Table of Contents

Introduction.

Literature review..

Logistic case study of Starbucks.

Challenges experienced in supply chain and logistics.

A path for cost reduction.

Results of the logistic management

Learnings of the case study.

Conclusion.

References.

Introduction to Logistics

Logistics is defined as the implementation of an intricate task of an organization. In other words, it is the management of the supply chain of an organization to meet the consumer demands (Eruguz, Tan, & van Houtum, 2017). Logistics management is a segment of supply chain of an organization which plans, controls and implements the flow of goods efficiently from one point to another. In order to achieve the competitive advantage companies must carry out their logistics tasks effectively. Moral logistics management confirms that goods are transported in the utmost cost-effective, secure, well-organized and opportune method. This helps the company to save costs and satisfy the consumer needs. In addition to this, poor management of logistics can lead to delayed transportation which can cause significant loss to the organization.

Therefore, proper planning of logistics system requires proper vetting, software management, different resources, and career strategically planning. For example, for an IT company inbound logistics can have different chips, computers, cables, printed circuit boards, and routers whereas outbound logistics will be related to the shipment of completely assembled products(Kain & Verma, 2018).Companies implement several business development procedures to advance business presentation. Logistics and supply chain organization has been observed as the critical feature for the businesses to attain competitive advantage. Moreover, these management strategies have been established since1980s. Furthermore, most of the organizations have not yet conceptually understood the administration of supply chains.

The fundamentals of logistics management incorporate a company’s wider developments managing and implementing the merchandise lifecycle to exploit productivity. It also forms a business’ skills for competitive compensations across its complete unified subdivisions and processes. Moreover, logistics also accounts for external salesperson or independent management divisions (Wang, 2016). However, logistics management essences practically on interior goods movement, precisely, domains like goods transference, delivery, warehousing and distribution. It is approximately constantly an inside intensive practise with a responsibility to exploit goods activities, either they are physical or provision products.

While nature of the sources of inputs are a major concern in manufacturing industries, in administration organizations the implication of getting customers to give right and complete information is vital (Delgado et al., 2019). This report will explain the key concepts of logistics management and its contributions to the real-world industries. It will also include the summary of case study of logistics management in real world organizations. Lastly, the conclusion has been added which will explain how the stakeholders and theories can create value from this analysis.

Literature Review of Logistics Management

Logistics management is a segment of supply chain management to plan, control and implement the flow of goods in an efficient manner. Supply chain management includes the management and planning for all the organizational activities related to procurement and sourcing. In addition to this, it also comprises of partnership and coordination with the organization’s channel partners related to suppliers, customers and third-party investors (Kain & Verma, 2018). Most common tool used for logistics management in an organization is Material Requirements Planning (MRP). MRP can be defined as a set of methods which uses receipts of the goods and the requirements by the organization for calculating the exact requirement of logistics. Furthermore, MRP recommends a replenish to the company for placing orders for the required logistics. Main objectives of utilizing MRP for organizational management are:

  • Reduction in supply
  • Timely delivery of all goods and services
  • Precise distribution of manufacturing costs
  • Effective utilization of available resources
  • Immediate decisions in case of any emergency in logistics system

MRP is a closed loop feedback system which supports logistics supply for making effective decisions (Eruguz, Tan, & van Houtum, 2017). Here, closed loop feedback refers to the validation of all the planning processes which are included in the logistics system. This adds value to the organization through differentiation of products for achieving competitive advantages. Another way of adding value to the organization is service. It helps in developing relations with the consumers through establishment of an augmented proposal. Augmentation takes many forms such as financial packages, logistics amenities, after-sales facilities, etc. Logistics management comprise of suppliers, procurement, operation, distribution, and customers.

Main aim of a logistics management system if to provide best services to the customers at a low cost and to link the market place, manufacturing process, distribution network and procurement activity.

Logistics and Consumer Service

The accessibility of data due to the technological advancement interceded on the management of logistics. This advancement has created a competitive environment in which goods life cycles have been reduced. Moreover, this likewise interprets to a higher and increasingly exact data on stock requirements and inventory (Wang, 2016). This obtains more significance when it is seen that proper logistics management accounts for consumer loyalty. In reality, the accessibility of a thing and its conveyance completely depends on its administration. In the event that client support quality is estimated on the distinction between the last emotional quality observation and the unique desires, Logistics ought to be estimated in view of comparable standards. Furthermore, when observed from a Supply Chain or stock point of view, the unadulterated accomplishment of one explicit norm or objective can prompt customer disappointment.

According to Stough (2017), Customer Expectations impacts Customer Satisfaction also, as the affirmation of the first desires has been recognized as the most powerful factor of fulfilment. Prior to the rush of mechanical advancements, it was seen that more established clients had a higher view of graciousness, security and comprehension the clients. The spread of new advances and the new ideas of Client Delight and Customer Advocacy, may prompt more youthful individuals to have better standards contrasted with more seasoned ages (Wang, 2016).The social results of a high consumer loyalty are especially spoken to by the dedication and by the insurance of the client base from the exertion of the contenders. This brings to a lower cost of client securing and an expansion of the association's notoriety.

Warehousing, Goods Handling, and Packaging

Warehousing refers to the act of storing products that will be supplied to the consumers. It utilizes detailed foundations that benefit manufacturers, suppliers, and vendors to monitor record and accumulate the goods safely. Wang (2016) stated that logistics facilities heavily subsidize to the complete fulfilment for procurements. The accessibility of a good and its distribution times, the revenues and guarantee circumstances are vital characteristics of consumer service (Stough, 2017).Transposing venture to strategic and operational levels relies on, from the regulatory perspective, changing standards and measures for surveying effectiveness of the points acknowledgment. Standards and measures for investigation of oddities of the genuine condition of things from the one that has been arranged, on an operational level, are not just long haul yet additionally extremely broad with regards to the acquired information, for example share in the market.

Use of Technology in Logistic Management

Delgado et al. (2019) claimed that by designing and implementing web system the company can improve its logistic and supply system. The major problem experiencing by the companies is the delay in the deliveries. It can be improved by using a software which will keep a record of the purchase order, generate a detailed report of the order, fill the form of the vehicle on which it will be delivered and final delivery. To create such software, the companies can use PHP programming and MY SQL database manager for developing software as defined above which can keep track of every little detail of the product from the stretch till the delivery to the customer. 

Big Data Analytics in Supply Chain and Logistics

Wang et al. (2016) stated that as the demand of the consumer is increasing the data is also simultaneously increasing and to manage such a large amount of data it is important that the organization to use some technology that can help manage the logistics of such a large consumer with its large mass of production. The researchers further stated that big data and big analytics will ease the problem of the companies facing issues in supply chain and logistics. It will help the organization to measure the performance of the different departments and also provide them with the ability to determine the operations conducted in them. Supply chain analytics will help the companies to monitor the metrics and help them identify the root cause of the problem. It will also help the organizations to better deliver the decisions and earn a tremendous amount of profit from it. 

Green Supply Chain Management

Suryanto et al. (2018) stated that business environment is changing all over the world now and this is why now it is time to change the processes of the companies and converting them into greener ones. It can be achieved by incorporating changes everywhere be it supply chain management or logistics the company now in order to attract customers towards them have to adopt green practices even in the operations and management. The need of the hour is to understand the new concepts of green supply chain management and incorporate them into the organization. It will help the organization to gain superior performance. 

Logistic Case Study of Starbucks

Starbucks is the largest coffee house all across the world known for its ultimate coffee and beautiful ambience. Despite being a coffee giant, the company is suffering logistic issues in its supply chain. The company's cost of the supply chain was high and it was facing a challenge to reduce it. There was a time in 2007 and 2008 when the company's leader doubted whether it would be able to supply to its 16700 outlets or not (Nguyen, 2016). At that time the sale in the commercial sector declined. And due to this, the cost of the supply chain was raised to $75 million.

Challenges Experienced in Supply Chain and Logistics

A team of executives were appointed to investigate the issue and find out the reasons for the increase in the cost and problems experienced in the supply chain. They found out that the service of the coffee house was not meeting the expectations and this was one of the reasons in failure in logistic management. Other than this, the executives also found that fewer than the 50 per cent outlets deliveries were not on time. Apart from this, poor outsourcing decisions have led to an increase in 3PL expenses. The transformation in the supply chain has made it more complex to operate.

A Path for Cost Reduction

Starbucks thus decided that it needs to work on reducing the cost of the supply chain. The leaders of the company decided three main objectives to be accomplished by them. These include reorganizing and redesigning of the supply chain, reduction of the cost to serve the customers and lay the foundation for future capabilities in this direction. 

To meet these objectives star buck decided that it needs to divide its supply chain function into three groups. The leaders named these groups have a plan, make and deliver. Along the side, it also established a new production facility which helped the coffee house to bring the plant to the number of four. Besides this, the company was planning to terminate its partnership with the most effective 3PLs. It started managing all its partners with a weekly scorecards system. It was aligned with service level agreements.

Results of The Logistics Management

Peter Gibbons, the executive of the supply chain operations stated that the measures taken by the company to improve its logistic system have helped in saving $500 million in the year 2009 and 2010. It has even completed its transforming program and is successfully selling coffee to its customers. 

Learning of The Case Study

Starbucks uses a centralized system to manage its logistics and supply chain in six continents. It is due to this; the company manages and operates the global distribution in the United States, Asia and Europe. The Starbucks used a scorecard system by which it uses to access the four important things which include safety in operations, end-to-end supply chain cost, on-time delivery enterprise savings and supply chain rates. It even started using digital technology for checking its supply chain efficiency and power whether it is able to meet the growing demand of the coffee house or not (Chuang, 2019). The automated system helped the company to check its logistics in real-time. It helped in developing and scheduling plans in production and distribution department giving the Starbuck supply chain the added flexibility to meet the growing demand of the customers. The supply chain automated software helped the company to keep track of scheduling, transport, storage capacity, stock inventory and so on. The constant update on this information helped the company to operate its supply chain with maximum efficiency (Sarkar 2017). It is due to all these measures the company has resolved its logistic and supply chain issues and is selling coffee all across the world.

Conclusion on Logistics Systems

This research report discussed the key concepts of logistics management. Logistics is defined as the execution of an intricate task of an organization. Logistics management is a segment of supply chain of an organization which plans, controls and implements the flow of goods efficiently from one point to another. Furthermore, supply chain management includes the management and planning for all the organizational activities related to procurement and sourcing. In addition to this, supply chain and logistics management are two different things. In an organization, logistics management is a segment of supply chain management. According to the literature review, most common tool used for logistics management in an organization is Material Requirements Planning (MRP). It can be defined as a set of methods which uses receipts of the goods and the requirements by the organization for calculating the exact requirement of logistics. From the analysis it can be seen that technological advancements have led to the change in the product life cycle. This obtains more significance when it is seen that proper logistics management accounts for consumer loyalty.

The literature review further stated that big data and big analytics will ease the problem of the companies facing issues in supply chain and logistics. It will help the organization to measure the performance of the different departments and also provide them with the ability to determine the operations conducted in them. The stakeholders must remember that customer expectations impact customer satisfaction also. Suppliers having logistics management skills and proper knowledge have been considered as an important factor throughout the research for maximizing consumer fulfilment by an organization. The major problem generally experienced by the organizations is the delay in the deliveries to the clients. This can be improved by using software which will keep a record of the purchase order, generate a detailed report of the order, fill the form of the load vehicle and finish the pursuit of each delivery. From the case study, it is clear that even big companies face supply chain and logistic issues as is the case with the Starbuck. It was falling short in its supply chain and the cost of it was also high. It was necessary for the company to reduce its supply chain cost.

Thus, the company appointed executives to investigate the problem areas. Once it was done the leader incorporated the supply chain measures. It started using a scorecard system by which it accessed the various things like an end to end supply cost, enterprise savings and so on. The transformation which was introduced in the supply chain of star buck proved to be beneficial as it was able to reduce the cost by saving $500 million. This indicates that supply chain cost to the companies is high but with suitable measures, it can be reduced and deliveries the product according to the demand can be improved. Green logistics system will help the organization to gain superior performance. The fundamentals of logistics management incorporate a company’s wider developments managing and implementing the merchandise lifecycle to exploit productivity. It also forms a business’ skills for competitive compensations across its complete unified subdivisions and processes. On a concluding note, this research work identified the importance of a logistics management system in an organization. It is a part of all the strategic planning issue related to the supply and storage of goods. In addition to this, poor management of logistics can lead to delayed transportation which can cause significant loss to the organization.

References for Logistics Systems

Brinch, M., Stentoft, J., Jensen, J. K., & Rajkumar, C. (2018). Practitioners understanding of big data and its applications in supply chain management. International Journal of Logistics Management, 29(2), 555-574.

Chuang, H. J. (2019). Starbucks in the World. HOLISTICA–Journal of Business and Public Administration, 10(3), 99-110.

Delgado, A., Chanamoth, H., Arias, A., & Carbajal, C. (2019, November). Improving logistic management in a mass consumption distributor by web system design. In 2019 IEEE CHILEAN Conference on Electrical, Electronics Engineering, Information and Communication Technologies (CHILECON) (pp. 1-4). IEEE.

Eruguz, A. S., Tan, T., & van Houtum, G. J. (2017). A survey of maintenance and service logistics management: Classification and research agenda from a maritime sector perspective. Computers & Operations Research, 85, 184-205.

Guo, S., Shen, B., Choi, T. M., & Jung, S. (2017). A review on supply chain contracts in reverse logistics: Supply chain structures and channel leaderships. Journal of Cleaner Production, 144, 387-402.

Kain, R., & Verma, A. (2018). Logistics management in supply chain–an overview. Materials today: proceedings, 5(2), 3811-3816.

Nguyen, H. (2016). Supplier Selection Process in Café Industry: Case: X Coffee vs. Starbucks.

Sarkar, S. (2017). The Supply Chain Revolution: Innovative Sourcing and Logistics for a Fiercely Competitive World. Amacom.

Stough, R. R. (2017). New technologies in logistics management'. Ann M. Brewer Kenneth J. Button David A. Hensher (ed.) Handbook of Logistics and Supply-Chain Management, 2, 513-520.

Suryanto, T., Haseeb, M., & Hartani, N. H. (2018). The correlates of developing green supply chain management practices: Firms level analysis in Malaysia. International Journal of Supply Chain Management, 7(5), 316.

Wang, G., Gunasekaran, A., Ngai, E. W., & Papadopoulos, T. (2016). Big data analytics in logistics and supply chain management: Certain investigations for research and applications. International Journal of Production Economics, 176, 98-110.

Witkowski, K. (2017). Internet of things, big data, industry 4.0–innovative solutions in logistics and supply chains management. Procedia engineering, 182, 763-769.

Wichaisri, S., & Sopadang, A. (2017). Integrating sustainable development, lean, and logistics concepts into a lean sustainable logistics model. International Journal of Logistics Systems and Management, 26(1), 85-104.

Wu, P. J., & Lin, K. C. (2018). Unstructured big data analytics for retrieving e-commerce logistics knowledge. Telematics and Informatics, 35(1), 237-244.

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