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Case Study One: Air Bond Express (ABE) Ltd ABE is company specialising in parcel delivery business. Since its incorporation in 2010, it has grown rapidly
Case Study One: Air Bond Express (ABE) Ltd ABE is company specialising in parcel delivery business. Since its incorporation in 2010, it has grown rapidly due to a boom in online shopping. The company has 168 delivery vehicles of various sizes. Recently, due to the COVID-19 pandemic, online shopping has taken a leap and ABE is now facing challenges to deliver high volume of parcels on time. Business model ABE' collection and delivery service uses delivery vehicles to transport parcels to and from local depots (owned by Malaysian Airports or Kuching Port Authority) and individual (personal or corporate) addresses. Vehicles may also pick up parcels from the addresses to which they deliver. This is particular the case for corporate customers. Each time the vehicle calls to pick up or deliver parcels is known as a stop. At the end of each day, vehicles, along with any parcels not delivered, return to ABE's depot. The following day, the delivery administrative staff will call the customers of the undelivered parcels to determine a time for delivery. Regardless of who pays for the service, ABE regards anyone to whom it delivers, or from whom it picks up parcels, as a customer. Due to the increased competition in the logistic industry, these groups of customers are expecting competitive prices, reliable and flexible services from ABE. Figure 1 below shows the process of parcel pick-up and delivery. Operational Performance Evaluation and TQM During the recent operational performance evaluation, the CEO of ABE, John Smith, mentioned that although there was an increase in demand, customer satisfaction has declined. This was mainly due to late delivery. Upon investigation, the reasons of late delivery were miscommunication between staffs, increased in the volume of parcels beyond the handling capacity and, in some occasions, incorrect address details indicated on the parcels. Hence, John proposed that a Total Quality Management (TQM) system should be implemented in order to not only improve the quality of the services to meet customers' expectation but also to improve financial profitability. However, John reckons that such a big project requires detailed planning. All staff members need to be informed about this decision and adequate training is also needed in order to equip them with the needed skills and knowledge for the new TQM system. ABE has a culture of openness, with regular staff meetings with John. Among the issues discussed during these staff meetings were operational and financial performance of the company. Apart from these regular meetings, John often has discussion with all levels of staffs in order to understand the problems faced. Environmental Sustainability The company needs to determine the measures of environmental sustainability to be incorporated into the annual reports for the year ended 31 May 2021. The areas include pollution and resource consumption. Most of the vehicles used for delivery are using diesel engines with only four on petrol engines. Most of the parcels handled by ABE are placed in plastic bags. These are non-biodegradable materials. Daily dispatch lists are printed for each vehicle prior to their departure in order to monitor the quantity of parcels despatched and delivered. ABE has a perpetual or continuous inventory system for the plastic bags used. All plastic bags received from the suppliers are stored in a store at the depot. The amount received will be recorded in the inventory system. There are only two sizes of plastic bags, i.e., 18cm x 25 cm and 21 cm x 30 cm. The despatch unit will request for the plastic bags from the store when it is nearly running out. There were occasions where smaller size plastic bags ran out of stock. So, the despatch staffs need to use the bigger plastic bags as a replacement. ABE does not have a purchasing policy for the plastic bags. It orders from any suppliers, who can give the lowest prices. However, some customers ever complained that the plastic bags were less durable, causing some damages to the parcels delivered. Required: (a) Explain the features of a TQM system and evaluate whether it is justifiable for ABE to implement TQM in order to overcome the poor customer satisfaction and to improve financial profitability. (Max 500 words; 15 marks) (b) Explain Life Cycle Assessment (LCA). Analyse how LCA can be used by ABE to assess the environmental consequences of its service and suggest one possible way to reduce the environmental impact on each of the three areas identified in the case. You need to justify your suggestions. (Max 400 words; 10 marks) (c) Discuss the importance of a good inventory system to any businesses and suggest how ABE can improve its inventory system. You need to use some of the details in the case to support your answer. (Max 400 words; 10 marks) (Total 35 marks)
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