Report On Galea Timber Products

Report on Galea Timber Products

Executive summary

1. Company background

Galea Timber Products Company is a small Australian company which operates in the timber product manufacturing sector. It was established in 1994 and has the main office in Seventeen Miles Rocks, Queensland, Australia.

The company has one production site and one warehouse which are located in the same place with the office. The total number of its employees is 5 of which three people are full-time workers who are in charge of the production. Two others are part-time sales who handle the marketing function and website creation for Galea. The manager, who is also the owner of the company, is in charge of all daily operational issues.

Galea produces about 60 different products which are classified into 3 main categories: CD and VCD shelf, kitchen products and home-ware decorators. Among these products, CD and VCD shelf are the company's hot sales product which accounts for more than 60% of the total revenues, kitchen products and home ware products make up for 30% and 10% respectively. The products' prices range from AUD$9 to AUD$320. On average, each year the total sales revenue is from AUD$70,000 to AUD$90,000

Up to now, the market of Galea is only within Australian. Moreover, Gelea doesn't deal with individual customers, but simply retailers and small gift shops. Accordingly, currently it has more than 100 customers, of which Harvey Norman and Good Furniture are the two biggest.

In addition, all the materials used for the final products are imported from foreign countries. The company has three material suppliers in three different countries which are New Zealand, China and Malaysia. In addition, Galea also has close and long relationship with the TNT transportation company to deliver the products to its customers since it decided to outsource transportation to third party in 1996.

2. Situation of logistics operations

2.1. Supply chain structures

2.1.1. Physical flows of goods:

The diagram below shows the company's physical flows from the raw material supplier to the retailers (Galea's customers) and to the end-users.

There are four main points in the company's physical flows: the raw material supplier, the company, the retailers and end users. Based on these four points, there are three stages to connect one point to another. In the first stage, raw materials are delivered from three different countries to the company's production site. Timber is delivered from New Zealand, paint is from Malaysia, and hardware for the final products is from China. The mode of transportation used in this stage is shipping since all the materials are of low value and not suitable for air transport. Besides, there are no ways to use the road transport mode from these countries to Australia.

In the second stage, after the final products are finished, they will be transported to the retailers. Since the price of the product does not include the transportation fee, customers will have to find the carrier themselves. However, if the order is over AUD$250 or the customers do not have their own transportation companies; the company will hire TNT to deliver the goods to the customer's store. Under this circumstance, the company will keep track of flows of good until

the goods arrive at the customer's store.

Then in the last stage, the retailers will sell the products to the end users. However, since the company's customers are retailers only, there is not much information about the final stage between retailers and end users.

2.1.2. Information management

2.1.2.1. Ordering process information

Within the company all ordering information is processed by the manager only. Any connection between the company and its customers as well as its suppliers is made through the telephone and fax and email. There is almost no direct contact across the company's supply chain. Although the company has a website, it is used mainly for promotion. Customers cannot place an order online. Similarly, the company cannot order directly from its supplier's website. All the documents which come along with physical flows of goods, such as delivery notes, invoices notes, are mainly piled up in the form of paper. Electronic data is rarely used in the company.

2.1.2.2. Demand forecasting information

In general, the company has no systematic demand forecasting system. The material is ordered by the fixed-interval approach. Both timber and paint is ordered once a month and hardware, every two months. However, the quantity of each order is basically calculated by the retailer demand and on the experience of the manager about the average quantity of finished products sold out each month.

2.1.2.3. Management information

Currently, management information is insufficient. Information to support the manager in operating the company is not always available. In fact, the company has some kind of information related to the logistics and the overall performance of the company, such as the transportation cost, the inventory level. However, the method to collect such information is simple, merely based on the experience of the manager rather than formal knowledge. For example, when the company wants to know the retailers' feedback about the quality of the products, the manager only uses word-of-mouth method to ask them directly. Moreover, the company lacks important management information, such as the warehousing utilization level, the company productivity, the cost of ordering and logistics.

2.1.2.4. Computer system

Galea has only one computer which is used by the manager to email to his suppliers and retailers. There is almost no specific software to assist the manager in keeping track of the inventory level or the material inflows and finished product outflows or other financial issues. All the work is done manually by the manager.

2.1.3. Organization structure

Totally, there are 6 people working in the company, including the manager, three workers and two sales persons. Compared with the structure of a normal company which usually has different functional division, the company has only separated into two divisions, marketing and manufacturing, while other operating functions are all done by the manager.