LOGISTICS & OPERATIONS MANAGEMENT 3 - Essay Example

LOGISTICS & OPERATIONS MANAGEMENT 3 s want products available in the right sizes, at the right time and in perfect condition. This is possible if three key decisions are coordinated, that is inventory, capacity, and delivery/scheduling. These three areas comprise the total process of logistics and a decision in one area may affect the other areas. The three areas under analysis represent interlinking circles because they depend upon each other and influenced by each other. Scheduling is concerned with the timing.

Operations scheduling is concerned with the specification in advance of the timing of occurrences within the system, arrivals to and departures from the system including arrivals to and departures from inventories within the system. Thus managers can consider the inventory management problem to be a part of operations scheduling problem. Conventionally managers take a narrower view of the delivery. The timing of activities may have a direct impact on resources and the level of service (Naylor, 2002).

The purpose of capacity management is the planning task, and the modification of capacity is the key problem area in system control. Capacity decisions will have a direct impact on system performance and on both resource utilization and customer service. It is important to note that organizations cannot operate without good capacity management. For instance, excess capacity gives rise to low resource productivity, while inadequate capacity means poor customer service. Decisions made in other areas have a direct impact the other area.

Inventory management is aimed to plan and facilitate the provision of effective customer service. For instance, organizations cannot exist without stocks of raw materials, work in progress or, where appropriate, output goods. The planning of inventory levels, the control of inventories and the maintenance of such stocks are crucial for production and successful performance. Inventory management requires considerable capital inflows, so there is a necessity to coordinate the benefits of inventories and high customer service against demand fluctuations (Slack, et al, 1995).

In general, three areas of concern is a part of an organization responsible for producing the goods and providing the services that it sells in the market. Some organizations produce physical items such as furniture, building materials or stationery, whilst others provide services such as medical care, banking facilities or retail sales outlets. In order to produce or provide these items to a required quality level, at an appropriate time and within acceptable financial constraints, organizations create a number of functions that are essential.

For instance, the case of Polarica's wild berries, operating on the European market, depicts interlinking circles and important of these circles. In order to meet new economic environment, "a simple heuristic model was constructed, from which it was concluded that additional volumes of frozen blueberries require more storage facilities and it was also recommended that the location should be based on load-distance analysis" (Levn, Segerstedt, 2003). If the company cannot increase it is storage capacity it will not be able to meet demand fluctuations and create competitive advantage.

Also, if the nature of demand and the location of major customers is forecast to change, then relocating manufacturing units and stocks is the decision that can lead to savings related to reduced distribution costs. Today, "the relevant time scope to consider demand and capacity is the product range cycle" Lehtonen, et al 1999).It is important to note that the impact of new technologies on logistics is crucial because if technological changes affect one area of logistics there is an urgent need to improve the other areas.

In this situation, three areas of logistics are concerned with the transformation process which takes inputs and converts them into outputs, together with the various support functions closely associated with this basic task.References1. Naylor J. Introduction to Operations Management, 2nd Edition Pearson Education, 2002.2. Lehtonen, Juha-Matti, Holmstrm, Jan, Slotte, Jonas. Constraints to quick response systems in the implosive industries. Supply Chain Management: An International Journal Mar 1999, 4 (1), pp. 51 - 57. 3.

Levn, Erik, Segerstedt, Anders. Polarica's wild berries: an example of a required storage capacity calculation and where to locate this inventory. Supply Chain Management: An International Journal. Jul 2004, 9 (3), pp. 213 - 218.4. Slack N., Chambers S., Harland K., Harrison L., Johnson R., Operations Management, Pitman, 1995.