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Importance of logistics strategy
Importance of logistics strategy
Important of logistics management
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1. Logistics is the process of effectively and efficiently managing the movement and storage of information, products, and services between supply chain players with the aim of meeting the needs and requirements of customers. Logistics is important in private companies because it allows companies to meet the requirements of customers and in turn gain profits, and stay competitive. Logistics is important to public companies because it allows them to successfully meet its social objectives and even during successfully conduct international trade. 3. Logistics adds economic value through form utility, time utility, place utility, quantity utility and possession utility. Form utility is basically the value that is added to product through the process …show more content…
Discounts that may be related with amount of quantities purchased. If this discount relates to transport then both the shipper and customer will benefit. Place generally refers to which distribution channel to adopt. The marketing department’s concern will be to decide which agent to deal with; whether to sell to wholesalers, retailers or even directly to customers. This decision will affect the decisions or actions that logistics decides to take. Wholesalers buy in bulk and usually places orders in a consistent manner. However, retailers usually buy in small quantities and usually places orders inconsistently and require short lead times. Logistics will then be tasked with the duty of finding fast and responsive means of transportation to meet these needs. In addition, a company might spend a lot of resources in promoting its product and attracting customers. The department responsible for promotion must collaborate with the logistics department to make sure that there is enough inventory to meet the demand that sometimes may not be too certain following intense advertising. Moreover, marketing department may be deciding on the physical attributes of a new product; its size, weight, shape and other dimensions. These decisions will affect the ability of logistics to move and store these goods and even the overall profitability of the firm. If the packaging is too cumbersome and bulky, this could mean …show more content…
9. There are four approaches that an organization can choose from to analyze logistics systems. These are namely: materials management versus physical distributions, cost centers, nodes and links, and logistics channels. Materials and physical distributions looks at grouping logistics into either inbound or outbound. Moving and storing goods brought into the organization (inbound) will require different attention from moving and storing finished goods. Another approach to analyzing logistics systems is to view the various logistical areas as cost centers and then examining to find the lowest cost trade off you can get. The logistics channel considers the network of organizations involved in the flow of goods within the supply chain. Nodes are storage points, assembling facilities or manufacturing sites in an organization. Links shows the transportation networks that links these various nodes in the system. Organizations prefer to use the node and link approach of analysis because it simply illustrates the very complex logistical system. In addition, this system allows you to see where improvements can be made in the
...dustrial Distribution allows me to pursue my interests in both Business and Engineering, and therefore I chose that major. Also, it will help me to build my personal characteristics that will make me successful in this major. As my education continues, I look forward to learning how manufacturers and distributors maintain good communication and relations, so that the products can be distributed efficiently and avoid problems. If there are problems, I would also like to comprehend ways to solve those problems. In the future, I hope to work for a company such as Amazon, Dell, or Boeing in the field of logistics. These companies depend on logistics in planning and conducting their operations. Since logistics and relations between manufacturer and distributor are critical to the everyday operations of businesses, understanding this will help me in my future endeavors.
Throughout the years, there has been a wealthy contribution, regarding the design procedure of a distribution centre. Despite that, there are differences, regarding the number and the content of the steps. Generally, the most commonly described stages are the definition of the business requirements, the analysis of data, the operating methods, the equipment requirements and capacity and the design of the layout (Apple, 1977; Oxley, 1994; Baker & Canessa, 2009; Rushton et al., 2010). It is important, however, before proceeding to the selection of the equipment and the operating methods, the design of the layout and the rest of the steps, to determine the distribution center’s role,
The brainwave of Logistics and Supply Chain Management came into existence decades ago and now has evolved as an elaborated organization alongwith application of variegated operations. This paper mentions the essence of Logistics and Supply Chain Management in a broader and centralizing way. Here , we will also talk about how Supply Chain incorporates Logistics and how does this industry works together as a whole.
Coyle, J, Novack, R, Gibson, B & Badi, E, 2011, Transportation: A Supply Chain Perspective, 7th ed, South Western Cengage Learning, Mason, USA.
Outbound logistics: They are made up of centralized logistic centers to promote efficiency, global network, reduced emission of CO2 by 22% to ensure ecological sustainability and lastly to improve customer service.
While excuse may be granted for shortcomings unsuccessful efforts made in reducing cost of raw materials storage, that of the finished goods should not be forgiven, rather, attributed to inefficiency on the part of management. One of the major strategies used by manufacturing companies is to aggressively push their product to the final consumer. With this, the quantity of finished goods to be held will greatly reduce and so also their storage cost. To facilitate the timely distribution of their finished goods to consumer, companies permanently engaged some major distributors as mini-depot for further distribution to other smaller distributors within their localities. While major distributors also sells in bulk to other distributors within their locality and also engaged salesmen, these other distributor too sells in smaller quantities to retailers and some also engaged bicycle boys to sell directly to the final consumers. All the suppliers and actors on the chain of distribution are rewarded with commission on sales (distributors) or salaries plus commissions for salesmen and
The transportation & logistics industry is a form of industry that keeps people and products on the move, it includes airlines and airports, shipping companies, logistics service providers and other transportation companies. That’s why it is considered the backbone of modern global supply chains. In a place like the Kingdom of Saudi Arabia that has diverse geography with a dry desert and great temperature extremes and a large area of about 2.1 million square km, a transportation & logistics industry is a necessity. Imagine you need to move from one city to another (of course it will be so hard to cross large areas of empty deserts) you have only two options to transfer from one to another city; the first option is to drive and the second option is to fly and ship your car via a car transport carrier. The harsh climate in Saudi Arabia makes people to prefer using the second option, this cause the market of transport market to enlarge. Albassami International Group is one of the biggest companies established to satisfy those needs. It is considered one of the biggest companies specialized in vehicle transportation in the Middle East. The philosophy of the company is to serve the needs of the clients over the span of thirty two years, throughout which they constantly had an eye to the future by evaluating the most appropriate ways in which to make transporting clients’ vehicles via the best and safest answer. They operate round the clock to serve clients at all times.
Reverse logistics is the process of returning faulty goods from customers. Reverse logistics and returns management continue to be an important part of the world economy. The development of a reverse logistics competency could augment a firm’s supply chain strategies, and if well executed, could transform returns from a cost center to a profit center by extending the productivity of materials, resources, and labor. Information Technology can improve the reverse logistics benefits for a firm that collaborating with supply chain members. In having a superior logistics performance, some competencies are required in considering relationships, technology, and reverse logistic. (Tyler R. Morgan, Robert Glenn Richey Jr, Chad W. Autry, 2015)
Prabir K. Bagchi, (1992)analysed the needs of logistics in global market place and uncover the issues for implement International LIS and framework are discussed.
Logistics has played important role in the business competition and is one of important factors in the production cost increase. World Bank has made a survey on logistics performance (Logistics Performance Index: LPI) to measure the efficiency of logistics system of each country [1] as shown in Figure 1.
Transportation is an essential part of the global supply chain as it provides the link between the company and the supplier and customers, it is an important part of logistics process and function dealing with the aspects of location of economic utilities. It works closely with inventory, planners, transportation to ensure that the business is made available for the customers. The company’s ability to serve the customers through efficient and effective transportation is essential to gain customer confidence and expand business for the company. Logistic is very important
A simple definition of logistics would be a type of management toward your resources, raw materials, products and goods on the way of allocation such as obtained or acquired, get stored in the inventory or warehouse then transfer to transport out to the hand of the final consumer or customer at a particular location from warehouse and inventories. The cost that happened along the process also known as the logistics expenditure or cost of logistics process and basically the logistics cost will affect the production cost and operational cost as well as this following research purpose and objective is to discover the relationship between logistics activities and the production cost that whether the logistics activities will affect the production
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
Wholesalers acts as a lesion between manufacturers of commodities and other industries that are interesting in selling the same products. Along this distribution chain wholesalers usually purchase goods in large quantities and in turn sells them to retailers who ultimately supplies goods and services to consumers. Due to the available space at wholesale locations they are able to store products for distribution to retailers which reduces retailers storage costs. Wholesalers are able to store goods in large quantities which allow retailers to purchase in small quantities. Due to this option retailers are able to only purchase what is needed at that given point (Kotler & Keller, 2012). Additionally, because wholesalers are able to purchase goods
As an outcome of the thesis, my professional interest on the issue associated with the development of logistics sector has been enhanced. Furthermore, I am planning to keep an eye on the sector to enhance my knowledge which will benefit me and the organization I work for.