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Running head: CASE 3 ORGANIZATIONAL AND MANAGERIAL ANALYSIS 1
CASE 3 ORGANIZATIONAL AND MANAGERIAL ANALYSIS
Case 3 Organizational and Managerial Analysis of Light Up My Light, Inc.
Abstract
This paper will focus on the organizational and managerial issues of Case 3 of the Florida Institute of Technology Management (MGT) 5006 Course: Logistics Policy. Case 3 focused on analysis of Light Up My Light, Inc. (LUML) performance data in warehouses and financial data to include Strategic Profit Model. This paper will use Contemporary Logistics, Eleventh Edition as the basis for organizational and managerial issues. I will describe how LUML is a fragmented, decentralized and networked organization. I will also link my analysis in Case 3 to the managerial issues of Productivity and Complexity. Productivity of the company hinges on very vague terms of output. Warehouses use the metric of shipments as their basis of productivity with no real analysis of inputs (human capital). LUML is also slightly complex in that it has warehouses in 8 different locales with decisions seemingly made at each warehouse in regards to logistics functionality. The limited information available so far prevents a deeper dive into the issues of Quality, Risk, and Sustainability for the purpose of this project.
Case 3 Organizational and Managerial Analysis of Light Up My Light, Inc.
The purpose of this paper is to link my analysis in Case 3 of MGT 5006 to the various organizational and managerial issues in logistics. I will specifically look at the type of logistics organizational structure that Light Up My Light, Inc. (LUML) seems to have based on the limited amount of information in the 2 cases so far in this course. I will also attempt to describe what I believe to be LUML’s organizational design. I will then link my analysis to the managerial issues of productivity and complexity. For the purposes of this paper I am using the definitions and explanations used in Murphy & Knemeyer’s Contemporary Logistics Eleventh Edition.
Through the last two cases, but especially the information in Case 3, one can come to some conclusions of the type of organizational structure that LUML employs. LUML is a smaller company, but does have eight distribution warehouses across the nation that allows it to distribute its products. Throughout the cases I am writing memorandums on behalf of my boss, Tom Perkins, who is the Vice President for Logistics to the CEO, Mrs. Elise Ennis. All of this information points to the organizational structure. It indicates that the company operates a more unified structure being that there is a dedicated logistics department in which we work. All of the CEO’s questions about logistics in the company seem to go to Tom Perkins, and by extension, us. If the company were using fragmented structure, the CEO would more likely be going straight to a particular department head for logistics information. Without more information to contradict, I also believe that LUML operates a centralized structure as opposed to decentralized. I do not find that decisions about logistics are made independently across division or product group level.
The organizational design of LUML is a little harder to decipher. The evidence I had was the questions asked of me so far from the CEO and my boss Tom Perkins. The particular questions concerning the operation and proficiency of the warehouses across the company lead me to believe that the organizational design is probably a network in which the company empowers its warehouse managers to make decisions for their warehouses independent of the main office in Melbourne. If decisions were being made in Melbourne (i.e. hierarchical/functional) and directed down we would probably not be receiving inquiries about analyzing and reporting on warehouse functions. On the same token, there is no evidence to suggest that a single employee has cross-functional responsibilities that would make it a matrix design. Overall the evidence from the cases indicate that LUML has a unified and centralized logistics structure and its design is that of a network. I think that this is the best possible structure and design for the company. The unified structure is also used by leading-edge logistics companies in the nation (Murphy & Knemeyer, 2015). The network design that LUML seems to employ, in my belief, is the best overall. This design allows a company to provide quicker customer response leading to increased customer satisfaction because it allows lower level leaders and managers in the company to make decisions quicker, such as at the warehouses of LUML.
Murphy & Knemeyer (2015) describe five overall managerial issues that span across all logistics functions. They are Productivity, Quality, Risk, Sustainability, and Complexity. In order to be more concise I will focus on two that I believe this case highlighted the most. These are productivity and complexity. The productivity of the warehouses seem to be of high concern for the CEO of LUML and will take up the bulk of my discussion.
As mentioned, productivity of the warehouses are of serious concern for the CEO of LUML, who may make a decision in reference to changing out the contract of one of the warehouses. Productivity is probably the most visible of the five because it is where money is made or lost for a company. In general terms productivity is found by dividing input from output (Murphy & Knemeyer, 2015). We don’t have a lot of information to go on in reference each warehouses inputs, but we do have their outputs from 2016 and 2017. The warehousing department uses shipments as their metric for productivity. While this is a good metric to use, it does not provide the full picture because it says nothing to the inputs of each warehouse, which means the true productivity of the warehouse cannot be found. This is why one of my recommendations to the CEO was to have each warehouse manager do a full productivity report of their respective warehouse. The CEO wants to find ways to have the warehouses become more productive and decrease overall costs. Murphy & Knemeyer (2015) describe the three ways to increase productivity. They are to decrease input while maintaining output, increasing output while maintaining input, and increasing output while decreasing input. Warehouse operations input deal with human capital, which means decreasing input in the company is not really logical. The warehouses would have to increase output in order to increase productivity. Another facet of productivity that is not specifically mentioned in the case, but is absolutely implied is the transportation of goods. Obviously, the goods that are made must make it the customer somehow. The cheapest method for a company to do that is through trucks. A robust trucking organization in a company is also expensive in fuel and maintenance costs of the fleet. Productivity is also where information systems (IS) upgrades can be beneficial for a company. The use of radio frequency identification (RFID) allows a warehouse to digitize its inventory. The use of global positioning systems (GPS) allows a company to track its truck fleet and allows drivers to utilize quicker route planning which saves in gas costs. Companies can also employ the tachograph in their truck fleet to allow continuous recording of the truck and hold drivers more accountable while they are on the road (Murphy & Knemeyer, 2015, p.59). When it comes to automation of warehouse functions the Defense Department, and more specifically the United States Army has transitioned to a digitized warehouse operation. The Army’s Supply Support Activity (SSA) has transitioned to the Global Combat Support System- Army (GCSS-A) which is a digital system for warehousing and distribution operations that utilizes the robust civilian logistics structure as well as RFID to facilitate warehouse operations. (United States Army, 2017). In my personal experience it seems to have made a positive impact on SSA operations in the last three years since its implementation.
The second managerial issue of concern with LUML is complexity. The company operates eight warehouses across the country which implies complexity because of the different nodes in which logistics takes place in the company. This is common across large companies across the globe and is not necessarily a bad thing. It would be incumbent on LUML on properly manage the warehouses and their productivity to limit the impact of the structure’s complexity. Being that LUML is a light fixture company and focuses its efforts to that end, it does not have to worry about range complexity. On the same token there is no evidence to suggest that LUML suffers from faulty processes, or process complexity. (Murphy & Knemeyer, 2015).
In this paper I have described the organizational structure and design of LUML as well as how the managerial issues of productivity and complexity relate to their operations. LUML seems to operate under a unified and centralized structure and a network design. The warehouses seem to lack basic productivity reporting measures as they do not take into account their input. LUML has a complex structure in that it operates eight warehouses across America, but does not have range or process complexity.
References
Murphy, Jr., Paul R.; Knemeyer, A. Michael (2015). Contemporary logistics eleventh edition. Saddle River, New Jersey: Pearson