StudyCorgi Business & Economics

Operations Management of Logistics and Supply Chain

Introduction

Business organizations have different departments and segments that work harmoniously to ensure that every targeted goal is realized. The nature of such departments is informed by different factors such as an organization’s industry, mission and vision, and business model. Logistics and supply chain are functions undertaken by a corporation’s supply chain management (SCM) department. The primary goal of these roles is to ensure that finished products or goods are transported to the targeted consumers efficiently and as demanded. Supply chain and logistics are complex processes since they deal with numerous tasks such as storage, security, transportation, and customer satisfaction. The concept of operations management has attracted the attention of many supply chain and logistics managers in the recent past. The purpose of this descriptive paper is to analyze the unique issues surrounding the power of operations management in logistics and supply chain.

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Establishing an Effective Operations Management of Logistics and Supply Chain

The term “operations management” refers to any activity or department that designs and controls various business operations and production processes. The department also focuses on operations associated with how services and goods are transported to different customers. This analysis shows that the best way to establish an effective operations management of logistics and supply chain should be informed by every function or activity undertaken in a given organization (Sanders, 2017). To have an efficient supply chain and logistical operations, every operation management department should be keen to support a wide range of transportation activities and ensure that various products are available to the greatest number of customers.

Operations management is a concept that should be embraced by supply chain managers to design powerful logistics models. They should control every supply chain operation to ensure that different resources are used efficiently. The approach will reduce wastes and deliver quality products/services within the stipulated period. The concept can also be expanded to include every logistical operation undertaken to acquire raw materials for producing certain goods. Involved persons will come up with appropriate plans to control various procedures and ensure that materials and finished products are transported, stored, and handled efficiently (Kherbach & Mocan, 2016). An effective operations management of logistics will also be achieved when different actors and stakeholders are involved throughout the supply chain process.

The efficiency of operations management of the supply chain can also be improved or supported using modern technologies. Such innovations will guide managers to acquire and monitor information. The collected data is used to identify the location of different materials, locate lost products, monitor potential sources of wastes, and project the time taken to deliver goods to the final consumer. The use of modern technologies streamlines various operations and activities undertaken throughout the supply chain process. Vilko, Ritala, and Edelmann (2014) also acknowledge that the approach results in improved problem-solving and decision-making processes. When logistical operations are completed effectively, the targeted company will be able to make profits and achieve its potential.

Since operations management is a wide field, its core attributes can be implemented within a corporation’s supply chain and logistical processes to increase efficiency. This means that an effective operations management of logistical procedures should be optimized using a powerful approach. The optimization approach will also ensure that different departments such as manufacturing and research and development (R&D) liaise with the logistical segment to produce what is needed by the customers (Kherbach & Mocan, 2016). When such products are ready, the supply chain department will acquire finished goods and deliver them to the consumers within the stipulated time. Throughout the operations management process, every actor must be keen to reduce wastes. Departmental leaders should also strive to reduce their expenditures if their companies are to record reduced logistics, manufacturing, and inventory costs.

The concept of green logistics has emerged within the past few years. Nezekati, Fereidouni, and Rahman (2016) acknowledge that a company that is planning to have an effective operations management of supply chain and logistics must be ready to embrace the power of this concept. This model focuses on appropriate practices such as green storage, packaging, circulation, and transport. With the use of advanced technologies in logistical operations, companies can simulate their supply chain processes in an attempt to do away with activities that appear to threaten the natural environment. Supply chain managers can go a step further to use vehicles and systems that do not pollute the environment (Patil & Dolas, 2015). Packaging should be done using biodegradable materials. Companies should also use their supply chain procedures to meet the expectations of their customers. This goal can be realized if operations management roles echo every environmental conservation agenda.

Benefits of Effective Operations Management of Logistics and Supply Chain

Successful corporations put the diverse needs of their customers and stakeholders first. Kherbach and Mocan (2016) argue that companies that ignore the concerns raised by their customers are usually at risk of becoming uncompetitive. That being the case, corporations that design efficient operations management of supply chain and logistics will find it easier to meet their customers’ demands. Efficient transportation and delivery systems ensure that superior goods, services, or products are available to the targeted customers. Since consumers are always in need of suitable or sustainable services, an effective supply chain process will meet the needs of different customers (Nezekati et al., 2016). This fact explains why companies should implement powerful operations management of the supply chain to attract more customers, satisfy their demands, and encourage them to do repeat business.

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Operations management, as described earlier, streamlines various activities within a given process or system. Whenever applied in supply chain systems, operations management results in increased visibility. This means that different innovations such as modern technologies guide managers to track goods, movement, disruptions, and errors (Vilko et al., 2014). The streamlined processes empower supply chain managers to collect timely information or data for optimizing various operations. Potential causes of disruptions are identified and addressed before they can affect the performance of the targeted company. The benefit of such actions is that the supply chain process keeps moving, thereby supporting the organization’s business model.

A satisfied customer will be willing to support his or her favorite company and make it profitable (Kherbach & Mocan, 2016). Effective operations management of supply chain systems improves the level of customer experience or satisfaction. This achievement will also strengthen a company’s brand image. This achievement will attract more potential customers since their emerging needs are met using powerful supply chain processes. Consequently, the company will produce more goods or services and market them to different customers. The approach will result in increased revenue.

The use of efficient logistical and supply chain management processes makes it possible for many companies to cut their operational costs. For instance, the supply chain system empowers managers to ensure that inventory is at an optimum level (Sanders, 2017). The right modes of transportation are identified depending on the nature of the finished products and customers’ expectations. These practices are used to minimize costs and eventually increase profits.

Companies that embrace the power of operations management in their supply chains tend to record reduced wastes. The strategy echoes the major aspects of lean practices. This means that such supply chain procedures guide managers to identify consumer needs, ensure that required products or materials are delivered efficiently, and respond to every unpredictable event (Patil & Dolas, 2015). Data is collected from different points to ensure that every activity is completed as planned. Consequently, the sustainable supply chain supports the business model of the targeted company.

The problem of unpredictability has continued to affect the performance of many organizations. More often than not, companies with unsustainable supply chains produce goods and services that might not be demanded by their customers. This gap results in the massive production of unwanted goods. Such products must be warehoused, thereby increasing the risk of wastage (Kherbach & Mocan, 2016). An efficient supply chain supported by appropriate operations management roles will ensure that demanded goods are manufactured and delivered to every customer within the stipulated period. The strategy will also address a wide range of challenges such as changing consumer expectations, emerging markets, and global policies.

Potential Risks: Mitigation Strategies

This discussion reveals that effective operations management of logistics and supply chain delivers numerous benefits that can make more companies profitable. Unfortunately, this supply chain management concept is not insulated against potential risks that can affect a corporation’s business models. Since many multinational companies operate globally, it becomes hard for them to prevent natural disasters that can disrupt their supply chain processes. Nezekati et al. (2016) assert that disasters such as typhoons and earthquakes can interrupt the most powerful supply chain and render it ineffective. This risk can be managed using a comprehensive risk aversion or management strategy (Bala, 2014). The framework should be designed in such a way that potential disasters are identified and tracked. Alternative solutions should also be considered to deal with disasters whenever they strike.

As indicated earlier, modern technologies have been considered in an attempt to support the effectiveness of different supply chain processes. Such innovations empower managers to identify emerging gaps, track goods, and make timely decisions. However, such technologies tend to have increased chances of failure. Any form of breakdown can affect a critical process or disorient the entire system. This is a major risk that should be taken seriously by supply chain managers. The threat can be mitigated using backup or manual systems. Additionally, software engineers must monitor these technological systems frequently (Sanders, 2017). Software backups should also be put in place to take over whenever there is a breakdown.

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Many sustainable and admirable logistical systems are associated with multinational companies. Such corporation’s models explain why their supply chains must be redesigned in such a way that they conform to the laws existing in every region or country. This is a major risk that can affect the effectiveness of streamlined supply chain systems (Bala, 2014). This risk can, therefore, be averted by designing powerful supply chains that can be redesigned depending on the requirements of a particular region.

It is agreeable that consumers’ needs change constantly. Some products are also known to have short lifecycles (Bala, 2014). That being the case, many scholars in the field of supply chain management have argued that these two elements amount to a major risk for many logistical experts. This means that a specific product might consume numerous resources and fail to meet the needs of different global customers. This demand uncertainty can affect the supply chain processes of a given company and make it unprofitable. Companies should, therefore, undertake numerous studies frequently to predict these changing consumer behaviors and expectations (Vilko et al., 2014). This strategy will ensure that operations management procedures are aimed at producing demanded products and services that can meet every customer’s needs.

Companies with Effective Operations Management of Logistics and Supply Chains

Several corporations have managed to develop effective operations management of supply chain and logistics. The first example is that of Home Depot. This retailer markets a wide range of construction and home improvement products in Canada, China, Mexico, and the United States. Home Depot used to operate an independent supply chain department in every store. However, this model was found to be unsustainable and unproductive. This understanding led to the centralization of individual supply chain departments through the power of operations management. The company introduced modern technologies to forecast sales, manage inventory, and make timely decisions. These strategies improved the level of performance at the company (Sanders, 2017). The costs incurred for different replenishment orders reduced significantly. This example explains why effective operations management for logistics can improve a company’s competitiveness.

Coca-Cola remains one of the most successful multinational corporations in the world. Having been in business for more than a century, the leaders at the company are always keen to identify emerging technologies and use them to support its supply chain processes. The corporation’s supply chain is supported using powerful operations management initiatives. Validated and state-of-the-art techniques are implemented frequently to support the process (Sanders, 2017). Such strategies are used to optimize sourcing, promote information sharing, improve packaging, and transform the corporation’s supply chain procedures continuously. Such measures explain why the company’s global supply chain network remains unrivaled.

The same strategy has been taken seriously at Wal-Mart to add value to its customers. The managers at the company adopted advanced models that echoed the concept of lean (Sanders, 2017). A centralized supply chain network was implemented to reduce hoarding or warehousing expenses. This new system resulted in superior inventory management that minimizes operational costs. Consequently, the company has passed across such savings to their customers. This move has resulted in increased customer satisfaction and profitability.

Conclusion

This discussion reveals that effective operations management of logistics and supply chain can deliver various goals such as cost reduction, timely response, waste reduction, and improved profitability. Companies planning to improve their supply chains should consider emerging technologies and make operations management a critical aspect of every organizational function. Potential risks such as natural disasters, technological disruptions, and changing consumer needs should also be identified and addressed using evidence-based strategies. The success stories of corporations such as Wal-Mart and Coca-Cola should be studied carefully by supply chain managers who want to achieve their potential. Consequently, such leaders will develop superior supply chain models that can add value to every customer.

References

Bala, K. (2014). Supply chain management: Some issues and challenges – A review. International Journal of Current Engineering and Technology, 4(2), 946-953.

Kherbach, O., & Mocan, M. L. (2016). The importance of logistics and supply chain management in the enhancement of Romanian SMEs. Procedia – Social and Behavioral Sciences, 221, 405-413. Web.

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Nezekati, H., Fereidouni, M. A., & Rahman, A. A. (2016). An evaluation of government role in green supply chain management through theories. International Journal of Economics and Financial Issues, 6(S6), 76-79.

Patil, G. B., & Dolas, D. R. (2015). Green supply management: A review. International Research Journal of Engineering and Technology, 2(8), 1095-1099.

Sanders, N. R. (2017). Supply chain management: A global perspective. New York, NY: Wiley.

Vilko, J., Ritala, P., & Edelmann, J. (2014). On uncertainty in supply chain risk management. International Journal of Logistics Management, 25(1), 3-19. Web.

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StudyCorgi. (2020, December 21). Operations Management of Logistics and Supply Chain. Retrieved from https://studycorgi.com/operations-management-of-logistics-and-supply-chain/

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StudyCorgi. 2020. "Operations Management of Logistics and Supply Chain." December 21, 2020. https://studycorgi.com/operations-management-of-logistics-and-supply-chain/.

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