Vison, Mission and Values
SSAS is a distristibution company that deals with car wheels. It ships tyres from Japan, Korea, Germany, France, and the USA to the port of King Abdul-Aziz in Dammam, Saudi Arabia. After shipping the containers, the distribution starts at the port of Dry port. Many shops, retail centers and garages are actually set up for distribution purposes. Distribution has to cover other major cities like tabuk, medina, mecca, Jeddah and Hial. However, during the distribution, supply chain strategies are used in the process.
Before you start developing a business plan for a distribution company, you need to understand a number of common, but very essential principles for organizing this activity.. Its content characterizes the type of business in which a business entity on the basis of a contract purchases products from a direct producer and then sells it through retail or wholesale sales, using its own trade and logistics resources and equipment (Christopher, 2016). . There are no uniform requirements for a distribution company’s business plan, since this activity depends on a variety of variables – regional business characteristics, seasonal conditions, the nature of the products sold and so on. The companys distribution strategy has to be strategically planned and has to satisfy customers needs and wants (Fredendall, & Hill, 2016). .
Distribution company business plan
The distribution of tyres, like Goodyear, Michelin, Bridgestone, Yokohama and continental depends on how demand and supply is set up in the markets supply chain. It should be borne in mind that the implementation of distribution activities in some cases cannot be limited to trade as such. Distribution is a whole range of measures to promote goods along the line from the manufacturer to the final consumer. In drawing up a business plan, investments should be made necessary to create and develop other divisions of the company that will develop effective logistics, organize distribution networks, work with brands and familiarize consumers with new tyres of their products, increase the company’s reputation rating in regards with the tyres (Fahimnia, Sarkis, & Davarzani, 2015).
When drawing up the distribution plan of the tyre, it is necessary to decide on whose behalf the company will act in the future (it depends on how the profitability will be distributed). The fact is that today there are two views on this type of activity:From the point of view of the product manufacturer, the distributor’s functions include the organization of product sales channels, as well as the effective management of their promotion (Fahimnia, Sarkis, & Davarzani, 2015).
On the part of the distributor, this business is the work of delivering and locating marketable products in its territory and then bringing it to the consumer.Thus, the essence and the ultimate goal of the activities of both entities is total – profit. Moreover, both the manufacturer and the distributor are practically “tied” with sales volumes. But a lot depends on the specifics of different business sectors and the resources used. The most common practice is to act on behalf of both subjects, which is realized through the conclusion of a special agreement between them.
Diversity as a Core Value
In the distribution chain processes, SSAS will use either public warehouses, private warehouses or climate warehouses. It is important to note that distribution of tyres in major cities is done through retail warehouses hired or leased to store the goods for the company’s garages to act as feeders. The warehouse systems is done through batch processes. The JIT and the inventory management systems are used in releasing the inventory to the public. FIFO, LIFO and many more are used in inventory management. However, for the sake of costing and accounting purposes, FIFO is the systems that SSAS is using to manage its inventory.
The goal of the inventory management by SSAS is to gain profit from the wholesale trade in tyre materials by creating a wholesale base. The main difficulties lie in the organization of search and establishment of reliable relations with manufacturers of high-quality materials, as well as in the development of routes and efficient logistics channels. The considered project of activity is not connected with the use at the initial stage of highly qualified employees and the use of special technologies. The total investment costs amount to 11.855 million riyadh.
The main integral parameters of efficiency
Parameter values
1 Annual / monthly discount rate 24% / 1.8%
2 Payback (total / discounted) 21-24 / 30 months
3 Net value of 13,329,398 riyadh
4 ARR (Investment Return Ratio) 6.56%
5 IPP value (rate of return, internal) 4.71%
6 PI value (index of return) 1.15
The project involves the opening of a base of tyres for wholesale. In the future, it is possible to open additional activities: own production, as well as trade other products like Rims and tubes. The intentional narrowing of the range of products sold is associated with the need to consolidate supplies at the initial stage of the company’s operation and to improve logistics.
The project provides that the main object of the distribution company will be the territory of the base with an unheated covered warehouse located on it, the necessary access routes for road and rail transport. On the territory of the base there is a room for the company’s office and a change house for a staff of 100 sq. m and 20 square meters.
The main competitive advantage of the newly created company is to work with direct suppliers of tyres, which will give an opportunity to form competitive prices for the products sold and to guarantee its delivery in various volumes. The demand for this product is due to the increasing pace distribution in the region and the high market demand for high-quality tyres materials. It is assumed that by the time of the project payback period a stable client base of at least 5% of the regional market capacity will be formed. (Hugos, 2018).
The business is not seasonal, investigator but it seems expedient to begin work on creating a base and registering a distribution company even before the onset of the work. Activities to find the location of the base must be completed by end of day, and the first active purchases begin in the morning. The time limit for registering an enterprise and signing lease and investment contracts is 2 months for the warehouses. The optimal legal form of a distribution company is an individual entrepreneur with Stages of project implementation (example): Stages Conditions Terms Market analysis, performing technical and economic calculations.
Car-Pooling and Parking Services
Development of statutory documents, conclusion of investment contracts 10-30 days Acquisition or rental of process equipment, vehicles, consumables Within the framework and on the terms of concluded investment contracts 10-30 days Installation and installation of necessary technological equipment At the expense of credit or investment funds 10-30 days training company personnel In accordance with the areas of activity and the nature of the product, which is to work with 1-30 days Marketing
Managing Inventory in Supply Chain Management Warehouse
It should be noted that the regional market at the height of the tyre distribution season suffers from a significant shortage of these materials. Sales and marketing plan Realization products are carried out with the help of active and passive sales, including through its own online store with pre-ordering delivery. Information about the company’s activities and product range will be placed in the regional and federal mass media, specially published catalogs and other information platforms. The schedule of the wholesale base is seven days a week, from 09.00 to 18.00. These days trade is conducted by two sellers, if necessary, employees of the company can be transferred to work in two shifts. Sales of products to end consumers are made on the terms of self-delivery and full prepayment of the consignment of goods. The company assumes the formation of a diversified pricing policy, under which consumers will be given discounts and deferred payments.
The company’s managers are charged with monitoring receivables. To do this, it is necessary to equip the base with appropriate vehicles and equipment. High-quality execution of loading and unloading operations requires the acquisition of: Wheeled excavator – for bulk materials. Calculation of staff costs ? Position Salary (in ru Execution of all administrative procedures in the company is assigned to the individual entrepreneur. The manager is supposed to have knowledge in the field of entrepreneurship, accounting, technology of working with tyres materials and ensuring labor protection. They should also develop a detailed business plan of the distribution company with calculations. Financial plan and performance evaluation. The approximate amount of investment costs is estimated at 11,855,000 riyadh. Of these, it is supposed to invest own funds in the amount of 3 million riyadh and attract credit resources in the amount of 8,855 thousand riyadh. The loan rate is 18% per annum, the term is 36 months. Repayment is made by annuity payments. The first payment is made no later than three months from the date of its receipt. The effectiveness of the wholesale base project (distribution company) for the trade in tyres materials is estimated using standard integral indicators obtained by analyzing the predicted financial results of activities for a certain period.
The profitability of distribution is calculated based on the analysis of the following data: Expense and receipt of funds. Result of activity, expressed in monetary form for the current date. The overall financial result of the company. A discount rate of 24% makes it possible to talk about significant financial sustainability of the project with a low level of risk (see table 1). With an average mark-up on goods sold around 20% and an average monthly turnover of finance at 20 million riyadh, the timely repayment of the loan is expected and the enterprise goes to self-sufficiency in 3 years from the moment of launch. You can speed up the process by attracting additional funding from the co-founders. In this case, it is intended to convert the form of activity into an LLC and early repay the loan. The distribution of profits between the co-founders is planned on the basis of shares in the authorized capital. Net profit upon reaching the payback period is expected to be at the level of 25-30 million per year (Wang, & Cullinane, 2015)..
Future Plans for Charging Stations
Design an optimal supply chain for given product and market situation to meet organisational strategies.
Meanwhile, SSAS company plans to build a strong sales platform for B2B partners, using advanced traditional and digital marketing, database technology analysis, while providing a financial solution for the supply chain. CI partners have a supply office in Mecca, factories and supplier resources in China, Germany, Turkey and Russia (passenger and commercial cars, motorcycles, trucks, special cars and trains). The purpose of this cooperation is to achieve a stronger position in the purchase of auto parts, car accessories and related equipment.
One of the most common definitions of the supply chain, based on a synthesis of the opinions of many leading foreign experts, is as follows: a supply chain – three or more economic units (legal entities or individuals) directly involved in external and internal flows of products, services, finance and / or information from the source to the consumer.
Specta part of ERP systems; Moreover, integrated logistics supply management is not an end in itself, but one of the most important elements of optimizing a company’s business processes. Electronic trade has connected the buyer and seller directly: intermediaries are often not needed, and the customer begins to understand how difficult the company’s drug line is and makes its choice , given the new factors (Mangan, Lalwani, & Lalwani, 2016).
Propose Inventory/Stock control policies and processes to optimise performance strategy
Companies like SSAS, meanwhile, have to learn how to make direct deliveries of goods to a much wider audience of customers, since in many cases going online means switching from selling wholesale to retailing and from mass service to individual service. At the same time, sellers should not only be able to organize delivery, but also make every interaction with a customer as convenient and simple as possible. E-business has unique technological capabilities of personal service. The ability to manage the supply of a huge number of small lots, plus the individualization of relations with customers – these are the modern criteria for the success of e-commerce and logistics. A new business strategy is emerging. Now effective ways of interacting with the client, allowing him to become part of the logistics chain and involving him in internal business processes, are developed using a single logistic strategy that allows you to manage customer relationship (Customer Relationships Management, CRM) and SCM. Types of business process connections . Each company has its own supply chains, since their leaders in each case see their company as central and therefore consider potential members of the network structure, proceeding first and foremost the interests of the company. In this regard, the network structure of the supply chains of this company, perceived by the other participants, is arbitrary in relation to them. Since each company is simultaneously a participant in a different supply chain, it is important that all managers understand: the roles and perspectives of all participants are interrelated.
Investigate supply chain issues to develop a proposal for a supply chain for this organisation
SSAS: Tyre Distribution Company
Therefore, the integration of business processes within the company and the management of these processes will be successful only when it is carried out expediently from the point of view of each participant, although the degree of participation and role will be different every time, which we will discuss below. Integration of all business process links across all supply chains and their full management, as a rule, does not occur. The factors of such integration are inherently situational, for each link they will be their own, in addition, the levels of integration of different links and different periods of time can also change significantly. Therefore, at any given time, certain links for a central company turn out to be more important than others. As a consequence, an important task arises – the reasonable allocation of limited resources across links to various business processes occurring in supply chains.
Discuss which aspect of the chain should or could be optimised and discuss how this is affected by the various environmental impacts on the supply chain.
Four main types of relationships between business processes can be distinguished in these chains: managed, tracked, unmanaged, and links to objects that are not part of the supply chain, i.e. external. Managed inter-process communication is communication that the central company considers necessary for integration and management. She can manage these relationships in collaboration with other supply chain companies. The central company integrates and manages process connections with first-level customers and suppliers.
The central company is also involved in managing relationships between processes at other levels that are not relevant to first-level suppliers. Tracked connections between processes. Compared to the inter-process managed links, the tracked links are not so critical for the activities of the central company, although they are also important, therefore they must be integrated and managed by other companies that are part of the common supply chain. The central company monitors or verifies, as necessary, how these connections are integrated and managed (Wisner, Tan, & Leong, 2014). Uncontrolled connections between processes are those that the central company is not actively engaged in and which are not so critical for it to allocate resources even for their monitoring. In other words, the central company either completely trusts other members to manage these connections, or because of limited resources, leaves them at the complete discretion of the other participants in the chain. For example, a manufacturer may have several suppliers of packaging tyres, but as a rule, the manufacturer does not integrate and manage the links that go from these suppliers further down to the organizations that grow trees.
Of course, it is important for the manufacturer to have a reliable supply of tyres, but he does not think that he should actively engage in relations between the suppliers of tyres and their suppliers along the technological chain. Links to objects that are not part of the supply chain.
Managers understand that their supply chains are influenced by decisions that are made elsewhere. Chains in some way related to them. For example, a supplier of a central company can also serve in this capacity in the chain of its main rival. Therefore, the structure of the chains of this supplier can affect the number of employees allocated to design products for the central company, or the size of the products allocated to it in case of shortages, as well as measures taken to protect confidential information. This feature leads us to the need to establish a fourth type of business relationship – links with objects that are not part of the supply chain. These links connect members of a central company’s supply chain with non-members. Relationships of this kind are not considered as relationships of the central company’s supply chain structure, although they may affect its performance indicators and its network supply chains and indeed do have such an impact. How tightly companies integrate and manage connections beyond the first level.
In order to achieve specific goals in the chains, for example, uninterrupted availability of products, improving their quality, reducing overall costs in all supply chains, in some cases companies work through other participants and sometimes do without them, acting independently. (Monczka, Handfield, Giunipero, & Patterson, 2015). At the same time, farmers are encouraged to purchase raw materials and equipment at contractual rates. This allows us to achieve higher quality raw materials (in this case tomatoes) and at the same time lower prices. However, with this approach, there is no financial loss for farmers.
References
Boonjing, V., Chanvarasuth, P., & Lertwongsatien, C. (2015). An Impact of Supply Chain Management Components on Firm Performance. In Proceedings of the 6th International Conference on Engineering, Project and Production Management (pp. 555-565).
Brandenburg, M., Govindan, K., Sarkis, J., & Seuring, S. (2014). Quantitative models for sustainable supply chain management: Developments and directions. European Journal of Operational Research, 233(2), 299-312.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Fahimnia, B., Sarkis, J., & Davarzani, H. (2015). Green supply chain management: A review and bibliometric analysis. International Journal of Production Economics, 162, 101-114.
Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. CRC Press.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain management. John Wiley & Sons.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.
Wang, T., & Cullinane, K. (2015). The efficiency of European container terminals and implications for supply chain management. In Port management (pp. 253-272). Palgrave Macmillan, London.
Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A balanced approach. Cengage Learning.
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