Designing an effective logistics network is critical for the success of a firm. Crandall, Crandall, and Chen (2015) define logistics as “the management of the flow of items from the point of origin to the point of consumption in order to meet requirements of customers or corporations” (p. 68). A logistics network is a system that involves moving raw materials from suppliers to a firm, storing them before they can be used for manufacturing, holding in stock already processed products, and facilitating transportation of the final products to clients in the market. The focus of this paper is on how to design a logistics network consisting of only one warehouse.
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Steps Needed to Design the Optimal Network
When designing a logistics network, it would be necessary to take specific steps to ensure that the desired goal is achieved. The first step is to define the suppliers. It will involve identifying specific firms that can supply the needed materials reliably. According to Christopher (2016), a good supplier should be able to deliver quality products at the right time and of the proper quality. Reliability is a critical factor when selecting an appropriate supplier. The firm should be assured of continued delivery of the needed products at all times without fail to avoid disrupting the production process.
The next step is to develop a fully functional warehouse that is capable of holding the raw materials once they are delivered. Given that this would be a single warehouse, it is expected that it will only be holding the raw materials and not the finished products. The warehouse should be properly structured to hold the raw materials in an appropriate manner before they are sent to the processing plant. If necessary, it should have coolants to help protect them. The warehouse should be designed in a way that the received raw materials are packed at the extreme back end of the store. The materials will be moving consistently from the back to the front where they are to be released to the processing plants.
The third step is to develop a proper communication network to help in coordinating the movement of the materials. The communication system should be based on emerging technologies. It will be necessary to ensure that information flows seamlessly from one department to another to avoid cases where the production process is halted because of insufficient raw materials. As Wang (2014) observes, a proper communication system also enhances coordination among different departments within the firm.
Information and Data Needed to Make the Determination
Effective communication is critical in ensuring that the logistics network functions effectively. According to Myerson (2015), without proper communication, it would be difficult for a firm to have an effective flow of the needed materials. Various departments are expected to maintain close communication. It should start with the sales and marketing department. This department should inform the production department about the number of products needed in the market. Once the information is received, the message is expected to flow to the logistics department explaining the quality and quantity of raw materials needed. They should also specify when it is expected to be on the production floor.
The logistics department should then find ways of accessing the materials needed. Once the supplier is identified and the price determined, the next step is to inform the finance department about the resources needed for the project (Kessler, 2013). The finance department is expected to give approval for the purchase of the raw materials based on the availability of the resources. When the payment is made, the supplier will confirm the same and state when the materials will be made available. An integrated communication system improves openness and real-time flow of information from one department to another.
Strategy to Be Employed in the Network
When defining an effective strategy to be employed in a logistics network, it is necessary to understand the goal that needs to be achieved. In this case, the primary goal will be to minimize logistics costs and improve efficiency. As such, the appropriate strategy will be to embrace augmenting human operations. The strategy involves computerizing warehouse operations. It will minimize human involvement in handling the products. Machines will handle most of the tasks within the warehouse. Once raw materials are offloaded into the warehouse, computers will control their movement. Conveyor belts will be used to facilitate the movements of these materials.
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Computerizing the entire system not only improves communication but also reduces waste. The controller will know when some materials have overstayed within the warehouse. Appropriate action can be taken within the right time to reduce cases where materials are damaged because of constant handling (Hanne & Dornberger, 2017). Minimizing human labor not only eliminates time wastage but also reduces the damage of the materials through constant handling. The initial cost of installing the system may be high, but the long-term benefits will outweigh the cost. As such, the management should consider embracing this strategy.
Christopher, M. (2016). Logistics & supply chain management (5th ed.). Harlow, UK: FT Publishing International.
Crandall, R.E., Crandall, W.R., & Chen, C.C. (2015). Principles of supply chain management (2nd ed.). Boca Raton, FL: Taylor & Francis Group.
Hanne, T., & Dornberger, R. (2017). Computational intelligence in logistics and supply chain management. Cham, Switzerland: Springer International Publishing.
Kessler, M. (2013). Logistics network design in Africa: Integrating aid flows and national self-supply. Bern, Switzerland: Haupt.
Myerson, P. (2015). Supply chain and logistics management made easy: Methods and applications for planning, operations, integration, control and improvement, and network design. Old Tappan, NJ: Pearson Education.
Wang, J. (Ed.). (2014). Encyclopedia of business analytics and optimization. Hershey, PA: IGI Global.