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International Logistics: T&L - Essay Example

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Contemporary business environment is indicative of a highly competitive marketplace wherein every organization is involved in applying innovative strategies which seek to align their resources in a manner that help them gain a niche in their respective industries, and attract a larger consumer base in the process. …
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International Logistics: T&L
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Download file to see previous pages As the number of companies offering homogenous products flood the markets, the competition to retain and /or expand consumer base intensifies even further. The growth and survival of the companies, in such an environment, hence directly depends on their internal operational processes as well as effectiveness of the same, and their efforts towards profit maximization. Inventory management, has ever since, gained widespread importance as one of the key strategic alternatives available to companies to retain and sustain their longevity in the business and prolong their competitive positioning in their respective industries (Muller, 2011; Tersine, 1994). There is a strong and direct relationship between stock management and profits; hence the issue of effective stock management has gained considerable significance and momentum as a key strategy to increase financial returns through minimal investment. The strategy applied by Tate & Lyle, of investing in warehousing facilities, contrary to popular wisdom suggesting against it, is a case in point. This paper aims to discuss the key reasons behind the company’s decision to continue to invest in warehousing facilities despite the fact that almost all the modern theories on inventory management suggest otherwise. It also discusses the various ways in which warehouses can be managed economically. Stocks act as a safety buffer between orders placed and received, and acts a safeguard for the companies to cope with unexpected demands (Waters, 2003; Voortman, 2004). Some of the other key reasons for inventory holding are listed below: Capacity planning: Holding of inventory helps companies in capacity planning and scheduling production processes, thus providing them the ability to manage and control the raw material requirements within a specified period of time. Coping with unpredictable demand: It helps them in coping with external economic conditions such as fluctuations in demand, change in consumer preferences etc. Coping with unreliability in supply network: Companies may often face situations whereby the supplier network breaks down, or the suppliers are unreliable and fail to deliver the products on time, in such a case inventory holding acts as a boon. It also safeguards them from losses in situations where there is a serious shortage in supply of required raw materials (Muller, 2003). Protection from cost inflation: Inventory holding protects the companies from sudden rise in prices of required materials, due to inflationary pressures. Furthermore it also helps the company in managing and controlling ordering costs, since buying in bulk affords them the opportunity to save the additional costs involved in repeated purchases. According to Hugos (2011) one of the key advantages of inventory holding, is cycle inventory. Transportation of products or raw materials across different locations entails delays. Hence, in order to exploit the economies of scale with regard to production, procurement as well as transportation, firms are required to reduce the time delays on account of transportation of required materials, which can be ensured only through bulk buying and storing of such materials, thus giving rise to cycle inventory. Holding of inventory safeguards the firms against market uncertainty by helping them cope with unexpected rise in demand. The benefit is calculated in terms of a trade-off between holding large amount of inventory and loss of profits due to inability of the firms to cope with ...Download file to see next pagesRead More
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The topic of "International Logistics: T&L" is quite popular among the assignments in university. Still, this document opens a fresh perspective of seeing the issue. I’ll use the idea for my own paper.

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