Role of Logistics in Enhancing Competitive †MyAssignmenthelp.com

Question: Discuss about the Role of Logistics in Enhancing Competitive. Answer: Introduction In any business organization, there are core functions that are; marketing, production and accounts and finance. These functions are carried out within the production department, marketing department and the accounts and finance departments. Logistics department play a vital function in coordination activities of these core functional departments (Bhatnagnar and Teo, 2009). This report analysis how logistic management is used to ensure that there is smooth running in the operations of the business organization. It also discusses the effectiveness and efficiency of the order cycle and the inventory management of business organization and gives recommendations on how to improve on the effectiveness and efficiency. The report describes these issues using Dell Company as an example of how the logistics management can be used in the effective and efficient running of the business. Dell Computer Corporation is a US company that was founded in 1984 by Michael Dell initially dealing with the manufacture of personal computers. The turning point that enabled Dell to penetrate the market was by using a strategy known as build-to-order whereby the customers ordered the personal computers directly. The orders were made the shipped to the clients within a week of placing the order. This made it grow and sell its products to other countries outside the US such as the UK and others parts of the world. Over time, Dell explored to other products other than the personal computers. Now, Dell manufactures, repairs, sells and provides personal computers, data storage products, servers, computer software and peripherals, televisions, printers and cameras. Dell also sells electronics manufactured by other manufacturing companies. They have customers in virtually every part of the globe and carry their business internationally. Dell's major competitors include Toshiba, Acer, Apple, Sony, Hewlett-Packard (HP), Samsung and Lenovo. Interfaces of logistics and core functional areas Logistics management is the effective and efficient management of every day activity in creating the finished service or product of a company. The aim is to plan and synchronize all the actions needed to accomplish anticipated level of services delivered and quality at lowermost probable cost (Gunaseakaran and Ngail, 2003, Li et al., 2006). The eventual objective of every logistics system is to please the client by creating connections of persons at all points in the firm to the market. The greatly competitive market for clients and capitals, logistics performs a significant function, by making products and services available to customers, promote greater levels of effectiveness and efficiency in performing the activities, with the end getting results that are better (Fugate et al. 2010). Logistics also are a chief element of differentiation in the market (Bowersox et al., 2002). The performance of logistics department in any organization has an influence on the general performance of a firm (Larson et al., 2007). The logistics department closely interfaces with the other organizations department such as the finance and accounting, production and marketing. The interface between the logistics department and the Finance and accounting department: preparation of budgets, discussing contracts with transporters, and handling shipment involve the finance and accounting staffs. However, numerous businesses struggle apportioning cargo and transport costs correctly to the correct department or locations. Therefore, the logistics department becomes important in informing the finance and accounting department about the costs to be assigned to each section where the products are moving until they reach the customer. The interface between logistics and marketing: When products are completed, they have to move from the industrial unit to the warehouse or client. Logistics ensures that the products move and that adequate extra capacity to handle the following product is available. When there is a shift in marketing focus of a company, reverse logistics handles getting products from stores or accept the products returned from clients. If the logistics department is efficient, it can be used as a marketing tool. Companies with efficient logistics systems are able to charge prices that are lower and therefore market the companys products. Other companies can attain distribution times that may allow online buyers acquire their imports quicker, while others can use the logistics department to transfer products from foreign factories to the stores fast. Logistics is closely linked to marketing by its functions in client services. Interface between logistic and production: The manufacture of finished products needs acquirement of parts, raw materials and components. The logistic department therefore ensures that they acquire the right parts, components and raw materials to the production unit to produce quality products. The quality of materials brought in and the parts purchased defines the quality of finished goods to be sold and distributed. Order cycle An order cycle starts when the customer makes an order, the order is entered and sent to warehouse, the order is prepared and shipped, invoice is prepared, the transporter makes to deliver delivers the order. The order cycle lastly ends when the order is received by the customer. Order processing system receives order statistics from clients, put the data in a central databank and directs the order data to the departments of accounting and shipping. Order processing systems aid to make sure that all of the orders of customers are completed on time. A firm with a strong order processing system leads to both the business and customer benefiting. Clients experience more dependable supplies and correct fulfillment of the order. Businesses can make the most of their profits by not be unable to find or errors in reading of orders (IBSolution 2013). Sales order processing is done by the distribution channel comprising of retailers, wholesalers, distributors and customers. A competent order processing aid in simplifying the procedure of ordering, saves time and the order processing errors are reduced. The developed countries are using web based software are to realize the capability to process client orders efficiently and effectively. Computerization of order processing offers businesses additional regulation and perception of what is going on a day to day operations. It aids business manage the supplier and customer relationship in a better way manage, manage production and inventory, conform with governing requirements, manage funds and sales projecting, make the business visible to processes and increase the general profitability of the business (Peoplesoft, 2011). For the Dell Company, the following is their cycle order; In terms of sales, the order is placed by the customer through retailers. Replenishment orders are placed by the distributors to the sales department. A sales order is generated comprising of order information for instance preceding balance order, ordered item, amount and date of delivery. At the production level, an order is given by the sales department to the production department for them to design the production plan. Production department confirm with warehouse in order to make sure that the supplies are adequate to manufacture the products that have been ordered. Customers also place their orders directly to sales department. When the production department fulfills the order, stores department will prepare a delivery order document that is sent alongside the finished product. Then the items ordered are sent to the customer through coordination of the logistics department The logistics department creates a list that shows information of products to be taken by logistics department to transport the entire finished product to the client. In terms of distribution, Dell Company has numerous distributers all over the globe who also get orders from retailers. The retailers not only do direct sales from the many branches globally, but there are those who keep the Dell products. Then the products are sold directly to customers by the retailers. Inventory management Inventory management deals with issues such as at what time to order, the quantity to order and the amount of stock to retain as a safety stock (Silva 2009). It consist of a number of choices that intents at synchronizing current demand with the supply of materials and products to different places and the right time. Inventory also can be described as a physical amount of merchandises put in store to satisfy the expected request (Wanke, 2011). Inventory management is among important undertakings of trade logistics. The purpose of inventory management is to have inventories at a cost at the lowest and to make sure that the supplies for the operations going on are not interrupted. The chief aim of inventory management is have the inventories on ideal level, without extremes. Inventory management deals with having the correct inventory in the correct amount, right place, right time, and right cost. Effective management of inventory is the outcome of exceptional inventory control and inventory management. Inventory control comprises handling the inventory now in the store, stockroom or warehouse. This means that one should be aware what products are available, how much of each item is present and their location. It shows having precise, comprehensive and well-timed inventory dealings record and evading dissimilarities between inventory levels and accounting. Inventory management comprises assessing how to order goods and the quantity to order and recognizing the best efficient source of supply for every item in every location (Cachon and Fisher, 2000). Keeping the correct quantity of inventory is critical. If the company orders very little, the customers will switch to other supplies. On the other hand, if the company orders too much, there is a possibility that the store will be full of extra products in store that it may need to sell at a low price or the stock may become outdated. Recommendations: Having an inventory management system that informs the movements of stock throughout all channels would considerably decrease the risk of selling too much. A good inventory management should be able to track movement of inventory continuously, rather than tracking it once in a while. The automation of inventory has led to development of is one of inventory management software and this greatly reduces the risks of missing orders or selling too much accidentally (Esker, 2013). Conclusions Logistics is linked to production, marketing, and finance and accounting. All the activities in these core functional departments are coordinated by the logistics department. In the business firm, the logistic department harmonizes the undertakings of production, purchasing, warehouse, transport and customer service. It ensures that the correct product gets to the correct client, in the correct amount, state, place, time, and cost. The undertakings of supply start with the receiving of clients order. The entire orders are handled by sales department. It offers demand request to department of production for them to produce who buy materials that are needed from the suppliers. After fruitful production, the goods produced are taken to stores who send the products to the customer through the logistics department. Order processing systems can use both the old and new processes, integrating manual systems with technological answers. The planning, storing, moving and accounting for inventory is the basis for all logistics. Keeping the correct quantity of inventory is vital. Through automation of inventory management process, the company is able to cut down the possibility of human error. Once the company uses inventory management software, there is more time for the staff to do more in growing the business. References David L. Anderson, Frank F. Britt, and Donavon J. Favre, The Seven Principles of Supply Chain Management, Supply Chain Management Review, (1997). Gunasekaran, A. and Kobu, B. (2007). Performance Measures and Metrics in Logistics and Supply Chain Management: A Review of Recent Literature (1995-2004) for Research and Applications. International Journal of Production Research 45: 2819-2840. Fugate, B. S., Mentzer, J. T. and Stank, T. P. (2010). Logistics Performance: Efficiency, Effectiveness, and Differentiation. Journal of Business Logistics31: 43-61. Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S., and Rao, S. S. (2006). The impact of supply chain management practices on competitive advantage and organizational performance.Omega 34: 107-124. Larson, P.D., Poist, R.F. and Halldrsson, A. (2007). Perspectives on logistics vs. SCM: a survey of SCM professionals. Journal of Business Logistics 28: 1-24. Bowersox, D.J., Closs, D.J. (1996). Logistical Management: The Integrated Supply Chain Process. New York. McGraw-Hill Companies. IBSolution. Retrieved from: www.ibsolutions.com. Accessed on September 28, 2017. Esker. (2013). Automated Sales Order Processing for Order-to-Cash Performance. Retrieved from: www.esker.com Accessed on: September 27, 2017. Cachon, G. P.and Fisher, M. (2000). Supply chain inventory management and the value of shared information. Management Science, 46(8): 1032-1048. Bhatnagnar, R. and Teo, C-C. (2009). Role of logistics in enhancing competitive advantage.International Journal of Physical Distribution Logistics Management 39: 202-226