A Comprehensive Report on John Deere's Logistic Management System

This report provides a comprehensive analysis of John Deere's logistic management practices. It begins with an introduction to the company and its commitment to customer service, highlighting the importance of supply chain management. The report then delves into the structure of John Deere's supply chain, including indirect materials, external services, inter-factory operations, and electronic solutions. It examines the company's supply chain management strategy, focusing on cost reduction challenges and the methods employed, such as optimizing terminal locations and utilizing third-party logistics providers, like ocean transportation and freight forwarders. The report further explores John Deere's order processing systems, transitioning from manual to automated processes, and details the customer order cycle, data processing, billing, and delivery. Inventory management and performance improvement, including the use of fuzzy logic, are also discussed. The report concludes with an overview of John Deere's multiple products and services and its continuous efforts to achieve growth in manufacturing.

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Logistic Management
Student’s Name
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Table of Contents
Background and Introduction Company 3
Logistics Management and Supply Chain Management 3
Structure of Supply Chain Management 4
Supply Chain Management Strategy 4
Supply chain cost reduction challenges 4
The path to cost reduction 5
Supply chain cost management 5
Order Processing System 5
Order Management Cycle 6
Customer Order 6
Data processing 6
Billing 6
Delivery 6
Improvement 7
Inventory management 7
Performance Improvement 8
Conclusion 8

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Background and Introduction Company
Back in 1837 Blacksmith John Deere made an innovative step to develop the farming
industry by the use of a self-digging steel plow. This plow invention helped the farmer and
completed work efficiently. Therefore, by the use of this innovative product, the work output
had increased and labour efforts decreased. Approximately over 180 years ago John Deere
started to produce more products with the use of emerging technology and data insight. The
company now offers a widerange of solutions for encouraging the modern farming concept in
the market (Zhivitskaya and Safronava, 2015).
John Deere works with the motto of commitment and the company is committed to
offering the services to the people who are connected with the land. The company offers
distinct products and services with distinguished value. To achieve the success, the company
promotes the relationship building with their suppliers and provide services which cannot be
pursued by the other competitors available in the market (Fugate et al., 2010). The supply
chain management plays a significant role in providing innovative services to the customers.
John Deere always tries to give finest solutions and values equipment support to complete the
needs of the customers. Deere & Company is a renowned company for the supply of
machinery that is used in the agriculture and diesel engines. In the year 2014, John Deere
listed itself as the 80th company in the fortune 500 ranking by the Americans and 307th rank as
the Fortune Global(Lynn and Fish, 2011).
Logistics Management and Supply Chain Management
Supply chain management and logistics management both play vital role in the growth of the
organization. In respective to supply chain management if any variance is found in the
inventory, it can only be dealing with the effective logistics of the company. Logistics
management is the large process of maintaining raw material to the final stage of the products
packaging and distribution (Omar et al., 2012).
To influence prospect in developing markets John Deere focuses on uniting and
supporting supply chain management substructure, procedure, and processes to decrease the
costs and improve the efficiency of the processes. Every product category of the company has
its own supply chain process. Supply chain processes have several steps in the making of the
product from the initial stage to the final stage. These processes are separately known as the

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supply chains. Supply chains of the products can be complex and complicated(Peppard and
Ward, 2016).
Structure of Supply Chain Management
To understand the supply chain structure of the John Deere, first it is better to understand the
use of each supply chain (Joel et al., 2014). The company supports the four supply chain
management structure:
1) The first chain is known as the indirect material chain which includes services
like building construction and capital required by the company. As the
availability of these services is high in the market so they involve less risk as
compared with the other chains of the supply management.
2) The second chain is known as the external chain which includes third-party
services provide like logistics service providers (Attaran, 2012). It also includes
the suppliers of the parts those supplies are used in the operation of the John
Deere factory.
3) The third supply chain is the inter-factory chain. As John Deere has multiple
production factories to transport the product from one factory location to
another, it is done through this supply chain. These supply chains usually bear
heavy volume of the material and products(Omar et al., 2012).
4) Lastly, this fourth supply chain is the John Deere electronic solutions. The
company’s electronic solution wing wasformed in the year of 1987. The supply
chain produces the electronic components for the use of the John Deere
production unit (Peppard and Ward, 2016). Most of the components provided by
this unit are totally different from the rest of the components used by the
company. John Deere Electronic Solutions is also the primary supplier for the
inter supply chain. In order to get the product like control modules and
electronic circuits inter supply chain need to connect the JDES.
Supply Chain Management Strategy
Supply chain cost reduction challenges: The major challenge in the supply chain
management faced by the John Deere is the cost of the supply chains. As the company offers
numerous product range which is based on the consumer market and industry equipment

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too.Retail activity of the products is behaving as per the season. The majority of sales are
achieved in the month of March and July. So with the huge product sales, supply chain also
gets affected (Lynn and Fish, 2011). To handle the bulk product traffic John Deere needs a
valid supply chain process.
To achieve this, the company contacted their nearest warehouses regularly and tried to
complete the sales by getting the services from the nearby stores of manufacturing units. This
process was slow and time-consuming, so the company looked for the best idea for cost
reduction of the supply chain by at least 10 %(Lynn and Fish, 2011).
The path to cost reduction: To promote the reduction of supply chain costs, John Deere
redesigned the whole process of the supply chain management. The company has optimized
all the terminal locations to design the best plan for the supply of the products (KueiHuang,
2010). John Deere also increased the use of third-party logistics to attain the desired supply
chain cost reduction. The company mainly focuses on two types of service provider:
1) Ocean Transportation: Ocean transportation is the way to carry the goods
and by the use of ships. Ocean transportation is the part of the business unit
from the last 50 years. As per the current data, Wallenius Wilhelmsen
Logistics is recognized as the best service provider inthe John Deere
company by the John Deere excellence program(Lynn and Fish, 2011).
2) Freight Forwarders: Freight forwarders are especially known for the
shipping and storage of the product. With the shipping and storage, they also
provide another service like tracing transportation, export document, and
cargo insurance(Gill et al., 2010).
Other service providers are ground transportation and small packages.
Supply chain cost management: By incorporating the third party logistics suppliers, John
Deere managed to reduce the supply chain cost including inventory cost by $ 1 billion and
also annual transportation cost was also decreased by 5 percent (Gill et al., 2010).
Order Processing Systems
With the bulk supply of the product, the next challenge that came across the John Deere
production house is the order processing systems. Previously the company supported the

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traditional system for the order processing which consists manual entry of the data. However,
they realized that manual intervention may decrease the efficiency and only increase the
inaccuracy (Axsäter, 2015). With the same thought, they modify the order processing manual
system in the automated order processing system.
Order Management Cycle
 Customer Order: This is the stage where the customer can book an order for the new
product and service. This also provides the processed order information as well as
placing order information to the customer(Peppard and Ward, 2016).
 Data processing: Data processing can be considered as the important stage of the
order management cycle. As this is the stage where all the data were combined
together to check the status of the product or service books by the customers (Rushton
et al., 2014). By using the cloud-based network John Deere cuts down the in-between
data processing the doubled the speed of the process.
 Billing: Billing units of the company are fully based on the E-bill/ E-invoice format.
They support both indirect and direct methods for the processing of the bill. By just
sending the copy of the bill through an email company can process the order, as the
company believes in the fast services that can be achieved by cutting the payment
cycle time from the process(Omar et al., 2012).
 Delivery: After completion of all the process customers can receive their product
through the party logistics service providers.

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Improvement: Order processing system can impact the logistics function in two ways. If the
order processing system is implemented in the best way they can improve the quality of
information management system of the company. Another influence is the customers' order
messages set the logistics function motion. Accurate ordering system can lead to timely
delivery of the product and other series (Schaltegger and Wagner, 2017).
John Deere updated the company’s traditional ordering system with the cloud-based
automated system. The automated system resulted as the better way out with additional
benefits like efficiently and accurately. John Deere supports the cloud-based automated
system that can be accessed from anywhere and anytime. This system promotes customers to
process the order request and check the order status with less overhead. The system also
controls the order cycle automatically(Peppard and Ward, 2016).
Inventory management
Approximately two years back, some companies promoted the efficient customer response
methods to examine the supply chain process instead of controlling the logistics cost. In
recent times customer service became the center of attraction for all manufacturing industries.
John Deere is also focusing on the value-based services for the customers. In this type of
environment, the company decided to hold the inventory and focused onto improvisation of

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the customer service (Pettit et al., 2010). With this organization also faced the problem of too
less inventory and too much inventory.
Commonly, organizations have the perception that cuts the cost of supply chain
management better to cut the cost of inventory. In recent times the company followed the
same by reducing the inventory by 60%, therefore, transportation cost also decreased by 20%.
These methods promoted the inventory reduction strategies in supply chain
management(Pettit et al., 2010).
To understand the logistical strategy John Deere focused on the inventory cost, supply
chain capabilities, and product market demand (Mikell, 2016). There is so many organization
available in the marketplace, those use the different method to manage inventory like most of
the companies use the inventory control method, some manufacture focuses on the inventory
management approach and other never actively manage the inventory of the product. Some
popular methods for the inventory control are ReOrder Cycle, ReOrder Point (ROP) models,
and Economic Order Quantity (EOQ) model. However, these methods come with the limited
accessibility of the inventory functions. John Deer approached fuzzy reasoning method to
control the inventory and logistics management(Pettit et al., 2010).
Performance Improvement
The influence of many outer causes on the procurement logistics system sometimes
creates a situation for which right decision, making it depend upon some methods and tools
that can specify the properties of the event through numerous parameters like information
inaccuracy and changing parameters (Zhivitskaya, 2015). So the theory of fuzzy logic is the
best tool to manage the inventory and control in the field of logistics (Lau, 2016). Fuzzy logic
is the set of rules which can thoroughly model the human knowledge of the specific
application.This model is based on the fuzzy theories, fuzzy reasoning and fuzzy rules. The
typical structure of the fuzzy reasoning consists three sets:
1) Fuzzification: This set defines the member function for the defined input
parameters and calculates the degree of the parameters passed.
2) Output: after getting the membership degree output calculates the member
function of the output parameter of the model. This part consists rules, member
function, output mechanism and output parameter.

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3) Defuzzification: Defuzzification calculates the precise value for the output
parameter on the basis of the resulted member function. This result the numerical
value for the X.
Structure of Fuzzy model
Conclusion
John Deere is the organization with the multiple products and services. To achieve more
growth in the field of manufacturing it is important to modify the system structure of the
organization. In order to achieve the same John Deere can use the approach of modification
to rectify their supply chain management, order process management, and inventory control
management. Third-party logistics and the cloud-based system can help in the timely and
effective process of the products ordered by the customers. For inventory control main step is
to get the description of the company from outside and inside.
Using the knowledge decision system can be developed. This fuzzy set valid for the
handling of inventory management system under uncertainty. By implementing these method
companies can achieve greater heights. Once John Deere will start the process the company
can also start to recognize the paybacks- an organization that is more adaptable, flexible and
fully able to answer the business impulsiveness.
Fuzzification(MemberfucntioninputparameterX)xiRulebasedoutput,MemberfunctionoutputparameterYxiDefuzzification(DefuzicationMechanism)

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