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Logistics Management

Logistics Management

 

 

Logistics Management

Introduction

The Council of Logistics Management defines logistics as the integrated control, monitoring, planning, and realization of product and material flow in trading and industrial companies in tandem with the complete value-added chain with a view to abiding by customers’ requirements. The rapid growth of technology has resulted in a total transformation of societies and business operations in the 21st century.  In order to remain competitive, most firms have deemed it necessary to adopt technology in order to remain ahead of the pack. Therefore, most firms have incorporated ICT systems in their logistics. Some of the ICT systems adopted by organizations include transport management systems, GPS, warehouse management systems, as well as GIS.   As a result of this adoption, companies have realised a tremendous transformation in the way that they manage their supply chain. The report below shall endevour to explore the key components of logistics management. In addition, the report shall also attempt to research on the key ICT systems applicable in each of the identified key components of logistics management.  A critical assessment of the challenges and benefits associated with the application and adoption of the technology shall also be explored.

Background to logistics management

Logistics has to do with the movement good or materials from one point to the end-user. Logistics management entails optimizing the various links in the entire supply chains so that customer can get hold of the goods in a timely and efficient manner (Sweeney 2005).  The term “logistics” has its origins in the military where it was used in reference to techniques sued by the army to get supplies, men, and ammunition to the battlefield. Over the years, the term has evolves and it now involves the orderly movement of materials or good in the business world.

Key Components of logistics management

Since logistic management covers an entire business supply chain, there are several key components attached to it.   They include:

Transportation component

This is by far the most common component of logistics management. The manner in which an organization transports goods or materials from one designated location to the other has a huge impact on the overall performance of such a firm.  Due to intense competition, societal calls to minimize infrastructure congestion and pollution, and the crucial challenges faced by the logistic industry in narrowing margins while at the same time raising demand, it has become necessary to adopt ICT tools in a bid to achieve these objectives.

The adoption of ICT in transportation logistics has completely changed the business landscape (Fisichella, Pandolfi & Targon 2006). There has emerged the need to make use of satellite location system in order to keep track of the movement of goods through the transportation network (Svitek 2006). An example of an ICT system that has been adopted in the transportation sector is the use of automatic vehicle identification techniques (15) that allows for storing of shipment information electronically. In this case, planning process involves the gathering of information pertaining to transport network conditions using sensor networks. The information is then stored and made available to uses in real-time databases. Another technique is the use of GIS (Granqvist  2003) that allows for geospatial data management, thereby facilitating in the process of decision making.  

The adoption of ICT system in transportation management is associated with a number of benefits. For example, the use of cargo monitoring systems allows companies to monitor the status of their cargo in real time. Also, the use of coordinated routes provides the management with advanced notification, in addition to reporting an emergency in time.  However, it is important to first take into consideration the economic and technological feasibility of such potential technologies, along with user acceptance prior to adopting them. Another problem in the adoption of CIT technologies in the field of transportation management is that there is no guarantee that the investments made in such a technology shall be protected in time (Jando & Gála 2002).

Warehousing component

The storage of raw materials and goods can be accomplished in different ways. For example, some manufacturers retain some of their raw materials in the main plant where surplus raw materials are held in the warehouse to facilitate replenishment as the need arises. Other manufactures have warehouse located strategically in different parts of the country in order to exploit shipping routes from some of the key cities.  If at all manufactures are to pick their raw materials and package the finished products in an efficient manner, there is need to ensure that the warehouse is put under logistics management. The way in which stored goods have been arranged, or the slotting profile of such goods, could have a tremendous influence on how safely and quickly your workers are able to pick orders as they arrive, pack and dispatch them (Hausmann 2001). There is need to ensure that items that finds their way into and out of the warehouse quickly are accessed with relative ease. In addition it is also important to ensure that there is enough space in the warehouse to facilitate the storage of large consignments of raw materials or goods.  

On the other hand, those goods that are ordered less frequently should be stored in a location that is less accessible. The ability of an organisation to fulfill orders efficiently will be determined by when and how stock is received at a warehouse, before being unloaded and if need be, replenished. In this respect, there is need to make use of advances in ICT to ensure improve efficiency and effectiveness in the management of raw materials and goods in and out of warehouse (Management Hub 2012). Proper warehouse management ensures that a firm is able to maximize value, even as it endevours to minimize costs.  As such, the use of communication and software technology enables warehouse operators to pick up orders with relative ease and with few errors in the shortest time possible.  Examples of the ICT systems that have found use in warehouse management include:

Warehouse Management System (WMS)

This software is normally used to control and track the movements of raw materials or goods in and out of the warehouse. For example, WMS could find use in the control and tracking of a shipping consignment from the dock into the warehouse. Also, the software finds use in warehouse management so that the available personnel, space and material handling equipment can be utilized properly. This helps the organisation to improve efficiency and productivity. Moreover, WMS also provides timely, subject oriented and consistent information at the exact point where such details are required (Faber et al. 2002). Therefore, it also plays a crucial role in supporting decisions makers. There are a number of benefits associated with the use of this CIT system. To start with, it ensures shipping errors are minimized. Secondly, it results in increased productivity of the personnel. Thirdly, WMS increased the traceability of raw materials and goods in the warehouse, thereby enhancing the decisions making process (Cadre Technologies 2012).  However, it is costly to install and manage WMS, not to mention that employees might resist the introduction of such a tracking and controlling system at the workplace.

 

 

Radio Frequency

This device can be used along with the WMS, printers and Radio Frequency Scanners to facilitate wireless communication in the warehouse.  This particular technology is especially critical in the case of large warehouse where it is important to have immediate information. The tool allows for an efficient running of a business.  The use of Radio Frequency communications at a warehouse facility has a number of benefits, including speedier transactions and processing of information (Sma-Promail 2001).  They also improve the speed of receiving and dispatching goods and raw materials.

In addition, the technology reduces bulky information storage because it is a paperless operation. Also, Radio Frequency leads to improved control of the operations of a warehouse, in addition to reducing the overall costs of operating a warehouse facility. Some of the areas where Radio Frequency is beneficial include the receiving dock. In this case, the device allows for the receiving of update in real time (Murray 2012).  It could also be mounted on lift trucks in order to provide instructions to lift trucks operators on where to locate certain products, in addition to helping them confirm that a transaction has been compelled. Radio Frequency also finds use in loading operations. One of the challenges of using this technology is the cost of training personnel on how to use it. The initial cost of installing the software is also high.

Supply component

Supply function is concerned with the ability to secure raw materials and goods meant to be sold to end-users or consumers in the form of a finished product. Manufacturing companies need to always ensure that they maintain suitable supply o raw materials and goods. This calls for understanding and predicting the minimum amount of raw materials required to facilitate production and to enable the firm operate at a profit (Sweeney 2005).  Procurement officers in the procurement department of an organisation are normally charged with the responsibility of identifying the suitable raw materials or goods at the most affordable price in the market. In addition, the procurement officers have to ensure that such raw materials are always available in the warehouse whenever they are needed to facilitate production.  It is important for companies to become aware of market and seasonal trends so that they can forecast the necessary amount of raw materials supplies. This could prove to be a very complex undertaking in a predictable market environment.  In order to regularly monitor and account for supplies and raw materials, an increasingly higher number of companies have embraced useful ICT tools. Some of these ICT systems that have found use in the supply component of logistics management include:

Stock control system

This is a database application that helps to regulate the amount of stock. It can also be used to regulate the amount of raw materials in the supply chain. The application enables one to record the amount of raw materials or stock within the supply chain. There is also a provision to record when orders of a given product need to be delivered. Moreover, the application enables one to undertake Just in Time ordering of raw materials or stocks. The database can also produce a list of the suppliers and the products that they stock. As such, this eases the activity of ordering raw materials and stock. Because the database can hold the maximum and minimum levels of stock, one can always tell when the minimum stock levels have been reached, and this is a cue for you to restock your supplies (Al Kattan & Al Khudairi 2010). Once deliveries are made, the application enables one to update records.  It also records the time when deliveries have been made. As such, one can be able to trace delays in deliveries. This ICT application speeds up the process of ordering and replenishes raw materials and stock within a business premises.  In addition, because it can also forecast stock levels on the basis of past sales, it enables the company to avoid over-ordering, in addition to prioritizing on the fast moving goods.   One of the challenges that often accompany this ICT application is that it can lead to employee layoff s because of increased throughput and efficiencies. Accordingly, employees are likely to resist its introduction within the firm.

Vendor Managed Inventory software

This particular ICT software offer trading partners access to inventory data. In addition, the tool also allows trading partners to manage the shipment of products more effectively, in addition to improving in-stock performance (Tempelmeier 2006).  The process of placing orders is normally automated, and this ensures that there are no delays in ordering for stocks.  In addition, the processes of  receiving shipment, bill payment and invoicing is based on real-time shared inventory metrics and for this reason, the software enables wholesalers, suppliers and retailers to work together in a more effective and efficient manner in order to not only maximize return on investments, but also optimize inventory levels (Franke 2010). Some of the benefits of the Vendor Managed Inventory software are that it leverages the demand for information at the point-of-sale in real-time in effect facilitating in plan production and forecasting of future demand. Also, the software enables users to overcome supply interruptions, as well as minimizing lead-time variability and optimizing shipping costs by fully utilizing ordering minimums. Furthermore, one can be able to detect overages or shortfalls to financial targets using this tool. However, the challenge of using this tool is that employees are likely to resists its application.

Conclusion

If at all organisation is to remain competitive in the modern-day business environment, it is important that such a business adopts advances in technology and at the same time, try to minimize errors and operational costs. Companies that able to do so gain a competitive advantage over their competitors. One of the critical areas of a business entity is the issue of logistics. It involves the control and monitoring of raw materials and products. Some of the key components of logistics management include transportation, warehousing and supply. All these areas have now adopted ICT system to improve service delivery, reduce delays and operational errors. However, the adoption of these systems is faced with a number of challenges, including operational changes, cost of installation, and employee resistance. Nonetheless, the application of such ICT tools as GPS and warehouse management systems is more beneficial to a firm that the use of conventional methods of operation.

 

 

 

 

 

 

 

 

 

 

Reference List

Al Kattan, A &  Al Khudairi, T 2010,’ Simulation of Inventory Control System in a Supply

       Chain Using RFID’, IJISSCM, Vol. 3, No. 1, pp. 1-19.

Cadre Technologies 2012. Enterprise Warehouse Management System. [Online]. Available at: 

Faber, N, Marinus, R, de Koster, S & van de Velde, L 2002,’Linking warehouse complexity to

       warehouse planning and control structure: An exploratory study of the use of warehouse

       management information systems’, International Journal of Physical Distribution &

       Logistics Management, Vol. 32, No.  5, pp.381 – 395.

Franke, PD 2010. Vendor-Managed Inventory for High Value Parts—Results from a survey

       among leading international manufacturing firms. Berlin: 

Fisichella, A,  Pandolfi, A & Targon, V.  Risk Management in transportation of dangerous

       goods, 5th AED Conference, 12-14 June 2006, Prague, Czech Republic.

Granqvist, J et al. 2003. Freight Transport Telematics Architecture. Helsinki, Finland: FITS

       Publication.

Hausman, W 2001. Supply Chain Performance Metrics, in Billington C., Harrison T., Lee H.,

       Neale J. The practice of Supply Chain Management. Norwell, MA: Kluwer.

Murray, M 2012. Implementing a logistics management system. [Online]. 

 

Tempelmeier, H 2006. Inventory Management in Supply Networks—Problems, Models,

       Solutions. Norderstedt: Books on Demand.

Management Hub 2012.  Features of Warehouse Management. [Online]. A

Sma-Promail 2001. Warehouse Management System: Radio Frequency (RF) System. [Online].

      

Svitek, M 2006.  Electronic fee collection system and Telematics services on

       this infrastructure, Proceedings of AED 2006 Conference, Prague (Czech Republic).

Sweeney, E 2005,’Managing the Supply Chain: the Role of Information and Communications

       Technology (ICT) as a Key Enabler of the Process’, Business Ireland, pp. 105-109.

 

 

 

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