1. INTRODUTION This report will cover logistics and R&D section from the simulation, where I will be stating theories of logistics, and logistic transportation concepts, and analyzing my understanding for research and development. I will be stating out my decision for logistics and R&D section in the simulation as well, and point out the reasons why I have made the decisions.
2. CONSIDERATION OF RELEVANT THEORIES & CONCEPT 2.1 Logistics: According to Grund & Vartdal, logistics is “the process of planning, implementing and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods, services and related information from point of origin to point of consumption for the purpose of conforming to customer Requirements’ Council of Logistics Management” (Grund & Vartdal, 2000). It is a part of value chain activity, planed, implemented and controlled in order to meet customers’ needs for goods, services and related information, it is a combination of transport, storage, handling, packaging, distribution processing, distribution, information processing and other basic functions. Logistic Management has four major characters, firstly, to achieve customer satisfaction as the first target, secondly, optimize the enterprise as a whole as the purpose, thirdly, information-centric, fourthly, value efficiency and effectiveness.
2.2 Logistics and Transportation: There are several classifications for logistics and transportation. – Road transport: Mainly use gas trucks and other vehicles, road transport is responsible for close and small quantities of cargo, also where water transport and rail transport difficult to play their advantages. Road transport has several advantages such as strong flexibility, road construction period is short, low investment, easy to fit in local conditions and less demanding for facilities stations. It is also able to take the door-to-door transport form, without having to transfer or repeat loading and unloading. – Rail transport: Mainly responsible for long-distance, large amounts of cargo, where it has no water transport conditions in the region, almost all bulk goods are rely on the railway transport.
It has several advantages such as fast speed, not limited by natural conditions, large carrying capacity and low transport cost, though it is inflexible and can only be achieved in the fixed line transport, need other means of transports’ cooperation and convergence. – Water transport: Mainly bearing torque, long-distance transport in river and costal sea.
There are costal transport generally use in small vessels, offshore transport depending on medium-sized and small-sized vessels, ocean transport in use of large volume of large vessels, and inland waterway transport. Water transport is able to transport forhigh-volume, long-distance and low-cost, though it has obvious drawbacks such as influenced by port, water level, season and climate. Air transport: Mainly in use of aircrafts for high value, and has the affordability of a strong freight goods such as expensive equipments, spare parts, high-end products, etc., also, some urgent need materials due to its high cost. Its main advantages are fastest speed, do not have terrain restrictions, where rail or cars cannot reach, it can rely on air transport, hence it is significance. Pipeline transport: Mainly in use for gas, liquid and powered solids.
2.3 Research and Development According to OECD factbook, R&D refers to “creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new application.” (OECD factbook, 2008). It reflects the technological strength and core competitiveness. A country’s R&D level reflects its political and economical strengths, an enterprise’s R&D level reflects its competitiveness. Research and development is the process of innovation into mold. Product innovation and technological innovation are the core of innovation, a company’s research and development generally refers to product development and technology research and development. R&D and technology development are closely related. Emerging technologies can always bring new products, R&D tend to correspond to the product or focus on product innovation, and new product ideas need new technologies to achieve, they have very close relationship.
3. INDIVIDUAL ACTIVITY DISCUSSION AND REFLECTION This round for in-house development is 21,360K USD for Tech 1, and 21,362 for Tech 2, where money needed for new features are 71,240K USD for Tech 1, and 71,243K USD for Tech 2. As there are several plants in Asia and Europe, there will be one addition feature for Tech 1, and three addition features for Tech
2. The priorities from USA are Asia coming after Europe coming after USA, the priorities from Asia is USA coming after Europe coming after China as the civil war in Olistan has brought up the oil price, thus the logistic transportation would cost more, whereas the transportation cost is 29 USD/unit from USA to Asia and from Asia to USA, 13 USD/unit from USA/Europe, and 9 USD/unit from Asia to Europe. The in-house and contract manufacturing in USA are 5,082K USD for Tech 1 and 3,863K USD for Tech 2, while the in-house and contract manufacturing in Asia are 550K USD for Tech 1 and 1,245K USD for Tech 2, where they both allocated full capacity. For USA market, there are 1,392K units manufactured in USA for Tech 1 and 1,026K units for Tech
2. For Asian market, there are 1980K units manucatured in USA for Tech 1 and 615K units for Tech 2, 550K units manufactured in Asia for Tech 1 and 1,245K untis for Tech 2. For Europe market, there are 1,709K units manufactured in USA for Tech 1 and 2,222K units for Tech 2. Moreover, the average logistics per sold product is 16.9 USD in Asia, and 13.1 USD in Europe. According to the logistics theory, it suggests that if the products run out of supply, we will need to transfer the products to those regions where have higher profit. In this case for Round 3, oil price goes up, so we have decided to have Europe as the interlink station prior than Asia.
4. CONCLUSION To sum up, our group has gained 17.44% market share for this round, in order to achieve more market share, and gaining more shareholder return, we will need to focus more on the strategies selected in order to plan and implement more effectively. There are a lot we will need to improve in future rounds.
5. REFERENCE Cesim simulation Market Conditions [online] Available from http://gc4.cesim.com/dss/gc/MarketConditionsPage [7th Aug 2011] What is Logistics, available from CULC Managing International Trade Unit 7 Knowledgecast page 5. Research & Development [online] Available from http://en.wikipedia.org/wiki/Research_and_development [8th Aug 2011]