Logistics Management - Essay Example

Logistics Management Logistics Management In the current competitive environment, businesses require speed in delivery, design, concept, and production. This will give them a competitive edge over their rivals by increasing customer satisfaction. Logistics management is the governance of the functions of the supply chain. This includes fleet management, transportation management, warehousing, order fulfillment, network design, and supply planning. The functions of the logistics management may also include customer service, sourcing and procurement, production planning, and packaging and assembly. An organization can automate the workflow and management of the supply chain. There are different categories of logistic automation software that can help streamline the supply chain. Logistics management coordinates all logistics activities and integrates them with marketing, sales, finance, and information technology. Logistics also govern the complex information systems, communication, and control systems required in the business environment (Barnes, 2011). The success of a business depends on how fast it can manufacture, transport, get raw materials, improve the quality, and timely delivery to the customer. The transportation infrastructure of Multi-niche is poorly managed and organized. The supply chain heavily relies on transportation of raw materials and finished product. A well managed transportation system ensures products reach their customers at the right time and are distributed to the right destination. Constant communication and fleet tracking is necessary between the transportation department and fleet drivers. Multi-niche lacks the capacity to track the transportation process, which leads to the loss of products after they leave the warehouse. This will increase their accountability for customer products both in the warehouse and during transportation. The company also has to expand the capacity of their transport network in order to accommodate an increase in customer demands. The quality of service is also poor. Drivers deliver goods to the wrong doorstep or to the post office without attaching delivery notes. The customer order processing department at Big W is poorly managed. Customer orders take long to deliver due to an increase in the number of orders. Customer orders should be processed upon receipt and the product specification details determined. The department has to communicate with the customer regarding the date of delivery and the location. The company has to process the order according to customer specifications. In the current situation, the company takes a long time before delivering the products to customers. Some customers also receive part of their order and some products are never delivered. The store does not inform customers when their products are received, which is an indication of poor customer service. The store is supposed to inform the customer about their products upon receipt and the collection process. The customers in Big W have to keep on enquiring about the delivery of their ordered products. The highest numbers of parcels in Australia flow through the international mail and are subjected to manual and labor intensive handling processes. The Productivity Commission is mandated to investigate matters related to parcel handling. Retailers have to register their imports and exports with the customs for taxation purposes (Australian Government Productivity commission, 2011). The commission has made recommendations to the government to reduce the cost of parcel handling. The retailing sectors wants the government to exempt low value threshold for imported and GST goods. Most imports are subject to a low value threshold of $1000, and imports below this threshold are exempted from indirect taxes, fees, and charges (Board of Taxation, 2010). According to the commission, lowering the threshold to $20 would increase the parcel processing fee. Online retailing has increased the number of international parcels handled in Australia to over 58 million. Reducing the number of parcels subjected to LVT would increase the number of parcels processed within a given period. The current growth in the number of parcels in Australia has been increased by the increase in online shoppers from overseas. This has increased pressure on the existing facilities of Australian customs and Australian Post. Domestic and online retailers account for over 6 per cent of the total retail spending in Australia. Market analysts have projected a growth rate of 10 to 15 per cent per annum (Forrester Research, 2011). The daily post handles mail and the number of letters sent has drastically reduced due to reliance on e-mails. This has created several speculations that the Post may turn into a fully fledged bank or a telecommunication service provider. The constrained infrastructure of parcel handling in the Australian post has led to delays in parcel delivery. The high number of parcels ordered during the festive season s overstretches the parcel handling facilities at the Post. This causes delays on Christmas deliveries experienced by multi-niche online retailer. The cost and infrastructure of handling parcels in the country can be improved. Market analysts have indicated that the postage cost of parcels is a major limiting factor for online retailers. Freight cost between Auckland and Sydney is lower than those between Melbourne and Sydney. The geographical location of Australia also increases the postage cost of imported parcels. The Australian Post can introduce price caps for online goods delivered within Australia. This would include reducing the postage cost for online purchased goods. There are third party companies involved in parcel postage and freight services. These companies may impose different price rates that make parcel postage expensive. The government can regulate the rates imposed on goods for local delivery, exports, and imports. The commission can also regulate the duty and local handling charges imposed on exports and imports. This includes exempting certain products from import or export levy and reducing the overall tax rates for imported products (Zsidisin, Voss and Schlosser, 2007). According to ANRA, retailers face relatively high transportation costs when importing their goods. Customers also prefer online shopping through companies that provide tracked shipping of goods. In Australia, very few companies offer tracked shipping compared to overseas countries such as USA. This makes it safer to order goods from the U.S rather than from Australian retailers. Retailers can fix RFID chips on goods being transported and bumper bar codes on transportation trucks. This will improve the delivery system by reducing the number of products lost during transportation. Customers require real time updates regarding products on transit. Retailers require the necessary infrastructure that can give customers real time updates about the location of supplies. The country has a poor transportation network that delays the movement of freight vehicles. Transport networks between cities and regional areas, and across metropolitan cities is poorly developed. Traffic congestion delays the movement of goods requiring interstate transportation. An improvement in the transport network would reduce the transportation time. The Australian post can introduce collection points that enable customers to collect their parcels at any time of the week. Customers can collect items at their convenience instead of waiting for slow delivery by the Post. This would reduce congestion at the post offices due to the large number of parcels received by Australian Post. The Post can introduce different shipping lines for goods purchased online and another for mail and other parcels. This involves the creation of a department that deals with the delivery process of online purchased goods. The introduction of tracked shipping would reduce the amount taken during transportation. Transportation crew may take long to make deliveries or deliver goods to the wrong location. Continuous tracking enables customers and workers at the Post to monitor the movement of goods for convenient delivery. Tracking services also create confidence in customers due to guaranteed safety of their goods. The customs department makes it mandatory to declare imported goods. The customs department calculates the amount of duty to be paid for imported goods. The declaration and duty processing activity involves filling of forms and payment advice list. Fast declaration methods such as the use of barcodes and RFID chips would improve the activities of the customs department. The customs office does not accept personal checks for duty payment. A merchant fee is also charged on importers who pay for their duties using visa cards, MasterCard, and other credit cards (Customs, 2008). A more flexible payment process is necessary for clearing custom duties for different categories of goods. This would involve the use of personal checks and a reduced merchant fee for online shoppers. The use of mobile money transfer systems would also enhance the process of paying custom duties. Retailers can pay for their goods from any part of the country through mobile money transfer services. The customer order processing logistic system at Big W online is dysfunctional. Order processing involves filling a form; determining product specifications; drafting a quality check list; developing a delivery schedule; and determining the location of delivery (Waters, 2010). The order is then entered into the system, which to signify the beginning of product preparation. Taxation and other price requirements are conducted on the order such as crediting. During the ordering process, the retailer also determines the availability of the product and determines the delivery process. Prices and discounts to be provided to the customer are determined once the order is processed. The retailer identifies the supplier of the product and drafts a delivery plan for ordered goods. The ordering process at Big W is not well coordinated between the supplier and the retailer. Products ordered from different manufacturers take long before deliveries are made. Some of the products are not delivered in the right quantity within the stipulated time. The customer service process is also not well developed within Big W online retail business. The customer service department determines the contractual services required for the client, customer service, location of service, and service level. Changes in the product specifications are received by customer service. The changes are then forwarded to the order processing department to incorporate the changes (Fawcett, Ellram and Ogden, 2007). Customers are informed about the progress of their orders through the customer service department. They are informed about any delays in delivery and the quantity available for delivery. Customers purchasing from Big W have to contact the organization to make a follow up of their orders. The organization is supposed to inform the customer once the products are ready for collection or delivery. Late delivery forces customers to look for alternative sources of their products, which is an increase in expenses. The process of order processing can be improved by automating the system. This involves the introduction of enterprise resource planning software that handles the ordering process. The use of software quickens the process by eliminating manual errors and bottlenecks. This establishes a smooth flow of sales quotes for approved orders, order fulfillment, and timely invoicing (Gunasekaran and Ngai, 2003). The software incorporates a portal that forwards order requirements to manufacturers and suppliers. This reduces time taken before the supply can deliver goods to the retailer. Automated order processing systems provide an interdepartmental information flow that quickens communication between departments. The organization has little insight on customer orders, which delays the delivery process. An automated system contains real time information regarding approved orders. The retailer can track the product preparation process by the supplier. The system also contains information that can be accessed by customers as a follow up of their orders. An electronic data interchange (EDI) is a structured data transfer between organizations in a supply chain. EDI transmits electronic documents and data from one organization to another. The organization can transmit orders to different suppliers once they have been improved. A streamlined data transfer reduces the time taken to send orders to manufacturers and suppliers (Cao, Gruca and Klemz, 2004). A reduction in human interaction with the transmission process leads to few errors. Suppliers and manufacturers also transmit information regarding product availability through the same infrastructure. This speeds up the product preparation and delivery process. Big W can increase their access to the progress of customer orders through the use of EDI. Quick access to customer orders helps the customer service department deliver timely responses to customer enquiries. A timely and accurate response helps build a trusting relationship between the organization and customers. Automated systems also improve customer service by providing a complete self-service access to order and delivery process. This increases the ease of conducting online business for Big W online. Big W online has outsourced the services of a third party logistics company. These companies handle transportation, distribution, inventory management, and warehousing. Logistics outsourcing aims at reducing the length of order cycle, overall inventory reduction, and logistics cost reduction. The relationship between the 3PL providers and the organization determines customer satisfaction (Doney, Barry and Abratt, 2007). The current relationship between Big W and the 3PL company is not successful. The company manages online orders for internet shoppers. Big W is the retailer and the 3PL company deals with customer orders and delivery. Most online shoppers fail to get the complete package they ordered due to poor online order processing by the 3PL company. These two organizations have failed to establish a successful relational exchange, which has led to delays in customer order processing. The success of a business involved with 3PL companies depends on the information flow between the two institutions. Big W has several online shoppers, and the logistics company has the responsibility of handling and processing online orders. The retention of customers relies on the overall performance of a company. This includes the performance of outsourced business activities. The performance of Big W relies on the order processing capacity of the 3PL company. Satisfied customers increase their purchases from the retailer, which helps an organization retain its customers. The commitments, communication, trust, and dependency on the 3PL determines the relationship with the retailer (Bolumole, Frankel and Naslund, 2007). The credibility of the relationship between the two partners relies on the efficiency of the 3PL company. The 3PL company hired by Big W is not efficient due to its inability to process the large number of online orders. Delays in product delivery are mostly caused by slow order processing and communication breakdown between the two companies. Some improvements are required in the online retailing industry in Australia. Improving the transport network in the country will reduce transportation time and cost. The amount of time taken by goods in transit determines the transportation time. Customs officials have to streamline the process of declaring products and paying duty fee. Reducing the amount of taxes imposed on online purchased parcels will ensure a fast customs clearing process. A reduction in taxes will also increase the number of parcels purchased from online stores. Reducing shipping charges would also increase the number of customers who conduct online purchases. Tracking goods in transit enhances the security of goods, which attracts more customers. The use of automated order processing systems reduces human errors and increases the flow of information between different departments and business partners. The speed of order processing determines the time taken to deliver purchased goods. The relationship between 3PL companies and online stores has to be successful in order to increase the number of orders processed. In conclusion, the success of an online retail business depends on the supply chain. The logistics involved in the chain have to be managed properly to ensure customer satisfaction. Order processing determines the quantity, quality, cost, and delivery date of goods. Timely delivery relies on how fast orders are processed and on the efficiency of the transport network. Customer satisfaction depends on the quality of goods and timely delivery. The information regarding ordered products should be accessible by customers and should be up to date. Logistics management is necessary for cutting the lead times in the manufacturing process and office operations. These operations include the relationship with third party logistic companies. A successful relationship ensures timely delivery, increases the market share and boosts customer satisfaction. References Australian Government Productivity commission. 2011. Economic structure and performance of the Australian Retail industry. Productivity Commission Inquiry report, 56, Nov, 2011. Barnes, P. 2011. Multifactor Productivity in Growth Cycles at the Industry Level, Productivity Commission Staff Working Paper, Canberra. Board of Taxation 2010, Review of the application of GST to cross-border transactions: A report to the Assistant Treasurer, February, 2010. Bolumole, Y. A., Frankel, R., & Naslund, D. (2007). Developing a Theoretical Framework for Logistics Outsourcing. Transportation Journal, 46(2), 35-54. Cao, Y., Gruca, T. S., & Klemz, B. R. (2004). Internet Pricing, Price Satisfaction, and Customer Satisfaction. International Journal of Electronic Commerce, 8(2), 31-50. Customs (Australian Customs and Border Protection Service) 2008, Australian Customs Notice No. 2008/43, 12 September 2008. Doney, P. M., Barry, J. M., & Abratt, R. (2007). Trust determinants and outcomes in global B2B services. European Journal of Marketing, 41(9/10), 1096-1116. Fawcett, S. E., Ellram, L.E., and Ogden. J. A (2007). Supply Chain Management: From Vision to Implementation. Upper Saddle River, NJ: Pearson Prentice Hall. Forrester Research 2011. Australian Online Retail Forecast, 2010 to 2015, 28 January. Gunasekaran, A., & Ngai, E. W. T. (2003). The successful management of a small logistics company. International Journal of Physical Distribution & Logistics Management, 33(9), 825-842. Waters, C. D. J. (2010). Global Logistics: New Directions in Supply Chain Management. London: Kogan Page. Zsidisin, G. A., Voss, M. D., & Schlosser, M. (2007). Shipper-Carrier Relationships and their Effect on Carrier Performance. Transportation Journal, 46(2), 5-18. Read More