Analyzing Logistics in the Business Organization

¶ … Logistics in the Business Organization

Why have supply chain management issues often been ignored by senior management?

As an organization becomes more and more profitable, the managers perceive a lesser need for addressing issues in the supply chain (Dutton, 2009). One of the key causes encompasses the profitability of the company and the focus is on profit margin generated. With regard to companies that generate greater profit margins, while transport and logistics form a meager part of expenses, managers barely dedicate their time in supply chain management. Instead, they have a tendency of laying emphasis on what generates greater proceeds. Nonetheless, when the organization is in turmoil and having poor returns, managers will acknowledge the need for having an effective and efficacious supply chain. This is owing to the fact that every minimal expense will have an impact. As a result, every probable solution is sought after, when the margin of profit is deteriorating. Supply chain management is one of the manners in which an organization can boost its profit margin by having a well-timed distribution and managing of inventory from the starting point of procurement to the delivery to the consumers (Dutton, 2009; Rudski, 2008).

Customarily, supply chain management will encompass numerous operations, such as procurement, distribution, retail, transportation and even financing. At times, top-level managers might not have a proper understanding of this whole association. Therefore, lack of understanding of these aspects might result in ignoring the supply chain management. As a result, it is necessary to underline the significance of role played by supply chain management in order to make such top-level managers to understand its decisive role in the performance of the company (Robert, 2008). The argument made by the author is that managers end up ignoring supply chain management as they might not be completely cognizant of its competitive advantage with regard to resolving a number of the issue that are worrisome (Robert, 2008).

In addition, according to Robert (2008), one of the other reasons why senior management of companies constantly ignore logistics is owing to the fact that some of them are not completely cognizant of the benefits that come along with it. Lack of interest in the supply chain management and operations possibly make the senior management ignorant of the importance of this sector of its operations of the company. Conversely, this could be the result of supply chain managers failing to give insight and understanding to senior management regarding the prospective advantages of logistics for the company. Therefore, taking this last possibility into consideration, it can be inferred that the reason is because there is a lack of cooperation and link between senior management and the supply chain division of the company as well as other supportive divisions involved in this function (Robert, 2008).

Question 2: How would you convince senior management to focus more attention on supply chain management?

It is imperative for senior management to lay emphasis on supply chain management in order to realize what is fully achievable. One of the ways of convincing senior management is to bring into focus a number of the objectives predetermined by the management to accomplish (Robert, 2008). A number of these objectives consist of decreasing risks and thereby safeguard generated revenues and returns, attaining organizational growth subsequent to every year, exceed the already set proceeds, increasing the return on equity of the shareholders and also attaining a competitive edge (Robert, 2008). This required plan thereto would cause the management take into account all areas of operations, including SCM, thereby realizing its potential and importance. Another way of attaining conviction is having proper communication with senior management to generate cognizance regarding its potential in realizing their objectives. Such an action will necessitate deliberations to seek the attention of the senior management. This would necessitate furnishing particulars and information of how supply management can advance and accomplish a number of their objectives, for instance maximizing the shareholder's equity. This can be undertaken through cost saving which is realizable through supply chain and increasing proceeds through customer satisfaction (Dutton, 2009). This improves the profit margin while simultaneously decreases expenses, which has a remarkable influence on the performance of the company. To detail the conception, numerous other approaches to influence senior management can be employed, for instance presenting the experience of other corporations that have realized accomplishment through judicious deployment of supply chain management. Presenting the senior management with the status and position of the companies prior to and subsequent to supply chain management, can be a very effective way of convincing them about the role SCM can play to enhance the performance of the company. More so, another aspect to present is the present status and position of the company in comparison to such companies that have proven records of the benefits of supply chain management (Dutton, 2009).

Question 3: When promoting supply chain management initiatives to senior management, how would you utilize the expertise of external logistics and logistics management organizations?

Proficiency in external logistics and logistics management organization can be best utilized when endorsing supply chain management initiatives to senior management. To start with, it is pertinent to involve a number of stakeholders, who play a vital role in the effectiveness of the supply chain. This encompasses retailers and suppliers together with valuable and discernible contributions from third party logistics and fourth party logistics. One of the advantages they offer is that they hold an extensive coverage and experience with diverse companies within various commercial fields (Dutton, 2009). To be more precise, they can assist the company in curtailing mistakes and trials considering the fact that they have a wide array of experiences to offer, in addition to the necessary measures. In addition, bearing in mind they are independent operators, nonaligned to the organization, they stand a better chance of influencing and converting those that may be in disapproval to usage of supply chain in enhancing performance of the company (Robert, 2008).

Such external influence makes becomes more worthwhile, as supply chain necessitates more collaboration between the company and other stakeholders, such as suppliers and retailers. Thus, operating closely with them could be a useful maneuvering in presenting the concept to senior management through the mediation of the participating stakeholder. It is thus easier to convince the management that what is required is accessible (Dutton, 2009). Vendors offer perceptiveness as to what is taking place and working together raises the level of efficiency. As such, there is a need for partnering with vendors if there is to be any success in supply chain management. Therefore, in presentation of the notion to the senior management, the vendor plays a vital role to influence the management that the required partner for productivity is accessible (Dutton, 2009).

Module 1 -- SLP

In order to continue succeeding in the global market, there is an increasing demand to implement proper strategies and approaches in addition to having timely and effective implementation. More so, as the market becomes increasingly globalized, the level of competition increases even more. The inference is that no single organization can succeed without rational, practical plans and strategies. In particular, logistics is one of the key factors and elements in business, and amounts to the crucial operations of the flow of products, services, information and resources. As pointed out earlier, one of the major problems for organizations is that senior management have a tendency of ignoring logistics. Top-level managers tend to ignore supply chain management owing to their comparative ignorance and due cognizance of its competitive advantage with regard to resolving a number of the issue that are worrisome (Robert, 2008). One particular company that will outline this aspect is Tesco. Tesco is one of the largest vendors and retail companies across the globe. The corporation operates more than 2,400 retail stores and has over 350,000 employees across the world, with profits exceeding £3billion per annum. The company's largest consumer market is in the United Kingdom. In addition, in recent years, Tesco has expanded its operated to the United States, Thailand, and Central Europe. The reason why this particular organization was selected follows the problems and issues experienced by it with respect to logistics in the year 2013.

Vlachos (2014) points out that there are numerous benefits to senior management being keen on logistics. This is owing to the fact that improper and ineffective execution of logistics approaches such as reverse logistics can result in calamitous and vast legal complications in addition to financial consequences. This was the case with Tesco in the year 2013. Being one of the biggest renowned retail supermarkets in the United Kingdom, Tesco was forced to take out all of its fresh and frozen meat products off the shelves. The main reason was ignorance in the logistics of the company as food authorities in Ireland found that the supplied fresh and frozen meats included horse meat (Vlachos, 2014). The disparaging outcome of this occurrence is that despite having to remove and return all of the distributed products, Tesco experienced a negative consequence as the market value of the company's stocks declined considerably. This is one of the negative impacts of having the senior management ignoring logistics. This not only influenced the financial aspect of the company but also had a bearing on its consumer loyalty. The company did not concentrate on its logistics and supply chains causing it to believe, erroneously, that its products were still trusted by the consumers in the marketplace (Vlachos, 2014).

In addition, according to Ahmed (2015), in the past year Tesco has faced investigation owing to the treatment given to its suppliers. There are accusations that Tesco had gone against the Groceries Supply Code of Practice. One of the charges is that the company had delayed payments owed to the suppliers. In addition, the company had several invoicing discrepancies, consumer complaints, short deliveries and made deductions for items that had initially not been agreed upon. This is one of the consequences arising out of senior management's policy of ignoring logistics and, instead, concentrating on other areas that generate profit. As a result, complaints have been made that Tesco's supply chain in the United Kingdom are managed and run by incompetent individuals, the aim being to save on expenses and putting more pressure on suppliers, or at times even exploiting them (Ahmed, 2015).

Tesco boasts of an impressive thirteen percent market share in the United Kingdom retail market. As the company is placing emphasis and concentrating on increasing its share in food and at the same time increasing its participation in hypermarkets, it is imperative for Tesco's senior management to also focus on logistics. In doing so, the company will be able to attain the optimum level of efficiency within its supply chain. In addition, such issues and problems as experienced within its supply chain will cease, bringing in more value for the organization. For instance, the operations taking place within its logistics department ought to be benchmarked against that of the competitors. For instance, are the company's suppliers treated better compared than the rival companies treat their suppliers? In addition, the company can choose to check its prevailing stock on an everyday basis in real time. This is centered on the inventory in place (Fernie and Sparks, 2009) In addition, the orders of the company ought to be processed in a centralized manner. In so doing, the company will not experience any flaws or issues regarding the inventory or stock that is distributed to different retail outlets. Being in the retail industry, making the most of logistics approaches such as reverse logistics, Tesco will be able to make effective decisions concerning the eventual destination of its products and the manner in which they can be introduced again back into its supply chain. This will enable the company to become all the more successful in such a competitive market. In addition, not only will Tesco be able to increase its profit margin, but also it will be able to increase its market share in its target markets (Fernie and Sparks, 2009).

Tesco has not had any preceding experiences with virtual logistics service providers, that is, fourth party logistics providers. In accordance to Rushton and Walker (2007), corporations in some industries or sectors have no desire to outsource their supply chain. This is owing to the fact that either they perceive the supply chain as a different, independent entity or because their scale of operations implies they have the capacity to counter the abilities and competence of a fourth party logistics provider. Tesco is one such company, as they consider themselves to have not only the scale but also the proficiency to run and manage their individual supply chains in the best possible manner. In particular, such corporations have a tendency of laying their emphasis and concentration on decreasing logistics and operating expenses, and endeavoring to outsource particular logistics activities as commodities (Rushton and Walker, 2007). One of the other main reasons why Tesco has not had any experiences with virtual logistics service providers is because they acknowledge that in order for that to take place, they have to give up some control. The company is reluctant to let other entities or establishments manage their supply chains and more importantly, have access to their supply chain data. This is because they customarily consider these two aspects to be exceedingly valuable and thereby the need to protect it from external controls (Rushton and Walker, 2007).

There are major advantages and disadvantages that might result from using a VLSP (?

) for the organization. To start with, more often than not, the amount of capital necessitated in transforming a supply chain can more often than not, be considerable. This investment capital size can be an issue and can be a major issue for the company. Re-engineering of the supply chain is an intricate and complicated issue. Therefore, the possibility that the company invests tens of millions into such a project proving ineffective cannot be ruled out. In addition, the cost savings instigated by the project might not be significant in terms of percentage or proportion saved through the use of a fourth party logistics service provider. The other disadvantage is that Tesco is a conglomerate with numerous corporations. In order to shift to using a fourth party logistics (4PL), the company will have to give up the direct control of its supply chain operations. In addition, the company will also have to bear the loss of its relationships with 3 PLs (third party logistics) as well as with other providers. This can be a significant disadvantage for the company as it has invested much time, effort and finance into building and fostering such relationships (Rushton and Walker, 2007). Another disadvantage is that once the use of the 4PL is established, it will be exceedingly hard for the company to withdraw from the use of the 4PL structure or model. This is owing to the fact that all the procedures and structures will have been established and developed by the fourth party logistics provider, which will possess the commercial affiliations with third party logistics providers and other carriers (Rushton and Walker, 2007). In general, the downside to incorporating 4PL is that this is a costly and longstanding investment for the company, therefore if it does not produce substantial, effective outcomes, the company will have to bear a major loss.

Nevertheless, the company does require a relationship with a 4PL and will stand to benefit from its advantages. To start with, the fourth party logistics provider incorporated method to manage the entire supply chain is a major part of the value proposition. Rushton and Walker (2007) state that different from 3 PLs, 4 PLs are not entirely concentrated on logistics tasks and undertakings, but rather seek to address issues across all procedures that influence and affect the supply chain. The company will largely benefit from the fact that a 4PL endeavors to improve on cost, service and swiftness to the supply chain encompassing the suppliers, inventory, physical network, and carriers (Rushton and Walker, 2007). In addition, Tesco is constantly expanding its operations overseas, which bring to attention the significant need for the company to lay emphasis on core as well as non-core activities so as to continue being relevant and competitive in the global market (Rushton and Walker, 2007). The management of overseas suppliers and the practice of managing procurement orders by means of ocean shippers or 3PL consignment forwarders, and the networking of these procedures to the logistics activities at the end point, are extremely complex and detail-oriented (Rushton and Walker, 2007). the company can resolve the intricacy by making use of 4 PLs and can successfully improve the supply chain functionality (Rushton and Walker, 2007). Employing the fourth party logistics provider, will benefit Tesco in that, the 4PL will be able to come up with performance metrics in order to measure and supervise the whole supply chain and all the entities or stakeholders that contribute to it. This will enable Tesco to be able to resolve issues and problems and for the observing prevailing conditions and enhancement of the performance of service providers and transporters across the supply chain (Rushton and Walker, 2007).

Module 1 -- Discussion

Logistics R Us

The company that I have previously worked for is DHL. In my own personal experiences, logistics have played a significant and key role for the organization. From what I have seen, logistics can be outlined as the aspect of planning, implementation, and controlling the placement, distribution of products and services. This also encompasses all the associated supporting activities, all that are found within a system intended to attain distinctive goals and objectives. The main action and activity undertaken by logisticians is logistics management. Logistics management can be understood as the activities included in the management of the supply chain. In particular, this includes planning, executing, and administering the efficacious, effective forward and reverse flow as well as storage of products, services and associated information. This flow starts from the point of origin, which at times can be at the manufacturing center as well as to the end-point, which is the end-user consumers, so as to satisfy the requirements of the consumers (Transfreight, 2016).

Logistics and the work of logisticians are central to the operation of the organization in question. The managers of the company's supply chain have become aware that high-tech logistics technology can profit them as it can effectively guarantee better cognizance and perceptibility, allowing them to maintain overall control and continue being a pioneer to the other corporations (Vella, 2012). One of the ways to elucidate on this aspect is the company's use of RFIDs. In relation to information from the DHL website, this logistics technology has come to be a major trend and is of great benefit to the company. To some extent equivalent to the barcode, this innovation has the key task of the provision of product data and information or even at the inventory end (DHL Website, 2015). Nevertheless, the significant competitive edge of the RFID encompasses the aspect that data involved does not essentially have to be delivered in an arduous and encumbrance line-of-sight process and run through. Instead, the entire product line or inventories is undertaken through the use of radio waves. As a result, this makes the technology to be considerably quicker, programmable, and devoid of hands-on control or surveillance (DHL Website, 2015). This is owing to the fact that it increases the guarantee of effective transport and distribution within the supply chain. In addition, efficiency is attained as several transponders can be read in real time, all at one sweep. DHL being a company that deals with bulks of inventories; the use of logistics helps the company in its supply chain management. This makes it possible to enhance the operations within its supply chain through prompt and effective delivery of products to consumers. This in turn, increases the level of customer satisfaction, which facilitates the financial performance of the company (Vella, 2012).

Module 2

Case: Logistics Providers, Traditional and Virtual

In the recent years, the amalgamation and practice of supply chain management (SCM) ideas has resulted in the business of logistics service providers. This encompasses third party logistics (3PL) and they play a more widespread and incorporated role with its consumers. Subsequent to this trend, new and innovative structures of this role have developed, for instance, logistics integrators, in the form of fourth party logistics providers, which combine the management and operation of supply chain logistics (Rudksi, 2008). The following table will compare and contrast the functions normally associated with fourth party logistics to those of third party logistics.

3 PL (Third Party Logistics Providers)

4 PL (Fourth Party Logistics Providers)

This is an establishment that operates with shippers so as to be able to manage and run the logistics operation division of another business. In essence, third party logistics encompasses the outsourcing of activities that are interconnected to distribution and logistics.

A fourth party logistics provider serves the purpose of being an integrator that amasses resources, capacities and technologies to manage comprehensive supply chain solutions.

Functions provided include:

1. Freight forwarding

2. Transportation services

3. Packaging

4. Warehousing

5. Inventory Management

6. Integrating Operations

Functions provided include:

1. Procurement

2. Storage

3. Distribution

4. Processes

Targets a single function to manage or run

Has the capacity to manage or run a complete process. In fact, a fourth party logistics provider is able to manage a third party logistics provider.

There are a number of factors responsible for more and more companies relying on the services of 4 PLs. In accordance to Dutton (2009), because 4PL is able to manage and run the entire network, it stands to be in a proper position to come up with significant metrics in a mutual format by making use of terms and characterizations that are consistent and unvarying throughout the company as well as its supply chain. In addition, being in operation and having a functional relationship with a 4PL exposes the shippers to value-addition practices and emboldens innovation through the supply chain (Dutton, 2009). On the other hand, Win (2008) points out that fourth party logistics providers have the necessary set of skills to be able to manage, oversee and deliver added value to a company in comparison to having a solution borne within the enterprise. Taking this into consideration, more and more companies are leaning towards 4PL and deliberating on outsourcing to them, attaining proper and healthy relationships with 4 PLs owing to the constructive value that can be generated by making use of a 4PL provider (Win, 2008).