The supply and management of a company have various difficulties in trying to manipulate the logistics of supply and making analysis of the whole performance of the supplying team. These issues apparently result from low surge and have had great inconveniences to stock and management. The reasons for these intensive difficulties are a result of malfunctioning of one group or department and thus disrupting the paths of supply. Prior to lack of frequency in stock-outs, poor customer response and high prices on the products of the supplying enterprise have the greatest impact then due customers.
This results in reduction in profits and furthers the customer – supplier relationship. The operations of the supplying company have bigger effects on the customers unlike any other department involved in stock supply. This is well described from the logistics created by Harold, the director of Logistics explaining what Buy 4 Less had to go through due to malfunctioning of the Happy Chips’ management. The increased complexity in the supply operations make the methodologies that Buy 4 Less suggested to Happy Chips to implement so that both parties could benefit and improve the understanding of the results of poor management.
The factors that led to failure in the various sections mentioned above by Buy 4 Less were associated to activities in the product’s delay leading to low costs of income. The problems addressed by Buy 4 Less and other customers of Happy Chips require a complex analysis of set activities or else a high cost in resources production but a reduced cost in selling the supplies. This is unfavorably good for Happy Chips management as they count it as a bigger loss.
The activity based costing gives meaningful information about the driven cost from Happy Chips that Carter could have used to track down and establish a well published outcome that Wendell could have used to have simple and possible solutions to his problems (Kaplan, R et al 47) At this juncture, Wendell had to use more detailed analysis because the complexity of the problems had gone higher. This would have a negative result in averages as the original information was fraud or distorted at the segment point. Process cost interacts interchangeably with profit segmentation and this is what Wendell did not pay attention to.
The customers are torn between moving on with Happy Chips as their supplier while they still think of vacating from the firm to another supplier. On the other hand, Happy Chips is a firm that has not qualified to national levels and could only operate at the primary and local levels thus losing Buy 4 Less firm would be a great loss. As a result Wendell has to confine into explicit measures of the costs of activities and tend to pay attention to communicating with Buy 4 Less firm whereas he improves management fitness. It is fantastic that many managers have the final rule but it is profound that Wendell gets objections from his colleagues.
With anything that would give the customers better alternatives like relatively low costs for the products the firm makes, direct store delivery and distribution to various customers’ shops would rather sound finer and good to the customer himself. Being inconsiderate of the additional costs the supplier has to suffer by himself. In regard to the case demonstrated in the case of Happy Chips, Wendell is left with no option rather than to comply with the customer’s wish in order to benefit from the outcome of his firm (Kaplan, R et al 108).
As a manager, he finds himself in a tougher situation because he is even forced to make the direct deliveries lesser than before. The objections from the colleague made it more difficult for him to decide the best of all the collections he had done in the Midwestern University on the cost analysis. The management had to include cost of utilities as well as the basic costs. These would also lower the income. In consideration to the defaults the management had to appeal to their best customers. Happy Chips has no options to guarantee their safety from loss but have only one way to save it.
Accepting the decisions made by Buy 4 Less firm as due to lack of their appropriateness, they got the customers angry to no despicable point. For the safety of their reformation, they would have to comply with the customers’ decision in accordance to the logistic analysis. The direct cost of labor is a basis for bigger losses in the Happy Chips as the work would be increased but wages decrease. The cost of production would rise while the demand of the products decreases due to broken customer relationship. Eventually the firm would experience bigger losses in general.
The changes desired by Buy 4 Less should be adhered to by Happy Chips firm. The core reason as to why they should comply is because they might end up closing the firm taking into consideration that the head of logistics who had already submitted the analysis of the outcome. From time to time, the company receives many offers to make and sell products at a lower price unlike the significantly high prices that many customers would not be confronted with buy. Due to this offer, the companies make a special decision making meeting with the board so they can either accept or reject it.
For instance, Buy 4 Less is confronted to hit a very much lower cost in the products and even distributing them to customers’ premises. That would undoubtedly make a greater loss in the firm. Given conditions, the customers might disappear if Happy Chips does not comply with the requests and be left to die alone. Apparently, Wendell has no desirable option left with him and failure to eliminate these segments will be seen as lacking to comply with the current demands of the customers (Hitchner,et al 34). On the other hand, the amount of revenue required to be given by the Happy Chips firm is relevantly high.
The special order requested by Buy 4 Less is relatively comparable to incremental revenues in addition to the normal costs. Wendell is liable to determine the total costs he is about to recur from accepting the request. From the analysis point of view, the unit-level request is basically far from the special request by Buy 4 Less firm and the latter should not be considered. Segment report analysis created by Wendell should show that he had orders in potatoes that were more reliable than any other supplier.
In a good arranged order of the potato segment, he would restore the path of profitable sale of the same potatoes by dividing the segments according to grocery segment, drug and mass merchandise. From the analysis Wendell created from the University study of logistic, then this would help hip organize a presentable segment report. This report should not dwell on his colleagues and should stand upon making the critical decision in accepting the new orders to save his company. Increase in the mass merchandise would not affect the results of the new terms as far as the new order is still to be implemented.
The new order should be defaulted and as a result the additional profits are evenly shared to the affected areas in the supplying company (Hitchner,et al 67). Conclusion Segment profitability is a mutual concept by itself and far from the common understanding of the difficulties expressed by Happy Chips firm. The whole problem should be addresses in an agreement, so that Happy Chips should consider complying with the granted order to avoid higher losses. The segment of profitability is mutually critical if the parties do not agree and come up with a common solution.