The activities that a logistics manager might be responsible are:
1- Traffic and Transportation:
It is physical movement of goods. Transportation has an important role in the supply chain and it can amount to high costs. The logistic managers need to choose the most effective combination of transport to improve value to the company and customers. The forms of transportation are: Pipeline, sea, railway, air, etc.
2- Warehousing and storage:
Warehousing are the activities of storing, receiving shipping materials for production and distribution centers. It also includes managing human resources.
3- Material/Product Handling:
Allocation and movements of product and materials and its distribution within the warehouse. This includes order procedures, picking up and shipment areas on warehouse. The logistic manager needs to coordinate the type of equipment and storage devices used to handle the product.
4- Inventory control and management:
The logistic manager has the responsibility to assure that inventory levels are balanced and make sure the inventory is accurate. The inventory levels needs to be checked for replenishments either by monitoring shipments of orders, schedule of production or placement of new orders. The inventory accuracy needs to be check against system. Logistic managers need to schedule physical inventory checks and cross those numbers against the system. If there is any inaccuracy those needs to be adjusted on the system and inventory replenished if needed. Inventory control minimizes inventory and reduce cost.
5- Order fulfillment:
Those are the activities of filling and shipping of customer orders. The lead time for order fulfillments are important to control and minimize customer’s lead times.
6- Demand forecasting:
Forecasting is important efficiency of inventory. Forecasting needs to be accurate and reliable and logistic managers need to develop the forecast with marketing department at the most accuracy, as high inventories are attributed to poor forecasting.
7- Production planning and scheduling
The logistic manager needs to work closely with production planning in order to coordinate shipments and market demand.
Procurement negotiates contracts deliveries for product and also selects suppliers. The logistic manager control the transportation costs based on location and cost of materials necessary for production.
9- Customer service:
The logistics managers need to ensure the customer receives the product at the right time, place and with quality. The logistic manages needs to be concern with inventory levels and locations to assure right time and place can be met. Also that order fill in rate are complete. All 15 listed activities are connected and affect customer satisfaction.
10- Plant and warehouse site selection:
The Logistic manager needs to choose, location, size and quantity if warehouses based the inventory size.
11- Part and Service support:
This activity is especially important for technical product. The replacement of spare parts and repair are also part of the customer support and service as sales to customers do not ends with the delivery of products.
12- Reverse logistics:
The main focus of reverse logistics is to reduce costs by managing the reuse of materials. Those include returns, reuse, repair, recycling and disposal of those in the reverse journey from the customer to the firm’s warehouse and or supplier.
13- Protective Packing:
The packing is related to the type of packing needed for each mode of transportation and also the storage of product. Each mode of transportation might need different packing and that needs to be designed to minimize risk of damaging the product and reduce costs.
14- Information Maintenance:
Analysis control, manipulation collections, maintenance and storage of data related to logistics is one of the responsibilities of a manager. The data is important as it drive the decision process.
15- Salvage and Scrap disposal:
Salvage and scrap material have to be disposed and the logistic manager’s needs to manage that those are properly handled and sold to specialized companies. Today there are more and more public concerns with environment and companies to responsibly address their waste.
The four dimensions of customer services and how these elements affect the cost centers of both buyer and sellers are:
For the buyer perspective time means lead times, the order cycle and replenishment. As for the sellers time means the order management process and Bill to Cash process.
The factors that affect time are the degree in which logistics control the elements of lead time. Seller need to control processes of order picking, shipment of orders and order processing. Consequently, Logistics manager needs to control consistence across the order cycle especially length and duration. If that is not controlled it will impact inventory levels for the buyers.
The sellers need to work on improvements of cost centers that will result in the cost effective savings for the company and give the highest customer service returns.
Lead times will affect both buyers which expect lower inventories and sellers that aim for productivity savings and improvements. Therefore, time is very important for customer service.
From buyers prospective dependability and trust is important because it a minimize inventory levels considering the lead time is stable. The buyers that can rely on orders arriving at stable time could adjust their inventory based on those times and reduce or eliminate their safety stock quantity.
As for sellers dependability it is important as they can rely on buyers to run logistic department with stable lead times.
Cycle time directly affects buyers’ inventory level and stock out costs. If lead time is stable will reduce uncertainty of buyers. In the other hand if cycle time is unstable it will create delays and loss of sales for buyers in which will increase costs.
As for sellers if they can provide stable and reliable lead time to buyers it will create a differentiation in product and create competitive advantage against other competitors. In the other hand, if cycle time is unstable and create extra costs for buyers. The sellers might receive claims due to buyer’s delays and loss of revenue. That is why dependability is so important and both buyers and sellers need to rely on stable cycle times.
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Safe delivery is another important part of any logistic system. If products are lost or arrive damaged the buyers won’t be able to sell or use the product. When damaged product happens it will affect several buyers’ departments such as inventory, marketing and production and those can create high costs. Another important point is if buyers receive damage products they will need to increase inventory levels for the future to account for damaged product risks which would generate further costs to buyers’.
Correct orders are another important part of the logistic system, buyer’s needs to trust that filling orders will be accurate. If there is an inaccuracy it might cause loss of sales and or production. If customer is unsatisfied with the inaccuracy and they will need to reorder the product and they might choose other competitors to order from.
As for the sellers the correct orders results in high dependability from buyers. If there is inaccuracy buyers might claim the sellers causing increase of costs. Further it might cause loss of sales and trustability.
Communication with buyers is important to monitor the customer service level and dependability. The communications needs to be both ways buyers to sellers and vice versa and constantly open. As regular communication is needed to ensure efficiency on physical distribution.
There are three types of communications and those can be performed manually, electronically or through an information system.
- Pre- transaction:
It includes current product availability, delivery dates. Pre- transition provides buyers with information in which decisions are made. This communication is directly related to the company’s police towards customer service.
This provides both sellers and buyers with information about order filling, process of picking the product out inventory including time required.
Buyers need information on their orders and the update state of those. They will then communicate with sellers to have an update on the information. During communications sellers can assess inventory availability and if any product is not available they then communicate with buyers. Buyers and sellers can also communicate on status of shipments.
- Pos- transaction
This type communication is after sales service for buyers. It is related to returns, assembly or repairs.
The sellers need to be efficient and provide response quickly to differentiate from other competitors even if that includes returning product because buyers are not unsatisfied.
Buyers might have different requirements and sellers need to be flexible to accommodate those. They might require different packing, mode of transportation, carriers or delivery dates.
Seller or more specifically logistic manager need to factor buyer’s requirements in terms of costs and provide service level as reasonably required. Flexibility allows for sellers to be perceived as convenient and accommodating. Although, flexibility is needed sellers need to carefully analyze those requirements and try to create a pattern among those.
Customer service activities are costly and sellers need to examine those carefully to improve revenues and or address any loss of profit. Logistic managers need to determine the right level of customer service as it is more difficult to imitate, the cost associated with each activity must be beneficial for the seller the ideal is that the level of customer service costs equal to its profit return and also provide competitive advantage.
Marketing interfaces with logistics in terms of physical distribution and or outbound. As logistics is responsible for the transportation, storage and on time delivery of product to customers. In which interface with marketing in terms of being the key ability to provide product at the right quantity, time and place. The four basic concepts of market mix and how logistic interface are:
In term of prices logistic needs to adjust quantities in order to receive the most competitive prices for transportation modes. The price discount received for bulk volumes shipments offered by shippers are important and logistics need to manager those in order to have competitive prices. As customer might also might be offered discount price on bulk volume the transportation rates discount in terms of weights or volume are beneficial for both customer and seller as reduce total transportation costs. It is not always possible to benefit from the transportations rates however logistics needs to manager to investigate those in the market.
As per inventory logistics will also be part of the volume sold in different prices ranges and those will also affect the inventory levels and repleshiment times. Marketing will also inform logistics of the of the different sales projects in particular times of the year and special price rates that is needed to meet projected demand.
Marketing main concern is product and its physical characteristics. such as their size, weight and type of packing. All those are physical properties that affect the logistics system as they will be responsible to move and store .Physical dimensions affect movements system and transportation such as equipment handling, pallets, packing and others. Consequently, it is important that logistics managers work with marketing in terms of giving an input when marketing is working on physical characteristics of a product. Logistics also needs to work with marketing on creating specifications for new packing in terms of sizes and weight in order to minimize transportation issues such as inefficiently use of container space, use of size pallets on any issue that might cause damaged product.
If marketing works with logistics managers they can recommend changes that could make product friendly to the logistics system and reduce costs that would have an effect on product sales.
It is important also that marketing works with logistics in term of developing consumer packing, as it might influence sales. Marketing is concern with its appearance and the information provided to the customers. For logistics they are concern if the consumer packing fits the external packing, basically all dimensions that influence the logistics system including the protection of the product. The consumer packing will affect materials handling, transportation and warehouse.
Marketing spend millions in promotion such as campaigns and advertising l that will increase sales. Marketing works with push and pull sales strategies which means marketing can push to the distribution channels to the customer or pull it or a combination of both. The pull approach usually caused a high quantity random product demand by customers; therefore Marketing should work with logistics as those promotions which affect inventory levels as logistics managers need to ensure that quantities are available for sales. Although push strategy allows for marketing to predict the consumers respond to product in a more organized way, the interface of marketing and logistics is still important because allows for logistic to work in advance to have the optimal inventory level needed.
Place is directly related to the distribution channels. Marketing work on decisions such as selling product to wholesale or to retails or both. For logistics managers those decisions directly affect the logistics system requirements.
In my opinion, the most important component of the marketing mix is Product, most specifically consumer packing. With the growing consumer demand on Eco friendly packing, reduces, reuse and recycle marketing is forced into a position of redesign their consumer packing. The interaction between marketing and logistics is particular important, because the different trades off that need to be made when choosing a new packing. While logistic will be concern with reducing storage, weight and sizes, marketing will be concern with attracting consumers’ attention and reinforce brand image. Product also has distribution and storage that directly affect costs, performance and lead times.
Therefore, Marketing and logistics poor cooperation in terms of product consumers packing can lead to higher packing costs, transportation costs and longer transit lead times.
The open university of Hong Kong , Unit 1 & Unit 2 MKTB371 Logistics
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