Logistics Management at Samsung Electronics

This article discusses the logistics management at Samsung Electronics, including the main functional areas such as production, marketing, accounting, and finance. It also analyzes the current order processing system and inventory management policies. Samsung Electronics is a multinational company known for its wide range of electronic appliances and mobile devices.

Running head: LOGISTICS 1
LOGISTICS
Student’s name
Institution

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Logistics
Introduction
Studies define logistics as the process implementing, planning, and controlling the flow
of goods and services from the manufacturers to the consumers (Ghiani, Laporte & Musmanno,
2013).. Also, logistic pertains to the integration of inventory, transportation, information,
warehousing, and material handling. The discussion analyzes, logistic management at Samsung
electronics. The main functional areas of logistics management at Samsung Electronics are, and
related theories are examined. The report analyzes the critical interfaces of logistics at Samsung
Electronics, such as production, marketing, accounting, and finance. Moreover, a detailed
analysis of the current order processing system at the company is undertaken. Finally, the reports
evaluate the inventory management policies about Samsung Electronics and related theories.
Samsung Electronics is a South Korean company which was founded in the year 1938
(Jung, 2014). The company manufactures various electronic appliances and mobile devices.
Samsung Electronics headquarters are located in Suwon, South Korea. Samsung is a
multinational company and considered the second largest technology company around the globe
regarding revenue generation and market share. Samsung logistics are the largest across the
world since it has more various manufacturing and assembly plants in more than 82 countries
around the world (Moon at el.,2013). Samsung has obtained high market share around the globe,
and it is considered the leading company in terms of mobile and smartphone market.
Interfaces
Logistics with production in Samsung Electronics.

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Kovacs & Kots argue that, the relationship and coordination between the production
process and logistics management make it capable of a business enterprise to generate good
revenue (2016). In the case of Samsung electronics, logistics management support, and effort
leads to a meaningful production output to the company. According to a survey conducted on
value chain analysis, the production process is crucial since it highly contributes to the product
value (Coimbra, 2013). The main aims of the logistics management process are to resolve issues
regarding logistics on large scale manufacturing companies such as Samsung Electronics.
Therefore, in the case of Samsung Electronics, the production logistics department has
the sole role of managing the two main production lines (Wy at el., 2011). The productions lines
include; the handling of raw material and finished goods line and the transport line. Handling of
raw material is an essential task in manufacturing companies. Samsung has well-equipped
warehouses that enable storage of raw materials required during the production process. On the
other hand, finished goods should be stored in a different warehouse before they are supplied to
the consumers. Samsung is one of the companies which has a wide range of supplies that
distributes their products to the final consumer at their place of convenience.
Studies show that protective packaging is significant in logistics and customers
satisfaction (Chang, 2011). Good protective packaging serves as a better tool for the company's
bland. Also, there is some guarantee that the product will reach to the final consumer in the right
conditions as the manufacturer intended it. Additionally, protective packages reduce cost, which
might result from damaged products, labor cost, and returned products.
Recent reports from Samsung Electronics show that the company is intending to replace
the packaging of its products materials with papers and some other environmentally friendly
material. Also, the company is coming up with innovative ideas for designing better protective

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packaging materials for its products. For instance, they intend to replace the plastic holder trays
with pump molds. Also, they intended to replace plastic bags that are used for protecting home
appliances such as TVs, air conditionals, washing machine, and refrigerators with bags
containing materials that can be recycled.
Marketing of Logistics at Samsung Electronics company
Place
Place plays a significant role in marketing logistics. According to studies, the place
makes it possible for a business organization to establish a link between the customer and the
logistics provider (Christopher & Peck, 2012). However, the business organization should ensure
that the customers is not aware of the difficulties encountered in logistic process. Customers
value the output rather than the process itself. Thus, it is advisable for a business organization not
to expose the methods that are used during the execution of logistics to the customers.
Additionally, the location of the industry, the warehouse, and the customer can have an impact
on the marketing logistics process mainly through an increase or a reduction on the costs.
Reports show that Samsung Electronics took various step regarding the logistics market.
The company is highly involved in the management of suitable terminals such as Noi Bai, to
makes sure that the company's products are delivered on time. Studies show that Noi, Bai is the
largest export portal, of Samsung Electronics (Fletcher at el., 2013). Thus, Noi Bai has well-
developed warehouses where Samsung products are received before export.
Price
The business organization should make price decision by evaluating internal and external
factors. Therefore, marketing logistics should take into account the price drives such customers

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profile and order type. Although marketing logistics does not control the changes in the market
drivers, on the other hand, marketing logistics should give an understanding on how those factors
influence customer’s decisions in the market (Sheu, 2011). Additionally, other factors such as
shipping cost, which includes size, weight, and distance where the products are supposed to be
shipped, drives the price.
According to recent reports, Samsung industry is facing high competition from other
similar industries such as HTC, Apple, and Microsoft (Chang, 2011). However, there are
developing better price logistics strategy to curb the competition. The approach has enabled them
to get popular in the market. For instance, a survey shows that in 2016, they had obtained a
market share of 21.2% in the smartphone market. Thus, price logistics are vital in the market,
and better strategies should be adopted to gain a good market share.
Accounting and Finance
According to Brown, Beekers & Verhoeveh, (2011) logistic management in accounting is
complemented by various accounting frameworks that combine all the data in regards to the
supply chain. For example, when evaluating the inventory management, the concepts of Last in
First out (LIFO) and First in First out are used for determining the inventory turnovers. Also, the
idea of Economic Order Quantity is applied in inbound logistics to facilitate delivering the
number of products to be ordered. For instance, in Samsung electronics, sale forecast delivered
from the sale of various products is used to evaluate the EOQ and the inventory turnovers on
those products. Thus, in these cases, accounting methods are used to assess inbound and
outbound logistics.
Analysis of Order Circle

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According to Shafiee (2015), an organization with a high number of clients shall need the
initial processing system to facilitates all orders that the organization or a company provides.
Thus, in the case of Samsung Electronics, they keep the ordering mechanism simple, which helps
the industry to achieve the figures regarding inbound logistics. Samsung analyzes the data which
assist them to forecast the demand. Demand forecast facilitates the computation of the quantum
of inbound logistics. Thus, to enhance better transaction services, Samsung company places a
bottom at its website.
Typically, the consumers select all types of devices that they require to facilitate the
processing of that particular order. Also, the company provides a free telephone number to
enable consumers to call the company executives directly, in case of any inquiries. The company
executives are well trained to assist the consumers in decision making regarding the kind and
quantity of the product that the company can provide (Yu, 2014). Furthermore, Samsung
provides an online cart whereby the consumers can visit and get all the products they require.
Additionally, the online cart has a button that enhances the customers to pick their desired order.
Moreover, the button directs the customers to an online payments system.
Analysis of Key Performance Indicators (KPI)
Studies show that KPI is a significant metric indicator of overall companies’ performance
to achieve its goals (Yuan, Wang & Skibniewski, 2011). An organization should define goals
and objectives identifying the KIPs. Samsung Electronics utilizes various KIPs, which includes:
 Length: In this aspect, the KPI measures the average length of an order can stay before it
is being processed. Thus, Samsung determine the orders placed and so that the processing
of those orders can be executed in the shortest length possible

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 Variability: KPI at manufacturing firms is monitored in terms of od supply and demand
variability. Supply Variability determines whether the inventory conforms with lead
times and promise dates. Demand variability includes measurement of lead times, process
capability, and inventories.
 Visibility: According to studies, sales KPI visibility is crucial to the manufacturing sales
team. Visibility is essential when monitoring revenue circle. It assists the manager to
understand the productivity at each stage.
 Productivity: Productivity is crucial KPI metric. It shows the effectiveness of the overall
output. Moreover, it indicates whether the companies’ goals have been achieved or not. It
also measures various aspects of the places of work. For instance, it determines whether
the employees finish the projects on time.
 Errors: KPI may not be obtained accurately in a manufacturing firm due to errors caused
by a lack of accountability, poorly defined KPI, and lack of specificity. Thus, a well-
defined KPI structure has is free of errors and incorporate feedback in the organization
 Stock out: Stock out KPI pertains to measuring the number of time that a customer can
place an order. Therefore, it measures the company’s ability to meet the demand of
customers.
Recommendation
Order-batching. Samsung Electronics should implement the order batching that
pertains to order picking. In this concept, items related to two or more orders are picked
in a single picking trip. Order batching is essential since it can reduce overall order
picking the traveling distance when laws about the same location are picked together in

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the same order picking trip. The process can be beneficial to Samsung Electronics since it
can also reduce order trip cost and maximize their profits (Henn & Schmid, 2013).
Analysis of Inventory Management System at Samsung Electronics
Kimball & Leonard mention that inventory management plays a vital role in every
business organization to facilitate the production process (2010). They also argued that inventory
management indicates the company's ability to sort its outbound products as well as organizing
their supplies. Samsung Electronics company has dealt with a wide variety of products; thus, the
inventory management is very important. Also, their products vary in nature; for instance,
Samsung offers different models of the smartphone with different resolution and size.
The variations in their product make the company experience difficulties and
complexities while trying to maintain and track their inventories. Recent reports show that
Samsung's product has a high demand as compared to other brands such as Apple corporation.
Similar statics show that Samsung has managed to establish and maintain more than 80
manufacturing hubs around the world, to meet the high demand for their products (Lee, 2014).
This was achieved after interchanging the high demand with inventory turnover.
In the inventory management analysis, reorder point is achieved through forecast on a
particular device depending on the consumer's responses on the product and the promotion
campaigns. After forecasting the demand for a specific product, the economic order quantity is
delivered. Typically, the company keeps a stock over 5% to meet the product demand in case of
any unexpected increase on demand and any disruptions that might occur during the production
process. Samsung Electronics has a well capable inventory management department that

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monitors all the manufacturing hubs to prevent any issues that might arise. Such issues include;
shortages, assembling disruptions, and production issues.
Recommendation
Fix order point
Fix order point is essential in any manufacturing company. It monitors stock levels of the
company continuously. Thus, when stock levels fall below a specific limit, an order should be
generated to restock the inventory (Colgan & Keohane, 2017). Although Samsung keeps a
minimum of 5% stock levels, to cater for an exponential increase in demand or a problem in the
production process, on the other hand, they should increase the stock levels to 10%. Typically, it
is reported that the current stock levels do not always meet the increasing unexpected demand.
Thus, the fix order point is aimed at keeping the stock orders stable.
Conclusion
From the discussion, it is evident that Logistic management plays a vital role in
enhancing the growth of manufacturing companies such as Samsung Electronics. The inventory
management policies are also very essential at determining the prospective demand of a
particular product. Also, the incorporation of marketing policies and logistics management
enhance the establishment of a strategic plan on a product. Additionally, Accounting plays a
significant role to ensure that the company's product databases are well maintained and reviewed
frequently. Moreover, it is evident that accounting forms the basis of inventory management in a
manufacturing company such as Samsung Electronics.
According to the above discussion, it is evident that Samsung processes their orders
within 48hours of working days. Moreover, this company establishes an official account for their

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customers so that they can track their customer's orders. Samsung track all placed orders so that
they are to process them in due time. Taking into consideration that their turnovers are very high,
they keep a safety stock of 5%, which can be used in case of issues such as an exponential
increase in demand. Finally, they regularly carry out computations on EOQ, mainly periodically
to ensure that stock levels are the reflection of their current Samsung's product demand.

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