The Determination of The Logistics Management

Question: Write an essay on the determination of the logistics management. Answer: This report introduces the determination of the logistics management and the core areas such as production, marketing, finance and accounting of an automobile manufacturing company. The name of the manufacturing company is Rolls Royce. The purpose of the report is to create interface and make analysis of their current order cycle and inventory managements effectiveness. The report also states those functional areas through application of logistic concepts. The report also provides recommendations for improvement of the order cycle and inventory management through the help of those logistic theories. The overall aim of the report is to make the logistics management of Rolls Royce to be flexible and improved. Rolls Royce does the manufacturing, engineering and distribution of the luxury automobiles along with their parts throughout the world. The company was established in the year 1906 in Goodwood of United Kingdom (Rolls-roycemotorcars.com, 2016). The company became later the subsidiary of BMW in the year 1998, as they were the premium buyers of the models of Rolls Royce Motors. The company has a vast supply chain management where the total spending is over 4.7 billion pounds. The company has also the optimized design of supply chain along with control and planning, good relationships in supply chain, good management in logistics and purchase execution, good cost and quality management (Chen Kuang, 2013). The management of inventory along with the production, marketing, finance and accounting has a good workflow in the organization. As per the competitive market, there have been few loopholes detected which are needed to be fixed. Such resolution of the loopholes will make the overall supply chain process to be streamlined and it will ensure the beneficial result for the company (Newnes et al., 2013). The supply chain management of Rolls Royce normally makes a delivery of products of high quality to a base of diversified customers. 1. Interfaces of Core Functional Areas of Rolls Royce As per the theory of logistics, in case of stable demand of the cars, if the inventory cost goes high then to maintain the overall cost in a permissible limit, the company has to lower the cost of production. In case of seasonal demand, for pre-order cases, the cost of inventory goes high due to the delay in the logistics process, laydown in production and advance purchase of raw materials (Higgins, 2013). Rolls Royce makes a trade-off in such costs to maintain the overall cost of the system in a permissible limit. Production: In case of production, there is a balancing of economies of long production run that is against high inventory costs. For seasonal demand, seasonal inventorys acceptance is balancing the lead times of production (Laihonen, 2016). The interface of supply side has adequate stocking for ensuring the production of a logistics function. The protective packaging is also done for damage protection along with production through third party logistic provider (Ref?). Rolls Royce has incorporated such practices for aligning their production and logistics. Marketing: The marketing is based on 4Ps where price consists of carrier pricing, matching schedules, volume relationships. It has been seen that transportation rate gets cheaper for larger shipment (Lightfoot, Baines Smart, 2013). How much the product will get sold depends on its packaging as the logistic managers are involved in deciding product traits. The proliferation of product is also a challenge to logistics. Product Luxury vehicles Price Carrier pricing Place Focus on attracting wholesalers and retailers Promotion Develop a balance with push and pull strategies and advertising through social media The logistics also has affection on availability of shelf and stock out chances. Promotion should be made flexible where creating a balance in push and pull strategies and making the product more popular for persuading channel members (Chen Kuang, 2016). In case of place, if the wholesalers are combined with retailers then the size of shipment gets larger making transaction and logistics cost smaller. In case of very large retailers, smaller sales create larger transportation costs (Mabert, Soni, Campbell, 2015). In Rolls Royce, there is a proper coordination between marketing and logistics to make the whole process be streamlined. Accounting and Finance: The finance and accounting department makes sure that all the money is to be invested in correct place considering manufacturing and marketing to be two most important interface of logistics (Moore, 2015). The logistics has significant impact on the companys return on asset and investment. The costs associated are reported by the supply chain performance and trade-offs. Rolls Royce takes the necessary initiatives for the creation of a good coordination between finance accounting with logistics to make the whole business operations to flow in a good rhythm (Naumov Ivanova, 2013). 2. Rolls Royces order cycle management analysis 2.1 Effectiveness and Efficiency of Current Order Processing System at Rolls Royce The order processing system of the company consists of 6 components termed as the transmittal and preparation of order, receipt and entry of order, processing of order, picking and packing of the warehouse, transportation of the order, delivery and unloading of order to the customer. As per the given diagram, a process of order management has been elaborated where initially the customer place an order for a car model of Rolls Royce which gets received by the supplier of the automobile company through logistics team (Newnes et al., 2013). The order is then processed and the required car is been assembled in the car factory. Its then picked and packed in the warehouse from where it is been shipped for dispatch (van der Vliet Fransoo, 2013). Finally, after the shipment, the order is delivered to the customer, who has purchased the car.The overall process is designed in such way that it should not create any hazard in the supply chain starting from customer order placing to order delivery. But, in reality it has been noticed that the order received by the supplier stays in the queue to be processed which leads to process delay and increase in cost of production (Mabert, Soni Campbell, 2012). It has also been noticed that the orders are not been picked and packed in the stipulated time-frame which increases the inventory cost. The shipping department often becomes lethargic in shipping the order to the customer that results to increase of the transportation cost (Ng et al., 2012). Therefore, if all such delays are there then it tends to increase of the overall cost of the supply chain management leading to decrease in the profit margin. Such decrease of the profit can happen in case of stable as well as in seasonal demand. Therefore, the company should replace the professionals who are lethargic and hire qualified professionals at a lesser salary slab (Redmond, Carret Denis, 2014). Those professionals will work in the various segments of the logistics department in a higher pace resulting fast delivery of order. There should be more number of parallel units in the assembling section, which will perform the manufacturing of the multiple orders simultaneously (Naumov Ivanova, 2013). The parallel channels will be developed in the packing and shipping section, which will perform the dispatch faster. Recommendations to Improve Order Processing System The company should purchase innovative apparatus that will make a faster assembling of the systems. The company should segment its logistics team in several groups who will be dedicated to process the order on specified models (Parmer et al., 2014). Such grouping system will develop their knowledge in the nitty gritty and will enhance their expertise to make a better and faster assembling of the ordered cars and their delivery. The company should also adopt an ERP systems which will better integrate the overall manufacturing and logistics flow. Each and every employees of the organization will be trained to operate their respective functionalities in the ERP starting from order receipt to order delivery (Mabert, Soni Campbell, 2015). The information maintained in the database will provide the reports of the overall progress of the business to higher level managers so that they can plan accordingly in case of facing technical hazards (Newnes et al., 2013). The company should also purchase non-fuel transportations to minimize transport cost for order delivery. Analysis of Rolls Royce inventory management system Effectiveness and Efficiency of Inventory Management system at Rolls Royce Rolls Royce is quite flexible in maintaining their inventory which are been produced during the process of manufacturing. The company makes a provision of timely and reliable disposition of the stock materials that makes a recommendation of the modification in the information of stock that is existing. It can make the adjustments on the re-order rules and other opportunities related to cost avoidance (Roy et al., 2013). It makes a utilization of wide range of industry and site information. The company also has an improved inventory management system that can make the identification and removal of the inventory costs treated as unnecessary. As per the logistics theory, the warehouses can be utilized for postponing or delaying of the production through performing the light manufacturing activities. Until the actual demand of the customer is known, the warehouse having a good packaging capability allows the final production to be postponed (Moore, 2015). The processing and the postponing of the systems actually tends to some benefits which includes minimization of risk as the final packaging does not get completed until the specific order or package is received. The benefits also include that the total inventory should be reduced through the usage of the basic products for the labeling variety and configuring packages. Here the usage of the basic products implies that the item should not have to be committed to the customer in the plant of manufacturing (Patil et al., 2014). As the order of the specific customer is been received, the warehouse will make the necessary final processing through addition of the label and making the finalization of packaging. Though Rolls Royce has a good inventory management system but still it has been realized that as the car models are of quite high price, quite beyond the level of affordability of the normal customers, the sales of those cars are not as quick as compared to the other contemporary normal brands (Lightfoot, Baines Smart, 2013). Due to such reason, if preorders are been cancelled after assembling, the number of items in the inventory goes high resulting to increased inventory cost. It therefore requires a larger space for the warehouse to maintain those items. Some inventory products, which are aging for a long time, have the possibility. Recommendations to Improve Inventory Management System The company should adopt strategies such as inventory optimization tools like ERP, real time analytics solutions like SAP, track on essential attributes, leverage mobile devices, etc to reduce the inventory and its carrying costs. It should increase the investment in case of recovery of those inventory items, which may be damaged before shipping. Rolls Royce should incorporate a system, which will track the aging of the products and will contact with the marketing team to push those products to the customers which are kept in the inventory for a prolonged time (Patil et al., 2014). There should be an additional system, which will track the damages occurring in the inventory management system. Such system will indicate the dedicated maintenance engineer to make the necessary recovery of the damaged items. The company should provide unique stock numbers to its dispositions for the identification of the materials that are required and gives an approach to identify the inventory, which are potentially stranded or over-max (Smith, 2013). These recommendations are provided to design the reduction of carrying costs of inventory and ensuring the availability of the material that are based on the demands of current state and future. Conclusion Rolls Royce has been a premium manufacturing company, which has a good logistics team to execute their business process. The company has taken various policies to enhance their overall business process resulting to more sales of their automobiles. But it has been realized so far that there are few technical limitations and loopholes which is creating obstruction in the overall prosperity of the company. It has been discussed in the report that some changes should be incorporated in the order processing and inventory management so that it can reflect streamlined operations in the companys core functional areas such as the production, marketing along with finance and accounting. Such a flow will definitely make the overall logistics process of the company to be more refined in terms of order collection, processing, packing, shipping and delivering. Such process will surely give a bright image for the companys brand. If such process are been followed in the coming days, Rolls Royce will be able to beat its current sales records through increasing the satisfaction level of their customer. The logistics team should have to be more prepared and aware of the latest demands that they will be able to cater the latest trends. References Chen, P., Kuang, M. (2013, July). Implementation of Logistics enterprises Brand Competition Strategy in China. In2nd International Conference on Science and Social Research (ICSSR 2013). Atlantis Press. Higgins, S. (2013). Rolls-Royce: how innovation built a global giant. Laihonen, A. M. (2016). REDUCING RISKS IN THE LETTER OF CREDIT PROCESS-CASE ROLLS-ROYCE OY AB. Lightfoot, H., Baines, T., Smart, P. (2013). 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