Analyzing the Relationship Between Supply Chain and Logistics Management
Logistics management is a part of supply chain management, which manages products in a well-organized method. Supply chain management is wide-ranging words which show the relationship directly from the suppliers to the final purchaser. The main concept of values to the purchaser is clear in organization policy. The main objective is to achieve the loyalty of the purchaser forever by utilizing different marketing scheme and loyalty programs.
The first analysis will show the connection among logistics management and supply chain management and also measure the importance of helpful logistics management role in attaining the purchaser satisfaction. The second analyses will state about the ERP system to enhance the purchase satisfaction, decrease in cost reduction and it will also highlight some points on e-commerce. And in the last part it analyse the best practices to cost reduction and to achieve the aims of cost reduction.
Supply chain management is demarcated as the oversight of the materials, information and the finances. The procedure of SCM includes the coordinating and integrating these aspects among and within the companies. It is the administration of the flow of the goods and services which comprises the storage and movement of raw materials(Meade and Sarkis, 2015). Whereas, logistics management is a SCM part which is used to meet up the purchaser demands through the controlling, planning and implementing the effectual movement and storage associated information from source to destination. It is usually the governance of the SCM functions.
SCM and logistics are two inter-over concepts which are not separable. The management of supply chain revolves around the logistics. According to Kumar 2012, the originality of SCM has come from the developments of logistics. One of the main assumptions about the SCM is that a well-organized and bidirectional flow of goods and services must take place amid the corporations belonging to the chains(Kumar and Petersen, 2012). On the other hand, logistics controls and implements the efficient and effective flow and storage in both direction of goods and services. From this, a relationship could be identified between the logistics and SCM. The logistics is directly responsible for the SCM. The SCM is involved in the definition of the supply chain structure which creates the framework for the logistics operations.
The business environment around the world is now highly competitive and one way to gain the competitive advantage is to ensure that the customers are satisfied. Every business enterprise around the world now wants their business functions to be customer-oriented. It is a fact that having a strong and effective logistics system is a great way to ensure the long-term services and growth of the company(Meade and Sarkis, 2015). Customer satisfaction has become the key for companies aiming to gain a competitive advantage. Reliable product delivery in the supply chain is a great aspect in the maintenance of the customer satisfaction and logistics is an essential part of the supply chain. Logistics is referred as the engine for the economy of a company. This states that without an effective logistics management system, the entire economy of the company will have to face stagnation. Logistics helps to reduce the gap between the suppliers, industrial users and the producers and also the individual commuters.
Assessing the Significance of Effective Logistics Management in Achieving Customer Satisfaction
Having poor logistics management can reduce the source of procurement of the materials, movement or people and goods and services. Customer satisfaction is very important for the financial system of a company (Kumar and Petersen, 2012). If an organisation fails to satisfy their existing clients and customers, the business function of the company will get hampered. A company need to ensure that in every aspect at the time of dealing with the customers, the delivery is at the time and it is done according to the needs of the customer (Kappelman et al.,2013). The logistics management aims to reduce the cost from the suppliers to the end users by taking into account the quality of the delivery and time required. It is important that a logistic manager has good knowledge and logistic skills to increase the customer satisfaction.
An ERP stands for Enterprise resource planning. It is the incorporated administration of core business processes, repeatedly in instant and mediated by technology and software. ERP is used to store, collect interpret and manage form various industry actions (Kappelman et al., 2013). ERP supplies continuously and included modernized view of core business process utilizing universal databases preserved through a database management system (Harland , 2016). ERP systems typically involves the below stated characteristics:
- An integrated system.
- Methods in synchronized.
- A universal database that carries all the applications.
- A constant experience and appear across components.
- Setting up of the method with multifaceted data/application incorporation through the IT department, supplied the functioning not in small steps.
Enterprise resource planning or ERP is a set of customizable purposes that allocate businesses to administer and combine their foremost methods. The benefits of applying an ERP system are everlasting (Christopher, 2016). Foremost all ERP systems are mainly focused on the purchaser and final outcome. This means that the quality goods and services are manufactured and distributed quickly. ERP allow open conversation among vendors, suppliers, purchaser and all essential features of the company (Christopher, 2016). ERP also locate an industry with a determine set of business experiences diagonally the entire organization. There are various ERP systems that operate very effective methods to enhance the customer satisfaction level.
- ERP permit to make a good connection with new purchaser. It permits to complete exact provisions of delivery dates. It also provides door step delivery to the purchaser. It also permits online shopping to make good relation with consumers and modern aspects of technology.
- ERP system permits to execute all deals along with their dates between suppliers and new purchasers. It also provides whole information about the transaction dates with proven computerized analysis (Christopher, 2016). When the purchasers order the goods it remind automatically to the supplier about their demands as defined dependable rights inside the software.
- When the purchaser return the goods to the company. Company have to accept the defective products or repair or change the defective goods (Harland , 2016). It is most successful system to execute all actions with respect to the purchaser’s problems.
- ERP system permits to refund or provide discount for the goods. If the purchaser purchases the goods and suppliers provide a discount on the products, the then the systems automatically reduce the discount amount as characterize in backend system (Database).
- The better ERP system have various aspects for the purchaser but the essential function of ERP system is to concern invoice for the purchaser as their demands and needs.
- ERP system keeps more time for the purchaser, it permit purchaser to keep their essential time and take immediate action.
ERP system assists to reduce the cost without affecting the quality of the products or the status of the business and in same time interval reserving the profitability level that permits frequent growth of the company (Harland, 2016). But reduction of cost evaluates to fulfil certain situation like:
- To be sustainable: it is the ways in which it should not have harmful effects in future outcomes of the business.
- To be effective: it is the ways in which the outcomes have to be better than the asset made serially to apply those evaluates(Meade and Sarkis, 2015).
- To be realistic: it means that the businesses have the ability to set them in practice.
Tesco applied the ERP system to raise the profitability of the business. The centre ERP elements helped Tesco to enhance its company by starting an entire combination of the back and front office systems(Madapusi and D’Souza, 2012). Logistics Company profited from utilizing the ERP system, SAP software which enhanced communication among the associates of the business. Enhance in incomes by decreasing expenses and it also boost up the sales. By improved security the records are compact, combining separate security methods into a single framework. The ERP system helps the company to deliver the goods to its customer faster. It helps to improve the productivity and implement the inventory control. It helps the Tesco with order fulfilment by interconnecting the sales order to fulfilment management (Meade and Sarkis, 2015). The executives of the company set the service level and assign the inventory to the customer sales orders. The ERP system of Tesco is modern and has a holistic view of the customer. It helps the concerned business entity enable a better distribution of information across the internal teams within the company.
Understanding ERP and Its Role in Improving Customer Satisfaction while Reducing Costs in E-commerce
The methods of reducing logistics costs and supply chain costs are:
Consolidated shipments: it leaves without saying that delivering products in full container loads is favourable to less than a container load; it is a cost effective as well as secure. Also, products are loaded in a particular region which is not disclosed by other purchaser products. This stated, there are conditions when less than a container load is the favoured and extra financial choice(Kappelman et al., 2013). Namely, for moving a quite small shipment, a best method to decrease logistics costs is through consolidating shipments. This includes a collaboration of various smaller shipments from numerous suppliers sharing the identical destination into individual consolidated shipments. Moreover, Tesco collaborate to some alliance of identical destination to import their products in less cost effective result.
Cargo insurance: logistics planning and making policies for cost saving won’t signify greatly if it assure cargo appropriately. The insurance have to cover entire value of the goods to avoid disagreeable shocks. Supply chain operations have to combine constantly in a particular platform, easy to get to all included parties. By these methods it can avoid repetition of actions across businesses. Such repeated hard works are time taken and damage efficiency(Kumar and Petersen, 2012). Over 2 out f 3 business prefer to outsource as a minimum part of their supply. The reason behind outsourcing mainly involve cost reduction, developed efficiency, and the ease of conveying significant features of work to more skilled and efficient practised.
Optimised use of resources: scarce use of business advantages, like facilities or inventory, in use of fleet vehicle, directly influence the income (Chen, 2015). By optimizing the uses of advantages or benefits, involving their reputation, it can very much enhance company efficiency. This can be completed through sort out the routine again and successively carry the whole fleet of medium active all over the day.
Time planning: The opportune planning of methods like production routine, routes of the ships and transportation time is very important. Hasty, final preference and result will expect result in missed and delays targets, returning badly on the finances and the business image both. Internationally system of shipping and shipment professionals assures a punctual delivery and secure on universal scale.
Consolidated shipments is the best way to cost reduction and it is secure too because it allows the purchaser to join with some other alliances whose goods are imported at same place which reduce the cost of shipments(Adebanjo, 2013). It is secure because it does not share the details of the products with other vendors. There are conditions when less than a container load is the favoured and extra financial choice. Namely, for moving a quite small shipment, a best method to decrease logistics costs is through consolidating shipments.
Conclusion
In conclusion, it can be said that supply chain management involves the optimisation of the business operations to enhance efficiency and speed. The study highlighted that logistics is a part of SCM and it plans, impalements and controls the flow of the goods and services. The study analysed that logistics management is an important component of the business operations and its performance impacts the internal procedures and customer relations of the company. In order to improve the customer satisfaction, an information management system needs to be implemented as it will benefit the business in managing the logistics and supply chain.
References
Adebanjo, D., 2013. Classifying and selecting e-CRM applications: an analysis-based proposal. Management Decision, 41(6), pp.570-577.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Chen, I.J., 2015. Planning for ERP systems: analysis and future trend. Business process management journal, 7(5), pp.374-386.
Harland, C.M., 2016. Supply chain management: relationships, chains and networks. British Journal of management, 7(s1).
Kumar, V. and Petersen, J.A., 2012. Customer relationship management (pp. 1-10). John Wiley & Sons, Ltd.
Kappelman, L., McLean, E., Luftman, J. and Johnson, V., 2013. Key Issues of IT Organizations and Their Leadership: The 2013 SIM IT Trends Study. MIS Quarterly Executive,12(4).
Madapusi, A. and D’Souza, D., 2012. The influence of ERP system implementation on the operational performance of an organization. International Journal of Information Management,32(1), pp.24-34.
Meade, L. and Sarkis, J., 2015. Strategic analysis of logistics and supply chain management systems using the analytical network process1. Transportation Research Part E: Logistics and Transportation Review, 34(3), pp.201-215.
Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain management. Springer.
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