In the current paper, logistical operations and concepts in transportation, management, its application in the manufacturing industry, and IT in modern logistics and the value chain are analyzed. From the evaluation establishes that the transport element of logistics adds both the time and place utility to the product. Management, on the other hand, is concerned about the complete cohesion of the entire logistics system. In manufacturing, it aims to optimize manufacturing by attempting to forecast customer demands. Logistical operations and their integration are facilitated by the advent and use of information software and related technologies. IT contributes to the overall transformation of the system by improving logistical operations such as inventory keeping and management. It integrates the logistical operations in the supply chain leading to better management procedures. Finally, the concept of the value chain is discussed and grouped into five fundamental levels that added value to the product. They include: inbound, operational, outbound, marketing, and service logistics. Each has its own logistical operations such as the transportation element for inbound and outbound logistics. More than one element can be utilized to add value to a product at each particular level.
The current practices in business logistics stem from a military background, especially during the two World Wars (the 1920s to 1940s). The US military, which was a major bulk consumer of manufactured products in the country, had established logistical procedures linked to transport nodes such as military facilities. The procedures are still employed today and include the transportation, storage, maintenance and procurement of military facilities and personnel. Logistical activities were usually fragmented and possessed some constraints. Logistics was introduced as an official study that was conceived in the 1970s (Ballou, 2007). Thus, the current paper presents an explicit elaboration of the different logistics concepts, principles, and practices attributed to the current developments in business.
The fragmentation in the field comprised of three important logistical components at the inception of logistics: production, finance, and marketing. The structure led to setbacks in management in terms of control and focus on the most fundamental logistical procedures. However, the process had the advantage of business operational merits, including less inventory and low demand in warehousing, as each fragment focused on the components separately. Nevertheless, modern logistics introduced changes to focus on areas such as physical distribution and value chain within a firm and supply chain management.
Transportation in Logistics
Transportation forms a crucial part of any firm’s endeavors to seek stable control of its logistics. The bottom goal of logistics is to avail the manufactured product to the consumer in the appropriate quantities, time and cost. Only the best transportation strategy enables the achievement of goals. Every firm needs transportation in order to meet consumer expectations and requirements such as fair cost. Transportation essentially forms the link between the general product movements in the distribution networks. The elements include structures such as warehouses for temporary storing the product and plants were the production takes place. Thus, the best transportation that meets any criterion of the logistical strategy seeks to minimize the total time and cost with respect to the spatial characteristics of the firm. Nevertheless, it also has other direct and indirect influences on the firm or business (Baluch, 2005).
Transportation adds place utility characteristics to the product. It is only existent if a firm’s product is in a place where it can be consumed. Goods far from the required place will obviously not possess their full value. Transportation also affects the time utility, which also forms the end results of production, marketing, logistical components, so is the time utility (Baluch, 2005). Furthermore, the transportation element of logistics also influences the major decisions of any firm. The utilities created by transportation are fundamental in determining the extent and success of economic exchanges that are fundamental to running a business. The ability to transport a particular product depending on its physical attributes and the transport capability dictates the rules that determine the type of product a business shall produce. The ability to transport the product at an affordable cost affects the decision-making process.
Other fundamental factors influenced by the transportation component of logistics include pricing, location, purchasing, and marketing. Their combination affects decision making regarding the large scale production of a product (Baluch, 2005). The location, purchasing ability, and market area are affected by the transportation’s ease of availability, reliability and overall costs. Large scale production of a particular good may be viable if effective transportation makes the product competitive in the market.
Transportation consolidation is one strategy that is designed to reduce the overall costs incurred by the transportation component of logistics. The larger product transported per consignment over a long distance affects the overall costs incurred. For long distances, the benefits are most established when different means of transportation are used. They include combined with less road use, intermodal has little product handling, and multimodal transportation means (Baluch, 2005). Today, transportation operations logistics has the freedom to utilize trains, boats, ships, and airplanes. The constraints to transportation consolidation include the ability to load optimum weights and volume. Furthermore, products subjected to international transportation face limitations by Incoterm standards, such as the amount and type of product to be transported to a particular country and variations in insurance costs. Transportation also affects the extent of infrastructural development, which is considerably limited in developing countries (Baluch, 2005).
Finally, it is important to note that the advancement of transportation in the 21st century has been a big contributor to the improvement in modern business logistics. Today, many transport options are available for any particular company. The air transport improves the movement of perishables. Also, even more recently Amazon has considered the use of drones to make deliveries to consumers. The strategy will obviously improve the time utility value contributed by transportation logistics.
The end goal of logistical systems is the introduction of lean procedures in the processing, transportation, storage, and marketing of a particular product. Its management, on the other hand, is concerned with setting up systems that administer the control of the processes. It assumes the responsibility of designing the systems to fit the logistic requirements and demands of a particular business. The demands may be brought about by the desired situations for material flow, inventory, and flow of material. In the end, it supports the achievement of the goals and strategies of that business (Ismail, 2008).
Logistical Management Concepts, Principles and Practical Applicability
For the logical operation to be managed successfully, it must conform to certain operating principles. They ensure its applicability in the real and practical world of logistics. For instance, logistical management should have a rapid response mechanism that is able to adapt to the changing tastes and requirements of the client. Thus, the management can transform the production (form) or transport efficiency (timely) to meet the customer’s needs. The management, for example, is able to shift its focus from usual forecasting and inventory stocking. Inventory stocking was a common practice in the past as the logistical management majorly speculated on customer demand by preserving inventories in anticipation of demand from customers (Ismail, 2008). The approach has been improved by the advent and rapid growth of IT in the 21st century. The modern innovation has further positive effects in logistical management such as the form and efficiency of advertisement and product promotion.
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The former inventory stocking contributed to a technical inhibition to logistical management, especially when normal operations experienced variations. Thus, one important principle of viable logistical management is adaptability to the variations in operations. Logistical management should handle unexpected changes associated with manufacturing disruptions or incorrect location deliveries of damaged goods. In the past, logistical management was able to reduce or counter the variances using safety stock inventory and high-cost premium transportation. The process has so far been improved by the utilization of IT (Ismail, 2008).
Quality logistical management must also seek to ensure the perpetual product quality improvement and movement consolidation as is in TQM (Total Quality Management). Logistics should meet the quality standards required for the product; otherwise, there is a need for reverse logistical operations. Transportation consolidation goes hand-in-hand, since the larger the load moved per transportation distance, the lower the overall costs. The importance is in the quality of the product is maintained and its utilities improved accordingly; the product is not damaged in any way).
Finally, the concepts and principles of logistical management relate to supply chain management. Thus, management is mainly concerned with the strategic coordination of various business functions that add value to the product as it moves along the supply chain. It is also important to note that logistical management comes in various forms that strategize to handle business functions associated with the supply chain.
Logistical management exists in various forms depending on the choice of administering the management for a particular organization. The forms include centralized, decentralized and outsourcing as facilitation logistical operations (Ismail, 2008). In the centralized form, managers that head other divisions within a company are also given logistical operations to manage. One manager completes the efficient coordination of logistical activities. In decentralization, a type of management is set as a discrete entity or division to solely address and manage logistics. Finally, the outsourcing of logistical elements results in giving the responsibilities to the relevant companies while the firm seeks to concentrate solely on production.
Practical Environment: Logistical Operations Management in Manufacturing Organizations
Logistical management seeks to facilitate the processes of production flow. Thus, the materials received are efficiently and effectively converted into the finished products. Logistical management includes know-how and practical aspects.
In order to achieve efficient production flow in the manufacturing line, various supply chain tasks have to be managed properly. Inventory management, order-taking, and performance management should be accounted for. Order-taking refers to the receivership of orders from clients and customers to be integrated into the supply chain. The tasks should receive intricate management since they entail checking to ensure that the manufacturing capabilities can meet the orders requested. Moreover, responding to customers about the availability of the products and assuring or promising their quality and timely delivery are other tasks. In today’s world, order-taking can be done using messages such as facsimile and email. Usually, management ensures that the company can anticipate the customer’s demand known as forecasting in logistical management to gauge and prepare the manufacturing capabilities of the firm.
Secondly, logistical management in manufacturing industries seeks to stimulate the provision. The tasks include purchasing of raw materials and components, manufacturing to convert the raw materials into finished products, dispatching the products from the manufacturing plant to the consumer for guaranteeing the product. Consumer service employs after-sales service and warranties. The warranties, depending on the quality of the product manufactured, can affect the manufacturing processes, especially when there is a widespread defect. Therefore, logistical management must ensure that the services are updated regularly. It is a fundamental requirement that management understands the logistical dynamics of each process to ensure the complete efficiency of the manufacturing process.
Finally, logistical management in any manufacturing industry must ensure that the product reaches its destination. Thus, the transport element of logistics forms an intricate part of the manufacturing. The type of transport utilized depends on the various circumstances such as the permanence of services, the size of the manufacturing process, and the relationship between the producer and transport company. Manufacturing processes that involve large scale production require lasting solutions, such as contract distribution. As a result, the company can focus on the manufacturing process. However, outsourcing was uncommon in the past and, therefore, manufacturing management required the inclusion of ‘in-house’ mechanisms of transport. The mechanism can be used in cases when the manufacturer intends to use the mode of transport to perform an extra task other than distribution. The tasks include order-taking and occasional personalized deliveries to clients.
The Influence of IT in Contemporary Logistics
The influence of IT in any business logistics is paramount. An avenue in logistics, where IT has done some improvements, forecasts demand and decreases old age inventory stocking. The profound impact of IT in logistics is that it has facilitated the globalization of logistical operations from the procurement of raw materials to the sale and marketing of the products; for instance, internet advertisements. It has resulted in increased product variations and differentiations from the online services offered by companies such as Amazon for the international purchase online for later delivery. A scenario differs from the past, where the client had to physically appear in order to choose and purchase the product. The role of IT, thus, has linked the logistical processes of businesses irrespective of their location on earth.
In order to achieve globalization, IT eased the exchange of electronic data, employed genius inventory keeping methods through the bar codes and radio frequency identification. Also, logistical processes, such as the management of inventories, warehousing, transportation, and marketing, have been linked and managed effectively by logistics. Moreover, the linkage is perpetually supplied with real-time information to be integrated into logistical operations.
Transport outsourcing is a common phenomenon in modern-day logistical management, as companies seek to concentrate on manufacturing. The development of transport industries focused solely on transportation, allowing for the innovation and implementation of IT strategies into the transport element. The major use of IT-enabled efficient management in the flow of products amongst all actors in the value chain. For instance, any manufacturer or retailer wants to improve customer service delivery, while implementing lean procedures that completely reduce the cost of business operations (Myerson, 2012). The ability to serve a larger market through fewer centers is expected in the long run. The concept works in supply chain management and seeks to facilitate a firm’s goals of achieving competitiveness.
IT has led to a profound increase in the information portfolio of goods transported. The end result has been a significant change in the nature of goods transported. Also, the transport in the supply chain and its management becomes easy, faster and efficient by information technology. In the modern-day, logistical management towards the transport element has the capacity to utilize numerous novel controls in the transport industry. In fact, it redefined the role and scope of logistical operations such as freight transport.
The benefits of IT in logistical operations include streamlining constant and real-time connections between the major players in the operations and logistical management. IT has facilitated managerial coordination of the entire operating system and optimization, transformation and redesign; especially, during the application of lean procedures (Myerson, 2012). The management can understand each component of its logical supply chain and thus maximize on profiteering venues. The ventures include the ability to ensure optimum operational capacity and reduce the overall costs. It applies particularly to the manufacturing operation since bulk manufacturing lowers the overall cost of an individual product at any one particular time.
In the modern world, information technology has been applied in various ways to manage logistical operations. The use of bar codes and scanner for inventory management is one of the tasks. Thus, the company can easily record inventory and day sales, since the process of product identification is almost automated. Another application of IT is to enable the counting of products during the manufacturing process along the line. Tracking inventory of the total production is facilitated by the ability of the bar code and scanner to individually count and identify each product (Bourlakis & Bourlakis, 2006).
The second benefit is the ease of use and access to real-time data. The information runs through the supply chain only benefits when it has data warehouses. The use of multiple databases relies on informational subjects and is centralized. Therefore, any logistical process management strategy can utilize IT in making fundamental decisions that shall affect the state of the supply chain.
Finally, modern companies have also applied IT through software that provides tools for enterprise resource planning (ERP). The projects are programmed to reduce the overall manual work demand through the automation of activities that capture data, process the finances, inventories and customer’s information upon request. It can be completed by a click of a button in the modern world (Bourlakis & Bourlakis, 2006).
Concepts in the Value Chain Strategy
The value chain in logistics refers to the business processes from manufacturing to the sale that increases a product’s utility. Therefore, the use of elements such as transportation forms a fundamental component in the management strategies linked to the value chain. Subtly included in the foregoing discussions is the concept of value chain strategies. However, freight is only one element in a particular level of the value chain. Therefore, an overall view of the value chain should include different levels of operations. They include factors of the inbound, operational, outbound, marketing plus sales and service logistics respectively (Michail, 2013). In the majority of firms, the movement of a product from the manufacturer to the consumer mainly involves the value chain levels designed to increase the competitive nature of the product in the market.
The first level is inbound logistics. The product begins its primary phase before manufacturing. Logistical operations involved in the stage include the receivership and storage of raw materials before being released in a timely manner to the manufacturing stage (Michail, 2013). Thus, operational logistics adds value to the raw materials by turning them into final products. The second addition of value to the product occurs in the outbound level, where transportations and warehousing add the time and place utility to the finished goods.
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Finally, the two final levels of the value chain are consumer orientation and adding value through the constant communication and satisfaction of the customer. The factor involves the use of the marketing mix to meet customer’s needs and the use of advertisement in the logistical operations to increase sales (Michail, 2013). On the other hand, the service value chain level enables customer comfort through the guarantees that the product meets the expectations. The approach uses strategies such as offering warranties in case of electronic products. Support also involves after-sale services offered to the customers such as maintenance in case of software products or vehicles.
From the extensive elaborations above, there is an immediate realization of the important elements of the supply chain and value chain respectively. For instance, the supply chain has an overall look at the movements of the product from the producer to the consumer, while the value chain evaluates the strategies that add value to the final product. In the supply chain, the transportation element adds place and time utility. In the value chain, the major components form a part of the inbound and outbound logistics. In both scenarios, the concept of logistical management is vital in ensuring the cohesion, optimization, efficiency, and reliability of the entire chain from the producer to the consumer. Besides, the document has elaborated on the use of IT in logistics and the benefits of its application to improve logistical operations and facilitate managerial work. Computer innovations include the use of bar codes and scanners in order to manage inventories.