Dissertation about issues in logistics management essay

1. Introduction: This thesis is about logistics direction. It is a portion of the supply concatenation direction which involves with the influx, escape, procurance, care and storage of goods and services. The supply concatenation exists between get downing point to bringing point. As mentioned by Ackerman ( 2000 ) , “ Logistic direction fundamentally means holding a right thing, in the right topographic point at the right clip ” . This undertaking is focus on the activities of director of celebrated company to execute in order to do the administration a success.

In today ‘ s environment there is a demand to remain updated in order to cognize the defects in concern, to believe at the right clip and act consequently. There is ever a complexness in covering with the ever-changing client demands, their outlooks associating to monetary value, competitions in the economic system and so on. All these have to be met expeditiously in order to get by up with the state of affairs. The success of a goods or service depends on how good strengthens of the distribution scheme is studied and how the providers, markets, storage and transit are dealt with right scheme. The approaching countries trade with the full procedure involved in the transmutation of a natural stuff into the ultimate finished merchandise. “ Logistics direction presents a assortment of tools to understand the logistics in effectual determination devising and how it goes in associating the broader issues in the full supply concatenation thereby happening out ways and agencies in accomplishing the strategic ends ” ( Ackerman, 2000 ) . The company that is selected here is Tolam Logistics which is located in Hong Kong.

It was established in 1996 by Mr. Eric Lam who had about 20 old ages experience in cargo and transit. The TL ‘ s provide “ One Stop store ” logistics services by all type of installation of logistics like storage, bringing, usage clearance etc. The TL ‘ s chief clients included Toshiba, Sanyo, Kleon, Fuji ‘ s air conditioner and Plasma Televisions. It had a warehouse of 100, 000 sq. ft. and owns about 32 trucks.

The staff strength resulted to around 100 including lasting staffs ( Magee, 1985 ) . Tolam Logistics is a logistics company engaged in the distribution of goods that are received at its warehouse. The chief points that we focussed here is warehousing and distribution.

The aim of this instance survey is to discourse its aims, schemes and methods employed in: Transportation system planning: TL uses its ain trucks to transport the goods without depending on outsourcing of conveyance. Merely when the demand exceeds its conveyance installations it does non waver to do usage of outsourcing and in state of affairss where the demand is low it has no job to set its trucks idle. They use their trucks in such state of affairss to bring forth income by outsourcing their trucks to other utilizations. E. g. In monsoon season due to low concern activity at that clip non utilizing outsourcing trucks and deploy merely ain trucks which runs on fixed path and fixed contract which surety of fixed disbursal and income. Inventory direction: TL provides a sound stock list system.

They receive orders in the dark and do dispatchs in the daylight. They forecast the warehouse infinite and transit on a quarterly footing in order to cognize its demands. Companies normally reserve their infinite in the warehouse depending upon the volume to be held in the warehouse. They have latest engineering for lading and droping 14 vehicles at a clip. Information engineering: TL has an extended usage of computing machine systems to enter assorted minutess go oning indoors.

It maintains a separate database for each client. TL is now in the procedure of developing a new IT integrated system that will open up new issues to the company. Thallium does hold troubles in supplying different bequest systems, so they are be aftering to put in a common platform on the web so that all its clients can be satisfied at a clip. They are implementing barcode system to tracking goods ( Frederick Ross, 1996 )2. Purposes and Aim: We are larning about the issues of logistics direction and for this intent I am be aftering to take up the company Tolam Logistics as the chief topic. Tentative research inquiries can be considered for this intent is What are the chief factors that affect the logistics direction at TL, Do theories of logistics apply at the land degree? , How of import is logistics in pull offing client satisfaction? , What are the public presentation steps, bing methods and prosodies used for logistics direction? , Can modern communicating engineerings impact logistics direction. 3.

Theoretical Background: 3. 1 Logistic Strategy and Planning: The supply concatenation scheme is chief nexus to growing of concern scheme and it should taking attention of balance maintained between the cost and service offered by house. As mentioned by Tompkins ( 1998 ) , following factors have to be considered here, The clients and providers should be aligned in respect to the internal company operations. Company ‘ s influx ( Raw Material ) and outflow ( gross revenues ) should be maintained as per market demands and tendencies with the aid of internal company operations likes collect, pickup, packaging, present etc. The selling and gross revenues program should be aligned to run into the supply concatenation scheme means like E. g.

For establishing a new merchandise in the market gross revenues plan like selling should be start after adequate production flow carry on to carry through the demand of market, If market tendencies change the instantly we have other scheme for merchandise alteration. The capital outgo has to be aligned to the supply concatenation operations. E. g. Firm have enough capital for monthly fixed disbursal like production cost, gross revenues, salary, rent, selling and publicity cost etc. The HR construction has to be aligned to the supply concatenation E. g. HR construction have adequate work force to run the production, gross revenues and selling etc dept.

The supply concatenation has to be aligned in order to run into the investing policies. The supply concatenation has to be aligned in order to run into the growing marks. The supply concatenation has to be aligned in order to do room for enlargement of the concern. A Logistic planning involves the usage and direction of all logistic resources in order to keep the coveted cost and service public presentation. The considerations include the stock list placement, stock list degrees, figure of warehouses, types of warehouses, manner of bearer choice and so same will be forwarded. The company can make up one’s mind on whether to deploy a high service method or a low cost service method. A high cost method deploys more warehouses, use fast bringing transit and maintain high stock degrees.

This method of class is largely seeking to avoid the high cost. Whereas, a low cost service method gives value for cost by cut downing the figure of warehouses to one, usage inexpensive transit and maintain longer lead clip in telling stocks. Through improved warehouse design the cost of managing stuffs can be reduced to a great extent prior bringing goods arrange as to easy lading and droping from trucks, by set uping direct vehicle burden of stuffs from the warehouse and implementing machine-controlled installings are two methods that can cut down managing stuff costs.

By carry oning an appraisal of the conveyance costs and implementing the right pick by comparing current conveyance costs with that of the happening standard rates can convey down conveyance costs to the minimize with paths choice, velocity of vehicle, Regular maintained vehicle, route maps, uses the GPRS system to make at bringing point. This type of logistic planning goes a long manner in achieving the right logistic system. Company has to see four chief points while be aftering a logistic system ; they are as stated above, client service degrees, installation location, stock list determinations and transit determinations. These four degrees are related to each other and hence incorporate planning has to be considered. Planing here means planing the logistics web as a constellation of warehouses, production workss, selling countries, stocking-areas, transit and information systems that aim at equilibrating an equilibrium between the overall costs and the gross. Briefly thought for the logistic planning means the entire cost construct should be studied to see the supply chain.

3. 2 Customer Service Strategy: A Supply concatenation is fundamentally considered as a “ strategic construct that involves understanding and pull offing the sequence of activities -from supplier to customer-that add value to the merchandise supply grapevine ” ( Tompkins, 1998 ) . The function of clients in the supply concatenation market is non incidental. Every company in this concatenation, irrespective of market size chiefly they thankful to its clients as the fact is that in all net income of house there are clients are in centre whom to purchase the goods and services produced by each one of them. This century marks the terminal of monopolies and therefore clients can do an array of picks. When clients decide non to purchase merchandises in a peculiar supply concatenation, so no uncertainty the company would fall in without gaining any gross for the disbursals incurred in establishing the merchandise on the phase of impregnation and diminution phase. So, the supply concatenation should be structured in such a mode that there is a common nexus between the merchandises as such and the terminal client.

It is because that the gustatory sensations of clients keep altering and their outlooks goes on lifting, when merchandise rhythm at impregnation and diminution phase at they began diminishing ‘ brand ‘ trueness and set in for anything that attracts them. Thus the importing must be put on carry oning effectual market analysis to cognize the demands of different groups of clients to whom the offer is to be made. Its chief purpose is to smooth its contact with the clients. The principle behind this scheme is to better services provided straight or indirectly to its clients and to utilize the information in the system for targeted selling and gross revenues intents. A sort of prosodies should be used to measure the client service, like the company ‘ s ability to make full the orders in limited clip or the bringing of the merchandises on the due day of the month.

Other researches can be conducted to happen out the ground for non presenting the merchandises on the due day of the month. There is no via media for an act of carelessness in run intoing client satisfaction as it is the clients who finally judge the life span of the company. A In today ‘ s fast turning economic system, it is non the affair of fact that the large round the little but it is the fast beats the slow and the accurate beats the inaccurate.

Below are mentioned seven stairss to cut down the fulfillment costs by bettering client service at the same clip ( Tompkins, 1998 ) . Harmonizing to him, the undermentioned points are of import with respect to provide ironss, Integrate with order entry system: In today ‘ s hyper competitory economic system it is really hard to keep order fulfillment through the cyberspace. Most of them placed through cyberspaces are managed ill and which end in ensuing falsifying client satisfaction due to detain in merchandise bringing. Integrating a systematic order fulfillment procedure tends to cut down manual labor that saves clip, increases profitableness and client satisfaction E. g.

Order received in dark and do bringing in the twenty-four hours clip. Build in adaptability: Supplying exceeding client service has proved to be disputing in today ‘ s competitory environment. Companies can run into this challenge by turn outing to be adaptable with the client wants makes alterations in their orders right from the purchase and even upto and after cargo. This can turn out to be successful as the clients can acquire what they want even if their merchandise alterations from the market. E.

g. Tailor made transit system like boxing installation as per conditions. Confirm with saloon codifications: By altering the saloon coding into an machine-controlled one, the company can salvage a big sum of its clip and energy and even implement flawlessness in planning as it presents existent clip informations alternatively of mere projections.

E. g. In the ware house stuff arranged with barcode easy to turn up peculiar merchandise with the barcode system we can easy switch goods as per precedence of bringing and bringing topographic points. Conducting machine-controlled takings: Automated engineerings are easy fulfills the demands of client thereby increasing client satisfaction and delivery in perennial concern in a shorter clip span. E. g. Goods aggregation from client finish is one of good illustration of machine-controlled takings it ‘ s save clip and money of clients which conveying repeated concern. Automated transportation programs: Using automated transportation program the workers can pick to a predesigned manner of stacking the containers without traveling for test and mistake methods.

This saves a batch of clip and energy of the workers engaged in stacking the containers and rushing the bringing with less disbursal than without ASP. E. g. Barcode system on containers and on the country of ware house which easy track the goods and easy stacking and rushing the bringing.

Automate shipment confirmation: By using automated confirmation together with automated picking and utilizing saloon codifications, more clip can be saved on wadding, verifying and transporting procedure. Sourcing orders based on installation work load: Logistic directors should utilize the method of best utilize of infinite when multiple repositing and distribution installations are available in order to better reactivity and maximise flexibleness. The above factors tend to do the cargo reach the clients more rapidly and which hence has a direct impact on their satisfaction degrees. The criterions of service provided to stop clients should be determined and mentioned on top of the list. The staying strategic determinations should besides be taken sing the clients involvements. Frohne, ( 2008 ) , Organization has to seting the supply concatenation as such to run into the market demand and merchandise characteristics, Determining the relation theoretical account among the supply concatenation participants, Choosing the providers, Determining on the distribution channels, Adopting a specific method of stock retention, Determining the location and nature of the warehouse, Explicating guidelines in choosing the transit.

Taking a determination on any of the above mentioned factors without giving due consideration to the client demands may earnestly impact the execution of the general schemes of the supply concatenation, as the schemes of the supply concatenation are competitory in nature that aimed at terminal client satisfaction. A The focal point of supply concatenation on the clients can be studied more explicitly utilizing the Quick Response construct, which means placing the demands and responding to its alterations every bit rapidly as possible. This construct was developed in relation to textile industry in order to avoid losingss due to alter in demand. The QR nature is such that it assume in close cooperation with the supply ironss by supplying maximal satisfaction to its clients by cut downing the costs to its lower limit. This becomes material if the clients provide timely information to the providers sing their demands and they make timely supply of the demand. This method would no uncertainty increase gross revenues by cut downing the costs by conveying in net income to all the supply ironss involved. 3.

3 Procurement direction: Procurement is appropriate goods at best cost which fulfill the demand of purchase with good quality, measure, clip and location. It is sing the net income orientation fastest turning concern house instead than simple cost film editing steps. There is an old stating “ Goods good bought are half sold ” , this means that the success of an administration depends on the efficiency of its buying section. If organisation purchase good quality raw stuff so it ‘ s increase the productiveness of internal operation, quality of concluding goods, cut down the wastage. Buying dept and merchandising sections are interlinked, in other words if purchasing dept purchased goods without proper audience with the gross revenues section which knows the nature and tendency of the market, so the gross revenues section can non win to sell the goods at a net income.

E. g. if purchase section without consult with gross revenues dept purchase H2O resists boxing stuff in monsoon season to buy rainproof stuff for boxing it ‘ s indirectly consequence on concern cost, clip etc wastage. In monsoon season low concern activity need low measure of boxing stuff demand to cognize measure of stuff as good. Scientific buying methods should be adopted in order to buy the right merchandise at the right monetary value and topographic point, in right measure and quality and from the right provider. All these factors are interconnected.

There is ever confusion for all the concerns sing what to purchase, where and how to purchase. All these jobs can be solved by executing the following buying maps. Jones, James V. , p82 ( 2006 )Planing the purchase of goods: The manufacturer should make up one’s mind on the needed sum of stock of natural stuffs and parts that is to be purchased on the footing of expected volume of gross revenues and the estimated rate of production. It has some sub maps that has to be followed to do the purchase efficaciously. They are readying of the budget, finding of measures to be ordered, stock turnover, consideration of effects of alterations in manner and monetary value alterations. Collection: It means garnering goods from assorted beginnings and conveying them to the concern topographic point. E.

g. Head office ordered for boxing stuff and shop in warehouse so necessitate to provide at all subdivisions on right clip. If goods received from Japan to present at north London so japan branch send goods to chief office at uk subdivision so they supplies to London subdivision and London subdivision supply to north london subdivision whom deliver it to client. Locating the beginnings of supply: The purchasers have to seek for assorted beginnings of supply and keep contact with them. In the choice of the providers, the purchasers should see the efficiency, rate and location, capacity of supply goods, good will and fiscal stableness of the providers.

It is ever desirable to keep liaison with two or more providers to guarantee uninterrupted supply in instance of non handiness of natural stuff from one supplier purchaser sure for available from another provider and supply of natural stuff non interrupted. Market intelligence: The purchasers should be ever cognizant of the market, the monetary values, the alteration in manner, gustatory sensations and attitude of the clients should be updated. The launching of the merchandise and their impact on the clients should besides be monitored by study of client ‘ s like-dislike ‘ s, market portion, market tendencies etc. Negotiation of footings: After the above activities have been completed the purchaser has to finalize on purchasing. For this he has to negociate with the provider ‘ s footings and conditions.

Usual dialogues will be on the quality, measure, monetary value, price reductions and footings of bringing. Transportation of rubric: Finally, instantly after the payment the purchaser should acquire the rubric transferred in his name. He should acquire the relevant paperss like concluding understanding transcript, footings and status missive, citation etc in his detention. To take a speedy expression at how CEVA logistics a prima supply concatenation direction company has tied up its custodies with Ford, a planetary leader in the automotive universe, proved to be a success. The operation is located closely to the workss propinquity and provides little batch market devouring countries, container direction and efficient transit system. CEVA was awarded three awards for its efficient supply concatenation in supplying client satisfaction through keeping quality, fast bringing and excellence in direction from Ford. 3.

4 Fiscal facets of logistics: Fiscal directors have a duty to raise capital for keeping stock list and besides for the houses overall profitableness. There is a planetary solution for low hazard work. Once a company enters to make concern globally its fiscal hazards besides arises.

It needs to inquire inquiries as to how it will acquire its money in concern or whether the goods will be accepted merely after the cargo. Companies can utilize assorted fiscal instruments that Bankss offer presents in the signifier of missive of recognition and the similar. The payment status regulates the flow of goods or services in the logistic system and the manner of payment. Some of the common agencies of payment are manner measures, missive of recognition, commercial bill etc. on the footing of payment conditions ; Bankss have adopted a new agencies of payment under the term called fiscal technology. These have proved to be really much useful in enabling the free of capital that is blocked in ventures and besides cut downing the clip of financess being locked up in concern. They besides have to verify the footings and contract of payment with client and what is fixed disbursal are occurred against payment method with clients.

The currencies of assorted states can besides impact international logistics in many ways. These are foreign exchange control and hazards of exchange associated with repositing. This can be reduced by choosing specific company locations, states that have a stable market for their currencies. By cut downing the order processing clip can besides understate the hazards involved in exchange rate. 3. 5 Packaging and Inventory ManagementA Packaging is engineering of fixing goods for transit, gross revenues, warehousing, logistics, evaluate the design of merchandise.

Packaging is concerned with the planning, distribution, sals and storage etc. Boxing makes attractive to the terminal consumers the old merchandise. It is a group attempt of the interior decorator, the research worker, the applied scientist, the selling expert, the gross revenues section and the top direction.

“ It should be designed in a systematic mode in order to accomplish its really purpose ” ( Voortman, 2004 ) . A The assorted factors to be considered while taking packaging determinations are the size, coloring material, stuff, text, trade name name, caption etc. In packaging designs the AIDAS expression ( see Figure 1 ) has to be successfully implied.

AIDAS represents five basic points. They are attending, involvement, desire, action and satisfaction. These are really much of import in the supply concatenation scheme which goes finally in run intoing the client demands. The demand of packaging is to guarantee the supply of right measure and quality of the merchandise, to protects the merchandise from any harm caused due to dust, mishandling, pilferage etc, to makes the handling of merchandises handily, to ease the storage of merchandises, to makes it convenient to separate our merchandises from that of the others, to makes the merchandise more attractive, to assist the clients to recycle the merchandise for some other intentsBoxing holds a really of import topographic point in the supply concatenation logistic direction. Merely when the merchandises are presented good the clients has an impulse to purchase it more frequently.

AFig. 1 AIDASBeginning: – ego4. Inventory Management: A Inventory direction purposes to manage all map right with tracking and direction of stuff. Inventory direction is really broad definition like to replenishment lead clip, transporting costs of stock list, plus direction, prediction, rating, visibleness, future stock list cost, infinite, quality etc. The ultimate purpose of supply concatenation direction is how good you manage your stock list. Manufacturers face a figure of challenges which require non merely exceeding planning but besides an effectual communicating apparatus that keeps you updated at the goad of a minute. From rapid alterations of client demands, globalization or even natural catastrophes can do your stock list to be stuck up paving manner for no rewards to the employees. Therefore there should be a speedy information system to discourse the inbound and outbound issues impacting the demand and supply.

For this there should be a good managed supply concatenation stock list direction in order to maintain the concern running without any breaks ( Bowersox, 2000 )There are benefits and hazards of keeping stock list as mentioned below, Avoiding hazards of sale: If a coveted sum of stock list are stored that are ready to be sold, can convey in return to the company. It can avoid losing its clients for non supply of merchandises. Shelf-stocks are those merchandises which are sold to its clients with small or no alterations ; an illustration of such a merchandise is cars. Measure price reduction: When goods are purchased in majority measure the providers offer a price reduction.

This is in fact helps the purchaser to do a more border in net income. Even sometimes providers are ready to provide goods on recognition for clip period like one hebdomad /month that ‘ s all capital invest in other beginning for clip being assist to hard currency rhythm. Reducing telling costs: Each clip an order has to be placed it incurs certain disbursals like get offing costs, typing, O. K.

ing and the similar, so if stock list is stored in majority it can cut down the ordination costs to a great extend. Reducing the set up costs: Start up costs is incurred each clip a merchandise is produced. Keeping big stocks of stock list aids in cut downing the set up costs. Reducing hazards of production deficit: If any portion of a merchandise is unavailable it may ensue in the production to remain at a arrest. Therefore it is good to keep stock lists to keep sufficient flow of supply to the clients. Avoiding hazards of keeping stock lists: Decrease or diminution in the market monetary value: It faces the hazards of monetary value film editing by rivals or the reaching of a new merchandise.

In such state of affairss keeping stock lists in big A sum would merely turn out to be a loss for the keeping house. Besides inventories more money on new merchandise like advertizement, establishing, publicity offers, price reduction strategies etc. Deterioration of the merchandise: Merchandise may acquire worse when it is held for longer periods. Obsolescence of the merchandise: The merchandise may go disused and outdated when the client ‘ s gustatory sensations and penchants alteration. A While covering with stock list direction in the supply concatenation it is besides advised to travel through the costs of keeping stock list. The costs associated with stock list are of two types ; direct costs and indirect costs. “ The direct costs of keeping stock list are the stuffs cost, telling costs and transporting costs.

The indirect costs of keeping stock list are costs of financess tied up in stock list ( chance cost ) and the costs of running out of stock ( stock-out cost ) ” ( Waters, 2003 ) . When critically measuring the stock list direction we can sum up the aims like to guarantee that the stuffs are available for production without break, To keep sufficient stock of natural stuff in times of deficit, To guarantee that stock list of finished goods are readily made available to run into the client demands. , To keep a balance between the inventories. , To forestall the stock list from impairment by supplying proper repositing and insurance. From the above mentioned points it is evaluated that stock list if non controlled decently may either manner prove to be wastage to the concern. This has induced the demand to happen out techniques to command the inventory.

A4. 1 Economic Order Measure: EOQ ( see Figure 2 ) is the degree where entire demands of merchandise is changeless over and each new order is delivered in on a regular basis when in the stock list is reach at zero degree. It is of import to observe that merely the right sum of the stock list has to be stored.

EOQ means the finding of the right measure to be purchased. A balance has to be maintained between the carrying costs and the ordination cost. EOQ is the point where the entire cost of telling and the cost of transporting the stock list would be the lower limit. For EOQ we assume that the telling cost, rate of demand, purchase monetary value and bringing measure are changeless with fixed lead clip. The chief point here to be noted is “ whether you increase or decrease the purchase the sum of all the costs should be maintained at a lower limit ” ( Stock, 1993 ) . Fig.

-2 Formulas for Economic Order Quantity. Beginning: – Google Image. 4. 2 ABC analysis: A ABC analysis ( See Figure 3 ) is a technique of exerting selective control over stock list points.

It is a method of commanding stuff harmonizing to its value. It ‘ s a mechanism for impact on stock list cost by placing points. A concern need non exert the same grade of control over all stuffs. Materials of high value should be closely controlled than stuffs of low value. Consequently, the stuffs will be grouped as A, B and C. A class stuff constitutes merely a little per centum of the entire points but they have the highest value. By category points constitutes a higher per centum of the entire points but have merely a medium value and the C class points constitutes the highest per centum in the entire stock list but it has the lowest value. ABC analysis is based on the rules of Selective Inventory Management.

AFig-3 ABC Analysis. Beginning Google Image4. 3 Determination of Re-order degree: Re-order degree ( See Figure 4 ) is that degree of stock list at which the house should put orders in order to keep stock of the stock list. It is with respect to the timing of purchase. When orders are placed new merchandises will make the before it runs out of stock.

Last infinitesimal order placing is non found here as the orders are placed somewhat above the minimal stock degree. The above techniques can travel on a long manner to command the sufficient stock list. As stock list forms the life blood of a concern non a minute sloppiness can be made in keeping equal stock of stock list. As there is a supply concatenation all over the Earth it is high clip to waive with traditional stock list direction procedure and continuously manage stock list through the planetary supply ironss to optimize the stock list. The excellence in supply concatenation is required to strike a balance between the lead times, budgets, stock list costs and the hazards. In order to keep optimal use of stock list it is necessary to equilibrate the supply concatenation direction against the concern policies, altering market demands, hazards and other restraints.

It makes it of import to cognize what stock lists to transport, how, when and in what form. A