Principles of Logistic Management

This report studies and evaluates the effectiveness of logistics concept through inventory management and order cycle within an organization. It focuses on the principles of logistic management, logistic interfaces, production interfaces, marketing interface, accounting interface, finance interface, order processing system, and inventory management.

Running Head: Principles of Logistic Management 1
Principles of Logistic Management
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Principles of Logistic Management 2
Table of Contents
Introduction....................................................................................................................................2
Logistic Interfaces..........................................................................................................................3
Production interfaces.................................................................................................................3
Marketing Interface...................................................................................................................4
Accounting interface..................................................................................................................5
Finance Interface........................................................................................................................5
Order Processing System..............................................................................................................6
Inventory management.................................................................................................................8
Conclusion....................................................................................................................................11
Reference......................................................................................................................................11

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Introduction
An organization with complex operations is essential to employ and implement the logistic
concept in its daily activities. Therefore, this means the background of logistics is to manage the
flow of resources from the source to the point of consumption aiming to meet the organizations
and customers’ requirements. However, the main activities in logistics are to have smooth
integration of material handling, information flow, packaging, production, transport, and
inventory within the organization (Zijm et al., 2019). The primary purpose of preparing this
report is to study and evaluate the effectiveness of logistics concept through inventory
management and order cycle within an organization.
Hitachi Group Limited Company is the selected organization which is going to be analyzed in
terms of logistic concept in the industry. The Company is offering a variety of products and
services to the market intending to improve innovation and value from one end to another by
applying logistic concepts. The Company is used to manufacture the following products,
information and telecommunication systems, power systems, social infrastructure and industrial
systems, electronic system, construction machinery, high functional material and components,
automotive systems, and intelligent life & eco-friendly systems (Sato, 2019). Hitachi Company
has a significant market share within its industry since its market is growing on both the public
and private sector with local and global markets. For example, the Company has a local market
here in Singapore, and in other global location like Japan, the United Kingdom, and Japan among
another where the Company also offers its product and services. The Company is not a
monopoly in the market; this is having a competitive edge which enables it to penetrate and be
victorious over its competitors. The Hitachi competitors in the market are Fujitsu Company, Atos
Solution Company, Nutanix Company, Mitsubishi Electric Company, NEC Corporation, and

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Toshiba Corporation. All these companies provide Innovation Technology products in the
market.
Logistic Interfaces
Production interfaces
For a Company like Hitachi, Limited to have a successful logistics management operations is
required to integrate with other interfaces within the organization like production unit, marketing
unit, and accounting and finance unit. For example, is essential to apply the logistic concept and
its functions to the production unit since are necessary for performing plant's activities, planning,
and process raw materials, controlling product quality and maintenance the overall activities
within the organization. The production unit is required to minimize the logistic cost and produce
a quality product within the limited resources (Wong et al., 2018). All this is achieved through
having just-in-time production, which involves creating what is only required in the market
without wasting other resources. The raw materials and out must always be equivalent to ensure
maximum utilization of the limited resources available using minimal cost. Hitachi Company is
responding to the production challenges of logistic by employing experts and modern
technology, which is used to improve the product quality and efficiency. The techniques of using
advanced technology save time to improve quality and utilize the production material to the
maximum level without wastage. That is why effective logistic is essential in production
planning since this unit is indeed of raw materials which are processed to final products, thus
meeting the customer needs and demand.
Marketing Interface
After the product are released from the production unit are required to be supplied to the market.
Also, the organization is required to employ logistic concept to its marketing strategies and

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transporting the final product from the Company to the customer destination. "Place" is a logistic
concept which applied in the marketing department, thus providing availability of the product for
purchase at the right time. Corporation of logistic activities and marketing strategies helps to
reduce the shortage of product, thus minimizing the warehouse cost, inventory, and
administrative cost, finally processing the required order in the market (Lamberti & Pero, 2019).
See the figure below.
Figure 1. The logistics and marketing interface
Accounting interface
Accounting concept is used to control and manage logistic activities in the organization. This is
by providing systems for performance measurement like recording the progress of operations in
books of accounting. The recording will also help to track the previous process and predict the

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future one how are supposed to be implemented in a better way to meet quality products in the
market as per customer demand. The exercise will reduce unnecessary expenses since all records
are kept well and less time will be used. Transparency is improved within the management of
supply chain resource used in the organization since it is being accounted through recording
(Machado & Gomes, 2018).
Finance Interface
Finance section is used to fund day-to-day operations of production and supply to the destination
areas, thus making them accomplished without the challenge of finance. The organization
utilizes this finance department by cutting the cost of different suppliers or through using the
discount technique, thus improving the service on the other side of the Company. The finance
principle much influences the decision in the supply chain, thus controlling the long-term
relationship in the production unit, warehouse, and in the transport system of the Company (Zhao
& Huchzermeier, 2018). Better designing, and branding of the product, it depends on the finance
factors because if the Company is well stable in finance can produce quality brands in the
market.
Order Processing System
Order cycle is essential to process within a manufacturing company like Hitachi Manufacturing
Company. Order cycle is required to support manufacturing item; therefore, being classified as
an internal process which can stand for its own and stand for subcontractors processes. To ensure
current order cycle within a manufacturing process, the following logistic instruction is required
to facilitate assemblies, parts, products and others which is used to identify the worthiness of the
item, suppliers, delivery process and time and the purchase of the product to market (Kain &
Verma, 2018). Hitachi Company has many manufacturing processes within its production unit;

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therefore, to manage successful execution, the Company applies logistic instruction. Each order
has been identified without confusing with other multiple orders through the use of identification
code up to the final stage of purchasing an item. Due to the sophisticated innovation and
manufacturing process practiced by Company, it has achieved a successful and productive order
cycle throughout by having classified order, thus improving the efficiency. Manufacturing order
is one of the classifications which deals with the operation orders internally and dividing them to
subcontract, which can handle them easily. Purchasing order deals with only purchasing order
items, and its logistic concept is to maintain suppliers’ data, delivery date, cost unit, and other
requirements of the purchasing item. Other orders are classified as subcontract orders, which are
determined as pre-set items in the manufacturing planning process while others are determined
after the procedure while outlying the supplier's date given in the logistic process. Other items
are classified as operation orders meaning are orders which are necessary to be manufactured
immediately after they are ordered to the manufacturing unit. Hitachi Company, after sorting all
orders according to have gone forth and employed experts who will manage orders status, thus
avoiding unnecessary delay between the purchasing, production, and supply chain.
Schedule order is essential since if any change made without approval in the chain will not
influence anything while fixed schedule orders are the one which when changes are made, they
must control the production cycle (Zhao et al., 2018). From that level, the order becomes fixed
order meaning has already accepted and placed with order identification no, which therefore the
order will be recognized as complete order if all necessary change has been implemented and the
order is reflected the inventory management. See the figure below for more information. All this
concept has improved the production cycle of the Company, thus becoming successful amongst
other activities of manufacturing. According to this study within the Company, the Company is

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required to involve Information Technology innovation at a higher level while dealing with the
logistic ordering process. This will help to achieve the logistics strategy of producing quality
order using minimal time and less cost since everything process is automated. The organization
is after implementing this is required to be ready to support multiple levels of deciding as to the
flow of information, products, and order will be more as schedule; thus meeting client’s demand
accordingly.
Figure 2. Order cycle process.

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Inventory management
Inventory management is the concept which helps the Company to deal with all non-capitalized
assets and stock within the Company. Hitachi Company has tried the best in maintaining
effective exercise within the sector of inventory management. The organization has successful
control of the movement of manufactured goods to the warehouse and facilitate them to the point
of sale according to the demand (Das, 2018). This is made without delay since the organization
experts in inventory management keep track of finished goods in and out of the Company. The
inventory management within Hitachi Company is involved since the organization is significant
since the organization has warehouse distribution, unlike other small business. The organization
has created transparency within the supply and demand chain, which has improved the inventory
management within the retailers and suppliers of the Company. The Company uses demand data
from them, thus being able to focus and have an active demand forecast schedule in production,
thus enabling the team to make an accurate decision towards the inventory production and
supply. Hitachi Company has been involved in the advanced management of the supply chain,
which has motivated the success in inventory management. Inventory control process within the
warehouse has been automated to produce active toward goods movement between distribution
centers and stores. This has facilitated good negotiation relation about the costs, product
placement, and the product costs. Also, the organization has maintained efficiency in inventory
management through having management campaign which has motivated tracking sales based on
the inventory. "Key Performance Indicator (KPIs)" has been used in calculating the delivery date
of the internal movement of the goods, vendor-ordering processes, and mix of cross-docking. All
this is automatically calculated basing the inventory management system implemented in the
organization.

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According to the logistics and inventory management techniques, Hitachi Company is required
to recruit more methodologies, which will result in more effectiveness and efficiency than
before. Due to its thousands of product handling in the store, the organization is recommended to
apply some methodologies like a Stock review, Just-in-time methodology, and ABC analysis
methodology (Ahmad & Zabri, 2018). If stock review is employed well in the organization will
help to analyze the stock in hand compared to the future projection of the need. This will
regularly motivate inspection of the inventory, which will facilitate minimal reordering level
from the suppliers. Another methodology recommended being practiced Just-in-time, which will
be based on customer demand behavior. This methodology will help the organization to research
more on the seasonal demand, purchasing pattern of the customers, and focusing on the
improved accuracy of time and place. ABC analysis will help the organization to classify the
inventory according to thus reducing the cost and increase the value of the goods. The improved
inventory management will handle each category according to the best sellers and buyers related
to each, respectively. This methodology is essential and recommended since it provides better
control as required for the high-value goods, thus minimizing inventory cost, which will result in
the provision of high quality promptly.

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Figure 3. Hitachi Inventory Management Diagram.
Conclusion
In conclusion, for the manufacturing Company in the industry are required to employ logistic
concept for their advantage in both production and market place. The logistics concept provides
efficiency and effective process amongst the several activities like order cycle system in the
production unit, and inventory management has it has explained in the above study. Supply chain
and logistic cannot operate as a standalone system within the organization; therefore, to provide
success in the supply chain it requires other sections of the organization. Marketing concept,
accounting, and finance concept, and production concept in all units within the organization.
These new concepts used to sharpen and support logistic operations to a sharp point. This
facilitates smooth movement of raw material from the source to the production unit, to the
warehouse and finally to the market thus maintaining the time and place factor within the
organization and in the market which is the final destination of the goods.

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All this has explained well and in details using Hitachi manufacturing limited Company, which
has survived within a competitive market by providing quality and timely products which
experiences minimal production and transport cost. Only this is achieved through the effective
use and application of logistic ideas in the organization.

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Reference
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in the relationship between inventory management practices and performance: The case
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Das, D. (2018). The impact of Sustainable Supply Chain Management practices on firm
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