarian; more new elements add to the relationship, such as people with

different background, abolish discrimination of female, and out sourcing staff from

other branches. But culture change for the company still need time and better abilities

and implement. The Supply used Supply Chain Initiative (SCI) project to save its

revenue, in order to efficient and effect the supply chain process, but it ignore the add

value services. And because of the few capital intensive suppliers for QR, the new

form contracts will be high risk during the change process. The measurements of the

Supply are including Enterprise Resource System (ERP) and Scorecard Reporting.

Although the ERP system data upgrade is easier for procurement easier to set generate

measurements and benefit for integration, but not well to large transaction with large

corporations and costly. The inventory dashboard helps QR to better reduce cost and

increase information accuracy. The company is seeking for one system can manage

all types of procurement strategy, but still pay no attention on adding value activities.

QR seeks for more professional staff and attract them working for the company, the

Supply retrains their staff, recruits from trainees and graduates, and also supports the

university, but lack of measurements for making decision of who leave and remain.

At the customer and demand forecasting aspect, Procure to Pay project (P2P) is the

right system for QR to measure whether meet the customer needs and uncertainty

market environment.

Finally, although QR achieve successful regime change and make profit, but

according to the BEF system, these strategies still short term operations, looking for

better competitive in the new market, QR still need to improve integration and

alignment with corporate strategy to implement long term success.

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Issues identifyFrom QRs case, the issues faced by the company are from seven aspects.

Firstly is relevant to the leadership, the major obstacles faced by the management

around effective leadership is including: ensuring consistency of messages in allforms of communication, modelling values and behaviours in a stable and predictable

manner, and be able to measure the effectiveness of a nebulous concept leadership.

These disadvantages came from the wider corporation background. And the slow and

complex culture change would interrupt the development of the company.

Secondly, the challenges with strategy and planning are including: the operational

excellence strategy will continue to deliver minor benefit, but limited to continue to

generate larger step improvement.

Thirdly, data collection and manage the information should be developed in the

information system and process. The other challenges of progress are including: add

value process of the system, more systematic way for using data in decision making,

applying statistical thing, understanding in processes in order to better manage risk

and reduce forecasting error, adopting more approaches in training staff and interpret

the report, identifying and managing the value of intangible assets, improve better

decision support, develop process and interactive measures, and more seamlessly

interact with suppliers measurement system.

Fourthly, the HR challenges in the future are, quicker formalised ways of responding

to ideas and suggestions, influencing HR policies for different workforce, better

measurement and management the people who leave and remain, and being able to

cope with changing market conditions.

Fifthly, in the customer and market aspect, the most critical issue is that being able to

successfully address, is around benefit realisation.

Sixthly, in the ERP system, the time has come to challenge the scale and volume

arguments of ERP vendors. And identify the limitation of ERP system which work

not well with large volume transactions with other large corporations, and also

balanced the volume and value.

The last but not least, the sustainability for QR, integrating the separate silos, which

with many disconnects and complexities, and alignment with corporate strategy, the

strategy of operations needs to find more effective ways of engaging Boards and

Senior Executives, in order to be able to identify and use the respect and resources

needed to deliver the value that it can add to most modern large corporations.

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Answer questions1. According to the BEF (Business Excellence Framework) strategy which QR

used in the five years, I will analysis the key operational and supply

capabilities from seven means. Firstly, the leadership of QR has been changedfrom strong hierarchical control to egalitarian. The new staff with different

background and abolish discrimination, build up trust and collaboration. And

the new team is consisting of wider skills; the supply division became more

effective within supply chain. The new leadership is more flexible and

responsive to meeting customer needs. Secondly, the SCI (Supply Chain

Initiative) project helps QR save 100 million dollars in the five years. There

are three strategies in the project, operational strategy, supply chain

optimization and virtual supply chain. QR cooperated with PwC to operate the

operational excellence strategy, and achieve the goal well. The SCI operation

made QR reduce cost of procurement and inventory, better manage the supply

chain and improve flexibility and responsiveness to meet the uncertainty

demand. The third mean is the measurement in QR, the procurement

measurement based on ERP upgrade data, it was easier to generate. And the

Scorecard Reporting was developed for the inventory measurement. Despite

these two systems helped QR get the capabilities to measure the process

within supply chain, the information system and process also need to be

developed and put in the place to get the right details to manage, such as what

data should be collected and how information should be handle, stored and

analysed. The forth mean is focus on people, QR choose staff from re-trainees,

graduates and trainees. Fifthly, the supply division took a facilitation role with

customers to ensure their needs are met. P2P system is a good example for QR

to improve its customer service. And the next mean is process management,

improvement and innovation, ERP system was developed for QR to improve

the integration, but not work well in large transaction with large corporations.

The supply division should not only focus on high number but also high value.

The final mean is sustainability; the supply division should pay more attention

to integration and alignment with corporate strategy in order to improve long-

term sustainability of corporation.

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2. QR initiated the Supply Chain Initiative (SCI) with the five years potential

savings opportunity. This project consists with three targets, operational

excellence, supply chain optimisation and virtual supply chain. Operational

excellence (figure cs5.2) is the most impact compare to the other two, because

of the most revenue it saved and company did successfully in keeping the

money. The company also focus on flexible, in order to satisfy customer needs

and meet uncertainty demand. But the operational excellence strategy just can

continue to deliver minor benefits, and still can not achieve large step of

improvement to fix the problem.

Operation excellence strategy helps the company reduce cost, increase cash flow

and efficiency.

The new concept of operational excellence is creating greater dependency upon

suppliers, and with long term single relationship, relationship used is rather than

power because the regime changed.

Changing the contract type from traditional to new forms such as strategic

alliance and joint ventures(figure cs5.4), also helps QR save revenue and share

responsibility, but it with high risk at that period. Because of that the few high

value contract associated with key assets and limited competitive market. But

from the figure cd5.4, the new types of contract will be more common in the

future.

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3. The most important measure of operating performance used at QR is

integration which controlled by Enterprise Resource System (ERP) system.

Supply developed a business process which can translate user requirement

firstly into process requirements and then into system requirements, it seemed

like to satisfy any user of the system, and can get the temporary high level of

integration, but it is too slow and short term operation. It has no ability to

respond rapid changing market environment and too complexity to control the

forecasting. Also the company was seeking for one system can fit all

purchasing actives (figure cs5.9). It was hard to realize because the changing

of demand, customer needs and regulations. And it is difficult to realize

placing all types of transaction in ERP system. ERP system which was used

by QR is limited to work well with large transactions with large corporations.

And also ERP system is costly and may create ill-will with smaller suppliers.

It will lead the company lose value and customers.

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In my opinion, QR can not just seek for integration, integration just a part of

company measurement, it can pay more attention to long term relationship and

demand forecasting, and also do not ignore the smaller supplier to maximize

the value. Combine with Procure to Pay (P2P) system; cope with large volume

and high value.

4. The previous leadership the QR is strong hierarchical control in order to

centralize power, strongly focused on generating and maintaining internal

processes, so that the services were not flexible and responsiveness. Focus on

these problems, the new general manager set up a new concept about the

relationship and operations. Establish off site management workshops, some

of them involved key customers and suppliers, and strive to offer total supply

chain management for its customer, resulting in optimal procurement and

inventory practices. The manager used the aligning strategies to achieve the

goals. The manager also created a multicultural environment not only for the

staff but also for the suppliers and customers, this strategy made the staff workeffectively within the company, and achieve a diverse range of suppliers. The

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new concept also got advantages for flexibility and responsiveness to meeting

customer needs. The values were seen to be transmitted primarily through

relationships from the management team. But there is still disadvantage

between this relationship, such as human errors, misunderstanding and the

concept of leadership was not clear, as results of wider corporation which is

running in the rapidly changing environment and demand uncertainty. And

also in order to meet faster and more flexibility of uncertainty customer needs

and market demand, QR never stop changing their systems and strategies.

Such as use strategic alliances and joint ventures contracts with their

customers and suppliers.

5. Scorecard reporting was developed by QR to measure represented a major

turning point in implementing the supply chain optimisation strategy. This

measurement not only provides report to all level of corporations but also can

be detailed recommendations on the way of improvement initiatives. The

sample is shown on figure cs5.5. But it had been instead of a less complex

system which is shown on the Table cs5.2. But we have to say, the inventory

dashboard contributed the enormous effort for developing reporting capability.

This system helped the cataloguing team of QR successfully removed 130,000

duplicated, unnecessary and incorrectly materials. Compare the dashboard

with the measurements, some measures has been cancelled from the dashboard

format.

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6. In the case, the three key operational risks may be the culture change risk,

change contract types risks and Human Resource (HR) control risk.

In order to realise radically change the regime of the company, culture

changing is one the most critical issues for the manager, but because of thecomplexity and long time, it is also a high risk for the company.

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QR changed traditional contracts into new forms such as joint ventures and

strategic alliances. The suppliers of QR are capital intensive industries, it

means the suppliers of QR were few, so that there was restricted of few high

value contracts associated with key assets and limited competitive

environment faced to the company. And it is also hard to measure intangible

assets between QR and suppliers or customers, such as trust and collaboration.

HR is the most valuable asset of the company, QR spend to retrain the staff

and pay high wages for trainees and graduate, and supported university for

future development. But if these staff are not work for QR, it will waste the

revenue of the company, decrease competitive power of the company and

increase other companies, also the global strategy will be at risk of failing.

For these kinds of risk that mentioned above, the company can employ

expertises at risk management to evaluate the risk, better manage at market

forecasting and make contracts with the retrain staff or graduates.

7. From figure cs5.10, procurement model is consisting with corporate strategy,

supplier management, technology, procurement positioning and process, and

external collaboration.

The corporate strategy of QR was that use sourcing strategy, means corporate

with other companies which professional at the particular area, such as

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PriceWaterhouseCoopers(PwC). That made QR did successfully in the

particular area. For example, QR did successfully in keeping money of the

three strategies, and also remain flexible and responsiveness for its suppliers

and customers.

In supplier management, QR corporate with few capital intensive industries,

actives with P2P system, the advantages are improving monitoring and

reporting capacities to key stakeholders and using technology to make

sourcing activities easier to perform, and also reduced cost of transaction and

increased functionality of the transaction activities.

At the part of procurement positioning and process, QR just focuses on

integration, and ignored smaller suppliers and flexible reflection of the

uncertainty demand, I think the company should combine with another system

to optimize or balance the integration and competitiveness.

At the external collaboration side, because of the power shifting, it worked

with an extended enterprise model that uses relationships rather than power.

And QR also moving from tradition contract to new forms included strategic

alliances and joint ventures. But it involved in high risk in that period. Maybe

QR can input more flexible ideas to through the innovation period, such as

search more suppliers and market survey.

The last but not least mean is technology, P2P system is good for streamline

the procurement processes and ensure the lowest unit cost, but strongly

suggests that unless changes in technology are supported by parallel changes

in job roles and cultures practices, it would be hard to sustain improvement.

ERP system could not work well with large number of transactions with large

corporations, costly and slow, but well at improving integrations. QR must

evaluate these two systems or others well, and pay more attention on

satisfaction of customers and uncertainty demand, to optimal its system.

In my opinion, the procurement strategy may be not the best for QR.

8. The functions of BEF is that assess and improve any aspect of the

organisation, there are 7 interconnected categories: leadership, strategy and

planning process, data information and knowledge, people, customer and

market focus, process management, improvement and innovation, and success

and sustainability. These seven categories measurements helped QR to realise

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its advantages and disadvantages. Gave the industry innovation an benchmark

to select system, methodology for management and what challenges was faced

by the company. The theory of BEF helped QR successfully change leadership

from power centralised to egalitarian, made the process more efficient.

Strategy and planning process helped QR save 100 million within five years,

reduce duplication and unnecessary cost within the entire supply chain, also

more effective and efficient cash flow within the supply chain. Data

information and knowledge gave the criterions for QR to develop scorecard

reporting measurement, and the inventory dashboard made QR reduce

inventory cost and errors. QR also follows the BEF to recruit and retrain the

staff for higher skills and more professional on the logistics area. According

to the BEF, QR pay more attention to customer and uncertainty market, found

out the disadvantages of its operations, such as global contracts did not always

satisfy local regional requirements, and change the strategy to fit the

competitive environment to achieve goals. BEF helped QR to identify the real

needs, and then select the right system to improve competitive power. And

finally, QR identifies the future challenges for the long term sustainability of

the corporation.

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References

Australia, 2010, QR Services, CompleteRail Based Asset Solutions, Australia, viewed

at 28th March 2010.

Burgess K, Samsn D, Singh P.J., 2008, Operations Management: An Integrated

Approach,Striving for Operation Excellence within Queensland Rail Supply Division,

Cambridge University Press, New York, pp;.450-472

Chopra S. and Meindl P., 2010, SupplyChain Management:Strategy, Planning, &

Operations, 4th Edition, Pearson Prentice-Hall, Boston.

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