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QC Logistics

15 Feb 2017Business Essays

Introduction

QC Logistics, a logistics and supply chain management company, is pilot testing IonData Lite in one of its facilities. IonData Lite is an off-the-shelf inventory tracking system which combines a PC and a handheld scanner. The Company has several requirements for its new stock control system, and among the systems it researched on, IonData Lite has the best fit.

Summary

Company Background

QC Logistics, based on Waterford, is a business process outsourcer (BPO) for the logistics functions of several industries, particularly the pharmaceutical sector. As a BPO and by looking after peripheral aspects, QC Logistics allows companies to do their best. Clients trust QC to look after volumes of stock and ensure that stock is delivered just-in-time: if stock doesn't arrive and a production line is stopped, it could cost the client substantial amounts of money.

QC Logistics started operations in December 1996, employed five staff, and operated in a single warehouse (5,000 sq. ft.). At the time the case was written, the Company was operating in several warehouses with a total area of 130,000 sq. ft, and was dealing more than 14,000 pallets of stocks a week.

The Company's core businesses are those non-cores for its clients like stock management, just-in-time delivery and shipping. Its business is primarily focused in meeting the logistics needs of the healthcare and pharmaceutical sectors, the Company did work for companies in other industries. But the Company maintains that the level of internal standards and processes required servicing a pharmaceutical client, the systems it has were more than able to meet the needs of clients in other sectors. As such, it is this sector and its needs that the company based its systems, a selection of a new system, the implementation of its systems, and roll-out of its systems on.

Issue

Due to the uniqueness of the logistics function of QC Logistics' clients particularly its pharmaceutical clients, the systems it has must be more resilient than those of the competition. At the end of the supply chain process and what is noteworthy is that the product QC was responsible for was going to be consumed by human beings. As such QC Logistics wants this, a better level of service, and improved efficiencies in it warehouses to be addressed by its stock control system. Undoubtedly, such a system and its implementation will cost QC Logistics a lot of money. Fortunately, the new stock system was part-funded with a grant from the Enterprise Ireland eBusiness Acceleration Fund.

In choosing the new stock control system, QC's requirements include 1) the ability to manage stock in the warehouse, 2) provision of traceability, 3) had to be user friendly, 4) had to support integration of other systems, 5) support for bar coding, and 6) solid security.

Action Taken

QC Logistics chose IonData Lite. IonData Lite is an off-the-shelf inventory tracking system designed by Dun Laoghaire-based developer Ion Technologies. IonData Lite provides functionality on goods in, move and put away goods, bills and shipping, and stock checking. Also, the software allows QC Logistics to generate reports weekly.

As such, the new systems benefits QC Logistics' numerous clients by promoting better efficiency, easier production of reports, and better stock traceability. While it benefits QC Logistics by reducing level of paperworks, allowing the Company to sustain a competitive advantage, easier reporting, and increasing customer confidence.

In the implementation of the new system, IonData Lite, QC Logistics learned several things. QC Logistics thinks that these lessons are necessary in order for a successful system implementation and roll-out. These lessons are spending time on detailing the specifications – this was considered as a fundamental part of the process, having a plan and involving everyone – a clear outlined approach on the information technology project which should be led by a Project Manager is imperative, sticking to the timeline, and researching on alternatives before settling for any one system vendor.

Having said all these, QC Logistics kept in mind the areas in their system that needed to be expanded on in the future. The Company wants to integrate its client stock systems with the IonData Lite system, develop a client extranet that allows direct access to stock inventory and reporting on an as-needed basis, and roll-out of the IonData Lite system across all the company's facilities.

Recommendation 1

For any business organization, managing the supply chain – "the flow of materials from suppliers through manufacturing, distribution, and sales" (Turban, Leidner, McLean & Wetherbe, 2006, p. 2) – effectively and efficiently is one of the sources of competitive advantages. However, for most companies this function is not always one of their core competencies. Hence, like the pharmaceutical clients of QC Logistics, it is always more efficient and effective for some to outsource this function. Supply chain management then becomes the core competency of the outsourcing partner.

QC Logistics in looking for a system to fulfill all its current requirements, and still would allow for future expansion, can look at several supply chain management softwares available in the market. The SCM software allows QC to build functional systems that link all its facilities, ensure support functions, and connect with the company's supply chain partners and clients. SCM allows QC to connect it supply chain with the supply chain of its suppliers and customers (www.cio.com) and hence, it addresses one of the basic requirements of the Company: system integration.

Recommendation 2

Radio frequency identification (RFID) "uses tiny tags that contain a processor and an antenna and can communicate with a detecting unit" (Turban, Leidner, McLean & Wetherbe, 2006, p. 30). RFID technology is not relatively new. It has been around since the 1970s (www.rfidjournal.com). In using RFID in improving its logistics' efficiency and effectiveness, QC Logistics can use passive RFID chips with small antennae attached to cases and pallets. When passed near an RFID "reader," the chip activates, and its unique product identifier code is transmitted back to QC's stock control system.

With this system in place, when pallets are delivered to QC's clients' warehouses, RFID readers notify both QC Logistics and clients what products entered the facility, and where the products are stored. RFID will more than address the requirements of QC: traceability, error control, stock information, reduction in manpower, and FIFO stock rotation. Also, since RFID tags are unique, this would mean that it is possible to identify which stock might pass its expiration date first.

Conclusion

The success of QC Logistics lies in its capability to manage its clients supply chain: it must do this better than its competition. This ability is highly dependent on the system it employs. As such, care must be exercised in choosing what stock control system to use. IonData Lite substantially addresses the current requirements of QC Logistics, but I can't stop thinking that the Company might be jeopardising future growth by betting on such a very simple system.

References

  • Turban, E., Leidner, D., McLean, E. & Wetherbe, J. (2006). Information Technology for Management: Transforming Organization sin the Digital Economy (5th ed.). Massachusetts: John Wiley & Sons.
  • ABCs of Supply Chain Management. Retrieved on April 7, 2007.
  • Is RFID new? Retrieved on April 7, 2007.

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