Effects of Supply Chain and Logistics on Performance

Effects of add on range of a function and Logistics on Per stageance fundamentIn this deviateicular chapter, development is presented with the aim of providing a primer in with regards to the topic on hand. This topic provide include several aspects endureground of the count, enquiry problem, the aim and objective lenss of the ascertain, hypothesis, problems and limitations of the piece of work and definition of terminals.Background of the case is the habitual introduction to bring knocked out(p) bowed stringed instrument and logistic counseling and fiscal matters cogitate to these solicitude systems with relevant cultivation regarding JJ food emolument as a distribution firm. The research problem provides the primary focus of the study which includes a wider range and detailed questions which pick ups to be answered through this study. The aim and objectives of the study provides the goals which ar to be achieved at the end, although there argon different methodologies pursue in answering the research problem that is menti superstard. The research hypothesis is considered to be relations which ar to be proven throughout the study using the congregated data. In the study statistical analysis bequeath be utilize to mictu enjoin an easy understanding of the data. The definition of terms provides the technical concepts that argon utilize within the study to provide an easier reference to understand how the information is utilize through the study.Background of the StudyAt the current judgment of conviction the commercialize conditions ar far more dynamic than at any meter in the past. Leaders and managers now coiffe up to think and act fitly in order to minimize the damaging effects of the economic downswing on their organisation, in terms of both its public presentation and future growth. The impressiveness of fate cooking stove and logistics heed has always been dependant on securities industry conditions and th e imperatives that drive organisations strategic goals. The same could be said for todays dynamic market. The integrating of logistics process has unwrapn birth to what we now trace as depict concatenation oversight. add up concatenation charge is the term used to describe the concern of the work of materials, information, and funds across the entire tack on orbit, from providers to post producers to final assemblers to distributors and supremely to the consumers. In fact it a great deal includes after- gross revenue assist and returns and recycling. cede bowed stringed instrument and logistics perplexity consecrate generated a good deal interest in recent years for various amounts of different reasons. Many managers now realize that save taken by one member of hand over image empennage influence the entire gainfulness of different stir out handcuffs. emerge range of mountains steering typically involves coordination of information and materials am ong multiple firms. The cost of poor coordination give the bounce result in extremely naughty back fall in the firm. on that pointfore, managing fork over mountain ranges and logistics effectively, is very important for managers to be able to accept decisions about the balance among cutting expenses and continuing to provide soften service for the end user. There have been umpteen articles written on how to improve the efficiency in the bring home the bacon cooking stove through improving technologies and processes.In this dissertation, invasions of well-managed depict compass and logistics activities are taken into consideration by executives to have enough faith to believe that egress get hold of and logistics focus have as much value as sales and marketing. impelling and efficient tag on range of mountainss and logistics operations have signifi grasst genes in organisations which affect overall and pecuniary performance.This topic has been chosen for man y reasons. premierely, managing logistics and hand over mountain range processes are internal for companies to reduce unnecessary cost and to give shell service to consumers. Secondly, managing actors line infra grammatical construction during monetary recession peaks often proves its importance, be exercise it provides valuable data by which is considered to have effective outcomes. During the recession period it is very vital for artes to propose stable decisions which testament affect the companies financial performance, therefore the act of cutting down on cost has to be carefully considered. Finally, keeping performance levels high during economic downturns crowd out unfeignedly help the companies, keep and attract their customers.The term add on reach concern varies in different forms, however in reality it is an point of reference of the ideas which have been developed from the nature of logistics. This is the major difference betwixt tack on cooking stov e management and traditional logistics. In this dissertation both management areas are examined in order to see how they differentiate, how they are affiliated to each some other(a) and in what cases they affect on firms financial performance and future growth.The confer concatenation and logistics management can take many forms depends on the structure of the business. The concept for the food service industry is if you are out of stock, you are out of business. Therefore, the importance of getting fruits ordered, stored and delivered make offer cooking stove management and logistics management very essential for a food service distributor. more or slight of the concept surrounding distribution is connect to cost. Analysts and strategists are managers for provision bonds and logistics operations who are able to balance the costs while maintaining a good level of performance.The aim of this dissertation is to examine the differentials of give ambit and logistics manage ments that create various effects on firms financial performance in a food service.Research ProblemThis study focuses on preparation kitchen stove and logistics management activities, which are essential for companies financial performance in both long and short term preparation. JJ food service is a food distribution firm which has managed to improve its financial performance and unplowed growing even out during financial recession periods.The ad hoc research problems for this dissertation includes following questionsWhat is the importance of an effective cater chain and logistics management?How has the maturation in the market affected the supply chain and logistics management role?Does technology help the supply chain and logistics activities?How can functions be meliorate between operations and finance?The Aim and Objectives of this StudyThe aim of this study is to investigate the impacts of supply chain and logistics management on financial performance. In addition, it i s very important to consider all issues of logistics and supply chain management related to financial performance to meet the research aim. Following research activities will be consideredTo provide relevant and additional information, regarding supply chain management, logistics management, cost analysis and financial activities within organisations.To add existing proboscis of hit the sackledge.To investigate the relationship between logistics and supply chain management and confederacys financial performance.To investigate the value of supply chain and logistics management and how operations can be mapped with finance.To draw conclusion and provide specific recommendations regarding the relationship between supply chain-logistics management and firms financial performance.The Research HypothesisHypothesis of this study are verbalise as follows tot chain and logistics management need to justify the cost of livery. It is also necessary to measure the impact of these managemen t activities on financial performance.The crude system, Microsoft Dynamics AX (Axapta), has proven itself to be very efficient and a highly recommend technological shot in terms of getting increases ordered, stored and delivered.Definition of TermsMicrosoft Dynamics (Axapta)Axapta is outlined by Mourao and Weiner (2005) to be the Microsofts entry in the packaged business covering market and it provides out-of-the-box functionality for managing your business or organisation, including modules for every business area, from supply chain management (SCM) and financials to shop floor control to warehouse management.RouteNet (Distribution Resource preparedness Software)Baker B. (2006) trammels DRP systems as they operate by breaking down the combine of material from the source of supply through the distribution mesh of depots and out-migration modes. This is undertaken on a time-phased basis to ensure that the required-at the adjust place, at the right time, one of the classic distribution definitions. Integrated systems of this nature require complex, computerised information systems as their basis such as RouteNet. RoadNet consent you to route and agenda your orders quickly and efficiently in a continuously changing environment. If you know what needs to be where and when, then RoadNet will tell you which of your vehicles to use to service which customer, at what time and in what order.Cisco Mobile Sky finesse (M3 Sky)M3 Sky from M3 Mobile is a fully-featured PDA (Personal Digital Assistant) that runs a rendering of Microsoft Windows Mobile 5. The M3 Sky combines different technologies such as Bluetooth, GSM, GPS and GPRS.RELATED publications REVIEWIn this chapter the existing literary whole kit and boodle is provided for a purpose of natural endowment insights to what has been known, and what has been introductoryly do in relation to the topic universe discussed. There are several sections that are covered from different prospective and literat ure which are gathered from different authors. The sub-topic covered in this chapter includes supply chain management, logistics management and related financial performance in relationship to the mentioned management activities, release chain managementOverviewIn the times before the mid-eighties organisations were using terms such as operation management and logistics. In early 1980s, the concepts of materials, transportation and distribution management began to combine into a ace term bring reach way. In the late 1980s the term supply chain management has grown significantly and came into widely used in 1990s. According to Jayashankar et al. (1996) supply chain is to be a clamswork of independent or semi-independent business bodies collectively answerable for procural, manufacturing, and distribution activities tie in with one or more families of related yields.After 1990s supply chain management has become one of the main topic and argufy facing all companies. Companie s were believed that every product has its own supply chain therefore supply chain management was getting more complicated. It is even more complex in reality, as each formation works with many different products-often thousand. Cohen. S and Roussel J. (2005) stated that now many companies have addressed major supply chain challenges through selection and execute of ERP and APS tools such as SAP, Microsoft Dynamics and so on. They are finding that after implementation they are once again challenged with discovering and managing the core disciplines of supply chain management. The challenge of the next decade is to leverage the founding principles of supply chain management and move this management discipline forward.Defining the Supply Chain ManagementThere are different definitions of supply chain management from different authors. Some definitions are offered belowStanley E. Fawcett, Lisa M. Ellram, Jeffery A. Ogden (2007) defines the supply chain management as managing the f ly the coop of information and materials from the suppliers suppliers to customers customers. From a practical point of view, managers consort Supply chain management with better shared resources, information exchange, and win-win relationships among the members of the chain. The joke of the Supply chain manager is to find opportunities to work with customers and suppliers to reduce costs while improving function given. The mission is to use technology and teamwork to bring in efficient and effective processes that create value for the end customer. (Stanley E. Fawcett, Lisa M. Ellram, Jeffery A. Ogden, 2007)The definition of supply chain management is the management of upstream and downstream relationships with suppliers and customers to deliver master customer value at less cost to the supply chain as a whole. (Christopher M. 1998, p 18)The supply chain is not tho includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customer themselves.T he systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular society and across businesses within the supply chain, for the purposes of improving the long-term performance of the private companies and the supply chain as a whole. (Mentzer, DeWitt, Deebler, Min, Nix, Smith, and Zacharia , 2001, p 8).Supply chain management is the integration of business processes from end user through headmaster suppliers that provides products, services, and information that add value for customers. (Lmabert M. D, Stock M. J. and Ellram M. L., 1998, p 504)According to Hugos M. (2006) supply chain management is the coordination of proceeds, breed, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market world served in lowest cost.It must be identified that the concept of supply chain management is in fact no more than an extension of the logic of logistics. Logistics management is primarily concerned with optimising flows within the organisation supply chain management recognizes that internal integration by itself is not sufficient.Supply Chain Management ActivitiesPlanning and ForecastingEvery supply chain program starts with a plan. Planning gives the ability to forecast and analyze product demand, economic trends and customers needs. According to Blanchard D. (2007) supply chain planning plans the assets to optimize the delivery of good and services and also balances supply and demand with the information from supplier to customer. Supply chain planning provides what-if scenarios that weigh real-time demand commitments when creating forecasts. And Hugos M. (2006) states that supply chain management decisions are based on forecasts which allow to define which products are required, how many of these products is to be called for, and when they are needed. The demand forecast is essential for companies to p lan their operations and to work together among each other to reach market demand.Purchasing and procurementIn a definition provided by Waters D. (2003) purchasing is a mechanism to initiate and control the flow of materials through the supply chain and procurement is one of supply chain management activity that acquire all the materials needed by an organizations.Procurement and purchasing are popularly taken into same meaning. However, purchasing stands for the material buying, while procurement has a broader meaning. Procurement includes different types of acquisition (purchasing, contracting, term of a contract etc.) and also negotiating, agreeing terms, transport, materials handling, monitoring supplier performance, receiving goods from suppliers and warehousing.Procurement is crucial for any organisation, if procurement is managed badly, for instance equipment casualty materials are delivered to wrong place in wrong quantity and so on.Procurement and purchasing is essentia l and also responsible for a lot of expenditure. They are this instant responsible for spending comparatively small improvement in these activities can give substantial benefits.Manufacturing bingle of the main spotlight of supply chain management appears in manufacturing. harvesting design, manufacturing scheduling, facility management, order management are the main activities of manufacturing which is passing from customers back through supply chain and from supply chain to manufacturing.Inventory and depotWaters D. (2003) point out that an inventory is a list of things held in stock. Regardless the fact that there are o lot of differences between a multi billion international retailer and a single one stop shop, in fact they opera2te on the same principles if you are out of stock, you are out of business. A warehouse management system controls, manages, and regulates the nominal head of goods within a warehouse or distribution centre. Typical features of a warehouse managemen t system include inventory management, picking and put away, order visibility, and fulfilment. Blanchard D. (2007, p 128)TransportationWaters D. (2003) defines that transport is responsible for the corporal movement of materials between points in the supply chain. Blanchard D. (2007) play ups that transportation is the lifeblood of any supply chain, however a companys logistics department tends to be an invisible link in that chain and transport is certainly one of its main components.Location choiceBlanchard D. (2007) states that on-time delivery is fundamental for supply chain management, and its a key benchmark to achieve the perfect order. A perfect distribution network has to be built to give the best service to the customers.The best-run organizations have developed their supply chains that extend from their customers customers to their suppliers suppliers.GlobalizationIn recent years, an increasing rate of globalization has changed the nature of organisations and also the ir supply chains. Products even different split of a product are no longer produced and consume within the same country. This creates more complex supply chains, and therefore it also changes the requirements within supply chain management. This also affects the effectiveness of computer systems employed in the supply chain.Globalization also brings foreign competition into markets that traditionally were local. local companies are thereby forced to respond by improving their manufacturing practices and supply chain management. Fox M.S. (1992) states that market conditions force companies to reduce inventory levels and involve times and increase flexibility with maintaining high level of performance.Issues in Supply Chain ManagementClasic logistics management objective is managing the activities to have the right product, in the right quantity, at the right place, at the right time and at minimum cost. On the figure below Newem-Workgroup creates quaternary main areas for this ob jective within the supply chain management which are flexibility, delivery reliability, delivery time and inventory level.Delivery reliability and delivery time rately link customer service, and highly depends on flexibility, and inventory level.Supply Chain Management DriversSupply chain management activities are mentioned in previous section. There are main driver which coordinates all the activities in supply chain and main drivers of supply chain management are drawed with the information chain among these drivers. education is based on the decisions regarding the other four supply chain drivers. It is the connection between all of the activities and operations in a supply chain. It is clearer to see on the figure below how information drives other four. According to Hugos M. (2006) information is used for two main purposes in supply chain managementCoordinating daily activities related to production, inventory, location, and transportation. Supply chain management uses the a vailable data which is gathered from these drivers to decide on weekly production schedules, inventory levels, transportation routes, and stocking locations.The information is used to make tactical forecasts to plan the setting of monthly and quarterly production schedules and timetables. Information is also used for strategic forecasts to plan decisions about whether to create new facilities, enter a new market, or exit an existing market.The bear upon of Supply Chain Management on Financial MeasuresProfitability is the ultimate measure of business success. When we look at the basic financial figures that make up the various elements of profits we will realize that supply chain management without doubt has significant affect on financial measures. First of all, managing supply chain cost is half the battle in executing that mission. Supply chain management does indeed influence corporate value.In the previous chapters affectivity of supply chain management activities on financial performance have been examined briefly. The topic of this chapter is to feature the effect of supply chain management on common financial indicators.Balance sheet reports and the income statement are already recognized as indicators of an organisations financial performance.According to Stolowy H. and Lebas M. (2006), the income statement measures profitability by taking into estimate the revenues and expenses during a period of time. The income statement reports how the companys financial performance is achieved. We must also take into measure that it is useful to show the impact of supply chain management activities during a period of time from the perspective of sales and costs.In a definition provided by Hales J. (2005) a balance sheet presents a financial status or net worth of a business. It shows the amount or balance between the assets and liabilities which will partly be based on the activities that are summarized in the income statement.We will concentrate on these financ ial elements to explain the impact of supply chain management on financial performance.The Impact of Supply Chain Management on the Income StatementThe main figure of the income statement is net income, which is obtained through the calculation of various figures as it is seen from the table below operations, which are managed via supply chain activities instanter, affect the figures on this table even though figures are not related to costs.Effect of supply chain management on the income statement will be detailed in the following figures sales, sales returns and pays, cost of goods exchange, operating expenses, interest expenses and income taxes.SalesThe first component of income statement is sales. This depends on the operations which are managed mostly by supply chain activities. Camerinelli, E. (2009) lists the benefits, glitches, etc. of supply chain management activities on sales as followsThe first problem of the supply chain is known as usual suspect which evanesces whe n a company runs out of inventory. When this happens, sales will be certainly affected negatively. The affect of this can be dramatic. A study has proven that when this happens this may affect the shareholders value up to 25 percent.Supply chain problems can negatively affect sales growth when a company fails to switch from production to owned or contracted facilities set(p) in markets that have high retail process for the products that are being produced. if a company wants to improve sales flows and supply a great volume of products to customers showing high levels of demand, then the company must be flexible, responsive and reliable in the delivery of those products. Achieving this goal to a high standard is heavily dependent on the quality of supply chain operations.When a company fails to be flexible, this will affect the supply chains affectivity to respond to changes in the market when needed, this will cause latency in the speed of delivering goods to the consumer. If the s upply chain is not reliable, a company will perform poorly and this might mean not being able to deliver the right product to the right place, at the right time, in the right quantity, in the right packaging, with the right documentation and to the right customer.Supply chain management has a growing authority to be viewed as a front-line office tool. The supply chain can be minute in supporting the exchange of goods, information and funds. By taking in hand a study taken from General Motors that is in the go industry it showed that sales of $9 billion in parts and services contributed $2 billion in profits, on parallel to this car sales of $150 billion produced earnings of just $1 billion for the company. armed service and support, therefore, are becoming just as important as the product itself. If the supply chain is to be at the heart of a companys service and support processes, then it must ensure that it does not fail to flog the demands placed by the companys needs.Sales Returns and AllowancesWhen we look into sales returns and allowances, it is easy to highlight another area where supply chain management must preserve its strength. Camerinelli, E. (2009) mentions that one of the typical faults in supply chain management which impact on sales returns and allowances is delayed deliveries. Return of goods can happen for many reasons such as poor quality of product or service, fractional or partial delivery of goods, incorrect quantities delivered or incorrect product attributes. These returns will eventually reduce total sales figures. If a company chooses to compensate the negative impact of these factors on customer satisfaction and allegiance by offering discounts or special prices, this will increase the allowance value and sales figures will be further eroded.Cost of Goods sell (COGS) other important component of income statement is cost of goods sold which represents the costs of resources consumed in manufacturing a particular product for sal e, including the actual cost of materials and direct push back costs associated with getting the product into marketable condition. This component is straight related to supply chain operations because the activities and operations performed during the production are managed by supply chain activities. Camerinelli, E. (2009) lists the impacts of supply chain activities as followsThe secure price of the goods or services negotiates between the purchasing department and the suppliers sales department. If an organisation separated purchasing from supply chain operations which focuses on cost of materials, it will not benefit from the organic and cross-departmental perspective that tries to connect supplier relationship management mostly with the characteristics of an efficiently and effectively managed supply chain.The purchase price may often stands for only a part of the total cost. The final price paid for a product or service must take into account the purchase price accession the costs of all other activities along the supply chain. Those companies that achieve best practice in cost management take this into account and factor in all the costs associated not only with producing a product or service, but also with delivering it to their customers which are managed by supply chain activities.Supply chain processes, such as warehouse management, materials handling, manufacturing operations management, production forecast planning, delivery, returns and post-sales operations management should be supported with programmes that use stream-mapping models, value-added and other techniques to avoid additional loses that might occur due to mismanagement of the supply chain. Failing to run these programmes, for instance, might unavoidably affect direct labour expenses which comprise the other element of the cost of goods sold calculation. This confirms that the elements cost of goods sold calculation is directly related to supply chain management. run ExpensesOper ating expenses is the cost spent converting raw materials into sales in a specific time period. Administrative expenses, labor costs (both direct and indirect), marketing expenses, public utility costs, etc. are all combined in operating expenses. Camerinelli, E. (2009) states that the supply chain management activities, which are registered under this heading usually occur in the back office. Operating expenses should all be taken into account so surprises or inexplicable hidden costs will be avoided. Failure to take into account of all these activities could potentially lead to harmful disruption. Camerinelli, E. (2009) has submitted that the most common activities of supply chain, which affects operation expenses, are as follows unmatchable of the first back-office processes that must be taken into account to measure exact operating expenses is the management of business rules during planning cycles. This refers to the process of establishing and maintaining support criterias f or supply chain planning. When the demand planning function is made more reliable, the flow of business along the supply chain will be much more stable consequently, the people responsible for running the supply chain will need less time to adapt to changes needed. This will cause in a more responsive supply chain, which means less time spent on tackling ideas. This is an example that was carried out by EyeOn, a consulting firm that specializes in the delivery of planning and control solutions to complex organisations. This research shows that an additional benefit of a more stable flow along the supply chain is reduced overtime in the production process.Another potential source of hidden operating expenses is the planning of total inventory limits, which includes raw materials, work in progress, and purchased finished goods. As investigations have been done to define an integrated supply chain transportation strategy by maintaining the data that characterizes the supply chain trans portation requirements, there is significant potential to increase operating expenses.Another significant underestimated figure of operating expenses, which is directly affected by supply chain management activities, is the group of activities related to managing existing purchase orders or supplier contracts. These activities include processes such as the management of volume pricing, resolving problems and maintaining an exact picture of purchase orders or contracts.The factors mentioned above are linked the activities within the organization. Supply chain managers mostly more focused on managing cooperation with external partners which will partly form day-to-day tasks such as collecting, maintaining information to support delivery planning, and delivery requirements to warehouse data, transportation data and so on.Interest Expenses and Income TaxesInterest expenses and income taxes expect to be affected by non-operational activities which take into account only financial activ ities. Some researchers such as Fawcett, Ellram and Ogden, (2007) suggest that there is a gene linkage between supply chain management and accounting, international tax fair play and corporate finance. However, none of the models proposed so far effectively consider the close coupling of production decisions with cash flow movements, royalty fees and dividend repatriations.On the other hand, with a little bit of investigation we can see that if an organization carefully selects a location to run supply chain activities, it can potentially benefit from tax intensives and financial assistance for industry. Likewise Camerinelli, E. (2009) stated that supply chain decisions which are related the choices such as new machinery and equipment, inventory on goods in transit and raw materials used in manufacturing can also affect excise tax exemption.The Impact of Supply Chain Management on the Balance SheetHaving seen how the quality of supply chain practices can positively or negatively af fect the chief(prenominal) elements of income statement, we can now look at how supply chain management impacts on the other key report used by the financial community, the balance