Problem Transportation failure is one of the major problems encountered by Horizon. Orders telexed to 20 warehouses spread around the country. These warehouses will arrange transportation to send products to customers. Different warehouse uses different courier company. Because of these shipments are small, the transportation cost high and the bills will sent to Horizon. Some of the courier services were fast and reliable; others inaccurate and slow. Perhaps because of the various courier service used, Horizon unable to tell customers delivery date. Other than that, the cost of shipping ingredients to plants also high due to long distances depending on the season. Thus, to prevent customers from switching to other brands, Horizon needs to improve delivery service.

Factor and Solution Failure in using system approach is one of the reasons why Horizon failed to provide better service to customers. According to system approach theory, Horizon should see things as a whole, instead of individual activities. For example, orders should be all done by Horizon, then Horizon will arranging delivery courier. By doing so, Horizon can use truckload or carload when shipping products to customers because Horizon can gather all orders delivery location and separate them based on areas. This will save some delivery cost. Besides that, Horizon should use only one courier service and the best available to deliver shipments. This can prevent shipments delivers inaccurately and slow, and at the same time, increase customers’ satisfaction. Fast and accurate courier services normally cost more than others. This is the trade-off of having expensive courier and customers’ satisfaction. To lower down the total transportation cost, Horizon can use the cost saved from doing truckload or carload to minus out the expensive courier shipment. Thus, Horizon needs to see things as a whole using system approach of conceptual issues. Another solution is that Horizon should use total cost concept. The best approach is to determine desired levels of customer service based on customer needs, and consider how those needs will be affected by expenditures on other areas of marketing mix (Stock & Lambert, 2000). Like being explained above, hiring costly courier service to deliver shipments to customers can increase their satisfaction as the courier service provides not only fast, but accurate deliveries. By doing truckload or carload order shipments, Horizon can some cost on delivering individual shipments based on orders. Horizon should do negotiated pricing with selected courier so that Horizon can decrease total cost. Other than that, Horizon should also cut some warehouses off because they are not in need of many warehouses. Horizon should produce more to keep as stock to overcome stock out. By using system approach and total cost concept, Horizon can trade-off most of the costs and able to make better decisions. By able to deliver shipments accurately and on time creates time utility. Due to constant facing stock out, customers are on the edge of switching brands. By creating both place and time utility will increase the value of Horizon’s products as they are able to purchase at the right place and right time. On the production perspective, raw materials deliver to production plants at the right time is very important especially for Horizon who owns plants which are far apart with raw materials.

reference
Stock, J & Lambert, D (2000). Strategic Logistics Management. 4th ed. New York: McGraw-Hill Publishing.
Ingram, D. (). What Is the Definition of Order Processing Systems. Available at: http://smallbusiness.chron.com/definition-order-processing-systems-3197.html. Last accessed 5th Sept 2013.