Introduction to logistics management
Question:
Discuss about the Logistics and Supply Chain Management of Hapag-Lloyd.
In the time of strong competition, it is important for each and every country to provide effective products and services to the customers. To stay competitive in the market, logistics and supply chain can be very effective for the company. Logistics can be described as the most crucial part of the business operation within an organization to meet the various requirements and expectations of the customers in the operating market. Basically, it is an important part for the right management practices so that the company can get strong competitive advantage in the market (Assey, 2012). The right management practices for the organization can be described as the use of new and innovative technological system effective inventory management and proper supply chain management for the various business operations of the company. The management of any company needs to put the combined efforts for the effective logistics and supply chain management in the business (Cetinkaya, 2011). There should be the team of skilled and experienced employees in the company for the proper logistics and supply chain. In order to maintain the brand image in the market, there are many companies that are adopting the concepts and principles of the logistics management in their business operations. By the principles of logistic management, companies are able to provide best quality of services to the customers and maximum returns to the various stakeholders. In simple words, logistics management is all about the flow of essential goods and products such as flow of raw material to the production and then to the end users in the business operations.
This report focuses on the logistics management and its various interfaces in the company. For the discussion, the famous clothing and garments transportation company Hapag-Lloyd has taken. The company is the German transportation company including a cargo container line Hapag-Lloyd AG. This is the fifth largest container carrier in terms of vessel capacity. The company operates as the container liner shipping company in all over the world. The company is involved in the shipping and transportation of the containers by sea. The company provides various services such as reefer, dry, dangerous goods and special cargo services including coffee transport services. Logistics is the important part of the business of Hapag-Lloyd to become the world’s second largest exporting company (Hapag-Lloyd, 2017).
The company Hapag-Lloyd deals with the challenge of meeting the requirements of the customers by providing the products on time. So, providing the products on time, it is very crucial for the company to have effective operational management in its business. An effective e and proper logistics management system is important to implement the marketing strategies and improve the customer satisfaction in terms of delivery of the product on time. The interfaces of logistics focused on the functional areas of the company in terms of finance, production and marketing. These core areas are important for the planning and it success of the company in the operating market. It is understood that logistics and supply chain has the positive impact of the profitability and the growth of the business (Arndt , 2008). Along with this, it also affects the values of the shareholders in the company as the ultimate goal of the shareholders is to earn profit. To understand the role of logistics deeply in the company it is important to analyze the key functional areas of the supply and logistics management in the company (Joseph, 2014).
Logistics management in Hapag-Lloyd Company
With the delivery of the product at the set time and improving the customer satisfaction, the concept of logistics process is also very effective in improving the revenue of the company. Basically, there is the need to analyze the cost which is incurred in the distribution process to analyze the level of output of the Hapag-Lloyd. It is observed that the company is involved in the distribution process of various products. So, the logistics is effective and helpful in analyzing the earned profit and revenue in the operating market by distribution of goods. In simple words, the cost of the business and distribution process of the company. Further, demand of the services of Carrier Company the company is also based on the demand of particular product in the market. So, it is clear that the process of logistics is helpful in maintain the flow of cost and earning of the Hapag-Lloyd in the operating market. Further, it is also helpful in evaluating the output of the company in terms of its earning (Sweeney, 2013).
Next, Logistic process has the significant role in the marketing function of Hapag-Lloyd. The key purpose of the logistics process is to stay connected with the customers by focusing on the distribution of products on the time. This function includes various operations in the service company such as packaging the products in the containers and fulfilling the order by the time. In this process, the logistics system in the Hapag-Lloyd company is helpful in taking the various decisions related to the operational activities as the requirements of the customers can be easily fulfilled by the control over the business activities. Along with this, logistics is also effective in many ways i.e. replenishment of the orders, improvement in productivity and delivering the order on time.
In case of logistics-marketing interface of Hapag-Lloyd, the growth and the success of the company depends upon the marketing mix used by the company. Marketing mix includes 4P’s i.e. product, price, place and promotion of the services. The company has the competitive advantage of its strong position in the market for transporting of goods and products. Customers choose the services of the Hapag-Lloyd based on its best services and strong brand image. So, logistics is important for the company Hapag-Lloyd in terms of improving the customer satisfaction by delivering the products on the time. Along with this, logistics is the key factor of maintain competitive advantage in the operating market over the competitors. With the logistics process, company is also able to communicate with the customers in the positive manner (Rashid & Aslam, 2012).
Hapag-Lloyd has the benefit of logistics and supply chain management and effective inventory management in the business operations. Effective inventory management is important for the company because if the company is not able keep the record of the inventory properly then the company will not be able to get growth and success in the market. Further company may also face some economic losses due to the improper inventory control. The business objective of the Hapag-Lloyd is very simple. The strategy of the company is to deliver the products and services on time to the customers by its transportation services (Hapag-Lloyd, 2017). But it is not easy to achieve this goal with reducing the cost. Hapag-Lloyd is spending lots of amount and time and effort to keep record of the inventories. Company is using ERP system to order the required inventory. By the ERP software, the company is able to track the order processing system (Muller, 2011).
Functional areas of supply and logistics management
In Hapag-Lloyd, ERP software provides an effective control over many operational activities i.e. automated inventory management. The inventory managers of the company track the ordered inventory by the ERP system. Company always focuses that there is no overstock of inventory and raw material of products for the transportation purpose as over stock of the products will be the cause of delay in the delivery on time (Hapag-Lloyd, 2017). So, company always keeps limited stock of the products which are to be delivered to the customers. The orders are stored in the large warehouses of the company and they are identified based on the specialties such as garments and coffee products. The process of transportation and supply of the products is managed by the real time tracking system in the company. This system is helpful in informing about the order completion before the transporting the products (Chase, 2006). For distribution of the goods on the set time in the global market, the company has appointed the agents there. There are the strengths and weaknesses of the order cycling process and those are described below:
Strengths-
- Proper order cycling process enables the company for organizing, developing, defending and identifying the important and necessary resources and the required inventory in the better ways.
- Further, by the order cycling process, company is getting high level of customer satisfaction by delivering their ordered on the time. It is helpful in improving the trust of the customers for the transportation services.
Weaknesses-
- Despite of the strengths, the order cycling process requires lots of time and effort to give the trainings to the employees so that they can understand this process properly. Along with this, it also requires more cost.
- There is the drawback of the order cycle process that if this process is the implemented properly then it will be the waste of time for the company. Further, it also impact on the brand image of the company in the market.
Based on the above analysis, there are some recommendations for the Hapag-Lloyd by which the company can improve its order cycling process in the business operations. The recommendations will be helpful in maintaining the records of the shipped orders. Those recommendations are as follows:
- In Hapag-Lloyd, there should be transaction based movements in the order cycling process. By these kinds of movements, company will get exact record of the transported orders.
- At the time of order processing and fulfilling, the employees and the inventory managers must be present there. By this, employees will get all the information regarding order processing and order shipment (Grean & Shaw, 2010).
- There must be automated data collection method to collect the record of order shipment automatically and record all the data related to number of shipped orders. This will be cost effective for the Hapag-Lloyd.
In case of Hapag-Lloyd, the customers have trust on the company as it is the famous transportation company in the company and delivers the products on time. Hapag-Lloyd is focused on the on the inventory management process because stock and inventory management is the crucial part of the business. In the inventory management, Hapag-Lloyd uses tracking orders, analyzing the packing process, monitoring the history recording the order points, maintain the shipping material, and helping the employees to monitor the order level. Apart from this, Hapag-Lloyd is also focused on the forecasting of demand of the various products so that it can deliver the ordered products on the time (Donald & Stephen, 2014).
Figure 1: Inventory Management
(Source: Hussey, 2007)
Here are some recommendations for Hapag-Lloyd to improve the inventory management in the business. Those recommendations are as follows:
- The employees should be involved in the inventory management process and they should manage the record of important documents of order shipment on the daily basis.
- The people involved in the inventory management process should cross check the orders on the daily basis so that the order can be fulfilled at the time.
- Company must have sufficient level of stock of the products to reduce the waste of time and storage. Along with this, inventory manager must focus on the re-order point for the distribution of the products effectively.
Conclusion
This report has described the role of the logistics and order cycling in the inventory management process in the company Hapag-Lloyd. From the above discussion, it is observed that due the inv entry and supply chain management, company is able to open the door of its success in the market. With the effective utilization of supply chain process, Hapag-Lloyd is the famous product transportation company in all over the world. Although it is not very easy for the Hapag-Lloyd to stay competitive in the market with the effective transportation of the products by managing the orders on the daily basis but the company has done it by the proper record of the orders and shipping of the products. So, it is observed that the logistics and the inventory management is an essential part of the business for the business operations of each and every company.
References
Arndt , H., (2008). Supply Chain Management. Germany: Gabler Verlag
Assey, J.J.M (2012). A New Introduction to Supply Chains and Supply Chain Management: Definitions and Theories Perspective, Journal of Business and Economics. 5 (1). pp. 194-207.
Cetinkaya, B. (2011). Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice. Springer Science & Business Media.
Chase, (2006). Operations Management for Competitive Advantage. NY: Tata McGraw-Hill Education
Donald, W., & Stephen, R. (2014). Global Logistics: New Directions in Supply Chain Management. Kogan Page Publishers
Grean, M.,& Shaw, J.M. (2010). Supply-Chain Integration through Information Sharing: Channel Partnership between Wal-Mart and Procter & Gamble
Hapag-Lloyd, (2017). Strategy & Outlook. Retrieved on 26th May 2017 from https://www.hapag-lloyd.com/en/ir/company/strategy-outlook.html
Hapag-Lloyd, (2017). Supply Chain Day: Germany’s Largest Liner Shipping Company Opens Its Doors. Retrieved on 26th May 2017 from https://www.hapag-lloyd.com/en/press/releases/2017/03/supply-chain-day–germanys-largest-liner-shipping-company-opens-.html
Hapag-Lloyd, (2017). Your cargo – our passion. Retrieved on 26th May 2017 from https://www.hapag-lloyd.com/en/home.html
Joseph, L., (2014). Inventory Management Techniques and Their Importance. Retrieved on 26th May 2017 from https://blog.udemy.com/inventory-management-techniques/
Muller, M., (2011). Essentials of Inventory Management. USA: AMACOM Div American Mgmt Assn
Rashid, K. & Aslam, M. (2012). Business excellence through total supply chain quality management, Asian Journal on Quality. 13(3). pp.309 – 324.
Sweeney, E. (2013). The people dimension in logistics and supply chain management – its role and importance. Supply Chain Management: Perspectives, Issues and Cases. McGraw-Hill: Milan. pp. 73-82.
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