The primary aim of this paper is to provide an in-depth report on logistics and supply chain management. Logistics management, however, refers to the administration of the flow of products, information and related production resources such as people and energy from their original point to the final point, where the product is made readily available for the client’s consumption as well as for meeting the customers’ needs. It entails the integration of transportation, information, warehousing, handling of materials, inventory, and packaging of products. By discussing transportation and logistics, the paper will tend to highlight the essence and significance of transport in supply chain management. In broad, the article will debate the principles of logistics management through logistics operations that are conducted within an evaluation of a manufacturing organization. This discussion will have a connection with the provision of the information technology effect on the logistics industry as well as with the logistics industry’s strategy of the value chain. Thus, the paper will give a complete overview of the logistics and supply chain management logistics.
Organizations’ operation ranges from simple to complex. While ensuring that customers’ needs are adequately met, these processes are all valued and appropriately managed. This process of managing, organizing and implementing both straightforward and complex operations of an organization referred to as logistics. Therefore, in a more general sense of business, logistics means the proper management of how production substances, resources, and related activities are performed from the original point to the pint of consumption with a key aim of meeting the needs of clients or corporations.
The management of resources as far as logistics are concerned may include physical substances such as materials, food, equipment, animals, and even liquids. Other important aspects of the logistics are generalized as abstract items which include information and time. Logistics of physical products often involves the integration of the flow of information security, and other significant product processing activities i.e. proper handling, packaging, and transportation. From a broader view, logistics management represents a part of an organization’s supply chain which is responsible for the interpretation, planning, and effective and efficient control of business operations to keep the group moving. It is also in charge of the reverse flow and storage of information activities, goods and services all through the production process to amicably meet the requirements of clients which must also be included in the report. Thus, the primary purpose of the paper is to provide a complete report on logistics and supply chain management logistics.
Transportation and Logistics Management
From a logistic perspective, transportation is a flow of information or production items i.e. raw materials, goods, and services, from the point of origin to the consumption point. The organization modes of transport may include air, rail, pipelines, space, cables, water, and road. This field is also divided into vehicles, operations, and infrastructure. Undoubtedly, transportation is critical to an organization, because it ensures that the company trades efficiently (Holcomb, Liao-Troth & Manrodt, 2014). Thus, transportation and logistics are two distinct but interdependent factors within the supply chain. While traffic drives logistics, logistics, in turn, acts as a chief driver of transportation. In other words, traffic facilitates logistics management by ensuring the flow of operations while at the same time logistics ensures proper management of transportation activities. Therefore, the two factors work concurrently and independently such that when one stops, the other one is affected. However, logistics needs thorough planning while transportation is just a mode of the program execution indicating that transportation is a core part of logistics (Holcomb, Liao-Troth & Manrodt, 2014). Transportation also assists other critical elements of logistics i.e. packaging, storage, insurance, importation and exportation, containerization of products. For instance, for goods to be packaged, they must be moved from a given point to the next one. Also, those critical aspects should help meet the logistic executive needs to go from point of products’ origin to the insurer.
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Therefore, transportation is very vital within the logistics both in large and small organizations. Fortunately, transportation management software has made much easier transportation in groups and helped logistics management greatly. No doubt, transportation management software is an essential tool (Holcomb, Liao-Troth & Manrodt, 2014). Evidently, beyond the procurements of transportations and management of traffic through the software is accompanied by some issues (Porporato, 2016). However, professional logistic management often sorts all organization within a company, transforming all operations to great success; hence, meeting the needs of consumers effectively.
Logistic management is an administration of supply chain components used in meeting the needs of customers through the efficient planning, control, and implementation of active movements, practical storage of data and transporting the products from the point of origin to the consumption point. Consequently, logistic management helps organizations or companies reduce and boost the services offered to the clients. This process starts with an accumulation of raw materials to the final destination where goods and services are delivered to customers’ consumption. By adhering to the needs of clients and following the industrial standards, logistics management initiates the strategy involved in the processing processes, implementations, and adequate planning.
There are four main elements included in logistics management. The first part deals with transportation. In regards to this part, the company is advised to select the most appropriate vendor who is potential enough to provide proper transportation facilities. While choosing the appropriate provider, the most active shipping roots must also be considered. The second element entails the identification of the most competitive delivery method, and the last item is technologically based. In this part, appropriate software and IT resources should be used for proper handling production of the related processes. Therefore, this feature helps the company remain updated; and hence be able to evolve alongside technology and meet the rapidly changing customers’ demands. Being the base of the organization, all decisions made in logistic management must be wise and well-considered. For instance, failed or delayed deliveries may lead to dissatisfaction of the consumer. Transportation of goods is also another critical point of concern as its breakage which is majorly caused by careless traffic may cause a tremendous loss. This requires the company to be very keen especially with the transportation department to avoid such losses. Notably, poor planning of logistics increases the losses of the company.
Similarly, operational issues may also arise from the ineffective implementation of logistic software. Therefore, many efforts must also be made to software applications. Most of the problems in the company often occur because of weak decisions in regards to outsourcings i.e. the selection of inappropriate vendors of transporting goods without sufficient resources. To avoid such issues, the company must ensure that before starting its transportation operations, all the required transits mediums must be available. For instance, the vehicles must not only be efficiently fueled but also properly checked by the mechanic to avoid unnecessary breakages. Similarly, the drivers must be well trained and qualified to conduct the given transportation task. In other words, all sorts of organizational issues are solved by the implementation of the most appropriate logistics management practices. Such methods definitely will ensure the effective fulfillment of the activities conducted by the organization. For instance, a focus is placed on the collaboration apart from the market competition. By so doing, implementation of the best logistic management practices will guarantee that the providers of transportation means, buyers and vendors collaborate with each other, and hence, this will reduce additional expenses.
Impact of Information Technology on the Logistic Industry
IT departments are currently present in most of the businesses. Initially, IT departments consisted of a single computer that was subjected to a whole chain of technology processes. In this regard, the machine could store the data on a magnetic tape which was then boxed in the basement. Rather than using a magnetic tape as it was applicable in the past, nowadays companies have sophisticated computers, systems of databases, servers, and cryptographies that help them in data storage (Mehmann & Teuteberg, 2016). Thus, advanced IT systems have enhanced logistics management, making business more competitive. Therefore, information technology has enabled each company or organization to stay ahead of the other corporations in one way or another. Fortunately, the best example of IT-driven competitiveness is found in the logistics industry.
Logistics information systems are used in large computers. These systems aid the companies to improve the efficiency of operations by tracking resources i.e. raw materials from the point of attainment to the final stage where a complete product is offered to the consumer. Logistics information systems are also leveraged by the companies in attaining end-to-end visibility of raw materials or finished goods. Additionally, the systems enable easy tracking of internal data through the provision of reports on the inventory costs that determines the number of stocks required and their purchase to complete the company’s operations. Therefore, the systems contribute to the efficiency of the company, because they also provide lead times and optimal lot sizes to the business.
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Apparently, logistics rely on high-quality management levels within the company’s supply chain. An essential role of the logistics managers is to purchase the goods and make sure that efficient transportation is done to various destinations. While doing this, the managers depend on the advanced information systems which also assist them in managing and tracking materials starting from the very time of their initial creation within the company to the point at which they are now ready to be proposed to the consumers in the retail stores. Due to the increased volume of competency faced by businesses, information systems are the only means of ensuring accurate management of the product flow within an organization. Appreciation goes to the IT specialists who always tirelessly try to create the specific solutions suitable for most companies i.e. determination of the appropriate goods to be marketed or allocated to the right route for shipment. The specialists also work jointly with the logistic managers to ensure that information is conveyed accurately back and forth within the logistics industry.
Primarily, companies depend on product shipping and knowing all the time locations of goods. Significantly, when shipment delays or arrives at the required destination, the industry’s tracking system helps the company be aware of where the shipment was scanned last, and hence, find its exact location. On this subject, the driver who is transporting the goods also finds it comfortable with the system. The use of the GPS mapping software also enables the company driver to get a real-time direction notification towards the shipping course.
The current GPS is even more efficient as it not only gives the drivers a real-time direction but also allows them to determine the original amount of traffic along the scheduled route. By so doing, in case the drivers’ routes got in traffic jams, the system provides the alternative rousts. Therefore, this is a huge advantage for the company’s transportation demands, because it ensures a timely arrival of goods to the required destination. To conclude, the impact of information technology on the logistics industry is positive. It supports all the industrial operations, and hence, guarantees not only efficient but timely production processing and delivery of goods to customers.
Principles of Logistic Management
Principles of logistic management help the managers from various companies in deciding on how to conduct or proceed with the Directorate. According to the firm policy, customers should be segmented conforming to the needs of services of the various groups. This law requires the company, first of all, to determine the targeted customers than to proceed with arranging them considering the nature of their needs. After that, the company should make appropriate adjustments to the supply chain to ensure that the identified needs are met considerably. This principle guides the company on the right path, preventing it from providing the wrong product or using a bad technic in addressing the client’s needs. For instance, having known the exact customers’ needs, formulating a product that meets such needs is quite easy. The second principle is connected with the customization of the logistics network according to the required service and profitability of the client segment. In other terms, this second principle guides the company on ways of reduction of the production costs (Porporato, 2016). The policy also acts as a source of an industrial differentiation in which the actual goods are not widely differentiated. For instance, a paper company may find more radical and different client service demands in two main segments i.e. larger and small publishers. In order to serve those two groups, the manufacturing logistic network can be designed with three stocking distribution points in addition to roughly 46 fast response cross docks both located right beside the printing sites. Thus, such an operation technique ensures a smooth running of the distribution processes.
The third logistic principle requires the logistics industry to concentrate full attention and listen to the market signals. As stated by this principle, the company should also align the needs of customers accordingly all over the supply chain, while ensuring that the forecasts are consistent and that resources are allocated optimistically (Leon & Uddin, 2016). This principle also directs the business to conduct its operations to ensure that profitability is maximized efficiently. The next principle requires the products to be differentiated closer to the clients. Also, conversations must be spread across the supply chain. Meanwhile, the companies which strive to meet the needs of individual consumers through the mass customization approach are likely to discover the postponement value. Through this technique, product differentiation is delayed until the very last possible moment. Notwithstanding the fact that this criterion can cause some time wastage, it helps the company to avoid the issue of SKU proliferation, a problem that is commonly associated with the satisfaction of customer needs. As a clue to a hardware company, the manufacturer can need to identify the point where a standard bracket has turned to multiple SKUs especially during the packaging, and hence, driving about 16 ways of meeting a specified need of customers. Therefore, with more than one way of accomplishing a task, the company can now meet the demand in the best way possible. The sixth principle states that the logistics resource manager should control the supply resources strategically to reduce the total cost of possessing the products. In agreement with this principle, an efficient supply chain needs a liberal mindset in which every contributor to the significant profitability is rewarded responsibly (Leon & Uddin, 2016). Therefore, this principle is motivationally oriented and thus, facilitates the company’s processes. All in all, all these principles are goal-oriented as they provide the companies with the proper direction which if followed leads to success.
Value Chain Strategy of Logistic Industry
The value chain strategy revolves around all the firm’s activities that enhance business competitiveness. These strategies are very essential as they act as a chain of values that creates competitive advantages, which were primarily highlighted by Michael Porter. In summary, the value chain of logistics and strategies is summarized.
The value chain strategy, often presented in the form of a model as shown above, primarily aims at creating the values that can exceed products or services provision costs and at the same time generate a profitability margin. As highlighted within the strategy, inbounded logistics entails the receiving, controlling the inventory of, and warehousing of the products. On the other hand, operations comprise the value creation activities through which the input is processed into a complete product, timely designed to meet the client’s needs. Considerably, the outbound logistics consists of the strategic activities that are directly aimed at availing the finished products to the clients (Chandra, Ghosh & Srivastava, 2016). While these distinct activities mean literarily making the products accessible to customers, marketing and sales are literarily comprised of all activities that ensure goods realization from the stores for a profit gain mission. Whatever it takes, these activities always assist in making a product to obtain an instant value through the earnings (Leon & Uddin, 2016). Thus, services are comprised of activities that control and promote the value of goods. Some of the services enclosed under this category include client support and repair services.
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Besides the above primary activities, the supply chain also has some support activities. Here, the first activity is procurement which entails the acquisition of services, goods or works from external sources. This event occurs concurrently with human resource management. HR management consists of operations that ensure that highly-qualified workers are efficiently available in the industry. Such activities entail hiring, recruiting, training, compensating and developing and even discharging or dismissing the personnel if necessary. The next activity and the logistics industry supportive activities contribute to the development of technologies. It regards to hardware, equipment, software, procedures and technological skills and knowledge aimed at bearing the industrial transformation of raw materials to outputs (Mehmann & Teuteberg, 2016). The last activity under this set is the infrastructure, including such activities i.e. legal, finance, quality management among others. By the way, supportive activities are often viewed as “overhead.” However, some businesses have successfully used the activities to gain a competitive advantage. For instance, it refers to developing a cost-effective management position through an innovative management system.
This paper has provided an in-depth analysis of logistics management, generally entailing efficient management of raw materials and related transportations of substances within the industry from the primary point to the final stage where finished products are availed to the clients. Logistic management activities have a great impact on the logistics industry. For instance, they have eased the attainment of end-to-end visibility of resources. As noted in the upper part of the paper, there are five essential principles which govern the logistics management. They include a proper segmentation of customers based on their needs, customization of the network of logistics, listening to the market signals and making appropriate adjustments, differentiation of products through a close customer-based design, and practicing a supply chain that supports mindset enlightenment. The value chain strategy of the logistics industry is also discussed in this paper. This chain has both primary and supportive operations. The main activities performed within the value chain strategy include the service, inbound and outbound logistics, operations and marketing, and sales. On the other hand, supportive activities are summarized as technology development, management of human resources, and procurement. Others also revolve around the firm’s infrastructure. Thus, a complete analysis of logistics and supply chain management logistics has been discussed in this paper.