Three Steps to Improve Logistics System

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Table of Contents

Introduction
Changing the supply management
Increasing the use of technologies
Changing inventory management
Conclusion
Reference List

Introduction

A Logistics system can be named the heart of any organizations performance for it is directly responsible for its activities. The manufacturer can produce goods and the customer can demand these goods, but without a properly organized supply chain, there is no way in which these goods can be delivered to the consumers. The same goes for the rest of the aspects which the logistics system entails, such as transportation, packaging, warehousing, inventory, etc. Three main steps can be taken to improve the logistics system of the organization; they are turning retailer-managed supply into vendor-managed one, using technologies for fastening order processing, and improving inventory management.

Changing the supply management

The first step would be to introduce certain changes into the supply management of the organization. The changes in supply management will necessarily affect the performance of the whole organization (Murray, 2009). Traditionally, the organizations use retailer-managed supply, which means that most customers (not only the final ones but the retailers as well) are in charge of placing purchase orders or monitoring inventory levels (Ghiani, Laporte, & Musmanno, 2004).

A key step to improving the organizations logistics system may be turning the retailer-managed supply into the vendor-managed one. In this way, vendors will be able to control consumption and inventories, as well as make up their ways to replenish customers. This will result in reducing the costs through a better coordination of customer deliveries while customers do not need to allocate costly resources to inventory management (Ghiani, Laporte, & Musmanno, 2004, p. 6). This change will be beneficial for the organizations logistics system.

Increasing the use of technologies

Another step could consist in increasing the use of technologies to facilitate and accelerate order processing. Order processing is regarded as one of the key activities in any logistics system. It is the most time-consuming as well because it takes around 70% of the whole order-cycle time. Technological innovations can significantly reduce the amount of time spent on different activities connected with order processing.

For instance, bar code scanning can help to identify the required products and update inventory level records while laptop computers and modems allow salespeople to check in real-time whether a product is available in stock and to enter orders instantaneously (Ghiani, Laporte, & Musmanno, 2004, p. 6). Using all these technological innovations more often will help the organization to improve its logistics system.

Changing inventory management

The third step entails certain changes in inventory management. These changes might include making seasonal goods accessible to the customers all year round. This will not only increase the organizations profits but will widen its consumer base as well. Implementing this change will hardly require any additional costs for the company this is why the profits will be especially tangible.

The organization may decrease the prices for seasonal goods (for instance for summer goods) in winter or offer considerable discounts for these goods. This will not only increase the number of consumers but will help to deal with competition which the organization would have experienced when selling these goods in the summertime.

Conclusion

Taking this into consideration, it may be stated that three main steps may help the organization improve its logistics system. They are changing supply management, starting using technologies to accelerate order processing, and changing some aspects of inventory management, namely the sale of seasonal goods.

Reference List

Ghiani, G., Laporte, G., & Musmanno, R. (2004). Introduction to Logistics Systems Planning and Control. Web.
Murraym M. (2009). Creating a Logistics Strategy. Web.

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Three Steps to Improve Logistics System

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