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Operations and logistics management plays a very vital role in the operations of any company. The supply chain process of the company relies on the operations and logistics management from getting required raw materials, to the production process, up to its consumption.
The mission of the management is to ensure production of goods and services in the suitable quantity and quality and then distributing them at the required place at the right time. It further encompasses the systems of management and implementation for competent employment of personnel, inventory in-process and the company design to get the finished products.
Galloway et al (2000) describes operations management as that process that concerns itself with any activity of production, whether of service or manufacturing, private or public sector that is profit or non-profit making. It concerns itself with effective and efficient operations of the company. Alexander (2010) defines logistics management as that process between production stage to the consumption stage and how to plan, implement and control the flow and storage of products in these stages effectively and efficiently.
The supply chain is steps followed by a company to turn raw materials into a final and consumable product. The steps start from a plan to ascertain how the given service or good will meet the satisfactory needs of the consumers. It is followed by development stage which involves identifying the suppliers of raw materials and how to acquire the raw materials needed.
The other stage is the manufacturing stage where the products are manufactured and it also involves testing and packaging of the final product. It paves way for the final stage which is the delivery stage where the final products are delivered to the customer. There are also cases when the customers may not be satisfied with a product and they return the defective product and that is also part of chain supply stage.
Case Study: Coca-Cola Company
Coca-Cola is a beverage company with a workforce of over 100,000 people employed in its outlets all over the world. It is the world’s largest producer, distributor and marketer of beverages. It has over 400 million consumers throughout U.S, Africa, the Netherlands, Belgium, Great Britain and other countries. It has over 55,000 vehicles, vending machines, dispensers and over 2 million coolers. The company has been strategically located in almost every state hence having an edge over its competitors.
With the increased competition in the global market, Coca-Cola had to quickly and urgently respond to the customer’s needs to be able to penetrate to the major markets. This required them to be more innovative and possess the correct technology resources and capabilities.
According to Scully and Fawcett (1993), technology plays a vital role within the operation of global manufacturing. It increases the profit rates drastically and is also an added advantage in sustaining competition. In Coca-Cola Company, technology has been classified into human-ware, techno-ware and orga-ware.
Human-ware refers to the human labor that realizes the operation of the machinery in the industry. Techno-ware on the other hand is the machinery itself and the parts that make up the machines and orga-ware is the technology knowledge of handling the state of art machinery. Coca-Cola required changing its communication tactics which was largely done through emails in order to accommodate its large workforce.
It was agreed that the company’s culture had to be evolved to improve customer relations hence adopting a new technology by share point online that provided corporate intranet to address its needs for messaging. They have further adopted Microsoft online, Microsoft office live meeting and Microsoft exchange online.
These services have played a vital role in supply chain to communicate with its suppliers, distributors and end consumers. According to Upton and Jaikumar (2009) state of art machinery is now very vital in manufacturing companies for their flexibility and diverse accommodation of the products. They are able to produce high quality products at a very low cost; this technology process is very vital in the manufacturing stage.
Wild (2002) state that the ability to make productions to the satisfaction of a customer and still remain financially stable, is the determinant of venture success of a manufacturing company. This has been the sole goal of Coca-Cola. However, it has faced competition challenges from other beverage companies who are also penetrating the market at a very fast pace.
Inventory control is the process which ensures that the items are available to the customer and the inventory logistic actually aims at being a contributory factor to the profit of the company by servicing its market and financial needs. It further helps to achieve the purpose of optimization and meeting the three company targets namely Customer service, the inventory costs and the operating costs. The logistic inventory size is mainly determined by the means of transportation chosen and the delivery batch size.
The location of the company and its ability to reach to the customer location is one of the determining factors in inventory management. Coca-cola has managed to come up with a distribution strategy where they personally take their products to the customer’s location. Though a good strategy, Coca-Cola has had to invest more on its fleet of vehicles and personnel to achieve this.
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Inventory management also helps to identify a sudden demand reduction through sales and this can help to prevent stock outs or excesses. Coca-Cola tends to use the forecast-distribution to get the required inventory so as to meet the customer demand fluctuations.
The Logistics Operations Within A Company’s Supply Chain
Logistic network plays a vital role in the supply chain of a company. According to Ling (2003), a sophisticated and well-designed logistic network makes a possible quick response to a supply chain.
This quick response leads to a better forecast demand, reduction in cycle time and increased profits in supply chains. Distribution and logistics centers are the main links between the manufacturers, suppliers, distributors, retailers and the consumers. Coca-Cola Company has adopted a tool known as Supply Chain Operations Reference model to decrease its costs of production.
It has also improved its strategic competition among its competitors and this has helped in its increase of profits and revenues. A supply chain can slow down without proper logistic operation in place and supply chain is part of planning and implementation in the logistic operation and poor planning can lead to a break down in the supply chain.
Importance of Quality to a Company’s Competitive Advantage
Competitive advantage is the policy where a company is able to perform better than its competitor and quality is a vital determinant in competitive advantage. The quality of the product should therefore be sustainable, relevant and unique.
The product quality of the beverages produced by Coca-Cola is very unique and all attempts by its competitors to out-do it have been thwarted because Coca-cola measures every key product to meet the requirements of the company and customer expectations. The company has also been consistent in its quality production.
It has set up a governing body called The Coca-Cola management System that guides the quality and safety of the products. It aligns and integrates quality and business objectives with metrics that are used to monitor the company’s performance. It has also come up with a management tool for preventive integrating action to prevent product quality contamination. In the year 2007-2008, the company recorded a global index rating that was at 94.5 percent
It is therefore evident that operations and logistics management is very important and forms an integral part of any company. It aims at increasing the company’s profits and enhancing its business relations to achieve its mission. Failure of proper implementation of logistic operational management can lead to the collapse of a company. Qualified personnel, state of art machinery and quality products should be the key to any company in order to satisfy the large market.
Poor quality product will deter consumers from buying the product hence giving the competitor in the market an edge. Location of the company should be strategically placed to be near the location of the consumers. Technology process is also very vital and should not be disregarded and this has been the reason why Coca-Cola has maintained high profits through its operations and logistics management strategy.
Alexander, B. (2010) Humanitarian logistics: Modeling supply chain processes of humanitarian organizations. Germany, Die Deutsche Nationalbibliothek
Galloway, Les et al (2000) Operations management in context. London, A Division of Reed Educational and Professional Publishing Limited
Ling, L. (2003) Supply chain management: Concepts, techniques and practices enhancing value through collaboration. Singapore, World Scientific Publishing Co. Ltd
Scully, J and Fawcett, S (1993) Comparative logistics and production costs for global manufacturing strategy. International journal of operations and production management, 13(12), 62-78
Upton, D and Jaikumar, R (2009) The coordination of global manufacturing. Global commodity capacity. Web.
Wild, A. (2002) Best practice in inventory management. Great Britain, Elsevier Science Ltd