Logistics and Inventory Management Integration

This assignment analyzes the crucial relationship between logistics and inventory management within organizations. It delves into order processing systems, outlining standard steps and highlighting common challenges. The importance of integrating inventory management with logistics is emphasized to achieve efficient operations and customer satisfaction. The text also explores solutions like cloud-based systems for enhancing inventory management.

Running Head: LOGISTICS MANAGEMENT 1
Principles of Logistics management
By
Institution

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PRINCIPLES OF LOGISTICS MANAGEMENT
Every company has a big responsibility of ensuring customer satisfaction.
When the customer is satisfied, there will be a tremendous growth in the business,
as demand will shoot. The work of planning, implementing, and control of the
efficient, effective forward and reverse flow and storage of goods, services and
related information from the origin to the point of consumption is logistic
management (Christopher, 2016). A logistic manager fulfills this role. Logistic
management is a component of the supply chain management, which is very crucial
for the achievement of the company's goal.
In this study, I chose one of the food manufacturing companies in Singapore
called Golden Bridge Foods Pte Ltd. According to Sadie (2012), this company
started in 1993. The founder of Golden Bridge Foods ltd wanted to satisfy the love of
Singaporeans to processed meat, and hence the development of the company. After
three years, the company moved to the new site in Senoko South road Singapore.
The company is the leading manufacturer of the processed meat in both Singapore
and outside world. Their business has been growing and established due to the love
that Singaporeans have for processed meat.
The company has ensured jobs to some of the Singaporeans. For instance, in
2012, the company had employed 130 staff members, 35 were working in the
administration, sales and supports, ten were under management, and 95 were
working in the production and operations. The staff population has been increasing
yearly due to the growth experienced in the company. Global Bridge Foods
Company has been standing out among its competitors due to its unique production.
They were awarded several certificates one of them being an ISO-certified certificate
with the international organization and standardization (Sadie, 2012). This paper
explains how principles of logistics management are applied, their effectiveness in
the company and provides recommendations in the various logistics systems.
A logistic function within an organization is not independent. There must be an
interaction of logistics with one or two different functions within the company to
ensure maximum productivity and increased profit margins. Within a company,
logistics interfaces with different functions among them being:
Production/manufacturing, finance, accounting, and marketing. Interfacing with these
different organizational functions will determine the profit margin of the organization.
In Golden Bridgewood Company, there are various interfaces between logistics and

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the different functions within the company. The following are the description of how
logistics interfaces with other functions within the company:
Marketing: In recent times, organizations realize the importance of integrating
marketing and logistics. Warehouse and distribution are very critical in marketing;
there is no sale that can be recorded when the product manufacturing is stagnant, or
the product is not at the right place and time as required by the customers. When
marketers give orders from customers, the company has to meet the set deadline for
delivery. Logistic functions help in making the timely delivery possible. Marketers
need to ensure that the products are in stock and within the required time, they can
reach the customers. Without this integration with logistics, marketing will not be
productive (Min, 2015).
Finance and Accounting: Logistics integrates with finance in a manner that it
helps in budgeting, negotiating contracts with carriers, auditing freight bills,
discovering billing errors, and managing parcel shipping. All these are roles that
directly involve finance and accounting, but logistics comes in to give support and
the required information by the finance department. Finance department cannot
manage to monitor every bit of the carrier bills, payment and negotiations; by
logistics coming to help, it boosts the cohesion of the company. When there is no
integration between the two departments, finance and accounting department may
cause the bankruptcy of the company (Wuttke et al., 2013).
Production: Production or manufacturing is an important element of the
company. It is the main body of the company. There will be no production when the
supply of raw material is not efficient. There must be an effective way of supplying
raw materials, the intermediary, and the final products. Logistics helps in the
production department by ensuring there is an effective flow of the raw materials.
They build a trusted relationship with the carriers who are able to work with the
company’s logistics policies and hence ensure effective transportation of the raw
materials. Delivery deadlines set by customer gives a guide for carriers to work
within the time threshold. Lack of integration between production and logistics will
result in delayed production and thus the general delay in the entire process (Wuttke
et al., 2013).

Supply of raw materials Production
Marketing department
Distribution to customers
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Figure 1: Flowchart diagram on logistic interfaces
The efficiency and effectiveness of current order processing systems in the
company
Order processing system captures the data from a customer, stores the data
in the central database, and sends the order to the finance and shipping department.
In golden Bridge Company, the system is very effective, from the advertisement of
the products via online platforms, inquiries are sent in and follow-ups are made to
the customers in order to get sales from them. The Company has improved
transporting systems making the whole process efficient; products are able to reach
customers within the required period. There are different steps involved in order
cycle that make the entire process effective in Golden Bridge Food Company, (Carr,
2015).
Sales enquires and preparation of quotations
Golden Bridge Food Company advertises its products on different online
platforms, websites, social media, and many others. Most customers learn about
Logistic
interfacin
gproduc
tion. Logistics
interfacing
Marketing
Logistics
interfacingdist
ribution

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their products and are able to send enquires on the advertised offers. Once an
inquiry reaches the office, the office follows up with the customer via sale call or mail
to explain further on the products. The customer receives more information on the
product through the call or mail until he/she gets convinced. When following up an
inquiry, a sales person's target is always to get a sale. Once the customer has been
convinced, there is a preparation of quotations for the given products, the quotation
is then sent to the customer after being signed by offertory (Porter and Heppelmann,
2014).
Order acceptance
Customers take in various negotiations and considerations before giving an
order to the company. Once the order is there, it undergoes some verification to
before being accepted. Depending on the credit limit of the customer, the order can
either be accepted, reviewed or rejected. This can also happen considering their set
criteria. For example in this company, orders below $ 150 are accepted only if the
security code and the address verification are matching. Orders above $ 200, with
the security code and the address verification mismatching, is reviewed, orders
above $ 250, with security code and address verification mismatching, and the
delivery address mismatching the billing address will be rejected (Porter and
Heppelmann, 2014).
Dispatching and invoicing
Dispatching is a function of production in which company ships out goods and
makes them available to the customer according to the order that received. It is the
timely movement of the purchased goods by customers. Dispatching is always timely
in this company in order to win the customer’s trust. It is most valued in the golden
bridge as it helps in achieving maintaining longtime relationships with customers.
The product’s brand names, quantities, and prices put on an invoice sheet. This is
invoicing. The sheet also contains terms and conditions for the payment. The buyer
has to pay the seller as this sheet gives the evidence of supply (Porter and
Heppelmann, 2014).
The entire process is automatic making it effective. It has various advantages
and disadvantages. Among their advantages is that the company is able to scrutinize
the order and customer to ensure they can be able to pay, avoiding losses. The
timely delivery that despatching achieves makes the system to satisfy the customers.
Among the disadvantages, the process takes a long time and cannot handle an

Order enquiries and quotations preparation Order acceptance
Dispatching and invoicing
Delivery to customers
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order with an emergency. A company can go at a loss especially when sending
quotations with no feedback from customers (Christopher, 2016).
Recommendations for a more Effective Order System
The system used in the company is effective, although, for more
effectiveness, various changes have to take place. Technology integration with the
retailers demands capture systems will help the company to monitor demand
visibility as the product consumption continues. The company should also focus on
establishing a consistent customer experience through channels. Finally, the
company should invest more in technology systems, which will help in automating
most of the processes, which are manual.
Figure 2: Order processing system
Effectiveness and Efficiency of the Current Inventory Management Systems
For every organization or company to function smoothly, it has to employ an
effective inventory management system. Inventory management system is the
process of moving parts and products into and out of the company's location.
Updating Inventory management should always daily, this because of the daily
purchase orders and the company shipping the final products out daily. There are
many challenges experienced in inventory function; the management has to
understand inventory function in order to overcome the challenges (Hiiemaa,
2015).In Golden Bridge, the company employs both manual and computerized
inventory control systems. The inventory management system used in golden bridge

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company is very effective. It has minimal challenges that are experienced. There are
four processes involved in inventory management of the company:
Determination of the optimum inventory levels and procedure of their reviews
and adjustment is the first step. When there is too much of inventory, it will result in
locking up of working capital accompanied by increased carrying costs. When there
is a small inventory, it will release excessive capital for alternative uses and it
reduces carrying costs and increases the ordering cost (Luke & Argo, 2015).
The second step involves the determination of the degree of control that is
required for the best results. It involves the realization of the control required in
ensuring the objectives of the inventory management are realized. The company
uses various methods of categorization with ABC being the best. This method helps
to categorize products according to their value and cost, the valuable product
acquires more control (Luke & Argo, 2015).
Planning and designing of the inventory system is the third stage. The
inventory systems define the policies and organizational structure for the
maintenance and control of goods. The system helps in keeping track of purchase
orders, when to place the orders and how to supply. A technological technique is the
efficient one, which should be having a lot of consideration. The software has been
in use for almost five years to help in monitoring the inventory process (Hiiemaa,
2015).
The three steps in inventory management give us the detailed procedure used
in the inventory management of Golden Bridge Food Company. There are a tight
procedure and monitoring systems that prevent cases of mishandling goods. There
many advantages of this inventory management system. The computerized system
helps in saving time, which is important in accomplishing other tasks; it also helps to
boost the efficiency of the organization (Ready, 2017). When inventory management
becomes automatic, the rest of the departments like data collection, recording and
analysis becomes automated making the organization have increased efficiencies.
Data security, uninterrupted production, and adequate stock are also some
advantages (Ready, 2017).
The disadvantages associated with inventory system is that the software is
expensive to install and maintain, the system also needs a continuous update that
will help in keeping the monitors alert. This is at times very tiresome. Complexity is

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another disadvantage in that the process of learning how to use the system may be
complicated and requires an intense training (Ready, 2017).
Recommendations for an improved Inventory Management System
For more efficiency in the inventory function of the company, various
improvements need to apply. The company should employ advanced software to
facilitate inventory management. I propose the use of enterprise resource planning
software that helps the company to optimize inventory levels through the
identification of when to purchase and to fulfill demand from the customers (Hiiemaa,
2017).It brings transparency to the general process of inventory management. The
company should also establish cloud-based inventory management systems, which
can provide cost-effective systems while offering access to many users across the
world. This will increase the company's market share.
Conclusion
In any organization, there is the integration of the different departments in
order to ensure the achievement of the set goals. Logistics, one of the functions in
an organization cannot stand in isolation; it interfaces with various functions like
marketing, finance and accounting together with production to ensure customer
satisfaction. Logistics interfaces too with the order processing and inventory
management. Different companies depending on the market environment will use
different ways of order processing. The standard order processing used is sales
inquiry, preparation of quotation, order acceptance, dispatching and invoicing. The
whole process ensures delivery to the customers. There are many challenges that
accompany this process; this challenges led to the development of an automatic
process, which facilitates faster delivery of goods to customers. Inventory
management, just as logistics function of an organization, is very important. It
facilitates the entire process in which there is a movement of products into and out of
the company's location. Without the integration of inventory management and
logistics, it will be difficult to achieve inventory management objectives. Companies
or organizations require cohesion of the different departments in order to ensure
achievement of the general goal and mission of the company.

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References
Carr.S. (2015). Order Processing systems changes to fulfill orders faster. Retrieved
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fulfillment/.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Hiiemaa. K. (2015). Effective Inventory Management. Retrieved on 28/09/17 from
https://erply.com/effective-inventory-management/.
Lin, Y., Pekkarinen, S., & Ma, S. (2015). Service-dominant logic for managing the
logistics-manufacturing interface: A case study. The International Journal of
Logistics Management, 26(1), 195-214.
Luke, G., & Argo, C. (2015). U.S. Patent Application No. 14/819,928.
Min. H. (2015). Principles of supply chain management. Retrieved from
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objectives-pros-cons/
Sadie, N. (2012). Growing markets with processed foods.
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