BPMM3263

SUPPLY CHAIN MANAGEMENT

Table of Contents

No. Contents Page

1.0 Introduction 2-5
2.0 Executive Summary 6
3.0 Define the process and context (business unit) in 7-8
which it operates.
4.0 What are the strategy / market of the business unit? 9
5.0 Describe major risk/ cost of the practice ( In terms of 10
cost, time, quality, and flexibility)
6.0 Describe the current process structure in terms of 11-15
information, inventory, transportation and location.
7.0 Discuss the key issues in designing and implementing 16-17
the practice ( existing problems and weaknesses)
8.0 Discuss existing problems and weaknesses in the 18-21
current process. What additional capabilities does the
process need to develop?
9.0 How should the process be restructured to develop 22-23
these capabilities? Discuss why the changes suggested
by you will have the desired effect along the key
dimensions identified by you.
10.0 Discuss how the suggested changes should be 24
implemented with a time line. Explain any resistance
you may face in implementing the changes.
11.0 Conclusion 25
12.0 Reference 26
13.0 Appendix 27

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1.0 Introduction

1.1 Background of DXN

In this task we choose DXN company as our source to make us more understand the
important and what the associated of Supply Chain in a company or industry. DXN is a big
company and also had been expend in 28 countries for example Singapore, Thailand,
Australia, Bangladesh, Hong Kong, India, Mexico and more. The DXN is an abbreviation for
“dexin”. The world “dexin” is come from Chinese word which it carries the meaning in three
words are trustworthiness, honesty and kindness. This word is the basic for DXN to running
their business on company level from the top management to all their staffs.

DXN company actually was founded by Dato’ Dr. Lim Siow Jin and he is a student
that graduated from the prestigious Indian Institute of Technology. He started this business
with questing about the benefits of mushroom on human health because he very interesting in
mushroom. Since his interested very deep in benefits of mushroom, it derive him to utilize
the fullest potential of Ganoderma, is also call Lingzhi. Ganoderma was chosen because of it
nutrition and it also known as the king of herbs for human’s health and wealth with the
establishment of DXN in 1993.

Dato’ Dr. Lim Siow Jin

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Besides that, the core business activities of DXN is include cultivation, manufacturing
and marketing the health food as a supplement for convenience to their customer to practicing
a healthy lifestyle. Considering it as based in Malaysia with the worldwide operation, the
DXN company is well-known as Ganoderma business to worldwide. Because is based health
product, the product line that introduced is include dietary supplement, food and beverage,
personal care products, skin care and cosmetic, household products and water treatment
system. Since its inception in 1993, DXN has retained their concept of “One Dragon One
World One Market and One mind”. The concept gives powerful to DXN because it has sailed
through continuous growth over the years. Therefore, DXN Holdings Berhad was listed on
the Main Board of Bursa Malaysia on 30th September 2003. After that, it was delisted on 27th
December 2011 because of take-over offer by the founder. The picture below shows the
award that DXN got.

DXN Holdings Berhad is the investment holding and management company of DXN
Group. DXN’s high regard for quality earned the company many outstanding citations and
recognitions from the various health and business organizations. Besides that, with in their
strong foundation and sustainable development, DXN has rapidly diversified into other
business activity which is including property, renewable energy, information technology and
more. In their core business of network marketing, the rapid global expansion of DXN is
recognized internationally by its vast growth of members worldwide and its amplification of
footprint in key strategic location. So, DXN is solidifying its position as the world leader in
Ganoderma products with in more six million of registered distribution world wild.

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1.2 Logo of DXN

Logo is a critical aspect in business marketing. As the company’s major graphical

representation, a logo anchors a company’s brand and become the single most visible
manifestation of the company within the target market. So that, the well-designed logo is
important part of all company’s in marketing strategy. In this part, DXN have a logo to
differentiate them with another competitive in term of the product, quality, service, awareness
and many more. The picture below is show the logo of DXN Company.

DXN Company creates the logo for showing to other in term of their identity.
Because of that, every color and shape that they use carries the distinctive meaning. First the
color of red represents the fire to symbolize the spirit fighting of the company to progress.
Second is green, it constitutes as tree for dynamic growth and expansion of their market
symbol. The last is blue for water to symbolize the company as foundation for all vigorous
departments. So, our group can see this company very tough on their business from all
categories for make the best for customer. Since that, their philosophy is to provide the low
price but high quality for their product. Although in low profile but they keep generating high
income in direct selling.

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1.3 Product of DXN

As we mention before, DXN product is about healthy and supplements product. So

DXN have six product categories which is health food supplement, food and beverage,
household product, personal care, skin care and cosmetic, water treatment and home
appliances series.

DXN brings a series of health products made of 100% natural raw material without
any artificial preservatives, colorings or flavorings. We also visit their plant and see the
process of DXN product. Form the visited we can see, every manager teach to their employee
to emphasize the hygiene in processing the product although they have so many room to
isolate for every product. Furthermore, very part in the plant have CCTV for make sure the
employee and product in good condition.

In addition, DXN reinforcing the customer confident about the quality of their product
with always gave priority in every single step of production. Therefore the recognition of ISO
14001, ISO 9001 and TGA is indicating that their products have attained international
standards. So the recognition DXN have is proven that every their product very quality and in
international standard level. The picture below is showing a part of DXN product.

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2.0 Executive Summary

This report provides background of DXN, DXN is a multilevel marketing company

based in Malaysia. DXN was founded in 1993 by Dato' Dr. Lim Siow Jin. The core business
activities of DXN include the cultivation, manufacturing and marketing of health food
supplements containing Ganoderma or Lingzhi. The company's other products include food
and beverages, personal care products, skin care & cosmetic products, household products
and water treatment systems. As of March 2014, DXN had penetrated more than 185
countries by establishing branches, stockists and/or service centers with more than 5 million
distributors worldwide including Europe, the Middle East and the Americas.

Next, this report also provides process and the context in which it operates. DXN have
their own strategy and market to become world successful company. Although DXN is a
successful company, they also face with risks and cost of the practice and how they face it in
terms of cost, time, quality, and flexibility. Moreover in this report provide the current
process structure in terms of information, inventory, transportation, and location.

Every company must have key issues in designing and implementing the practice
(existing problems and weaknesses) same like DXN. Furthermore, DXN also have existing
problems and weaknesses in the current process. Besides that, there are additional capabilities
can develop. More, in this report also have change suggestion that will give effect the
company and what may face in implementing the changes.

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3.0 Define the process and context (business unit) in which it operates.

Manufacturer and pharmaceutical DXN at Jitra, Kedah produce the products from the
start planting, processing, packaging, marketing until to the customers. Before DXN exists
the founder of DXN deep interest and endless efforts has driven him to utilize the fullest
potential of Ganoderma or Lingzhi, which is well-known as the King of Herbs, for human
health and wealth, with the establishment of DXN in 1993. The core business activities of
DXN include cultivation, manufacturing and marketing of the health food supplements.
Based in Malaysia with worldwide operation, the company is well-known for its Ganoderma
business. Its product lines include dietary supplements, food and beverages, personal care
products, skin care & cosmetic, household products and water treatment system. All products
DXN produce based on ganoderma or lingzhi, spirulina, coffee, and many more.

Ganoderma or lingzhi is a mushroom or reishi mushroom. It is species complex that

encompasses several fungal species of the genus Ganoderma, most commonly the closely
related species Ganoderma lucidum, Ganoderma tsugae, and Ganoderma lingzhi. DXN is the
largest manufacturer plant the ganoderma.

First step to plant ganoderma is by placing in the bag containing of powder blend of
wheat, rubber wood dust and water wells. Before plant the ganoderma, they will steam the
bag so that no dirt or germs that will cause mildew damage. The ganoderma will be stored
tightly controlled environment in terms of hygiene and others. Within 90 days, the
ganoderma will be ripe and ready to be processed to become final products. Most DXN
product are based on ganoderma like supplement (Reishi Gano, Ganocelium, RG Powder and
GL Powder, DXN Reishilium Powder and many more) food and beverages (DXN Lingzhi
Coffee 3 in 1, DXN Lingzhi Coffee 2 in 1, DXN Lingzhi Black Coffee and else), personal
care (ganozhi shampoo, ganozhi toothpaste and many more) and more.

Besides that, DXN also process spirulina themselves. Spirulina represents a biomass
of cyanobacteria (blue-green algae) that can be consumed by humans and other animals.
There are two species, Arthrospira platensis and Arthrospira maxima. Arthrospira is
cultivated worldwide; used as a dietary supplement as well as a whole food; and is also
available in tablet, flake and powder form. It is also used as a feed supplement in the
aquaculture, aquarium and poultry industries. One of DXN spirulina product is DXN
Spirulina.

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Furthermore, DXN manufacturer not only do the planting but also process the raw
material and marketing the products. At jitra, kedah, the manufacturer will proses Cultivation
of Ganoderma Lucidum, Spirulina, Cordyceps and health supplements and other products
and also manufacturing Food & Beverage, Cosmetic & Personal Care products. The raw
material will go through certain proses before it edible to eats, and then every product will be
packaging.

The products that DXN produces are based on the demand, for example the high
demand on supplements product so, DXN manufacturer will produce more on the product.
DXN in Jitra, Kedah is the only manufacturer in Malaysia and the main manufacturer that
produce DXN product in worlds. So, because of that, they have to supply the products to
entire world. In Malaysia from Kedah to Ipoh, DXN have their own transportations to send to
their branches. Much more than that, they will make agreements with other transportation
company to send their products. Every truck that sends the products will go only one
destination, this is because DXN want to prevent from the damages or missing of the
products. Other country DXN will use cargo to send the products.

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4.0 What are the strategy / market of the business unit?

First strategy DXN uses are “One World One Market” means the distributors will
enjoy worldwide bonus with single membership card. Nextly, “One Dragon”, it means the
entire process, from cultivation up to marketing is solely handled by the Company. Also,
“One Mind” means the Company is concentrating on how to achieve the Global Vision and
hope that all the distributors will grasp this great opportunity and single-mindedly concentrate
on doing DXN business.

Besides that DXN, they built an in-house production line to process Ganoderma
products combining advanced technology with Dr. Lim´s medical theory of Ganoderma.
DXN Pharmaceutical is an integrated factory of 28, 000 square feet. This facility allows the
quality maintenance and assurance under the strict supervision of the Quality Control team of
DXN for the entire production procedure from cultivation, Aloe Vera products, Lingzhi 3 in
one Coffee, processing and packaging to marketing. DXN Pharmaceutical also ensures high
production capacity to meet the ever-growing demand for DXN products as its membership
growth accelerates worldwide.

Lastly, DXN expand business in Malaysia and also globally. The rapid global
expansion of DXN is recognized internationally by its vast growth of members worldwide
and its amplification of footprint in key strategic locations. On September 2003, DXN
Holdings Bhd. was listed on the Main Board of the Kuala Lumpur Stock Exchange (KLSE).
Last year our total turnover was US $ 860 million and we want to pass the US S one billion
mark in 2017.

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5.0 Describe major risk/ cost of the practice ( In terms of cost, time, quality, and
flexibility)

5.1 Cost

In terms of cost, DXN Pharmaceutical has to incur much cost on the use of Third-
Party- Logistics. The company has to pay more fees to this third party in order to fulfill the
customer’s demand. Besides, the cost also incur in the risk of damage products when using
the road and sea transportation. Sometimes, the company has to return back the money or re-
send the new products when the purchased products has been damaged. The last cost is
incured on the 1 lorry- 1 destination. Although it can reduce the delay time, but it will cost
more on the transportation cost.

5.2 Time

In terms of cost, DXN Pharmaceutical has a risk in the delay time of the delivering
process especially when they do the export activities. The customs process may take longer
time and sometimes we can’t predict the time.

5.3 Quality

DXN Pharmaceutical products may face risk of the lack of quality in their products as
the result of the delay time and not proper way in putting the products to the lorry or cargo
that can harm the quality of the products. For example outside the continent that may risk the
difference weather, the company has to prepare the proper packaging to encounter the lack of
product quality.

5.3 Flexibility

DXN Pharmaceutical may face risk of inflexibility of supply source of raw materials
especially its main materials which is Gano because of the unpredictable weather or process
during the plants.

DXN Pharmaceutical also may face the risk of demand uncertainty. The best practice
needed to address by the company is to become more flexible in the volume capacity. For
example before the company promoting their certain products, they have to prepared the
production volume so that it can fulfill the customer’s demand.

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6.0 Describe the current process structure in terms of information, inventory,

transportation and location.

DXN Pharmaceutical’s overall process structure is represented in the below chart.

Customer Shopping Pre- Planner Purchasing Raw Material

Order Order Warehouse

Customer Shipping Warehouse Production

(Loading)

6.1 Information Flows and Sharing

Information sharing serves as an essential approach for the survival of enterprises and
enabler of supply chain integration. Nowadays, with the advancement in information and
communication technology, information sharing has become more conceivable. Furthermore,
information sharing in supply chains has become more efficient by the global introduction of
long- term cooperation and coordination which leads ultimately to the improvement of
companies’ competitive advantages.

DXN Pharmaceutical is specialized in manufacturing sector plans, an essential role to

enhance economic development especially for Kedah and Malaysia. There are many different
types of information that has been shared within the DXN Pharmaceutical company,
including 1) Inventory Information; 2) Sales Data; 3) Sales Forecasting; 4) Order
Information; 5) Product Information and Information of New Products.

6.1.1 Inventory Information

DXN Pharmaceutical has several partners, subcompanies and also customers around
the world. Partners like to share Inventory Information the most. Sharing this avoids going
out of stock and stock repetition. It also reduces the total stock level and stock cost allowing
more accurate forecasts and decisions to be made. In sharing this kind of information, DXN
Pharmaceutical using the internet as their tool. They also has their own computer application
in recording the data of their inventory.

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6.1.2 Sales Data

Sales data sharing can eliminate order blow-ups, represent true customer demand, and
decrease the loss caused by shortage or excess of innovative products. Members in a supply
chain make forecasts independently.

6.1.3 Sales Forecasting

By sharing sales forecasts better predictions are made which may enhance the
competitive advantages of the supply chain.

6.1.4 Order Information

Sharing order information would lead to a quick determination of the bottleneck in a

supply chain, enhancing the quality of customer services. Customers can make the purchasing
order via its website and also email. There’s also steps in DXN Pharmaceutical Youtube
Channel to ease the customers in order to make their orders.

Official Website of the Company Steps in purchasing products online

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6.1.5 Product Information and Information of New Products.

Information about new products can be shared to allow receiving a timely supply of
goods from suppliers when the manufacturers obtain the real demand from retailers. The
company making use of website as their tools to promote and allow customers to see the
details their products.

Product Information

Details of each product

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6.2 Inventory

After the customers make the purchasing order and the company make the production
afterwrads, the finished goods then being stored in the warehouse to be grouped or badged
based on the products and the destination. They implement the First In First Out (FIFO)
process, which means they arrange the product according to the time they produced the
products or meaning that the first products that come to the storage then that will be the
products that will come out first. The principal of DXN Pharmaceutical inventory is they only
stored the purchased products from the customers (according to the demand) and there will be
no excessive inventories. Every six months, if they find the products remained, they will test
back or retest the products wheteher it is still consume- able or not.

6.3 Transportation

DXN Pharmaceutical uses three modes of transportation.

6.3.1 Road Transportation

Road transportation is used to deliver the products within Malaysia only. They uses
their own lorry or truck to deliver the products around Penang and Ipoh. If the destination is
more than Ipoh, such as Kuala Lumpur and Johor, they still uses truck but with the help of
3PL (Third- Party- Logistics) because the company doesn’t have enough amount of their own
transportation. Furthermore, the company is using 1 destination- 1 lorry to avoid the delay,
damage and missing products.

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6.3.2 Sea Transportation

DXN Pharmaceutical uses sea transportation or cargo to export their products outside
the countries since DXN had penetrated more than 185 countries by establishing branches,
stockists and/or service centers with more than 5 million distributors worldwide
including Europe, the Middle East and the Americas. The company uses sea transportation
because it incurs less- cost and more effective in delivering bulk amount of products.

Furthermore, the company also uses 3PL chosen to assist in doing the export activities
including in controlling and making ease of export procedures, data/ documentation
collection, customs, etc.

International Braches and Stockiest

6.3.3 Air Transportation

DXN Pharmaceutical only uses this mode of transportation to deliver the urgent demand
products from the customers so that the products can arrive to the destination safely and fast.

6.4 Location

Daxen's International headquarter has a 30 acre Ganoderma farms located at Bukit

Wang, Malaysia and a10 acre farm at Bukit Pinang in Kedah, Malaysia. DXN Factories have
also been established in India and Indonesia. DXN had penetrated more than 185 countries by
establishing branches, stockists and/or service centers with more than 5 million distributors
worldwide including Europe, the Middle East and the Americas.

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7.0 Discuss the key issues in designing and implementing the practice ( existing
problems and weaknesses)

The issues in designing and implementing the practice are the operation globalization
of manufacturing having a global procurement network that can support and react to supply
chain needs is important. According to many chief procurement officers, the problem is to
select a strategic supplier that provides manufacturing locations with consistent global quality
and a reliable local service. For safety and quality products, the pressure on manufacturers to
produce high-quality products that are safe is an increasing issue. The number of product
recall cases is growing each day. It can damage a company’s reputation and is expensive in
its bottom line.

To overcome this issue, DXN company must ensure that high quality starts with
selecting the correct raw material, deciding on the right production method according to
international standards and final testing and proving it. They should be together to create
more sophisticated equipment, test and measure it before processing the product. It is to
ensure the production quality more perfect.

Other than that, shorter lead time, less inventory and better throughput also become an
issue. With shorter product life cycles and changing market demands, companies are forced
to embark on a lean journey. It is important to note that the supply strategies in a lean
environment support the operations strategy. The next issue is always to find not just a lean
concept, but a working lean solution.

Next issue is to find a supplier with solutions and experience in supplier-based

consolidation processes. DXN company has issued to access to the latest technologies in
various fields to have the right experts has proven to be a great support in the development of
new products. So, they have to be committed to finding a solution to ensure that it is
functional, durable and safe. With the latest knowledge in fastening technology, they provide
technical advice on when to begin designing new products.

Inventory is the key issue to supply chain management success. Customers demand
that their orders be shipped complete, accurate and on-time. That means having the right
inventory at the right place at the right time. Sales want 100% customer satisfaction and to

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make sure that there is always inventory on hand to meet each other. The purpose of supply
chain management is to drive out inefficiencies, especially excess inventory. Yet, inventory is
a buffer against uncertainty. Uncertainty is difficult to forecast. A collaboration between
supply chain partners helps reduce uncertainty because of faster ability to respond and
change, but it does not eliminate it.

We found that the supply chain is in the midst of difficult situations or when a crisis
arises. It may be an issue with the production process, customer, delivery and others.
However, one executive offered a much different point about cost or pricing issues. He
advocated that supply chain performance should not be purely cost driven and that other
factors, such as service and quality, should be considered as well.

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8.0 Discuss existing problems and weaknesses in the current process. What additional
capabilities does the process need to develop?

8.1 Existing problems and weaknesses in the current process

The goal of Supply Chain Management (SCM) is to integrate both information and
material flows seamlessly across the supply chain as an effective competitive weapon
(Childhouse and Towill, 2003). This aassignment will explain about the existing problems
and weaknesses in current processes and how the weaknesses may be used to develop the
future supply chain in order to obtain more advantages and efficiency in its processes.
Management of supply chain, therefore requires the planning and control of activities to
achieve the desired goal and shaping the organization by coordinating activities, goals,
interests and relationships in order to avoid conflicts and make good decisions.

There are existing problems and weaknesses of the current process that involve in the
DXN Company in term of information, inventory, transportation, location and others.
Information is a data analysis concerning facilities, inventory, transportation, costs, prices
and customers throughout the supply chain. Since DXN Company is a multi-level marketing,
they are dealing directly with customers that have ability to match demand and supply,
resulting in better management of manufacturing and inventory control which leads to lower
total cost.

Customers obtain the information about product by other members. This company is
not using any social media like Facebook, Instagram or make any advertisement for
promoting the product, but they only use the members as intermediaries to sell and promote
the product to customers. The company make an application for customers only to buy the
product, but the problem that involves is some are not aware that information is being
collected on them and sold to third parties. Sometimes, there is no uniformity to how web
sites are organized or what information is provided and customer will not always find the
information they are seeking.

Inventory is an all raw material, work in process and finished goods within a supply
chain. The role in the supply chain is to mismatch between supply and demand, satisfy
demand, and exploit economies of scale and its impacts on assets, costs, responsiveness and
also material flow time. DXN company producing health food products by using red
mushroom as a main raw material. Mushrooms growing process carried out by the company

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itself, which starts from making block mushrooms process until sowing. The product itself is
processed using raw materials such as wood to make mushroom blocks. However, they do
not produce the wood, but they buy them from suppliers.

Raw materials such as coffee beans are produced by this company, but planting is
carried out in Malaysia. They plant in Brazil and then process the material in a DXN factory
in Malaysia. The problem that involves in the process is difficult to maintain the temperature
of the block. Other than that, the company needs to bear the cost of carrying too much
inventory and cost of losing sales. The company produces health food products; therefore it is
very important to ensure that the product is always available. But sometimes they cannot
ensure that the product can be served on time due to the increasing customer demand.

Transportation in the supply chain is a moving inventory from point to point. It means
that how the company deliver the product to the customer. The roles are moving the product
between stages in the supply chain that give impact on responsiveness and efficiency. Faster
transportation allows greater responsiveness, but lower efficiency. DXN company using road,
sea and air transportation. For domestic delivery, they use their on transportation, which is
lorry for area Penang, Kedah and Perlis. But over than Ipoh like Johor and Kuala Lumpur, it
is using truck that’s bigger than lorry to deliver more products.

The truck are not own by this company, so that they make a contract with another
company to hire the truck. For domestic transportation, it's rarely a problem occurs during
transmission because they loaded the goods one by one. The disadvantages of using sea
transportation are goods becomes slow arrived to the customer because compared with other
means of transport, sea transport is surely slower. In terms of number of moves, goods need
to be transhipped many times or goods must be loaded and unloaded several times when the
departure and arrival points are not harbour cities.

In addition, it is lack of flexibility because it does not offer door- to-door services and
also have a higher risk of crashed container caused by the bad weather. For air transportation,
it is more expensive transportation than other and always delays because of bad weather,
labor strikes, technical problems and border controls and also the cargo has volume and
weight limitations.

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Facilities are a physical location in the supply chain network where product is stored,
assembled or fabricated. Warehouses play a vital role in mitigating variations in supply and
demand and in providing value-added services in a supply chain. However, supply chain
practice reveals that warehousing decisions are not included when developing a plan for the
distribution supply chain.

DXN company has their own warehousing where to store goods that have been processed. In
the warehouse, they sort and separate the goods according to the product. So far, there have
no problem that happened in the warehouse like an accident or others because the workers
who operate equipment in the warehouse have been trained. So, it's a minimum percentage of
the occurrence of any untoward incident. This company also produces the product from their
own factory and they not depends on another company to make a production.

8.2 The additional capabilities does the process need to develop

8.2.1 Information

DXN company, maybe can use new information technology to promote the product via
Facebook, Instagram, advertisement and others. It is because, if they only using the
application, not everybody know about the product. The application only knows and access
by members. So that, the information does not reach to other people. It also aimed at other
clients of the right information from the manufacturer or company. Any false information
will cause losses to the company and dissatisfaction to the customer.

8.2.2 Inventory

DXN company must generate to process wood powder without getting it from suppliers.
They also have to add or repair the equipment most often to produce products more
efficiently so as to increase production to fulfil an increasing customer demand. Since coffee
beans are planted abroad, the company also needs to think about other initiatives for growing
coffee beans in Malaysia. If this can be done, it will reduce the cost of shipping the beans to
the rest of the country because each country has its own coffee plantations. The inventory
also most available when received customer demand.

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8.2.3 Transportation
To develop the transport process, the company needs to ensure that goods are
delivered on time. Maybe they should more often using ocean mode than other mode because
it will arrive faster. If using faster modes of transport, it can raise responsiveness and
efficiency.

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9.0 How should the process be restructured to develop these capabilities? Discuss
why the changes suggested by you will have the desired effect along the key dimensions
identified by you.

The strong of information technology innovation has already led in changing effects
for many traditional industries and operations. Engaging information technology innovation
has as well helped in advancing DXN organization’s sustainability and performances greatly.
Then, adopting information technologies in helping with improving some of the traditional
supply chain functions with delightful profit.

Several well know DXN involved in supply chain relationship through information
technology. Three factors have strongly impacted this change in the importance of
information. First, satisfying in fact pleasing customer has become something of a corporate
obsession. Serving the customer in the best way, most efficient and effective manner. Second,
information is a crucial factor in the managers' abilities to reduce inventory and human
resource requirement to a competitive level. Information flows plays a crucial role in strategic
planning.

Moreover, transportation is the most commonly outsource activity in supply chain

management. Currently, third party logistics is a very popular concept among supply chain
management. One way to minimize environmental effects during transportation is to choose
and collaborate with partners that share the same value. The most common service from a
third party logistics is transportation service, as transportation is the major activity that
produces CO2 emission; third party logistics transportation activities arouse attention among
DXN companies. Nowadays, environmental performances have been integrated into the
selection criteria for DXN companies to choose their logistics providers. Most of the third
party logistics would have to have ISO 14001 certificate or demonstrate some green practices
in order to being competitive in the market. However, to achieve sustainability would require
mutual effort from both third party logistics and DXN companies. Trust and commitment is
essential for both parties.

In addition, warehouses usually tend to maintain room temperature due to the

temperature requirements of some of the stock. Fuel or electricity is used for maintain the
temperature, which leads to the generation of emissions. However, room temperature can be

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maintained with the warehouse building itself sometimes. The orientation of the building
towards the sun and also the material in the building itself influence the room temperature.

1 degree’s difference can save 10% of the energy consumed. In addition to that,
ventilation design can also influence one warehouse’s temperature. Warehouses, as one major
component that constitute commercial building’s energy consumption, should be paid
attention to. The increasing of warehouse’s floor space does not only lead to more emissions
but also indicates that there are more businesses activities going on.

Lastly, the utility rate of the warehouses is also a key factor that can influence
warehouses’ sustainability capabilities. There are many ways to increase one warehouse’s
utility rate which is by the warehouse’s own design and its’ management. For example,
design the warehouse layout according to the product flow; reduce aisle way space and so on.

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10.0 Discuss how the suggested changes should be implemented with a time line.
Explain any resistance you may face in implementing the changes.

DXN establish appropriate levels of control and minimize risk. Supply chain
management policies and procedures should follow an appropriate sequence and structure,
and it is important to review them frequently which is if not constantly and bring them up to
date. Keeping them realistic and easy to understand and follow will help to ensure
compliance.

It is certainly possible to go too far in establishing policies and procedures. However,

that is why DXN companies periodically review their policies and controls to ensure that they
are not creating bottlenecks. Their goal is to streamline them without sacrificing the ability of
those controls to damage, fraud, and other problems. Risk mitigation goes hand-in-hand with
policies and controls, and best-in-class supply chain organizations integrate risk-mitigation
methodologies into their sourcing decision process.

Furthermore, optimize owned inventory DXN companies. Their teams are constantly
looking for new ways to improve the bottom line and reduce working capital. Supply chain
organizations should therefore constantly review their inventory quantities and strive to keep
them at an optimal level. Poor planning and forecasting are direct causes of inventories that
are out of balance with a business's needs. DXN companies also are placing more emphasis
on demand planning and forecasting as an additional means of ensuring optimal inventory
levels.

Lastly, whatever implementing the changes, but correctly staffing the supply chain
organization is vital to success. Elevating staff members' supply chain management skills and
knowledge is always a priority. But top leadership focuses more on strategy and is less
concerned about transactional ability. DXN companies must have supply chain managers
who have strong communication and relationship management skills which are both
internally and externally, the ability to think strategically, and a focus on value creation.

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11.0 Conclusion

After we finished this task, we can see that the Supply Chain very important in a company or
organization in term of to decrease the cost and increase the profit. When talk about the cost,
it very related to the logistics that a company have to manage so that any loss for logistic can
be minimize. In this part logistics might be the detailed coordination of a complex operation
involving many people, facilities, suppliers also the organization of moving, housing, and
supplying troops and equipment.

According the interviewed, DXN supply chain is about a chain that will started with first
stage and the chain will do around until facing the recently first stage back. The beginning of
chain is started with shipping. They do the shipping to pick up the ordering because the
information is important to avoid any loss for raw material part. Therefore easy for the
planning department to do planning in term of purchasing the raw material which is needed
when doing the production.

When finish the production department, the final good will sent to warehouse. In the
warehouse, the employee will compile the product according the purchasing order. Otherwise
the final product will damaged and expired. Besides that, the next department is shipping the
final product to the user and final customer.

In conclusion, they have around nine departments being involved in their chain. For every
department they try to minimize the cost so that they will get the high profit. Besides that, for
every supplier they have more than one supplier for one raw material. This because they want
to avoid any problem when a supplier have problem they can use another supplier to supply
the same raw material. We can see the management for all departments in DXN very
systematic and organized.

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12.0 References
 Keck, L., & Valen, G. (1998, October). Channel conflict: The impact of direct internet
sales of personal computers on traditional retail channels. Retrieved May 1, 2017,
from http://citeseerx.ist.psu.edu
 Suttle, R. (2017). The Disadvantages of Direct Selling. Retrieved May 1, 2017, from
http://smallbusiness.chron.com
 Sainathuni, B., Parikh, P. J., Zhang, X., & Kong, N. (2014, September). The
warehouse-inventory-transportation problem for supply chains. Retrieved May 1,
2017, from https://www.researchgate.net
 LTD Management. (2002, Oct. & nov.). Inventory-Critical issue in supply chain
management. Retrieved May 1, 2017, from http://www.ltdmgmt.com
 Daugherty, P. J., & Closs, D. J. (2016). Supply chain issue: What's keeping supply
chain managers awake at night? Retrieved May 1, 2017, from http://www.apics.org
 DXN, Background of DXN. Retrieved May 1, 2017, from
http://www.dxnmalaysia.com

13.0 Appendix

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