Understanding Operations, Logistics And Supply Chain Management

This report discusses the theories, issues, and solutions in operational, logistic, and supply chain management in the context of Volkswagen. It explores the importance of managing suppliers, maintaining quality, mitigating risks, and using technology. Recommendations include optimizing the supply chain and maintaining quality, while conclusions highlight the need for strong supplier relationships and strategic decision-making.

Understanding Operations, Logistics And
Supply Chain Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Critically review relevant operational, Logistic and supply chain management theories......1
Analytic discussion with relevant and similar example and applying appropriate solution of
operational management.........................................................................................................4
RECOMMENDATIONS.................................................................................................................5
CONCLUSIONS..............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
For any company whether it is a manufacturing industry or is a hospitality service
sector it is very essential for the management to work according to the set goal. There are
different operational functions which need to be performed in the organisation like that of
producing, financing or selling and distribution of the product of the company. The following
report is based on Volkswagen a car and automotive manufacturing Germany based
company. There are many operational, logistic and supply chain management work need to
be performed by the company throughout the world. Volkswagen is the worlds the largest car
manufacturing and selling company with having the current revenue of about €105.6 billion
in the year 2016. The company is making the decision regarding manufacturing of car then
marketing of car and then earning of profits. Volkswagen is having its suppliers all around
the world where they need to do the negotiation and then make the decision at company level.
Critically review relevant operational, Logistic and supply chain management theories.
Volkswagen as it the best known car and automotive manufacturing company of the
world and operating throughout the world in almost all the countries of world. The company
need to operate in number of areas across the world and they also need to manage the supply
chain as having many suppliers in all the countries (Sindi and Roe, 2017). Operational
department of Volkswagen work on the basic functional area of company which deals with
the day to day working of company. Which mainly include the manufacturing and assembling
of parts of car and make the tactical decision regarding the operation. All these decision are
made by the higher level of management which form a framework in the supply chain of the
company and also help to take the best competitive advantages. As Volkswagen is having a
global suppliers and company need to negotiate contracts to make the decision on company
level which help them to take advantage of Volkswagen global buying power. They need to
find those types of suppliers who will be able to sell the products of the company on a cost
saving purpose. Logistic is that part of Volkswagen which help it to identify cost saving
benefits and the 3PL company has integrated them into supply chain. To bring efficiency at
lowest cost strategies and tactical supply chain decision are made within the framework of
operational decision. In the automotive industry and the company like Volkswagen there are,
many issues regarding operation, logistic and supply chain management are faced and they
are also needed to solve at the management level (Prajogo, Oke and Olhager, 2016). The
operational function also support the market in which company is operating and then deliver

the service or the product which the company is manufacturing. The major issues which are
faced by the operational, logistic and supply chain management are as follows:
Managing inventory- this is the major risk which is faced by Volkswagen and they also
need to overcome it as this can become very irresistible if the material or inventory are been
wasted. This is majorly because of the warehouse in which Volkswagen is keeping the goods
and then handling them (Major Issues Facing Supply Chain Managers, 2017). Volkswagen
should maintain the level of inventory so that it is not wasted in larger quantity. The main
focus of the inventory manager is to limit the use and wastage should also be minimum.
Management of inventory is mainly done by the manager on charge who prevent insufficient
inventory which can reduce the effect on profit if they do not minimize the use.
Maintaining safety and quality- the quality of car which Volkswagen is producing and
manufacturing is best in all the aspect and after the emission scandal of 2015 Volkswagen is
focusing on it. They also face the problem of safety of the employee or the engineers who are
involved in the process of manufacturing (Jabbour and Renwick, 2017). The safety and
security of the customer and their family is also of the big concern of the company. As now it
is proving almost 6 airbags in the new model of Volkswagen Jetta. After the emission scandal
of the year 2015 Volkswagen has maintained the quality of car and focusing on fuel efficient
cars.
Risk mitigation- this is also a kind of risk which is faced by the company in which mainly
supply chain is affected (Major Issues Facing Supply Chain Managers, 2017). Like if there
are earthquake in North America then it should not affect the sale or supply of car in Asia or
any other part of the world. So there must be adequate backup plan which are to be there at
this type of situation which can also be if one supplier became insolvent then this should
effect the company on large part.
Technology- this is also a kind of operational or supply chain management problem which is
faced by the company. If Volkswagen is not able to make good and efficient us of the latest
technology then it will be possible of it to grow in the market. As the best use of the latest
technology and the implementation of it is very much important for the company as this help
it to increase the customer base. But to set up a very innovative team and then to regulate
them is also not an easy task for such a big organisation like Volkswagen.

Customer service- more the number of customer are happy and satisfied with Volkswagen
and its product more if the profitability of the company in market (Stanwick and Stanwick,
2017). Volkswagen always want to retain the customer by providing them the best quality of
service to its customer. But it is not possible to satisfy all its customer as they can be
unsatisfied by the availability of product or delivery of car. As supply chain is all about
providing right product in the right quantity to the right place and at right time. This can be
both simple and can get more and more complicated if supply chain is not maintained by
Volkswagen.
Volkswagen can improve the performance of company by simply identifying the
problems which are there in working and operations. Customer service should be the major
area of concern of managers at all levels. They should also maintain the quality of product
which is been produced as it is launching much fuel efficient cars which will also be earning
a good deal of profit for the organisation (Aitken, Deakins and Towill, 2016). Hence, they
must identify that operational and supply chain is an integral function and should be used to
reach out targeted audience and Volkswagen will not afford to go wrong with it. All the
supply chain professionals should be very peculiar about knowledge of operational field
which they are having and then work according to it.
Operational management is planning of improvement and designing of
transformation process which help Volkswagen in converting input like raw material, labour
and into output like goods and services. Operational management is the main purpose of
Volkswagen as it manufacturers best selling cars at higher quality which help them to reduce
cost and increasing profits of company. This also help Volkswagen in producing the fuel
efficient cars which are having a lower environmental emissions. The main functional areas
of operational management are finance, marketing and operation management. The theory of
operation describe how device or system can work and this include the documents or the user
manual (Vanpoucke and Muylle, 2017). This involve the process by which the raw material is
converted into a finished product with the use of labour and energy. While logistic is the art
of managing the supply chain and science of managing and controlling of flow of goods,
information and also the resources like energy. This is also concern with the integration of
information, transportation, inventory and warehousing of all the works and operation of
Volkswagen. Whereas the supply chain management is process of planning, implementing
and controlling the operations or supply and also work efficiently. It is also concern with the

movement and storage of raw material, work in progress and also the finished goods till that
time of its distribution. There are some theories of supply chain management but no theory to
explain existence or boundaries of supply (Holland and Yates, 2016). If there are any new
products which need to be launch like Volkswagen Jetta been launched with having 6 airbags
in it so company need to manage supply chain in all the countries and then help suppliers in
selling the car. It also developed service development and process of raw material being
formed to finished product. The after sale service which Volkswagen will be giving to
customer should also be very good so that customer is retained. They also need to mange
quality of car and avoiding the use of any harmful gas been emitted from car like was done in
2015. All the people who are involved in operation and supply chain need to be managed by
company so that they help company to grow. Logistic will be including channels of
distribution, networks, transportation, managing inventory and capacity.
Just in time or JIT manufacturing is a method which is aimed at reducing the flow
time in production system and response time in suppliers to customer (Reid, Ismail and
Sharifi, 2016). In this methodology it is important to find potential suppliers who can on right
time supply quickly all the orders. This is a theory of supply chain management which mainly
involve find right kind of supplier to supply raw material and then finished goods as well.
Analytic discussion with relevant and similar example and applying appropriate solution of
operational management.
Operational management is the area of which is mainly concerned with the designing
and controlling process of goods or services of Volkswagen. It is also the responsibility
which ensure business operations are very efficient in terms of using all the required and
available resource to their optimum use. It also focuses on meeting all requirements of
customers and managing entire production system of Volkswagen. The efficient conversion
of inputs like raw material, labour and energy into output like finished good and services.
Operational management is also concerned with the maintaining quality of service and
products (Simatupang and Sridharan, 2016). It requires both strategic and day to day planning
of production of goods and services and then decision regarding product designing,
management of quality and production planning. Inventory control is also included in this
operational management process as inventory is basic requirement of Volkswagen and then it
is necessary to mange it. To do minimum wastage of raw material and that of resources are
also significant in the way of operational management. The productivity is all depended upon

considerable use of technology, division of labour and that of capital in the most significant
manner.
Safety, risk and their management is another area which need to be involved in
operational management so that no one in the factory or site of Volkswagen is injured. This
safety is also concerned with the security of person who is driving Volkswagen car and the
others who are setting inside who are the customer of Volkswagen (Giannakis and
Papadopoulos, 2016). The potential area which need for improvement in Volkswagen is the
production or manufacturing department. As there is need of a good technique which are used
at the time of manufacturing of car. The technological advancement also need to be there. As
Volkswagen is generally manufacturing all types of cars from family to a sports car as it need
innovation in all its car model. Quality control and it's checking before any model of car is
going to showroom or to its end use customer must be done. The bad quality of car hit the
reputation of company and then they need to be called off from customer. Like it was done in
the emission scandal of 2015 and notice was issued for violation of clean air act in US. This
effected the sale of Volkswagen to a very big extent as it was tested and found correct that
there was emission of nitric or nitrogen oxide which is the main source of air pollution. This
cause formation of smog and acid rain in atmosphere and this very harmful for the
environment. Because of this emission Volkswagen need to call about 11 million cars from
all over the world during the period of 2009 and 2015. It became the target of many
regulatory investigations in several countries price of stock market fell gradually within third
day of the news. Thus, it is very important to maintain the quality of products and services in
operational management and then control it.
It is essential for Volkswagen to improve the performance of car in market, increase
profits and sales, improve the productivity of employee as well. There are three dimensions
of sustainability in Volkswagen which are economic, environmental and social factors and is
important to analyse them. Economic factor of company can increase the sale and reduce the
cost of company as they can use the best technology in the production of car. Environmental
factors were the main hindrance in the profit of company since last decade as because of the
gas emission scandal (Oldenkamp, van Zelm and Huijbregts, 2016). Social factor are also
part of Volkswagen profit as it is defined as the best selling car company of world and is
generally categorised as people's car.

RECOMMENDATIONS
 It is important to use the right place, right people and right time to supply raw
material and finished goods to customer.
 The quality of service and products need to be maintained in the process of production
and distribution as well.
 To minimize the risk it is important to identify all the risk which are involved in
supply chain and operational management.
CONCLUSIONS
From the above essay on operational, logistic and supply chain management it is
concluded that for such a big firm like Volkswagen it is important to deal with many types of
suppliers. The issue like customer quality which is faced by Volkswagen need to be solved by
giving them the best quality of service. Managing the relationship in supply chains with the
suppliers are also essential so that company can get the best kind of people in supply chain. In
the logistic decision strategic and tactical supply chain decision in logistic process in
Volkswagen focus on the third party logistics company (3PL). There are many operational
and supply chain issue which are faced by Volkswagen and how they are solved.

REFERENCES
Books and Journals
Aitken, J., Deakins, E. and Towill, D., 2016. A comparative study of manufacturing and
service sector supply chain integration via the uncertainty circle model. The
International Journal of Logistics Management. 27(1). pp.188-205.
Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk
management approach. International Journal of Production Economics. 171. pp.455-
470.
Holland, S. P., and Yates, A .J., 2016. Damages and expected deaths due to excess NO x
emissions from 2009 to 2015 Volkswagen diesel vehicles. Environmental science &
technology. 50(3). pp.1111-1117.
Jabbour, C. J .C., and Renwick, D. W. S., 2017. An analysis of the literature on
humanitarian logistics and supply chain management: paving the way for future
studies. Annals of Operations Research, pp.1-19.
Oldenkamp, R., van Zelm, R. and Huijbregts, M. A., 2016. Valuing the human health
damage caused by the fraud of Volkswagen. Environmental Pollution. 212. pp.121-
127.
Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes: Linking supply
logistics integration, supply performance, lean processes and competitive
performance. International Journal of Operations & Production Management. 36(2).
pp.220-238.
Reid, I., Ismail, H. and Sharifi, H., 2016. A Framework for Operational Agility: How
SMEs Are Evaluating Their Supply Chain Integration. In Managing in a VUCA
World (pp. 151-168). Springer International Publishing.
Simatupang, T. M. and Sridharan, R., 2016. A critical analysis of supply chain issues in
construction heavy equipment. International Journal of Construction Management.
16(4). pp.326-338.
Sindi, S. and Roe, M., 2017. The Evolution of Supply Chains and Logistics. In Strategic
Supply Chain Management (pp. 7-25). Palgrave Macmillan, Cham.

Stanwick, P. and Stanwick, S., 2017. Volkswagen Emissions Scandal: The Perils of
Installing Illegal Software. International Review of Management and Business
Research. 6(1). p.18.
Vanpoucke, E., and Muylle, S., 2017. Leveraging the impact of supply chain integration
through information technology. International Journal of Operations & Production
Management. 37(4). pp.510-530.
Online:
Major Issues Facing Supply Chain Managers. 2017 [Online] Accessed through:
<https://blog.procurify.com/2015/06/10/4-major-issues-facing-your-supply-chain-manager/>