Analysis of the State of Logistics - Assignment Example

Logistics Case Study [Name] [Course] [Lecturer] [Unit Code] [Date of Submission] Executive summary There has been much evolution in the supply chain such that today people are lost and sandwiched between a warehouse and a distribution center. However, literature on two existing categories of supply chain strategy that is, supply-focus and demand-focus strategies, broadly support cost focus and service focus that describe lean and agile ideas correspondingly. The two strategies endorse minimizing inventory in the supply chain and maximizing customer satisfaction. A warehouse is simply a facility put up to stock up supplies for a stretched period of time while a distribution centre is a facility put up to offer value-adding services to goods that are stored up for fairly short periods of time. Warehouses function in four main cycles that is, receiving, storing, picking, and shipping. Distribution centers operate in two main cycles; receiving and shipping. Some roles of a distribution centre include cross docking, consolidation, break-bulking, sorting and reverse logistics. Information and communication technology development has facilitated easy running of distribution centers. Introduction There has been much evolution in the supply chain such that today people are lost and sandwiched between a warehouse and a distribution center. Both facilities play a key role in supply chain management since they are the nodes in the supply chain where customer orders are brought together and shipped out and are for that reason decisive to the achievement or breakdown of various supply chains (Andel, 2007). Amid this mix up, this paper comes out to shed light on the distinction between a warehouse and a distribution center. Too, the paper surveys the contemporary role of distribution centers, for the most part regarding whether and how they fall in shape with current supply chain strategies. Background and Business Environment In ancient times, manufacturers and customers worked directly; the manufacturer produced the good and the customer bought it. However, with increased demand, customers ensured they bought more to meet up their needs; customers had the inventory. With the development of retail stores, customers could access a variety of options and had a stationary point from where to purchase their products, creating a new part of the supply chain process; inventory moved from customers to retailers who had to ensure they had enough goods to sale. In this development customers opted to buy smaller quantities as retailers would provide an ample supply to purchase from (Fassoula, 2006). With time customer demand kept on growing amid declining retailer space. This propelled the development of warehouses that entailed facilities offering extra storage space enabling retailers to satisfy the customers demand pushed by increasing orders. Warehouses belonged to manufacturers who desired to meet up increasing demand, so inventory moved from retailers to manufacturers. Today, much pressure is focused on reducing costs and satisfying the customer at the same time. Therefore, warehouse strategies have been analyzed leading to a new development, the distribution centers that handle and move goods instead of just storing them (Andel, 2007). Analysis of the Situation Regardless of the evolution in supply chain management, to this date there is yet no apparent understanding and distinction between warehousing and the concept of distribution centers. Combing through literature on two existing categories of supply chain strategy that is, supply-focus and demand-focus strategies, there is broad acceptance to the cost focus and service focus that describe lean and agile ideas correspondingly. The lean idea is for the most part centered on the eradication of supply chain dissipate possibly noticeable in terms of, for instance, surplus resources, soaring levels of stock or pointlessly stretched lead times. Agility, on the other hand, aims to gain from unstable marketplaces and as a consequence the capacity to take action swiftly to market prospects is important (Hughes, 2006). Lean and agile ideas are not equally special and may well be pooled together in point of fact to put forward, for instance, an elevated volume of lean supply channel sustained by agile channels for flows in demand and for unique goods. Modern day logistics is focused on attaining a top level of receptiveness to marketplace demand, albeit with fewer inventories. Pulling off a combined goal of lesser cost plus higher service has insinuation for each one point in the supply chain and to be more precise, for distribution centre operations. Key Findings Even though these two concepts of being lean and agile lay emphasis on dissimilar terms of cost and service, there are general subject matters and these have momentous connotation to the function and intent of distribution centers. One, apparently there is a broad consent that stock ought to be played down in supply chains. In lean supply chains low stock levels are looked upon as a key factor in trimming down costs and reducing waste. Secondly, regardless of whether stock is held or not, reduced lead times from the time when a customer order is received to making deliveries are looked upon as significant, principally in agile supply chains where service is considered an order frontrunner. Short lead times are fundamental to facilitate agile supply chains to act in response to unstable demand patterns and to take advantage of market openings once they come up. Likewise, in lean supply chains a cutback in lead times is by and large seen as a vital ingredient in the riddance of waste. Therefore, appropriate reengineering of supply chains to trim down lead times is openly coupled with cost lessening (Hughes, 2006). Answers to the Given Case Study Questions 1. Describe what you understand by the term ‘logistics value proposition’. In logistics value proposition entails a combined effort by a distributor to achieve customer satisfaction at the least possible total cost. Logistics carried out in this way generates value for the customer. Value proposition can either be in action or in form. In deeds, value proposition describes an offer made by the logistics company to various customers so that can gain more than they sacrifice usually in terms of value or utility. In form, value proposition is outlined in a brief and understandable statement to prospective customers as well as stakeholders an entity’s distinctive value-creating characteristics. 2. Define the terms ‘warehouse’ and ‘distribution centre’ and describe the role of each in adding value to an organization’s products and services, particularly in terms of utility. A warehouse is a facility put up to stock up supplies for a stretched period of time. The key use of a warehouse is to store goods with an emphasis of making best use of the vacant storage room. Warehouses function in four main cycles, that is, receiving, storing, picking, along with shipping. A distribution centre is a facility put up to offer value-adding services to goods that are stored up for fairly short periods of time. A well-ordered and run distribution center will offer numerous services such as shipping, order-fulfillment, cross-docking, labeling plus packaging along with any service considered essential to complete the order cycle, together with order processing, order preparation, receiving, dealing with returned goods as well as performance evaluation. Distribution centers are designed to give emphasis to quick movement of goods right through the facility. In supply chain management, distribution centers are the key points from which logistics are synchronized. The centers engage nearly all goods in two main cycles; receiving and shipping (Bonacich & Wilson, 2008). 3. Discuss the differences between warehousing and distribution centre operations. Distribution centers are said to emerge from warehousing and so the two are to a large extent similar. In fact, the two terms are often used interchangeably in literature. However, narrowing down their functions, the facilities are pretty different in several ways as detailed below; A warehouse basically offers fixed storage of goods whereas a distribution centre offers value-adding services to goods. Distribution centers put forward numerous value-adding services for customers other than just offering static storage of goods (Bonacich & Wilson, 2008). A warehouse pays attention to offering a well-organized and cost effective means of stocking up goods contained inside its walls. On the other hand, a distribution centre is centered on its customers with a singular duty of offering excellent service to the customers. A warehouse is not technology sensitive but a distribution centre is technology-based. At present, a distribution center has got to put in place high-tech order processing and shipping systems if it is to conduct its operations efficiently (Buxey, 2006). A warehouse is mainly inward focused and there is very reserved knowledge of what customer-service actually means. By contrast, a distribution centre is customer relationship-focused. Regardless of who the customers are or where they come from, a distribution center has got to hang about focused on the customers' needs. A distribution center is the main bond linking the suppliers and customers, so its management ought to be aware not only of the customers' requirements but also the most competent and cost-effective ways of fulfilling those desires. 4. Describe the role and function of three of the DC described in MHD Supply Chain Solutions. Analyze the role of the DC in ensuring overall quality of the products provided to its numerous customers. Distribution centers mainly amass and consulate goods from different points of production within a single firm or from numerous firms, for joint delivery to regular customers (Fassoula, 2006). The following is a list of roles distinctively for distribution centers: Making-bulk / breaking-bulk Cross-docking Transshipment Assembly facility Product-fulfillment centre Returned supplies 5. Describe various operations conducted at a DC and explain how these activities add value, particularly a) Cross docking In logistics, cross docking involves moving goods from a production plant or from several origins and combing the consignment then dispatching them straight to the customer as ordered. In essence, cross docking entails getting the goods at the inbound dock followed by transporting it out to the customer before long with no need of material handling or storing it up. Cross docking basically does away with the inventory-holding purpose of a distribution centre and serves the functions of consolidation and transportation. The design is to move inward bound consignments directly to out bound trailers devoid of storing them in the meantime. In a cross dock, merchandise incoming from a dealer already have a consigned customer, hence personnel simply should move the consignment from the inward bound trailer to an out bound trailer headed for the required destination (Fassoula, 2006). b) Consolidation and break-bulk Consolidation entails merging goods from numerous retailers or production plant into specified quantities at a distribution center for out bound delivery to a final consumer at a particular destination. Break-bulk is a process where some orders consolidated at a production plant or other distribution centers are forwarded to a break-bulk distribution centre where they are packed up into solitary orders and dispatched. Break-bulking processes are time and again used in circumstances where a main distribution centre is used in combination with regional centers that carry out local deliveries. Break-bulking could as well occur when a distribution centre receives a one big consignment then organizes for shipment to several other destinations (Buxey, 2006). c) Sorting Sorting entails reconfiguring goods as they move from point of origin to the customer. The sorting warehouse function optimizes different tasks separately or in groupings. This enables the facility to re-launch the order/part/quantity rapport where goods are in bunches. Sorting enables; Most excellent possible use of the resources Reduction of wastage Optimization of running processing times Optimization of reorganization times Enabling even production ability d) Reverse logistics Reverse logistics engrosses a logistics method of setting up, putting into operation, as well as managing a well-organized and valuable stream of raw materials, in-process goods, and completed goods along with associated information from the point of use to the their source for the intention of bringing back value or for correct disposal. Recapturing value entails returns management of goods that did not sale, remanufacturing as well as repair of goods, remarketing and recycling. To be more precise, reverse logistics entails the process of moving goods from their usual ultimate destination for the intention of recapturing value or fitting disposal. Reverse logistics covers the means by which goods are returned from the customer and the handing out of the returns by tuning-up and returning to the customer, taking the objects back into storage or revamping the items for resale. The returns logistics course of action has nowadays developed into a central part of the processing that takes place in the distribution center (Bonacich & Wilson, 2008). 6. Comment on the use of Information and Communication Technology (ICT) tools in adding value to the logistics operations of a DC. Briefly describe the latest tools used by prominent and dynamic DCs. According to Lankford (2004), logistics has brought about a huge assortment of information processing changes. Information and communication technology tenders returns for the entire supply chain network, from customers being exposed to superior product information to manufacturers and distributors being able to become accustomed promptly to changes in the demand. The end result is time and again more well-organized production and distribution arrangement with supplementary expediency of tracking consignments and stock. In short, Information and communication technology has facilitated logistics and supply chain uprising (Twist, 2005). Tools employed in modern operations at distribution centers include; Point of sale devices that record the sale of an item. Bar codes that facilitate automatic identification of goods. Voice based order picking, which enable interaction and sharing of information in various ways thus making easy order execution. Radio frequency identification, which can be used where there is no line of sight between the scanner and the label for automatic identification. GS1 System that makes possible unique identification of all trade items, processes, services, consignments, assets, companies and locations at any point in the supply chain. Conclusion The notion of supply chain agility has improved recently for the most part with regard to distribution centers. Although there is no clear distinction between a warehouse and a distribution center, it is apparent that the roles played by the two facilities are clear. A warehouse is merely a storage facility whereas a distribution center executes such roles as cross docking, consolidation, break-bulking, sorting and reverse logistics (Andel, 2007). Recent developments in information and communication technology play a key role in ensuring smooth functioning in distribution centers with devices such as point of sale devices, bar codes, GS1 system, and voice based order picking, among others. Recommendations Distribution centers are designed to last over a long time and therefore invite a bona fide test to enabling the operation of supply chain agility. Actually, obtainable literature is somewhat ambiguous as to whether there should be any distribution centers at all in agile supply chains, and, if so, what role they ought to execute (Fassoula, 2006). A lot of literature has also acknowledged that markets are becoming more and more unpredictable and with present substantiation that warehousing makes up a major share of logistics spending and some additional indication that the construction of big warehouses may be greater than ever. Therefore, this field calls for improved understanding should accordingly form the focal point of future investigative research (Andel, 2007). Word Count = 2520 References Andel, T., 18th Annual State of Logistics Report: The New State of Interdependence, Logistics Management, 2007, 46(42): 28-32 Baker, P., Designing distribution centers for agile supply chains, International Journal of Logistics: Research & Applications, 2006, 9(3): 207-221 Bonacich, E. and Wilson, J., Getting the Goods: Ports, Labor, and the Logistics Revolution, 2008, Cornell University Press, Ithaca, New York, USA Buxey, G., Reconstructing inventory management theory, International Journal of Operations & Production Management, 2006, 26(9): 996- 1012 Fassoula, E.D., Transforming the supply chain, Journal of Manufacturing Technology Management, 2006, 17(6): 848-860 Hughes, R.A., One on one, Journal of Supply Chain Management, 2006, 42(2): 2-3 Lankford, W.M., Supply chain management and the Internet, Online Information Review, 2004, 28(4): 301-305 Twist, D.C., The impact of radio frequency identification on supply chain facilities, Journal of Facilities Management, 2005, 3(3): 226-239 Read More