Supply Chain Management for Abbott

This assignment examines the crucial role of logistics and supply chain management within Abbott's operations. It emphasizes how timely delivery of pharmaceutical products is essential to meet patient needs and mitigate potential risks associated with delays. The analysis delves into the specific challenges and considerations involved in managing a complex supply chain for a company like Abbott.

Running head: PRINCIPLES OF LOGISTICS MANAGEMENT
Principles of Logistics Management
Name of the Student
Name of the University
Author Note

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Executive Summary
This report aims to look into the areas where logistics management interface with the core
functional areas of finance, marketing, production and accounting, then analyze the
effectiveness of the order cycle and inventory management. Logistics management forms a
part of the supply chain management which involves planning, implementation and control to
ensure an efficient and effective forward and back flow and storage of goods, services and
related information from the point of delivery to the point of consumption so as to meet the
needs and demands of the customers. Abbott, the manufacturing company is considered for
preparing this report. In Singapore, Abbott has been operating since the year 1970, focused
on manufacturing products related to nutrition for babies, to development of pharmaceutical
products for aged people to remain active, to creation of diagnostic tools for the public
healthcare system in Singapore. The report concludes that logistics serve a major purpose to
coherently utilize the activities of the different functional areas in an organization. The
functional areas will only be effective in providing the respective services, if they receive the
desired support from the logistics department.

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Table of Contents
1. Introduction.........................................................................................................................3
2. Discussion...........................................................................................................................3
i) Production.......................................................................................................................4
ii) Marketing....................................................................................................................4
iii) Finance.............................................................................................................................5
iv) Accounting........................................................................................................................6
2.1 Effectiveness Of The Order Cycle And Inventory Management.....................................7
3. Recommendations..................................................................................................................8
4) Conclusion.............................................................................................................................9
5. References............................................................................................................................10

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1. Introduction
Logistics management is a part of the Supply Chain Management, dealing in the
planning, implementation and control of activities related to the forward and back flow of
goods and services, with other relevant information from the delivery point to the point of
consumption for meeting the needs and demands of the customers (Agus & Shukri Hajinoor,
2012).
Abbott, the manufacturing company of Singapore, considered for preparing this report
mainly deals in developing locally manufactured nutritional products for babies to have a
healthy start, manufacturing pharmaceutical products for aged adults to stay fit and energetic
and produce diagnostic tools for the mass healthcare system in Singapore. Through this
organization, how the logistics management interface with the different functional areas like,
production, accounting, finance and marketing will be discussed and thereby an analysis will
be carried out to determine the effectiveness of order cycle and inventory management
(Christopher,2016). Then, based on the analysis, the necessary recommendations would be
made by applying the relevant concepts and theories related to logistics.
Thus, the report would conclude that for any manufacturing organization to succeed,
logistics will have a significant role to play because no matter how the different departments
of an organization carry out their duties, they would yield the desired results only if the
activities get coordinated with the proper delivery of goods to the right kind of customers in
the appropriate time (Dekker et al., 2013)
2. Discussion
All the areas work in-tandem with the logistics department and thereby
increase the effectiveness of the organization as a whole. Now the report discusses

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about the possible areas of interface between logistics and the different functional
areas like production, marketing, finance and accounting of Abbott.
i) Production:
An organization’s production department is mainly concerned about
converting the inputs into finished products, through a series of processes. In
case of Abbott, who specializes in manufacturing nutritional and
pharmaceutical products, production process would only be successful if the
distribution network is strong with the help of an effective logistics
department (Dyckhoff, Lackes & Reese, 2013). The goods that are produced,
if they don’t get delivered in the same form to the right customer segments in
the right time, then the whole purpose of getting the goods produced, goes in
vain. As a result of which, the company can potentially suffer heavy losses.
Production would only be meaningful, when the goods get passed on to the
customers in a swift and efficient manner, without any loss of time (Fernie &
Sparks, 2014).
ii) Marketing:
Marketing is a combination of many activities starting from identifying
the four key components, Product, Price, Place and Promotion and thereby put
emphasis on these four aspects. They help cite out the features of the products,
their utilities, why should customers purchase the products and how do the
products fulfill the customers’ needs and demands (Grant, 2012). Then the
prices are strategically kept low initially in order to attract the attention of the
customers and persuade them to buy the products. This pricing method is
known as penetration pricing. Gradually when the products start getting good

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response from the customers’ side, the company adopts the strategy of price
skimming, thereby increasing the prices to substantial levels for covering up
the initial loss (Gunasekaran & Spalanzani, 2012). Next comes, selection of
the appropriate place to distribute the products. This where the role of logistics
comes into play. For a company like Abbott, who deals in manufacturing of
pharmaceutical products and other goods related to health, getting the products
distributed through an efficient logistics department is a must (Nam et al.,
2013). This helps to uphold the image of the organization which leads to
strengthening of relationships with business partners, suppliers and retailers.
Last but not the least, the process of marketing is incomplete without
promotion. Organizations carry out many promotional campaigns to spread
awareness about different kinds of products and thus help people to
understand their utilities and effectiveness (Rushton, Croucher & Baker,
2014). Success of any manufacturing company is firmly dependent on an
effective logistics department.
iii) Finance
Finance department forms an integral part of any organization. They
deal in maintaining the accounts of the employees, look after their salary
details, take care of the cost of procurement of materials, take into account the
delivery charges charged by the logistics provider (Schönsleben, 2016). Here
the role of purchasing manager becomes extremely important as he is the one,
who handles the cost which the company incurs by paying the required
amount to the ones getting the goods delivered to the suppliers. Finance
department and logistics do not necessarily go hand in hand. On one side,
where Finance is recognized as a controlling function, which does not believe

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in blocking cash through credit and inventory and speed up the process of
process of recovery (Rushton, Croucher & Baker, 2014). On the other hand,
logistics always try to expand the business by providing more credit to
customers and hold inventory to serve customers better. In case of Abbott, the
company’s finance department would help to cut down the inventory expense
by lowering the rate of interest for storing, thus saving significant amount for
the company (Seuring & Gold, 2013). The emphasis on creating opportunities
for the organization to save puts Finance in the forefront. Financial
performance of any organization depends upon the ability to manage cash in a
profitable manner. For the manufacturing organization Abbott, who deals in
pharmaceutical products, economical logistics would work to the advantage
for them. Timely delivery is critical but on-time delivery with less cost is
always an ideal situation for the company (Schönsleben, 2016).
iv) Accounting
The accounting side for any organization takes into account the amount
which a company spends on warehousing and transportation and tries to cash
on the opportunities for reducing costs through discounts or by persuading the
organization to hire less expensive vendors for logistics. The logistics manager
for Abbott can look to reduce the cost of storing the pharmaceutical goods, so
that they are in a better position to tackle emergency situations, where there is
heavy demand for goods from the customers (Stadtler, 2015). Keeping the
accounts of the company will help keep track of the proceedings and thus
control the expenses. Abbott, who is into manufacturing of pharmaceutical
products for people of all ages, demand would always be on the higher side.
So the important aspect for the company will be not only to keep sufficient

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stock of goods but also ensure that the products get delivered to the right
customers in the right moment to meet their needs and requirements.
2.1 Effectiveness Of The Order Cycle And Inventory Management
The order cycle maintained by Abbott is an efficient one. Right from receiving
the orders to the processing of those orders by keeping in mind, the requirements of
the customers, a smooth flow of activities take place, hence take care of the products
getting delivered in right time and place. Storing of pharmaceutical products is critical
and they are done by checking all the specifications and through following the
guidelines (Wang, 2012). Keeping the products in right form by complying with rules
and regulations help to meet up the demands and earn the trust of the customers. This
is where the Economic Order Quantity gets implemented. EOQ refers to the
maximum amount of goods required to be purchased in an instance so as to minimize
the total ordering costs or for holding products in stock on an annual basis. Abbott
makes sure that their EOQ is up to the mark, so that they can meet up the demands
every single time.
AlinIQ Inventory Management System combines innovative RFID technology
and streamline the process consulting, which allow the labs to stay ahead of
operational needs, help prevent shortages of critical items, lead to reduction of waste
and time consumed for manual processes. AlinIQ Always On services help deliver
predictive alerts to laboratories, thereby help to enable, detect and prevent the
downtime for instruments, upto three days in advance. The AlinIQ Analyzer
Management System provides hospitals and labs across the country, the ability to
integrate different systems of softwares into a single standardized system for
optimizing the processing time for samples, bring forth efficiency in the work flow

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and hence produce quality results (Wisner, Tan & Leon, 2014). Another effective tool
is AlinIQ Business Intelligence System helps in providing the tools for optimizing
throughout and increase the capacities of the existing systems, so as to help labs
absorb volume increases without adding to the budget. Finally, the Inventory
Management System of AlinIQ with a combination of RFID technology and a process
consulting, which is streamlined allows labs to stay ahead of their operational
requirements, thus helping them to keep sufficient stock of critical items and ensure
reduction of waste.
3. Recommendations
The above analysis has shown how logistics management integrate with the
different functional areas such as marketing, production, finance and accounting. The
importance of this concept, which is a part of supply chain management can be understood
from the fact that, without the existence of logistics, the functional aspects would not be able
to deliver as per the expectations. Logistics is an integral part through which the planning
takes shape. The following are some of the recommendations based on the analysis :
a) To further enhance the effectiveness of logistics, Abbott can use the theory of
strategic networks for enabling purposeful arrangements on a long-term basis.
b) The activities which have comparative advantage should be kept internally
while activities related to logistics should be contracted out to efficient outfit so that goods
get transported in due time to the concerned persons, with low cost.
c) Abbott, who deals in manufacturing pharmaceutical products could look to
increase their stock further, so that they can always meet up the demands of the customers
and provide them the essentials in appropriate times.

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d) The company can look to cut down their cost of manufacturing, leading to
lower down the transporation cost, which in turn would help in fulfilling the customers
demands by charging minimal price from them.
4) Conclusion
The report concludes that for an organization to run their operations in an
effective and smooth manner, keeping up all the activities related to marketing, production,
finance and accounting, in tune with the logistics is a necessity. Delivering the goods in due
time to the right kind of customers to fulfill the customers’ needs and wants is imperative for
any business to flourish and be profitable all through. The importance for any company,
dealing with logistics, lies in delivering the goods and services, in their appropriate form so
that the demands of the customers are met. For a company like Abbott, who deals in the
manufacture of pharmaceutical products, timely delivery of products is essential as people
and hospitals require medicines for treatment purposes and even the slightest bit of delay can
prove to be disastrous.

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5. References
Agus, A., & Shukri Hajinoor, M. (2012). Lean production supply chain management as
driver towards enhancing product quality and business performance: Case study of
manufacturing companies in Malaysia. International Journal of Quality & Reliability
Management, 29(1), 92-121.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Dekker, R., Fleischmann, M., Inderfurth, K., & van Wassenhove, L. N. (Eds.).
(2013). Reverse logistics: quantitative models for closed-loop supply chains. Springer
Science & Business Media.
Dyckhoff, H., Lackes, R., & Reese, J. (Eds.). (2013). Supply chain management and reverse
logistics. Springer Science & Business Media.
Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Grant, D. B. (2012). Logistics management. Pearson Higher Ed.
Gunasekaran, A., & Spalanzani, A. (2012). Sustainability of manufacturing and services:
Investigations for research and applications. International Journal of Production
Economics, 140(1), 35-47.
Nam, S. H., Kurata, H., Vitton, J., Park, J., Saen, R. F., Gershon, M., ... & Mahalik, D. K.
(2013). International Journal of Information Systems and Supply Chain Management.
Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.

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Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Schönsleben, P. (2016). Integral logistics management: operations and supply chain
management within and across companies. CRC Press.
Schönsleben, P. (2016). Integral logistics management: operations and supply chain
management within and across companies. CRC Press.
Seuring, S., & Gold, S. (2013). Sustainability management beyond corporate boundaries:
from stakeholders to performance. Journal of Cleaner Production, 56, 1-6.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management
and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Wang, J. (Ed.). (2012). Management innovations for intelligent supply chains. IGI Global.
Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A
balanced approach. Cengage Learning.