A Business Report on TKL Logistic Company Operations

1.0 Terms of reference.

Due to the current situation where the international oil prices have gone up and the general downturn in the economy coupled by the financial crunch in the United States that has had a ripple effect all over the world. It’s become imperative for companies that still want to compete and remain profitable to reassess their structural operations, in order to survive under the current unfavourable business environment. This report thus seeks to provide an in depth evaluation of the structural operations of TKL logistics, to be submitted to Mr. Steven Pulford, the CEO, TKL logistic firm in the UK.

2.0 Procedure.

The report provides information that is gathered from reliable secondary sources from both the internet sources and books Constructive research papers on the same topic were also used to provide the real picture of the situation at hand.

3.0 Findings.

3.1Changes in oil prices and its effect to UK, Businesses

Oil being one of the major sources of energy is basically an important component of any organizations production expenditure since in one way or another each and every company in any sector at least uses oil to run machines, transportation of both the n and outbound logistics concerns and many other ways, thus an increase n the price of the precious commodity basically affects all businesses.

In the UK, the changes in the oil prices are already being felt with the prices of essential commodities going up. The retail sales growth of most companies’ products has also been lackluster coupled with the reducing consumer confidence that has affected consumer spending rate. (Economic review ,2008)with this kind of trend in the UK, where consumption of goods and services is actually reducing due to the hash economics conditions, companies are thus faced with excess inventory problems.

Firms in the UK are also being forced to further cut back on new hiring of employees and this does not auger well with the current unemployed youths in the country.

3.1How the downturn in UK’s, economy is expected to affect logistic firms

            In the united kingdom more and more logistic firms are feeling the pinch of the high oil prices in the international market, this increase in the prices has been as a result of the fact that the hurricane Rita and Catrina grossly affected the oil producing areas of the gulf of Mexico and Saudi Arabia  is also at near or at its peak, with the skyrocketing of oil prices in the past few months more and more logistic firms are felling the heat more since at least 50% of the logistic functions involve transportation that is facilitated by availability of oil. It’s actually a step backwards for logistic firms that had managed to convince corporate clients to outsource transportation and warehousing services to them and also hanging their possibility of diversifying into other additional services in the balance. (Himoff, 2008)

            In a bid to keep afloat Logistic companies are expected to pass the additional costs to their customers. For instance Gefco logistics intends to pass some of the additional oil cost to the customers and keep other running costs lower by being more and more productive internally through continuous development. . (Himoff, 2008) and it’s also predicted that TKL logistics will also take the same trend.

3.3 Regional variations in the changes of the UK economy

            Regionally the change of the UK’s economy has resulted too wide differences in the regional economies In the wider UK, these differences are actually on such variables as unemployment, innovation and productivity performance, for instance the larger meta region which includes London and east of England account for a larger productivity performance than other areas of the country, (Abreu, M.et.al.2006) This makes the regions more viable for business.

3.3 staffing and structure

TKL, basically has a large staff (100) combined with the shift workers; this not only makes the wage bill higher but also other operational costs. Research shows that companies that use temporary employment for their core labour force are likely to use layoffs as a method of cost reductions (Cynthia, L.et.al.2001) In the same context its also stipulated that the best method of dealing with excess staff is actually balancing between layoffs and flexible staffing to reduce the level of suffering to the laid of employees and maximize on organizational productivity.

4.0Conclusion:

In summery it’s important to note that the rise in oil prices is basically an additional cost to the business, just like any other and organizations that would want to survive in the long run ought to find ways and means of circumnavigating the problem without losing  their grip of the market and customers through overpricing.

5.0Recommendations:

Basing on the above report I would suggest that the company start an initiative of cost cutting especially on its fleets of trucks since transportation accounts for over 50% of the logistics function. This can be done by effective management of the trucks through regular maintenance and also use of fuel efficient vehicles in order to offset cost increases, and also seek strategic alliances with other players in the industry.( Ricart, J.E. n .d)

Bibliography:

Abrou, M. et.al (2006) Regional variations UK and economic performance, research

 Paper linking research and practice

Cynthia, L. et.al (2001) the use of flexible staffing arrangement in core production jobs,

Economic review (2008) the impact of oil prices on the UK economy-Fourth quarter

 Industrial and labour relations review, 54, NO.2

Himoff, Jon (2008) Oil prices spell trouble for in denial logistic service

            Providers [Available from]

http://www.magentatechnology.com/library/newsandpress/resources/200512a.php [Accessed on 6^thOctober, 2008]

Ricart, J.E. (n .d) corporate strategy in turbulent environments: key roles of the corporate

            Level IESE Business School working paper NO 623

2008 set to be a challenging year for the logistic industry (2008). A manufacturing and

            Logistic journal [Available from]

http://www.logistics.com/absolutenon/template/?a=3643&2=31 [Accessed on 6^th

            October, 2008]