SWM – Australia Warehouse
Wk 5 Final Paper
MGT 496 Strategic Warehouse Management
SWM – Australia Warehouse
Business expansion in different markets is a way to ensure the growth of your organization. Strategic Warehouse Management, Inc is an organization that is focused on the creation and management of warehousing operations and the marketing development team is no stranger to the idea of growth in new markets. The CEO of the marketing development team believes that the organization has the potential for greater opportunity by expanding their current business operations in the United States over seas to Australia. By creating a plan that outlines the current operations and the plans to expand into the Australian Market as well as designing a supply chain that will be sufficient in any city in Australia the organization has better chance at succeeding. Outlined in this paper are the organizations plans to build a new supply chain as well as the following:
Warehouse Design Requirements
- The develop of requirements for the warehouse design and to provide an organizational structure to manage the warehouse in Australia
- Considerations for Workforce Management
- Critical regulations and other significant issues (e.g., labor climate) related to maintaining a warehouse in Australia as a foreign entity
- Export procedures and import procedures in the U.S.
- Supply chain risks and possible mitigations
- SWM outsourcing operations and activities
- Budget line items to be considered
Strategic Warehouse Management Inc can service many businesses in the area. However, there are many important elements to consider when looking at global expansion for any organization. The CEO plans to open a “non-resident company” (Land and Tax News, 2012) and has decided that the warehouse can be opened in any city in Australia. Some clients in Australia have also asked SWM to manage the flow of goods from Australia to U.S. locations. In order for this to take place, the CEO would like the preliminary plan developed as soon as possible. Included in the preliminary plan are the design requirements for the warehouse in Australia as well as the proposed organization structure.
When creating the warehouse design certain aspects need to be considered, such as how the warehouse will function and how the warehouse will stock and restock as well as storage of products. The design of the warehouse should allow for high productivity and efficiency as well as take into consideration the safety of the employees. “Typically, a design runs from a functional description, through a technical specification, to equipment selection and determination of a layout” (Rouwenhorst et al., 2000). When moving supplies and products, forklifts are necessary machinery to be used. The purchasing costs of a forklift as well as the maintenance costs are to be considered as well as the space needed for machinery and equipment. Ample floor space should be available for when equipment such as forklifts, lift tables, pallet stackers, and dollies.
Machinery and equipment are very important to the design of a warehouse however other areas need to be considered as well. Other areas to be considered are how and where the items are stored such as what shelving is required for storage of the products and materials and if some of the materials are required to be stored in temperature-controlled areas? If so refrigeration may need to be considered. By analyzing the types of materials that will be supplied in the facility you will have a better understanding of what kind of storage needs are necessary. I would suggest having temperature-controlled options available, especially considering the hot climates that are in Australia. By having temperature-controlled areas within the warehouse you are increasing how many clients/businesses you can accommodate. Other areas to be considered when deciding on the right facility to meet your needs are; ports of entry for shipping of supplies as well as customers, accessibility for customers, condition of current warehouse, size and structure. When looking at a facility to be acquired or rented these will help to narrow down your selection and avoid having to relocate the warehouse facility in the future.
The workforce is one of the main areas that needs to be considered when developing a business plan for new operations, especially in a foreign country. Understanding the local area and the type of talent is key to ensuring the right workforce is acquired and it is also important to understand any local employment laws. Making sure the right leadership and management are in place prior to the start of business will be crucial to a quick start up at the new facility. When you hear the terms leading and managing you think they are one in the same, however there are difference between the two terms. According to John Kotter (2001) professor at Harvard Business School, one is not better than the other but are complimentary to each other. He suggests the two difference between leading and managing are that managing is about coping with complexity while leading is about coping with change. By having a defined leadership role as well as managerial roles you can help to bridge any gaps that are found in processes and establish a solid workforce at the same time. The leadership and managerial staff should be well in place before the start of day to day activities at the new facility. By incorporating both Australian nationals and Americans in the team you can ensure that there is an impartial team in place. It is also very important that a mentoring and training program is in place prior to the start of any activities. By having the staff fully trained by the time of opening the facility you will have less complications when opening for business. A fully trained staff will optimize efficiency and productivity. Additionally, all staff should be properly trained on safety, preventive maintenance, sexual harassment, and ethics.
Regulations and Issues Associated with Warehouse Management as a Foreign Business Unit
Every country has different laws and regulations that need to be abided by when conducting business. Managing a business in Australia as a foreign entity is no different. “Australia, one of the most cosmopolitan of contemporary western societies, has a long history of immigrant entrepreneurship, with many ethnic groups significantly over-represented in entrepreneurial activities, particularly in the small business sector of the Australian economy” (Collins, 2003, pg. 137). Many of the business’s established in Australia are located in either industrial or agricultural areas that provide ample transportation connections. Many of these businesses are also located in more densely populated areas that help to provide a larger source of talent as well as easier access to and from the facility for transportation. Australia is also known for its competitive, and powerful economy and has a very low level of inflation that is partly contributed to the highly educated and globally competitive professionals that it produces. These professional’s makeup for nearly 50% of the workforce in Australia. Furthermore, 15% of the population can speak various languages. The talent pool in Australia provides many skillful professionals that make managing a global business easier.
Import and Export
Australia has six Free Trade Agreements between various countries as well as eight agreements that are still under negotiation. The agreements include legalities that are binding for each member to establish open access to trade of products and services. Utilizing quotas and tariffs established by the World Trade Organization (WTO) as well as INCOTERMs that allow for easier trade between countries. INCOTERMs are a set of international rules or trade terms that are set up to make international trade easier to understand who has what responsibility (export.gov) . The INCOTERMS established for Australia are Deliver at Place (DAP). These rules establish that the majority of the import is the responsibility of the seller, including packaging, loading charges, terminal charges, carriage/freight charges, etc. Under Customs Act of 1901, the ownership of the warehouse is liable and must pay a “warehouse goods declaration fee” (Customs Act 1901, 2017, pg. 138) making it the responsibility of the owner of the warehouse to ensure the security of the goods housed in the warehouse. Additionally, the Australian Customs and Border Protection are responsible for ensure all regulations are followed for import and export of goods across international waters. The regulations and laws that are established by both the WTO and the Australian Customs and Border Protection help to ensure that there is no fraud or illegal activity.
Supply Chain Risks and Mitigation
As a newly establish organization you need to be prepared for any risks that you may be facing. When establishing a business in a new country it is even more important to know the business risks and liabilities that could be associate specially to that location. Preparing for the will provide some protection as well as help to establish a plan of action or mitigation plan. In Australia the climate can pose as a threat and liability for an organization. Australian climate is susceptible to natural disasters such as brushfires, floods, sever storms, and earth quakes. It is important to have enough insurance on any goods that are housed in your facility. Additionally, ensuring that there is security and protection for not only the goods but the equipment. A mitigation plan needs to be established that will cover the event of a natural disaster such as the ones stated above. Another risk that is associated with a warehousing facility is security in and around the facility. Hiring a security firm can help mitigate any losses due to theft.
Outsourcing Operations and Activities
For many organization outsourcings can provide many benefits in some business areas. By outsourcing certain areas of business SWM can decrease the timelines of when it can be running at full capacity while decreasing costs and help the organization to be more flexible and efficient. “Companies are increasingly looking to break up their existing arrangements to ensure they are getting the right vendor for the right level of service, while simultaneously reducing the risk associated with single provider dependency” (Forbes, 2017, para 6). The utilization of a Third Party Supplier Relationship Management System is very beneficial in the fact that it helps to bring all aspects of the business together and helps to improve communication between the organization and its suppliers both internally and externally. This system is designed to maximize the value as an end product of those previously enumerated interactions (Maximizing the Value of Supplier Relationships, 2011). An SRM can promote competency and efficiency in an organization by helping to deliver goods on time and build a reputable business name. Outsourcing allows for an organization to meet every-changing demands of the market while keeping costs to a minimum. Some areas that are easier to implement outsourcing are areas like technologies. By outsourcing technology, you can ensure that new innovative ideas are being brought to the company without the added costs of creating the innovation. Ideally the company that you contract for outsourcing should already have designed and tested any new technology before it being implemented in your organization therefore keeping the costs at a minimum for implementation. Public relations is another area that can also benefit from outsourcing. By outsourcing PR you do not have to hire individuals for those positions, pay them a salary and benefits all while making sure they are trained on your organization. The PR firm you hire will already have employed professionals in that field that can train and understand what your organization needs more quickly while providing new and fresh marketing ideas.
At the end of the day, the budget is one of the key areas of success in an organization. An ill managed budget can destroy a company. As a business manager of an organization. You need to take into consideration all different areas of the organization that could affect the budget. Some of the key items that need to be taken into consideration when running a warehouse are:
Benefits, Taxes and Allowances
Space and Utilities (Water, Electricity, etc.)
Supplies and Equipment
Travel Expenses (International and Domestic)
Contractual and Consultant Services
The budget line items are only an example of many of the costs that are acquired when establishing and running an organization overseas. Other areas that need to be considered are local taxes and fees that may be required. It is important to hire an accounting firm as well as legal team that can help facilitate these aspects of the organization.
Building a good mechanism to track your progress is very important. Your organization needs to understand how it can improve to become the best. It also needs to understand when certain processes are not working within your organization. While Third Party Supplier Relationship Management Systems are ideal for enhancing communications between the suppliers and your organization they also act as a metrics mechanism. The SRM can provide visibility in different business areas that are not performing up to standards. Another tool that can be used to gather metrics are supplier compliance programs. Supplier Compliance Programs can be built for your specific organization, with measurable, attainable, and relevant data.
In conclusion the organization and operation of a warehouse in a foreign country provides challenges. With the plan I have provided I believe that the implementation of SWM in Australia will prove to be a success. Opening the facility will be an opportunity to expand operations globally and promote the organization within the region and help to expand into new countries in the future.
Australian export and import laws. (n.d.). Retrieved June 10, 2019, from http://www.austrade.gov.au/Invest/Doing-business-in-Australia/Investor-Guide/Running-a-business/Understanding-Australian-business-regulation/Australian-export-and-import-laws
Collins, J. (2003). Cultural diversity and entrepreneurship: Policy responses to immigrant entrepreneurs in Australia. Entrepreneurship & Regional Development, 15(2), 137-149.
Customs Act 1901 . (2017). Legislation.gov.au. Retrieved 21 November 2017, from https://www.legislation.gov.au/Details/C2015C00492
Rouwenhorst, B., Reuter, B., Stockrahm, V., van Houtum, G. J., Mantel, R. J., & Zijm, W. H. M. (2000). Warehouse design and control: Framework and literature review. European Journal of Operational Research, 122(3), 515-533.
Know Your Incoterms: An Overview Incoterms. (n.d.). Retrieved June 10, 2019, from https://www.export.gov/article?id=Incoterms-Overview
Forbes Welcome. (2017). Forbes.com. Retrieved 10 November 2017, from https://www.forbes.com/2008/05/25/core-deals-strategy-oped-cx_jh_pb_outsourcing08_0529risk.html#6b1949d94c9c