Introduction to Logistics and Supply Chain Management
The purpose of this report is to investigate and identify the various techniques used by a plethora of similar organizations in regards to logistics and transportation used - Introduction to Logistics and Supply Chain Management introduction. Business have now become aware of the importance of logistics and providing adequate supplies to satisfy the demand for their customers. Logistics is defined as ‘the process of planning, implementing, and controlling…flow and storage of goods, services and related information. ’ (Coyle, Bardi, Langley, 2003).
During our expedition in searching and understanding the ways in which our chosen organizations operate, we were able to identify certain similarities within each organization in regards to logistical procedures; i. e. receiving orders, order pricing/promotion and reverse logistics. However even though these organizations do implement these forms of logistics, there a differences in the approach and how they are used within the organization. Comparative Profiles As a group we found four similar companies with difference techniques in their logistics system, however the same in satisfying their customers’ demands.
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Company A is a fast-food outlet store, services in quality foods and acknowledges the customers. As a fast-food store they guarantee fast and efficient goods without hassle. The company was established in the 1990s and has continued to grow within the western suburbs. With over 10 employees, company A has been able to continue its legacy of being a family-owned business has promised to its loyal consumers. The products sold are usually foods which are produced and sold ‘on the go. Therefore they need a logistics and transport system, which make the goods available at the right time, because foods do have specific requirements in terms of storage and their expiry dates. Therefore Company A must be able to understand the frequency of demand for their customers. Company B employs 6 over 400 workers across Australia and even overseas and was first established in 2003 in Sydney. It is a jewelry retailer than spans internationally as well, with 3800 outlets across 22 countries. Company B sells a range of products and accessories including necklaces, earrings, bracelets, maintenance accessories and even gift boxes.
They particularly target the younger crowd, possibly from the ages from 13 to 30. This company deals with many consumers from a range of backgrounds ages, all of which have differential needs that must be tended to. Company C must be adaptable to different cultures as the are involved in many countries and also strives to maintain an up to date product line, concurrent with society’s fashion trends. Company C employs approximately 70 people within their small business in Victoria Company C is a small family restaurant established in 1990.
Company D Comparative Logistics Process. Receiving Orders: Company A allows customers to either place their orders face-to-face, usually between the employee and the customer. A customer would place their order verbally while the employee would place it into a computer which is then communicated to the people in the kitchen to produce. When customers enter the store their orders are received verbally. Which helps avoid dissatisfied customers, because the employee would be able to repeat the order if the customer requests it. On the other hand, Company B distributes using very dissimilar methods. Products are ordered from a local warehouse within the state.
These are delivered using a courier and distributed to every store based on electronically based stock levels. The arrival of new products is succinct with other stores within the state and all rely on couriers. The orders are then validated on the computer by simply scanning the barcode on the invoice. I receipt is then printed out and kept by the store to be later sent to head office, detailing all the stock received. Company C as a restaurant, the company bases its need for stock (food and beverages) on historical data that being previous days of operation.
The amount of food for stock that should be ordered through wholesalers is based on the demand of customers and how busy the restaurant is expected to be. For example on public holidays and special birthday bookings the restaurant is much busier. An essential rule that is followed is to have more stock on hand rather than to undersupply in case of an unexpected rush within in the restaurant. An overstock of supply to satisfy customers can actually be quite costly to a business, in regard to food that will expire and have to be counted as waste.
Order Pricing/Promotion: Order pricing is the how much the company mark up their prices sold to their customers. In order to determine the amount to charge, company A must take into consideration of whether the product that they are purchasing is being used, also the cost of storage in accordance with the conditions they need to be in. Electricity is also an issue, company A uses a lot of electricity to power the equipment used to cook the ingredients and wages need to be considered for the employees who cook it. Promotions are used seasonally or if the company wants to remove old stock fast.
With company A, they give out ‘freebies’ when a customer purchases a specific meal. This is an incentive for customers to purchase that specific meal to grab the ‘freebie. ’ Promotions for company A do not reduce the prices of their goods; however give their customers the chance to grab promotional items which entices them to purchase the goods. Similarly, in order to boost sales, Company B often has promotion such as “Buy one get on free” or “Buy two get one free”. These offers are usually used in conjunction with local magazines and are redeemed upon the presentation of a voucher found from within the magazine.
The “buy one get one free” promotions are usually based upon a certain range and are used to clear old stock or promote upcoming ranges. However, Company B uses very different methods for pricing. The materials used to manufacture the jewelry and the region in which the stores are situated influence the order pricing. All items are bought in bulk and the mark up acts accordingly. Furthermore, some ranges have a higher price mark up; ranges with more prestigious products and higher quality materials have a higher order price mark up.
In Company C prices are set in this restaurant through the basis of much effort and costs associated with bringing the stock (food) into a position ready to be served to the customers. Certain foods are more expensive when not in season, for example fruits like strawberries and bananas are not in season all year round. These fruits can be quite costly to purchase by the restaurant from wholesalers. In addition this restaurant only purchases the freshest food of the highest quality. This is a lot more expensive in comparison to not fresh food.
This restaurant has daily specials; a certain number of these meals are purchase by the restaurant and there is a time frame set by the restaurant manager that all these specials must be sold by. This ensures that no wastage will occur, as the specials usually sell quickly as they are often rare delicacies for example lobster crepes. Similarly like Company A and B, Company C also uses the ‘buy one and get one free’ vouchers so that the restaurant can attract more new customers. Reverse Logistics: ‘The process of collecting, moving and storing used, damaged, or outdated products and/or packaging from end users. ’ (Coyle, Bardi, Langley, 2003).
For company A, there is no need to return the goods to the supplier, if it has been used. As a fast-food outlet, company A throws away any stock that is uneatable or is not satisfactory. Usually for reserve logistic to work, company A is told by the customer that the product does not meet the standard and with evidence the good is thrown into a ‘waste bin’ (not considered to be a rubbish bin). From there the item is made again fresh and as required by the customer. Each day an employee will record the items which have been thrown into the ‘waste bin’ which is then brought to management this helps with supply management.
Company B, however, operates using different procedures. Items that are faulty, broken or categorized as a “change of mind” by the store can be returned in exchange for another item or money. Items that are returned are either sent to another department in which they are fixed if they are faulty or placed back out on the shop floor. Items that are delivered to the store and are broken within the store or tangled are also returned to the office. These items are written up on sheet, including the reason they are being sent, serial numbers and a description. Once the items are fixed, they are then sent back and distributed to the stores.
Transportation used by company A is mainly trucks and vans which bring in stock needed by the business. To place an order, the managers of the store will contact the suppliers who will then send the goods out. Storage is within the company, there are multiple freezers and fridges to store the frozen goods, as well as a store room to keep the dry goods for example: cups, lids, biscuits, spoons, sauces etc. Similarly, Company B stores their products on sights, the jewerly is stored within locked compartments within the stores and are constantly being placed on the shop flood to replace items that are sold.
However, Company B uses couriers to distribute their products. Companies such as star track express are used to deliver new products / replenishment items from the warehouse to the store. The items are then sold by sales people and distributed to the public, once scanned into the system. In terms of technology used by company A, for logistics, telephones and computer are used the most. Telephones are used to communicate to suppliers while computers record the stock brought in by the suppliers and the amount of stock left for the company to use.
This is the same for Company B, ordering processes and logistics are largely performed over the phone and via weekly / daily e-mails. Everyday, an e-mail is sent around to all stores to inform them of the performance of each store and whether they are on track. These e-mails are also forwarded to head offices and managers so they can keep track of the stores. The head offices are also mainly responsible for dealing with the suppliers of the jewelry and this is done in person through meetings and range viewings.
They also deal directly with the couriers who distribute new products. Company C also being in the hospitality industry has similar techniques for reverse logistics like Company A however the restaurant oversupplies on food. This leaves a lot of expired stock that therefore need to be disposed, and counted as wastage. Reverse Logistics is carried out on a daily basis, everyday expired and out of date stock is taken out of the restaurant and is counted as waste and disposed in the rubbish bins.
However scraps of food bought by customers and left on their plates are not counted as part of wastage coming out of the business’s earnings as it is food already paid by the customer. Conclusion In conclusion the four companies A, C, D are similar industries therefore following the same set of distribution procedures. However company B must alter their supply chain procedures according to their customers’ needs and their products. Some of their items are quite fragile and hence require special procedures. All companies use relatively similar logistical processed, relying heavily on the use on the internet and telecommunications.