Contemporary Logistics - Essay Example

Name Course Instructor Date Logistic Management Logistics refers to the overall management that is in control of providing actions in a company such as procurement, sales, distribution and production. Logistics synchronizes such actions with demand and it is aimed at increasing both corporate value and competitiveness by ensuring customer satisfaction at the most minimal cost while still fulfilling the company’s target (Jayaraman & Yadong, p56). There are five key concepts of logistics that require to be addressed by a company. The first concept is logistics and management. Management requires logistics since it ensures appropriate storage of inventory and increase in cash flow. The second concept which plays a role in enhancing competitiveness in the corporate world is logistics and globalization. Logistics and environment, the third concept, creates harmony between the environment and recycling –oriented society. The fourth concept is logistics and securing of compliance which provides a logistics framework that has safety measures within an organization. The final concept is logistics and human resources whereby consideration is made on the age group of logistic management team that will foster changes in the logistic activities of the company (Jayaraman & Yadong, p56). Jayaraman & Yadong (p60) asserts that, reverse logistics can be defined as the process of planning, controlling and implementing the efficient and cost effective flow of raw materials, goods in the process of manufacture, finished goods and all the related information from the consumption point to the point where they produced or the point of origin. In other word, reverse logistics is the opposite of logistics which refers to the process of planning, controlling and implementation of efficient and cost effective flow of raw materials, goods in progress and finished good from the source of manufacture to the point of consumption. Whereas the purpose of logistics is to ensure that products and services of the company conform to the requirements of the consumers, reverse logistics deals with the processes involved in recapturing the value of goods returned from consumers and ensuring proper disposal if need arises. Murphy and Wood (2011) asserts that there are three crucial factors organizations should focus on in reverse logistics. They include how products are returned to the company, how reverse logistics can be optimized and if it should be done internally or outsourced from external sources. In addition to this, they argue that the four major economic principles that add value to a product or service are place, form, time and possession utilities. According to Langnau (p18), products returned to the company re-enter the distribution system whereby they move along the distribution chain and get back to the factory for either repair or reconfiguration. This presents a significant challenge since the company has to device a cost efficient methods of returning the products to distribution as soon as possible. The discussion in this paper will basically focus on the important logistics that can be applied on the reverse logistics process in order to increase responsiveness on customer demand and reduce costs. Langnau (p18) maintains that, demand forecasting refers to projecting future demand and analytically predicting what will dictate the demand of goods and services. Knowledge of the expected fluctuations in demand enables the suppliers to keep the correct amount of stock so as to avoid wastage. Langnau (p18) maintains that, computer forecasting software is used to eliminate forecasting errors completely from the company. Implications of inaccurate forecasting might have adverse effects on the company logistics. Order management on the other hand refers to all the activities involved from the time a customer gives an order to the time the order is filled from the warehouse (Langnau, p18). Customer service is the ability of logistics activities as placed by management to satisfy customers or users of the end products in terms of dependency, time, communication and convenience. Marujo (p167) asserts that, a common strategy that many companies have tried to use to deal with returned products is the use of centralized service centre. However, it has been noted that centralized service centers are inadequate in terms of providing high levels of customer care services. To respond to customer needs in the most appropriate way, some companies have adopted strategies that increase flexibility, agility and ability in that area (Marujo, p169). For instance, the service center should be located near the customers instead of having it near the distribution center or the main factory so as to reduce customers inconveniences with regard to time and cost when they need to access repair and after sale services. Some retailer have adopted the liberal return policy as a way of analyzing the process of goods return and means of recapturing money that was previously entered as sale. According to Marujo (p173), the advantage of using liberal return policy is that it leads to improved sharing of risk between the consumer and the seller. In this case, the consumer is liberty to return the product to the retailer; the retailer has liberal return arrangement with the manufacturer who takes responsibility for the entire product life cycle. However, the liberal return policy has one short coming in that the manufacturer take the largest amount of risk at the end of the cycle. Langnau (p18) maintains that, managing reverse logistics is a very complex undertaking since it involves different kinds of activities .On top of this, it is quite difficult to predict demand making it also difficult to manage flow of products and information within the company and outside. Murphy and Wood (2011), establishing after sale services would be the most appropriate strategy to adopt for a company to achieve a competitive advantage against its competitors. The centralized service centers earlier mentioned can be used to deliver after sale services such as repairs. However, there are many challenges experienced in offering such services. For instance in managing repairs, challenges that would arise include inconsistency and uncertainty in demand hence reduced inventory returns, specifications by customers which may require additional resources in terms of expertise and finances. Murphy and Wood (2011), such processes may also require lengthy coordination and flexibility in terms of storage, transportations and processing. In this case the logistic activities are needed in the areas of storage and warehousing, transport, collection, recertification, sorting, remanufacture among other areas involved in the product cycle. Companies that offer this kind of services are placed at an advantageous competitive position and can grasp market opportunities easily than those that offer them. It is evident that there exists a relationship between procurement and logistic concepts. In order to understand the relationship, it is important to understand what is meant by procurement. According to Marujo (p173), procurement is defined as a market linked logistical system. It mainly acts as a link between company manufacturer logistic and suppliers’ distribution logistics. Items that associated to procurement logistics are defined to be goods that need to be supplied to the company as required. These goods can be merchandises that a company needs in order to manufacture its desired products, operating and auxiliary materials, purchases and raw materials. According to Marujo (p173), procurement logistics is defined as the application of logistics concepts in terms of procurement. In a deeper meaning it covers all activities that usually provide a producer with raw materials, equipments, purchase, replacement parts as well as operational supplies. In the past it was evident that materials were initially obtained locally which has been replaced today whereby a company is able to obtain materials around the globe due to internet and global networks. The diagram below defines how procurement takes place within logistic systems of a company. Marujo (p167) asserts that, the relationship that exists between procurement and logistic is noted through the optimization of an industrial system and total cost orientation. For instance, system orientation is used to market link procurement and logistic in the sense that it examines various relationships which exists among suppliers. The two are able to measure whether reduction of inventories within a company or business own supply warehouse requires increased inventories in the company supplier distribution ware house. It is for this reason that indicates the importance of logistic activities of customer service and demand forecasting is to any given reverse logistic operation. Marujo (p167) asserts that, in terms of supply chain, logistic is defined as that part of supply chain process that highly control effective flow and storage of information from a designated point of origin to the consumer point. Logistics concepts have been considered to be essential to various organizations thus making supply chain management and logistics represent synthesis of various principles, concepts and methods (Murphy & Wood, p1). The unification of the mentioned concepts and principals are very essential in the effectiveness of supply chain management. It is quite evident that today’s contemporary trends affect practice and scope of business supply chain and logistics. It is essential to place emphasis on supply chain management and logistics in a global setting so as to create a reflection on globalization (Murphy & Wood, p1). Shift towards what is known as service oriented shows how logistics principles and concepts which are normally applicable to both product producing and service producing. Main attention is given to integrated supply chain management as opposed to logistics. Langnau (p18) maintains that, it is further evident that supply chain management places emphasis on logistics interactions that takes place among functions of production, marketing and logistics. Moreover, opportunities of customer service improvement or cost usually are achieved by way of collaborating and coordinating channel members where various important supply chain activities or processes are not able to be placed under a logistician. The diagram below shows evolution of logistics in relation to supply chain; Marujo (p167) asserts that, in relation to customer service, there are certain set standards that indicate the level of output and degree of readiness in which the system that surround logistic respond. It is further evident that logistic cost tends to increase in relation to the degree in which customer service is provided. Such setting also widely affects logistic costs so as to support different levels of service. Langnau (p18) maintains that, in relation to customer service add value to reverse logistics, logistic activities are essential in the sense that it assists in creating value which is mainly expressed in terms of place and time. Clear understanding of logistic concepts gives a view to each supply chain process as a contributing activity in adding value. Logistic is known to control places and time utility through inventories and transportation and information flow. In order to understand the importance of logistic activities of demand forecasting and customer service to any reverse logistic operation, it is important to understand critical issues that surrounds’ inbound and outbound logistics activities (Jayaraman & Yadong, p56). Inbound activities entail all steps within external procurement that occur when goods are received whereas outbound activities mainly cover activities that are necessary for goods preparation and shipping to their respective destination. Inbound processing in reverse logistic highly determines external demands for goods that are mainly procured externally. Outbound processes form a basis for what is known as goods issue posting. With lengthy objectives stipulated within a firm, logistic manager are known to seek in order to achieve supply chain goals that will focus on moving towards a business overall objectives. It is therefore desirable for these managers to develop a certain logistic activity matrix which will ensure that there is highest return on investment over a stipulated time period. In conclusion, it is evident that for logistic, procurement and logistic are being operated efficiently, companies need to adapt management process that are associated with new technology. Management should focus on understanding operational, tactical and strategic which are the three parts that guarantees management. This requires levels of investment in technology. Technology will be able to guarantee importance of demand forecasting and customer services in reverse logistic activities. Adaptation of internet technologies in procurement, logistics and supply chain allows businesses to develop an advantage thus communicating customers with key management within supply management. Works cited Jayaraman, V & Yadong, I. Creating Competitive Advantage Through New Value Creation: A Reverse Logistics Perspective. Academic of Management Perspective. 2007, 21(2), 56-73. Langnau, L. Room for improvement. Material Handling Management, 2005, 60(1), 18. Marujo, L. A New Organizational Approach to Supply Chain Management . Brazilian Business Review, 2006, 3(2), 167-174. Murphy, P. & Wood, D. Contemporary Logistics. 2011 ,New York: Prentice Hall. Read More