Logistics and Supply Chain Management

This assignment delves into the crucial role of logistics in modern businesses. It examines how logistics integrates with production, marketing, and finance departments to ensure smooth operations. The focus is on core logistics functions like order processing, inventory management, and transportation. The importance of efficient inventory control and the impact of automation are highlighted.

Running head: LOGISTIC MANAGEMENT 1
LOGISTIC MANAGEMENT
Student’s name
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Introduction
In any business organization, there are core functions that are; marketing, production
and accounts and finance. These functions are carried out within the production
department, marketing department and the accounts and finance departments. Logistics
department play a vital function in coordination activities of these core functional
departments (Bhatnagnar and Teo, 2009). This report analysis how logistic
management is used to ensure that there is smooth running in the operations of the
business organization. It also discusses the effectiveness and efficiency of the order
cycle and the inventory management of business organization and gives
recommendations on how to improve on the effectiveness and efficiency. The report
describes these issues using Dell Company as an example of how the logistics
management can be used in the effective and efficient running of the business.
Dell Computer Corporation is a US company that was founded in 1984 by Michael Dell
initially dealing with the manufacture of personal computers. The turning point that
enabled Dell to penetrate the market was by using a strategy known as build-to-order
whereby the customers ordered the personal computers directly. The orders were made
the shipped to the clients within a week of placing the order. This made it grow and sell
its products to other countries outside the US such as the UK and others parts of the
world.
Over time, Dell explored to other products other than the personal computers. Now, Dell
manufactures, repairs, sells and provides personal computers, data storage products,
servers, computer software and peripherals, televisions, printers and cameras. Dell also
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sells electronics manufactured by other manufacturing companies. They have
customers in virtually every part of the globe and carry their business internationally.
Dell's major competitors include Toshiba, Acer, Apple, Sony, Hewlett-Packard (HP),
Samsung and Lenovo.
Interfaces of logistics and core functional areas
Logistics management is the effective and efficient management of every day activity in
creating the finished service or product of a company. The aim is to plan and
synchronize all the actions needed to accomplish anticipated level of services delivered
and quality at lowermost probable cost (Gunaseakaran and Ngail, 2003, Li et al., 2006).
The eventual objective of every logistics system is to please the client by creating
connections of persons at all points in the firm to the market.
The greatly competitive market for clients and capitals, logistics performs a significant
function, by making products and services available to customers, promote greater
levels of effectiveness and efficiency in performing the activities, with the end getting
results that are better (Fugate et al. 2010). Logistics also are a chief element of
differentiation in the market (Bowersox et al., 2002). The performance of logistics
department in any organization has an influence on the general performance of a firm
(Larson et al., 2007).
The logistics department closely interfaces with the other organization’s department
such as the finance and accounting, production and marketing. The interface between
the logistics department and the Finance and accounting department: preparation of
budgets, discussing contracts with transporters, and handling shipment involve the
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finance and accounting staffs. However, numerous businesses struggle apportioning
cargo and transport costs correctly to the correct department or locations. Therefore,
the logistics department becomes important in informing the finance and accounting
department about the costs to be assigned to each section where the products are
moving until they reach the customer.
The interface between logistics and marketing: When products are completed, they
have to move from the industrial unit to the warehouse or client. Logistics ensures that
the products move and that adequate extra capacity to handle the following product is
available.
When there is a shift in marketing focus of a company, reverse logistics handles getting
products from stores or accept the products returned from clients. If the logistics
department is efficient, it can be used as a marketing tool. Companies with efficient
logistics systems are able to charge prices that are lower and therefore market the
company’s products. Other companies can attain distribution times that may allow
online buyers acquire their imports quicker, while others can use the logistics
department to transfer products from foreign factories to the stores fast. Logistics is
closely linked to marketing by its functions in client services.
Interface between logistic and production: The manufacture of finished products needs
acquirement of parts, raw materials and components. The logistic department therefore
ensures that they acquire the right parts, components and raw materials to the
production unit to produce quality products. The quality of materials brought in and the
parts purchased defines the quality of finished goods to be sold and distributed.
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Order cycle
An order cycle starts when the customer makes an order, the order is entered and sent
to warehouse, the order is prepared and shipped, invoice is prepared, the transporter
makes to deliver delivers the order. The order cycle lastly ends when the order is
received by the customer. Order processing system receives order statistics from
clients, put the data in a central databank and directs the order data to the departments
of accounting and shipping.
Order processing systems aid to make sure that all of the orders of customers are
completed on time. A firm with a strong order processing system leads to both the
business and customer benefiting. Clients experience more dependable supplies and
correct fulfillment of the order. Businesses can make the most of their profits by not be
unable to find or errors in reading of orders (IBSolution 2013). Sales order processing is
done by the distribution channel comprising of retailers, wholesalers, distributors and
customers. A competent order processing aid in simplifying the procedure of ordering,
saves time and the order processing errors are reduced.
The developed countries are using web based software are to realize the capability to
process client orders efficiently and effectively. Computerization of order processing
offers businesses additional regulation and perception of what is going on a day to day
operations. It aids business manage the supplier and customer relationship in a better
way manage, manage production and inventory, conform with governing requirements,
manage funds and sales projecting, make the business visible to processes and
increase the general profitability of the business (Peoplesoft, 2011).
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For the Dell Company, the following is their cycle order; In terms of sales, the order is
placed by the customer through retailers. Replenishment orders are placed by the
distributors to the sales department. A sales order is generated comprising of order
information for instance preceding balance order, ordered item, amount and date of
delivery. At the production level, an order is given by the sales department to the
production department for them to design the production plan. Production department
confirm with warehouse in order to make sure that the supplies are adequate to
manufacture the products that have been ordered.
Customers also place their orders directly to sales department. When the production
department fulfills the order, stores department will prepare a delivery order document
that is sent alongside the finished product. Then the items ordered are sent to the
customer through coordination of the logistics department
The logistics department creates a list that shows information of products to be taken by
logistics department to transport the entire finished product to the client. In terms of
distribution, Dell Company has numerous distributers all over the globe who also get
orders from retailers. The retailers not only do direct sales from the many branches
globally, but there are those who keep the Dell products. Then the products are sold
directly to customers by the retailers.
Inventory management
Inventory management deals with issues such as at what time to order, the quantity to
order and the amount of stock to retain as a safety stock (Silva 2009). It consist of a
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number of choices that intents at synchronizing current demand with the supply of
materials and products to different places and the right time.
Inventory also can be described as a physical amount of merchandises put in store to
satisfy the expected request (Wanke, 2011). Inventory management is among important
undertakings of trade logistics. The purpose of inventory management is to have
inventories at a cost at the lowest and to make sure that the supplies for the operations
going on are not interrupted. The chief aim of inventory management is have the
inventories on ideal level, without extremes. Inventory management deals with having
the correct inventory in the correct amount, right place, right time, and right cost.
Effective management of inventory is the outcome of exceptional inventory control and
inventory management.
Inventory control comprises handling the inventory now in the store, stockroom or
warehouse. This means that one should be aware what products are available, how
much of each item is present and their location. It shows having precise, comprehensive
and well-timed inventory dealings record and evading dissimilarities between inventory
levels and accounting. Inventory management comprises assessing how to order goods
and the quantity to order and recognizing the best efficient source of supply for every
item in every location (Cachon and Fisher, 2000).
Keeping the correct quantity of inventory is critical. If the company orders very little, the
customers will switch to other supplies. On the other hand, if the company orders too
much, there is a possibility that the store will be full of extra products in store that it may
need to sell at a low price or the stock may become outdated.
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Recommendations: Having an inventory management system that informs the
movements of stock throughout all channels would considerably decrease the risk of
selling too much. A good inventory management should be able to track movement of
inventory continuously, rather than tracking it once in a while. The automation of
inventory has led to development of is one of inventory management software and this
greatly reduces the risks of missing orders or selling too much accidentally (Esker,
2013).
Conclusions
Logistics is linked to production, marketing, and finance and accounting. All the
activities in these core functional departments are coordinated by the logistics
department. In the business firm, the logistic department harmonizes the undertakings
of production, purchasing, warehouse, transport and customer service. It ensures that
the correct product gets to the correct client, in the correct amount, state, place, time,
and cost.
The undertakings of supply start with the receiving of client’s order. The entire orders
are handled by sales department. It offers demand request to department of production
for them to produce who buy materials that are needed from the suppliers. After fruitful
production, the goods produced are taken to stores who send the products to the
customer through the logistics department. Order processing systems can use both the
old and new processes, integrating manual systems with technological answers. The
planning, storing, moving and accounting for inventory is the basis for all logistics.
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Keeping the correct quantity of inventory is vital. Through automation of inventory
management process, the company is able to cut down the possibility of human error.
Once the company uses inventory management software, there is more time for the
staff to do more in growing the business.
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References
David L. Anderson, Frank F. Britt, and Donavon J. Favre, “The Seven Principles of
Supply Chain Management, Supply Chain Management Review, (1997).
Gunasekaran, A. and Kobu, B. (2007). Performance Measures and Metrics in Logistics
and Supply Chain Management: A Review of Recent Literature (1995-2004) for
Research and Applications. International Journal of Production Research 45:
2819-2840.
Fugate, B. S., Mentzer, J. T. and Stank, T. P. (2010). Logistics Performance: Efficiency,
Effectiveness, and Differentiation. Journal of Business Logistics31: 43-61.
Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S., and Rao, S. S. (2006). The impact of
supply chain management practices on competitive advantage and
organizational performance.Omega 34: 107-124.
Larson, P.D., Poist, R.F. and Halldórsson, A. (2007). Perspectives on logistics vs. SCM:
a survey of SCM professionals. Journal of Business Logistics 28: 1-24.
Bowersox, D.J., Closs, D.J. (1996). Logistical Management: The Integrated Supply
Chain Process. New York. McGraw-Hill Companies.
IBSolution. Retrieved from: www.ibsolutions.com. Accessed on September 28, 2017.
Esker. (2013). Automated Sales Order Processing for Order-to-Cash Performance.
Retrieved from: www.esker.com Accessed on: September 27, 2017.
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Cachon, G. P.and Fisher, M. (2000). Supply chain inventory management and the value
of shared information. Management Science, 46(8): 1032-1048.
Bhatnagnar, R. and Teo, C-C. (2009). Role of logistics in enhancing competitive
advantage.International Journal of Physical Distribution & Logistics Management
39: 202-226
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