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BBR502 Logistics And Supply Chain Management

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BBR502 Logistics And Supply Chain Management

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Course Code: BBR502
University: University Of Wollongong

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Country: Australia

Question:

You are a manufacturer of light bulbs and have a customer in Barcelona. You should try to sell their production presenting various offers:
1.INCOTERMS DDP2.INCOTERMS CIF BARCELONA3.INCOTERMS FOB (PORT OF YOUR CHOICE)
4.You will reference the costs of freight and shipping containers 20 “40” 40 “HQ, choose the most interesting means of transportation, either by cost or by transit time. Here are some references.
5.You need to make  the final invoice  tacking into  account  the  Incoterms.
6.The DDP shipment must meet the costs of arrival in the port of Barcelona. Attached cost:Respond to the questionnaire. Only YES or NO
1. If you shop FCA Madrid Airport, do you pay the air freight?2. If you shop DDP Tarragona, do you pay the maritime freight?3. What if you sell FOB Mexico D.F., do you pay the maritime freight?4. What if you sell CFR San Francisco, do you pay the insurance premium of the primary transport?5. What if you sell DDP Rio de Janeiro, do you pay the insurance premium of the primary transport?            6.  If you shop CPT Barcelona, do you pay the main transport?7.  If you shop FCA Milan, do you pay the insurance premium of the primary transport?8.  What if you sell merchandise EXW Peace, do you pay the load On the truck?9.  If you shop FCA Houston airport, do you pay the air freight?10.  If you shop DEQ Bilbao, do you pay the customs duties on the import (tariffs)?11.  If you shop DDU La Coruña, do you pay the customs duties on the import (tariffs)?12.    What if you sell DDU Jeddah (Saudi Arabia), do you pay customs duties on the import (tariffs)?13.    What if you sell CPT Cologne, do you pay the insurance of international transport?14.    If you shop FAS in the containers park of Atlantic Container Line New York, do you pay the  maritime freight?              15.    If you sell CIP Jeddah (Saudi Arabia), do you pay the export customs formalities?16.    Is the sale FCA Madrid an international sale?17.    If you sell CIF New York and the merchandise is destroyed during the trip, have you broken the contract?    18.    If you shop FOB Aqaba, do you pay the stowage in the port?19.    If you shop DDP Manresa, do you pay the costs of customs clearance of export? 20.    What If You sell FCA Madrid, do you handle the recruitment of maritime assure?     

Answer:

Introduction
The cost of health care in Australia is growing rapidly like other countries. The cost incurred due to supply chain system may goes up to 30% of total expenditure in hospitals (Alexander & Eugene, 2017). From previous research it well evident that implementing supply chain practices in healthcare industries reduce the cost in very significant manner. The operation in healthcare industries are bounded by tight institutional and regulatory pressure. Due to this institutional and regulatory pressure, the accurate forecast of sales can be determined with the help of lot of labor and long term plan, this is mainly due to difficulties occurred in measuring the magnitude of generic market player in this industries (Bolumole, 2009). The other reason includes that the its product development cycle is longer than any other industries, due to longer development cycle, the lead time also affect the capacity planning and managing supply chain industries. But most significant challenge is, inventory management in this industry. Some product has very longer lead time where as some product has very short lead time such as supply of blood. The blood supply chain in Australia is governed by National blood authority of Australia. Its supply chain process is named as Australian blood supply chain (ABSC).
The establishment of NBA was taken place in 2003, when national blood authority act came into action. It is a government organization and working under Australian government health portfolio, the prime job for this department is to manage and coordinates the supply of blood and their product to the entire Australian territory. The organization structure of NBA is as follows.
The head office situated at Canberra, including 53 number of staffs, and 25 contract staff, whole is managing whole Australia with their premium service.
Since as discussed above, the NBA deals with supply of blood and blood products. In the annual general meeting, there is an approval process as per supply plan and budget is provided by the Australian government, this budget is formulated based on demand forecast, which is done by as per demand forecasted from different states and territories. The administered revenues for financial year 2017-18 are kept around $ 1072 million, which is based on last year expense generated by $ 1032 million.
From growth of in expenses we can see that, the yearly expenses are down by 0.3% from previous year. The expense done includes grant rendering of goods and services, different procurement of product and services for blood supply, the consultation done for the improve and other miscellaneous expense. From graph we can see that there is sharp decrease in expense which is around $ 180 million for the period of 2013-14, this is due to lot of improvement initiative taken during this period, the inventory analysis and improvement were done with the help of stochastic model, this will be explained in inventory management section at later stage (Cahill, 2017).
Supply Chain
Since blood collection and distribution comes under national policy, for Australian government, therefore, all the supply of blood and its product are available at subsidized cost. It means that it looks like NGOs, which is working based on no profit or no loss system. The working process of supply chain process is given above in figure 4.
In general, the, the supply chain, for blood service system works under the four stages, which consists of Collection, Production, Inventory and distribution. The collection of blood is done through Australian as well as overseas donors, with the help of red cross society and some other overseas manufacturers. The next process consists of processing the blood unit or its different components is separated mechanically into red blood cell, plasma, or platelets. After mechanical processing, these packets come into inventories and stored at different blood banks, hospitals, where it is ready to be distributed as per their requirement. The whole process of blood supply chain is being performed with the help of five different processes. In which the first stage consists of Assessment of past historical data  in different territory, in which the introduction of patients were done with the help of different system, in this introduction the reason of requirement were assessed as per their disease, so that in future the blood is being supplied to their platform such as hospital or blood bank near patient so that they can avail easily. The second stage is the establishment of demand forecast, the basis of demand forecast has many factors like, review of product plan, customer interaction to blood agencies, demographic and population data and some emergency services. The NBA has established forecasting system, which is accurate up to 95%. The third stage includes establishment of annual blood supply planning for incoming and outgoing of blood and their product. The supply plan is based on 3 years of forecast done in previous stage. The BSC covers the plan of arranging blood donors, collection, testing and after that inventory management. The supply and demand are managed by review meeting done on monthly basis. The function at forth stage is to manage the supply of blood and its component at hospitals and blood banks on weekly basis. The collection plan is being broken to the daily basis, and in the same way consumption is also monitored. It is being done by monitoring the availability between two controlled line which is nothing but safety stocks for blood system. These controls limits signify lead time, production and allocation to different hospitals. The fifth stage consists of assessment and review from their customers end. Each blood service agency is capturing and monitoring the review from the patients and their relatives so that the service can be improved (John, 2013).
Distribution Chain
The distribution and service done by NBAs is one of the examples of state-of-the-art facilities, especially in government organization. The information and communication system by which, the NBAs is being operated are world leaders in their field. Some of them are mentioned below with their function in servicing the blood supply.
ABDR stands for, the Australian bleeding disorder registry system is a retails software, which is being used by the clinicians in all the hospitals and blood banks, so that the required patient can be registered and provide service they required from he NBAs facilities. BloodNet is an online software, for NBAs which is being used for updating the inventory status and used for ordering the blood and their component by some special authorities. At the same time authorities can also update the discarded and damaged blood product, so that they can avail the replacement. Blood STAR is the system by which the NBAs can get information for states and territories level. It provides state level overview for managing the supply chain of blood. MyABDR is the Android or OS level app for user who is suffering from bleeding disorder (Ellie, Fabricio, & Babak, 2017).
The whole Australia is covered by hub and spoke distribution network, by four zonal system, each zone has above figured network distribution system. In one zone There are five metro labs, which is supposed to be largest blood bank facilities in that zone, each metro lab capable of fulfilling the requirement of other metro lab as well as regional lab site, which is about eleven in number in each zone. Each regional lab covers around 35 hospitals or blood bank, where the blood and components are given to the patients. Each zonal network covers almost one forth of Australia to supply the requirement of blood and their components.
Contract and Procurement
Most of the contract’s services done by NBAs are based on Commonwealth procurement rules. They have developed a robust approach for contracting and procuring blood related product and services under the guideline of Australian government procurement framework. The regulation governs the whole system comes under Therapeutic goods administration. The various tools used for procurement of product and services are competitive tendering, price benchmarking and negotiation approach. The main aim for this method is to avail safe and secure product and services. The common things which is being found in tender is as follows.

The collect all related information from global market
The data collected form customer review in stage 5 which is in the form of customer feedback and stakeholder’s information.
The supply arrangement promised by contractors should satisfy the guideline which is given by Therapeutic goods administration.
The specific period of service given by contractor in that filed, experience.
The price quoted by contractor/supplier should be optimum from NBAs point of view.
The quality of product and services, security and safety.
Should be aware of NBAs supply chain network, and able to do commercial arrangement as per design given by NBAs, and able to sustain in that environment.

Now, there are fifteen number of contracts being managed by NBAs, which is solely related with blood and blood product. Some important type of contract is described below.

Procurement of Fresh blood and their product- Red Cross society is the main supplier through NBA procures fresh blood and their product.
Procurement of Plasma, and RBC – The Plasma and RBC is being supplied by National fractionation agency of Australia, and these agencies are Shire, Pfizer, Novo and CSL Behring.
Procurement of Red Blood Cell diagnostic product – There are four supplier who is providing RBC diagnostics tools to NBAs, these are Bio-Rad laboratories, Grifols Australia, Ortho-Clinical diagnostic, and Immu-lab.

Inventory management
Blood related inventory management done by NBAs includes he function such as ordering, storing, handling and issuing of blood and blood related components. Inventory management is one of the important parts for any organization, and if it is medical related then its importance is increasing by much higher degree, at one point of time, there is emergency of blood, and another time, we must store the product in such a way that, it must keep safe for long time. The ten-point policy adopted by NBAs areas follows (Gilmore, 2010).

Be aware of inventory levels – The person of associated with blood inventory management must know how to monitor it. They must aware of reviewing pattern for blood system, the must be aware of holding of inventories and reason for holding inventories, what is the trigger level, how much product is getting waste, and rate of inventories outflows. Each person in this section should have induction with medical officers for using the blood.
Trained staff- The staff which has taken training are more useful than untrained staff. The inventory management done by trained staff makes less or no wastage of blood. Each staff in this section should be gone through well designed training program.
It is a well-known fact that, when inventory is high, the wastage is also high, and entirely true for blood inventory, those hospitals or blood banks who has high level of inventories is also having high amount of wastage. They musts keep only much amount of inventory which satisfy the need of clinician. The blood staff must know about this figure.
Maintain less paperwork – The manual management of inventory is time taking and often trigger to higher level of inventories. The BloodNet app can provide what is the minimum order quantity as per your need. Planning well before stock ends is a good procedure in managing inventories. It is much better if staff anticipate the requirement of hospitals under your list.
Good relationship with customers – If staff is maintaining good relationship with clinician, they can communicate easily. They convince their customer about the importance of inventory management, as well as they try to figure out the reason of waste and avoid the unavailability of product.
For the blood inventory management, the FIFO (first in, first out) system is being used. The staff must know which product and where it is kept in their storage, so that, at the right time they can supply the product which is oldest one in their storage system. While should also know that product is not wasted due to long time.
The specification as per requirement- The cross matching for red blood cell is very important procedures for patient, if it is done for patient, then keep it aside, so that whenever he requires, it can be given very fast.
Well maintained tools- The tools and equipment used in blood service level, should be in optimum condition and have as per standard condition and guideline given by NBAs.
Well plan – If there is time, when there would be shortage of inventory, in such condition, it should be used wisely. It is better if staff is using local procedure to conserve the blood and their component.
Manage a well-defined program – Each patient is different for transfusion of blood, their requirement varies from other, in this condition, make a schedule for regular patient, so that blood can be given easily.

As discussed in introduction section, there was a stochastic analysis done during 2013, and result achieved, which helps to reduce the overall cost of NBAs by optimizing the inventory level in all over Australia, the brief of that analyses is given below.
Before, 2013 it was common for the hospital to order the blood without any calculation and keep it at their own place for emergency purposes. Most of the blood packet got damaged due to high perishability of blood. There is no definite ordering time and stock sufficiency. There is not certain demand forecast is provided at that time. AT this point of time Dr dillion and Abbasi proposed the two-stage stochastic programming model, which includes, minimizing cost and reducing blood shortage and waste. But first emphasis given on reducing the overall cost. To minimize the cost all variable is taken care. The target value is set at SUMPRODUCT of 30 different variables, that is related with cost. This was set as mixed integer linear programming (MINLP), with around 18 different decision variables. The last three decision variable is related with making linearized version of nonlinear constraints in this decision variable. To forecast the demand, they have adopted realistic data based on 12 weeks observation and calculating the demand with Monte Carlo simulation. There are three type of experiments is being performed. After calculation and analysis, it was found that there is a difference of optimized cost and actual cost around $ 140 million for all hospitals in Australia. Further implement it with all other Blood group the Cost was down around $40 million. This result causes the down in total cost of $180 million overall, which illustrated in figure-2.
SWOT for NBAs Blood supply system
From the above five stage of supply chain, integration the monthly planning cycle is the strength for NBAs BSC, it integrates the whole supply chain as per demand and availability. Its review system upscale them to improve continuously, this is the reason that its cost of service is declining year by year, while service is being improved. Its three-year planning based on forecast system, can reduce the volatility in the demand. Due to monotonous kind of service, there is no fear of competitors.
Despite state-of-the-art system maintained by NBAs, still there is lack of system integration, because the partners hired by NBAs is not getting full information on time. Due to this reason, lack of miscommunication is prevalent among their partners. The other weakness is the geographical condition of Australia itself, the reach of communication and service offered by NBAs is still a challenge and need more focus to improve it.
The state of art system established by the NBAs could be an opportunity for neighbor countries, especially New Zealand, Malaysia etc. The blood supply system of these countries is not good enough as compared to NBAs in Australia.
The supply of fresh blood is only done by Red Cross blood service, the dependency on only one supplier may cause difficulties sometime. This is true for this sector also.
Conclusion
As per given details about the National Blood Authority of Australia, we can conclude that, the supply chain adopted by NBA is continuous replenishment model with hub and spoke arrangement of distribution system. Some important feature of this kind of supply chain is that it regularly replenishes the inventory while working closely with suppliers and customers. The improvement program adopted by NBAs has reduced in the around $ 180 million. But this is not the end of continuous improvement, they must utilize some more innovative ideas, so that it can reduce their cost and improve the quality of services. Further research can be done to find the way of further improvement. The dependency on only one supplier on procurement of fresh blood can also be a major problem in future. NBAs must reconsider to contract with another supplier also.
References
Alexander, B., & Eugene, S. (2017). Procurement in public & private hospitals in Australia and Costa Rica – a comparative case study. Health system, 6(1), 56-67. doi:doi:10.1057/s41306-016-0018-z
Bolumole, K. L. (2009). The Customer Service Management Process. The International Journal of Logistics Management, 14(2), 1-33.
Cahill, J. (2017). ANNUAL report NBA 2017. National Blood Authority. Canberra: CanPrint Communications.
David, Z., Gilbert , N. N., & Gary, Y. (2016). Supply chain risk management and hospital inventory: Effects of system affiliation. Journal of Operations Management, 44(1), 30-47. doi:https://dx.doi.org/10.1016/j.jom.2016.04.002
Dunn, P. (2012). The Firm of the Future (1st ed.). 2012: Wiley.
Ellie, D., Fabricio, O., & Babak, A. (2017). A two-stage stochastic programming model for inventory management in the blood supply chain. International journal of production economics, 187(1), 27-41. doi:hhttps://dx.doi.org/10.1016/j.ijpe.2017.02.006
Flynn, B. (2014). lobal Supply Chain Quality Management (1st ed.). New York: CRC publication.
Foster, T. (2016). Managing Quality: Integrating the Supply Chain (1st ed.). Newyork: Pearson.
Gilmore, A. (2010). Services Marketing and Management (2nd ed.). London: Sage Publication.
Gomes, R. (2011). Physical Distribution Service. Jams, 1(1), 1-10.
Gulc, A. (2017). Models and Methods of Measuring the Quality of Logistic Service. Project, and Production Management, 255(264), 1-10.
Jeroen, B., & Hein, F. (2012). Supply chain management of blood products: A literature review. European Journal of Operational Research, 217(1), 1-16. doi:doi:10.1016/j.ejor.2011.05.026
John, C. (2013). Blood Supply Management: Experience and recommendations from Australia. International Society of Blood Transfusion and science series, 1(1), 1-5.
Laing, A. (2012). Managing and Marketing Health Services (2nd ed.). London: Thomson.
Peter Mudie, A. C. (2006). The Management and Marketing of Services (3rd ed.). Oxford: Butterworth-Heinemann.
Prakash, S. J., & Damien, P. (2014). Innovative knowledge sharing, supply chain integration and firm performance of Australian manufacturing firms. International Journal of Production Research, 52(21), 6416-6433. doi:https://doi.org/10.1080/00207543.2013.859760
Tishina. (2017). The management level of logistics. icie 2017, 1(6), 1-6.
Tišlerová, K. (2016). Management of Customer Service in Terms of. Research Article, 1(1), 1-5.
Vikram, B., Prakash, S., & Amrik, S. (2012). Collaborative management of inventory in Australian hospital supply chains. Supply Chain Management An International Journal, 12(2), 217-230. doi:https://doi.org/10.1108/13598541211212933
Wilson, G. (2008). Managing Quality (2nd ed.). New York: Routledge.

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