Question.653 - In your initial post, suppose that you are the logistics manager for a Fortune 500 company. You have been asked to analyze and reduce the cost and waste associated with the logistics function. How would you go about doing this? Describe the value that a more efficient logistics operation may bring to both the organization and their external customer. After your initial discussion post, respond to at least two of your peers. When responding to your peers, constructively critique their approach to analyzing and reducing the cost and waste. Do you agree or disagree with their approach? Why or why not?
Answer Below:
Logistics costs are the cost that is incurred during the flow of products from sourcing to the final destination. There are many aspects of logistics costs that include transportation, packaging, storage, and administrative costs that are required in the overall supply chain process. In forward logistics, costs are incurred in transportation, packaging, and storing while in reverse logistics, transportation cost is required to return the product from the final destination to the final source. The logistics cost is dependent on the scope and variety of a particular business organization. If logistic costs are handled properly, it affects the other aspects of the supply chain process like an increase in fuel that creates a problem in the market, labor costs, and international trade rules, and regulations. Therefore, it is very important to manage logistics costs because it plays a very important role in developing the supply chain process. Therefore, if I were the logistics manager of an organization like Fortune 500, I would have ensured to improve customer relationship management. For this, the cart abandonment rate should be reduced so that it doesn’t affect the shipping cost. The next thing I would implement is to outsource the warehousing system so that there is no frequency in travel which will help me to reduce transportation costs. Moreover, I would ensure that there is an effective decision-making process in the organization so that the operational costs are identified and I can incur the expenses and accordingly create a plan to reduce logistics costs. When it comes to reduction of waste, the first thing I would have implemented in the company is to plan a sustainable approach to logistic function. As forward logistics is an important and the most crucial model in the supply chain process, I will enhance reverse logistics in the same manner so that after delivering the products to the customers, it is also equally important to return back the products that are defective or exchangeable. The returned products will be back to the final source where the manufacturers can produce a new product with the used raw materials. This will eliminate the waste and also the production level will reach sustainability. Moreover, I will ensure the best quality of the products so that there is no possibility of returning back the products to the sources from the destination. Therefore, this will help in reducing transportation costs and at the same time provide the company with a competitive advantage of sustainability. Reference Foster, S. (2018). Managing Supply Chain and Operations (2nd ed.). Pearson.More Articles From Operation Management
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