Question

what role does supply chain and logistics play in an organization? provide examples

Answer 1

Supply chain is described as the method in which material flow from manufacturers to ultimate consumers. It involves various channels through which material passes and converted into finished goods and then transferd to customers. It is very important for any organization to have a good supply chain management so that materials are timely reached into the production department and then the finished goods are supplied in the market on time. It is very essential for businesses to deliver goods on time otherwise competitors can take your customers. Producing goods will be of no use if they are not delivered in the market.

Role of supply chain:-

1. The primary objective of supply chain is to boost the customer service. The channel of distribution should designed in such a way that it quickly delivers material and finished goods in the market. For example company Coca Cola is not able to deliver bottles on time so a customer who looks for coca cola in the market will be disappointed and can change his preference to thumps up.

2. When the products are timely deliverd to the retailers it helps them to reduce their storage cost. Because the products are quickly deliverd so there will be no requirement of storing products for longer time and it will also reduce thw wastage. Therefore it role is to reduce the storage cost.

3. A good supply chain helps in timely delivery of raw material in the production unit and helps in smooth manufacturing. Suppose there is non availability of raw material in the organization, this will hamper the working of whole production unit and flow of manufacturing will break.

4. The nexr role of good supply chain is to reduce the unnecessary cost in the channels. The channels of delivery should not be too long complex. A good supply chain has simplified channels which reduces the cost.

Logistics:-

Logistics is a part of supply chain. It is narrower term. It refers to the internal movement of information, machines, raw material, tools etc. It means it refers to the movement of raw material and other goods within the porduction area. For example it includes activites receiving the raw material, sending it for inspection, sending it into the warehouse, sending it to the production unit for manufacturing etc.

Roles of logistics:-

1. The first role of logistics department is to ensure the order processing. It is concerned with giving orders, taking recipts, making payment and making entry of purchase and then receiving the material.

2. The second role of this department is material handling. It means after receiving the material it has to organise it in a manner so rhat i becomes easy to take them for use. I also includes protecting the things from breakage. It is quite challanging for organization when amount of material is large.

3. The next role involves is storage and warehousing. It must ensure that material is safe and stored in the suitable environment. Products like electronics are quite large and produced in bulk because they are supplied in the wide market therefore it becomes very essential task to store them properly.

4. The next role is inventory control. It refers to continusoly checking and keeping the track of material requirement. Logistic department makes sure that there is proper availability of metrial to meet the future requirements and also ensure that material in neither in excess nor in shotfall.

For example if the requirement is of 40 units only and we have already ordered 100 units. This will lead to increase in cost and blockage of money. Logistic department therefore ensures that there should not such a problem arise.