What is bioenergy? This is what the future holds.

INFORMATION TECHNOLOGY OF VANCE BIOENERGY SDN.BHD

INFORMATION TECHNOLOGY

Now the documentation that the Vance.Bioenergy company use is 50% in manual and 50% in online which is SAP system. They just using SAP system in doing INVOIS while other documentation done in excel.

So, for future planning, they decide to improve the SAP system so that other documents can be implemented in SAP system too.

Next, the Vance.Bioenergy company also do an addition in used of transportation of their company. From two container, now they have four container. This help process of journey their company in send their product to the customer. This smoothly of journey cause customer satisfied with the service that they provide. At the same time, it can help in an increase the company profit and also can meet the customers satisfaction and customer loyalty.

TRANSPORTATION OF VANCE BIOENERGY SDN.BHD

TRANSPORTATION

Transportation in logistic activity can help the movement of an inventory from one place to another place. There are five mode in transportation that is Road, Railways, Air, Pipeline and Sea. Road is way or path between two or more places. It can allow easy travel for the transportation to move. It also lower total cost between the other mode of transportation.

 Railway is where a train runs along a set of two parallel steel rails, known as a railway or railroad. Air transportation is fixed-wing aircraft, commonly called airplane. Cost for company to send their product by using this mode transportation is high. Pipelines transport is sends goods through a pipe most commonly company used this mode of transportation is to sent liquid and gases Sea transportation is movement by means of a watercraft such as a barge, boat, ship or sailboat. This mode of transportation is used by the company when they want to export their product to the other country in large quantity.

Transportation is the professional area of logistics that geographically moves and positions inventory. Because of this fundamental importance and visible cost, transportation has traditionally receive considerable managerial attention. Almost all enterprises, big and small, have managers responsible for transportation. There are three factors that fundamental to transportation performance which are cost, speed and consistency.

The cost of transport is payment for shipment between two geographical locations and the expenses related to maintaining in-transit inventory. Logistical system should utilize transportation that minimizes total system cost.

 Speed of transportation is the time required to complete a specific movement. Speed and cost of transportation are related in two ways. First transport firm capable of offering faster delivery typically change higher rates for their services. Second the faster the transportation services is, the shorter the time interval during which inventory is in transit and unavailable.

Transportation consistency refers to variations in time required to perform to specific movement over a number of shipments. Consistency reflects the dependability of transportation. When transportation lacks inventory safety stocks are required to protect against service failure, impacting both the seller’s and buyer’s overall inventory commitment.

Transportation is the professional area of logistics that geographically moves and positions inventory (Bowersox et al, 2013).

 From the interview that we have made, transport that Vance.Bioenergy company used is tanker, container and ship.

Tanker is used when the raw material from supplier was send to Vance.Bioenergy company. Before they receive the raw material from the supplier, the tanker’s driver will give a letter from their company which said the tanker just bring for example raw material vegetables oil only and Halal. If the tanker is use for bring other than vegetable oil, Vance.Bioenergy company will not receive the raw material that the tanker bring.

Container is used when Vance.Bioenergy company need to sent their product to the port.

Ship is use when the product from this company need to export to the other country.

 Factor that this company used the transportation is price. They used the services of transportation everyday. If the carrier agent cannot give the competitive price, the company will find another transport.

INVENTORY MANAGEMENT AND WAREHOUSING OF VANCE BIOENERGY SDN.BHD

INVENTORY MANAGEMENT

The supervision and control of orders, storage and use of components that the company will use in the production of goods. Inventory management involves creating a purchasing plan that will ensure that the items are available when they are needed. . Two common inventory management strategy is just-in-time, in where the companies plan to receive the items as they are needed, rather than maintaining a high level of inventory, and material requirements planning, the delivery schedule of materials based on sales forecasts. Inventory management involves risk which varies depending upon a firm’s position in the distribution channel.

There are three inventory types and characteristics which is manufacturer, wholesaler and retailer. For a manufacturer inventory risk is long-term .The manufacture’s inventory commitment begins with the raw material and component parts purchase, includes work-in-process and ends with finished goods. In addition, finished goods are often positioned in warehouses in anticipation of customer demand. In some situations, manufacturers are required to consign inventory to customer facilities.

A wholesaler purchases large quantities from manufacturers and sells smaller quantities to retailers. The economic justification of a wholesaler is the capability to provide customers an assortment of merchandise from different manufacturers in reduced quantities. When products are seasonal, the wholesaler may be required to take an inventory position far in advance of the selling season, thus increasing depth and duration of risk.

For a retailer, inventory management is about the velocity of buying and selling. Retailers purchase a wide variety of products and assume substantial risk in the marketing process. Retail inventory risk can be viewed as broad but not deep. Due to the high cost of store location, retailers place prime emphasis on inventory turnover. Inventory turnover is a measure of inventory velocity and is calculated as the ratio of sales for a time period divided by average inventory.

There are four inventory functionality which are geographical specializations, decoupling, supply/demand balancing and buffering uncertainty. Geographical specialization positioning across multiple manufacturing and distributive units of an enterprise . Inventory maintained at different locations and stages of the value-creation process allows specialization.

Decoupling allows economy of scale within a single facility and permits each process to operate at maximum efficiency rather than having the speed of the entire process constrained by the slowest .Supply/demand balancing accommodates elapsed time between inventory availability and consumption .For buffering uncertainty accommodates uncertainty related to demand in excess of forecast or unexpected delays in order receipt and order processing in delivery and it typically referred to as safety stock.

Inventory policy consists of guidelines regarding what to purchase or manufacturer, when to take action, and in what quantity. It also includes decision regarding geographical inventory positioning.

A wholesaler purchases large quantities from manufacturers and sells smaller quantities to retailers (Bowersox et al,2013)

From our interview, Vance.Bioenergy company is a manufacturer who produce an oil.

What have we get from the interview is the inventory functionality is decoupling which this company focuses on produce an oil in large quantity.

 After Vance.Bioenergy company process the product that is an oil, there are allocated tank and an oil will store in the tank. This company product don’t have expired date because their type of product is First In First Out (FIFO) product.

 Logistic Department get an order from Marketing Department. So Logistic Department know what they want to do, when to take an action and in what quantity.

When the trade enter they will check the product can be supply to the customer or not. Then if the product can be supply, they will together the order  in one spreadsheets and their company logistic in Singapore will make a booking.

 When the Singapore make a booking then they send their booking to the Vance.Bioenergy company.  Then Vance.Bioenergy company will arrange how many container that they need to send the product and when the container need to in or out.

 After arrange the spreadsheets, the Spreadsheets Department will check a drumming. There two type of drum that is plastic and metal. Metal drum will enter one area and will do the drumming.  For an example, one container need 80 drums to full the container. So, the company will arrange for the shipment.

 Logistic will create a label and paste the label on the drums and then the drums will be put into the container and it’s ready to be export by ship.

STRATEGIES AND PLANNING OF VANCE BIOENERGY SDN.BHD

STRATEGIES AND PLANNING

A) CUSTOMER SUCCESS

Customer success shifts the focus from expectations to the customers’ real requirements. Requirements are frequently downgraded into expectations due to perceptions of previous performance, word-of-mouth, or communications from the firm itself. This explain why simply meeting expectations may not result in happy customers.

For example, a customer may be satisfied with a 98 percent fill rate, but for the customer to be successful in executing its own strategy, a 100 percent fill rate on certain products or components may be necessary.

From what I have learned, customer success is focus on how to achieve customer success, value-added services and also developing in customer success.

In achieving customer success, we must understanding of individual customer requirements and a commitment to focus on long-term business relationships having high potential for growth and profitability.

To ensure that a customer is successful may require a firm to reinvent the way a product is produced, distributed, or offered for sale. In fact, collaboration between suppliers and customers to find potential avenues for success may result in the greatest breakthroughs in terms of redefining supply chain processes.

Next, the notion of value-added service is a significant development in the evolution to customer success. By definition, value added service refer to unique or specific activities that firms can jointly develop to enhance their efficiency and /or effectiveness.

Value added services help to foster customer success because they tend to be customer specific, it is difficult to generalize all possible value-added services.

There are four elements in developing of customer success which are gaining cost effectiveness, market access, market extension and market creation.

From the information that i got from my interviewing, firstly the Vance Bioenergy was very care about the quality of their product in order to gain and maintain customer success.

 The quality of their raw materials is too high standard to gain a good product. Secondly is about pricing.

Their pricing were very competitive in term of local as well as overseas market. They also have the certification which are ISO, AAJCCP and FSCC.

The Vance Bioenergy also as top players in term of refine glassily and biodiesel



B) PRICING STRATEGIES

Pricing is aspect of marketing strategy that directly interacts with logistical operations. There are many pricing strategy which is F.O.B pricing, delivered pricing, single-zone pricing, Multi- Zone pricing and Base-Point pricing.

F.O.B pricing means Free on Board or Freight on Board. There are two types of  F.O.B pricing which is the F.O.B factory and F.O.B destination. F.O.B factory pricing is the simplest way to quote price. Under F.O.B factory, the seller indicates the price at the point of origin and agrees to tender a shipment for transportation loading, but assumes no further responsibility. The buyer selects the mode of transportation chooses a carrier, pays transportation charges, and take risk of in-transit loss and or damage.

For F.O.B destination, product ownership title does not pass to the buyer until delivery is completed. Under F.O.B destination pricing, the seller arranges for transportation and the charges are added to the sales invoice. The firm paying the freight bill does not necessarily assume responsibility for ownership of good in transit, for the freight cost, or for filing of freight claims.

The primary difference between F.O.B and delivered pricing the seller establishes a price that includes transportation. In other words, the transportation cost is not specified as a separate item. There are several variations of delivered pricing which are single-zone delivered pricing, multiple-zone pricing and base point pricing system.

Under single-zone pricing, buyers pay a single price regardless of where there are located. Delivered prices typically reflects the seller’s average. The same fee or postage rate is charged for a given size and weight regardless of distance traveled to the destination.

Single-zone delivered pricing is typically used when transportation costs are relatively small percentage of selling price. The main advantage to the seller is the high degree of logistical control. For the buyer, despite being based on averages, such pricing systems have the advantage of simplicity. 

The multiple-zone pricing establishes different prices for specific geographic areas. The underlying idea is that logistics cost differentials can be more fairly assigned when two or more zones are used to quote delivered pricing.

Base-point pricing system in which the final delivered price is determined by the product’s list price plus transportation cost from a designated base point, usually the manufacturing location. This designated point is used for computing the delivered price whether or not the shipment actually originates from the base location. Base-point pricing is common in shipping assembles automobiles from manufacturing plans to dealers.

F.O.B pricing means Free on Board or Freight on Board

In our interview session from Vance.Bioenergy company, they also F.O.B pricing and a few more that we not learn in our revision which is CIF/CFR and FCA. For the pricing, their customers choose what pricing strategy used.

Usually Vance.Bioenergy company follow the market value but cut down on commission not the pricing. Their pricing is very comparable. They have to lower their commission because of the broker. Sometimes, broker is most affected. But, they maintain the pricing to get satisfaction from the competitor and also customer.

To be conclude, the development of menu pricing as a strategy allows a seller to most pricing as a strategy allows a seller to most affectively charge for trhe actual service provided to a buyer.

VANCE BIOENERGY SDN.BHD

COMPANY’S MISSIONS

To do our best to fulfill our customers’ needs and constantly improve our capabilities, products and services.

COMPANY’S BACKGROUND

Vance Bioenergy Sdn. Bhd. is a leading ISO 9001 certified producer of fatty acid methyl ester (Vance Biodiesel), pharmaceutical-grade refined glycerine  (Vance Refined Glycerine) and other oleochemicals for use in many industries. Its production plants are located on a 3.2 ha site in the Pasir Gudang Industrial Estate of Johor, Malaysia. Vance Bioenergy benefits from both its access to fresh palm oil from the oil palm refineries in Pasir Gudang (with approximately 7 million metric tons of palm oil refining capacity) and its close proximity to Johor Port with its significant storage and berthing facilities, to ship products efficiently around the world at competitive prices.

On-site, Vance Bioenergy has two methyl ester plants totaling 150,000 metric tons of annual production capacity and two of the largest single standing glycerine refineries in Asia producing 40,000 metric tons of pharmaceutical-grade refined glycerine per annum. It also has its own storage tanks with a total capacity of 25,000 metric tons and equipped with nitrogen blanketing. Its fully integrated clean room class drumming line and warehouse ensure adherence to the highest quality and hygiene standards.

Our 24/7/365 on-site laboratory houses the latest testing equipment and is staffed by a full team of chemists, laboratory managers and technicians to maintain our stringent quality assurance standards. The team also engages in R&D and ongoing efforts to improve our products, expand our product lines and optimize production processes. The logistics team at Vance Bioenergy is also key to ensuring accurate and timely delivery of products to customers worldwide and is experienced in managing the entire spectrum of packaging and shipping solutions.

Coupled with the immense experience of the Vance production specialists who collectively have more than a century worth of work experience in the oleochemical and vegetable oil industry, Vance Bioenergy has both the technology and expertise to deliver high quality products that meet or exceed customers’ expectations. Vance Bioenergy is a socially and environmentally responsible company and has been an active member of the Roundtable on Sustainable Palm Oil (RSPO) since 2006. 

TYPE OF PRODUCT

1.Vance Biodiesel

Ø  Leading biodiesel exporter from Malaysia since 2006.

Ø  High standard of quality assurance

Ø  Efficient infrastructure and logistic

Ø  Strong counterparty and trading

Benefits:

Ø  Biodegradable and Non-toxic

Ø  Closed Carbon Cycle

Ø  Good for the Engine

Ø  Can be Blended with Petroleum Diesel

Ø  Available Today and Works Immediately

  2.Vance Refined Glycerin

ü  Internationally Recognized as a Reliable Long Term Supplier

ü  Premium Quality

ü  Full Range of Packaging and Logistics Options

3.Vance Surfactants

      Fatty Acid Alkanolamides

      Fatty Acid Diethanolamides

      Fatty Acid Monoethanolamides

ü  Applications

Suitable for use in the manufacturing of liquid products such as:

·         Dishwashing liquid

·         Detergents

·         Shampoos

·         Body washes

·         Cleansers

·         Hand soaps

·         Industrial cleaners and degreasers

·         Floor cleaners

Benefits & Features

ü  Foam booster

ü  Foam stabilizer

ü  Viscosity modifier

ü  Emulsifier

ü  Improves detergency

ü  Improves skin feel

ü  Biodegradable

Trade - offs in logistics

Logistics Implication of Different Competitive Positions

In this diagram, it explains value advantage and cost advantage.

In value advantage, it refers to quality of a service by a company to maximize customer service as it is one of the objective of business logistics.

In cost advantage, it refers to minimize cost in producing a product.

Integrated Systems

Direct Product Profitability (DPP)
 make a product and sell directly to the consumers to get fast profits.

Material Requirement Planning (MRP) and Distribution Requirement Planning (DRP)
 aim to make the necessary materials and inventory available when needed using distributions networks and transportation modes such as rail, road, air, pipeline, and sea (RRAPS).

Just In Time (JIT)
 make products upon customers request.

• the production of goods the customer wants
• the production of perfect-quality goods
• the elimination of waste (labor, inventory, movement, space, etc.)

Globalization and Integration

Globalization is the change in a business from a company associated with a single country to one that operates in multiple countries.

• Global branding - refers to the quality of products
• Global sourcing - raw materials must in good quality and where did they get the sources
• Global production - company manufacture available in each country to make products
• Centralization of inventory - company warehouse available in each country for service
• Centralization of information - to communicate with the  headquater

The Major Functions of the Different Planning Time Horizons

STRATEGIC	TACTICAL	OPERATIONAL
Medium to long-term horizon 1-5 years Trade-offs between company functions Overall "structural" decision   Trade-offs with other organizations Corporate functions plans and policies Policies decisions developed into a strategic plan For example; top management	Short term medium term horizon 6 months - 1 year  Subsystem decision are made   Annual budgets provide finance/cost basis The strategic plan detail is made into an operational planning For example; middle and first-line management	Day-to-day decisions making Operation controlled against standards and rules Control via weekly or monthly reports  Implement the work  For example; operating staff

The Total Logistics Concept

The total logistics concept (TLC) aims to treat the many different elements that come under the broad category of distribution and logistics as one single integrated system. It is a recognition that the interrelationship between different elements.

There are 4 different levels of trade-off have been identified.

1. Within Distribution Components
 Those trade-offs that occurs within  single functions among suppliers, manufacturers, distributors, and consumers (SMDC). The first of these providers better storage utilization but it is more difficult for picking. The second one is easier for picking but does not provide such good storage utilization.

2. Between Distribution Components
 Those trade-offs between the different elements in distributions. It started from the supplier that process a product then send to the manufacturer. The manufacturer will market the product by promoting it. Next, the distributor will distribute or deliver the product to the end users. Lastly, the consumer will buy and use the product to fulfill their demands and meet their satisfaction.

3. Between Company Functions
 There are a number of areas of interface between company functions where trade-offs can be made. Long production runs produce lower unit cost and more cost-effective production but mean that more products must be stored for a longer period which is less cost effective for warehousing. For instance, each departments of a company has their own functions. The company also must follow the level of management and its functions.

4. Between The Company and External Organizations
 Where a trade-offs may be beneficial for two companies that are associate with each other. The two companies have target one specific goals and work together but they do their own activities.