Course: Logistics Management (9543)
Semester: Autumn, 2021
ASSIGNMENT No. 1
Q. 1 What specific role does logistics play in supply chain operations?
Supply chain planning has become more complex than ever. To meet customer demands, business leaders must
appreciate the critical importance of one supply chain aspect, logistics management. Logistics is the part of the
supply chain involved in managing the forward and reverse flow and storage of goods, services, and related
information between the point of origin and the point of consumption to meet customers' requirements. Use of
advanced logistics, lean management, and optimization produce the most efficient, cost-effective, and
sustainable supply chains.
With its roots in the U.S. military practices of the 1940s and 1950s, logistics as a business concept and
academic discipline finally emerged in the early 1960s. Originally, logistics referred to the physical distribution
of resources. Over the following decades, businesses and academic scholarship recognized the importance of
supply chains on efficiency and profit margins.
By the end of the 20th century, logistics had been identified as an early “boundary-spanning” role, meaning that
someone engaged in logistics would often work with other departments to improve the functionality of an
organization in its entirety. A logistician could play a role in strategic planning, marketing, and accounting.
Over time, these duties of the logistician fell under the umbrella of the newer role of “supply chain manager.”
Currently, the Council of Supply Chain Management Professionals defines the field of logistics as just one
aspect of supply chain management. Supply chain management involves the planning and oversight of a variety
of elements surrounding supply and demand. Industry leaders focus on supply chain optimization and stay
engaged throughout the customer satisfaction process. They also uphold moral obligations and address supply
chain trends, such as ensuring sustainable sourcing and reducing carbon footprints. More specifically, logistics
in more narrow usage is the part of supply chain management that plans, executes, and monitors the flow of
goods and services.
Still, in many companies, roles in logistics, supply chain, operations, and manufacturing tend to overlap. They
have become, in casual usage, interchangeable now that they all have become subsumed into the larger division
of supply chain management.
Management and logistics coincide and are vital to any supply chain industry. Consider the success of wellknown companies with the most innovative and in-demand ideas—it would not be possible for them to deliver
on their promises without allocating sufficient time and resources toward supply chain planning and then
executing on these plans through core activities such as logistics.
Logistics management and planning require intricate problem-solving to get products from Point A to Point B
without disrupting participants throughout the end-to-end supply chain. Supply chain management can
participate in the early innovative phases before a product or service is launched. While product designers are
still at the drawing board, logistics managers can help determine how to best establish the flow of the supply
chain from suppliers to customers.
Simply put, supply chain management oversees a more extensive process, which includes determining the
specifications and type of materials needed for a product. Moreover, within that process, the logistics manager
determines how long it will take to move those materials and the most efficient way to ship them to the
manufacturer.
The essential role logistics plays in supply chain management is clear in the digital age. Businesses of all sizes
can scale logistics operations and generate massive growth through new technologies like artificial intelligence
and machine learning. Technological innovations assist logistics professionals who are often responsible for
work within the end-to-end supply chain: from the conception of a product to customer service after a product
has been delivered.
To operate a workflow in the age of same-day shipping, technology is indispensable. Under traditional logistics
management, for example, standalone company systems may be responsible for keeping track of day-to-day
activities within that organization. But no company in the supply chain is operating in a vacuum, and a
standalone system prevents visibility on shipments with third-party suppliers and shippers. Problems with
suppliers can go unresolved for weeks because there isn’t a tracking system in place to identify the issue in realtime.
In 21st-century logistics, the holistic supply-chain-management-oriented system uses technology to bridge the
gaps between nodes on the supply chain and make better decisions overall. Digitalization of logistics takes
operations management to new levels and allows for superior supply chain collaboration. Scanning and tracking
systems immediately identify problem areas that managers can resolve with fast and seamless communication
APIs. Workhouse wearables produce valuable data that help create a “touchless” supply chain, so employees
can optimize movement and limit the amount of lifting done on the job.
With the help of advanced logistics and optimization, supply chain managers carry a competitive advantage.
They have more time to focus on pressing issues and trends in the global supply chain, such as maintaining
ethical operations, cultivating a sustainable supply chain, and guaranteeing trade compliance.
Q. 2 What is meanty by value-added services? Why are these services considered essential in a customer
success program?
When customers purchase a product or a service, their interest is primarily on the core offering itself. However,
some companies and establishments have provided Value Added Services as a way to make their products and
services more enhancing and more marketable. These Value Added Services (VAS) are supplemental offering
but are usually ancillary to the core product or service. In most cases, the VAS are for free but in some cases,
they are provided at a very modest additional charge. Companies decide on the price of VAS according to how
it can improve their customers' rapport and also on its ability to increase income.
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Value Chain Analysis helped identify a firm's core competencies and distinguish those activities that drive
competitive advantage. The cost structure of an organisation can be subdivided into separate processes or
functions assuming that the cost drivers for each of these activities behave differently. Porter's strength was to
condense this activity based cost analysis into a generic template consisting of five primary activities and four
support activities. The nine activity groups are:
Primary
1.
Inbound
Activities:
logistics:
2.
Operations:
3.
Outbound
materials
machine
logistics:
handling,
operating,
order
warehousing,
assembly,
processing,
inventory
packaging,
warehousing,
control,
testing
transportation;
and
transportation
and
maintenance;
distribution;
4. Marketing and Sales: advertising, promotion, selling, pricing, channel management;
1. Identify the respective roles of VARs (Value Added Resellers) and 3M at the outset of the case.
2. Explain the benefits and drawbacks of working with VARs. Also, discuss why a company the size of 3M
would choose to work with VARs versus using DD (Direct Distribution).
3. Using the Excel spreadsheet, evaluate the variable costs of the current VAR distribution system and the
proposed DD system for fulfilling orders of Canadian hospitals. Assume that 3M currently compensates VARs
at a commission rate of 10 percent of the value of the products delivered. Make sure that all your costs in the
spreadsheet are annualized.
4. Identify and discuss other issues and costs that should be included in a detailed VAR versus DD analysis.
5. Based on your investigation and findings, what recommendations would you make to the Vice President of
3M Health Care Markets - continue to use VAR distribution, shift to DD, or something else? Explain your
recommendation and provide appropriate rationale for your decision.
Q. 3 Using Facebook user as an example, how could three different brands be perceived by different
consumers as being the best quality brand in the market?
Facebook has 1.56 billion daily active users . Let’s put that in perspective. That’s nearly 5X the population of
the United States, 20% of the world population … and still climbing.
So imagine the social influence achievable through Facebook in terms of your peer effects, ecommerce
business, referrals, customer relationships, reputation, brand awareness, and much more (let alone, in
combination with other social media platforms you market through).
It’s not only the sheer number of people but the amount of our attention Facebook owns. Globally, the average
user spends almost an hour per day on Facebook. Considering the average person sleeps eight hours a day,
that means about 7% of our waking hours is spent with our eyes glued to the social network.
Facebook Pages are the gateway for businesses to market to this holy grail of users. A Facebook Page is a
public presence similar to a personal profile, but allows fans to “like” the business, brand, celebrity,
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cause, or organization. Fans receive content updates from the Page on their News Feed, while the business is
able to raise brand awareness, deploy and track advertising, collect detailed audience insights, and chat with
users who seek customer service.
Instagram is well-known as a discovery engine for brands, but it can also drive sales and advocacy. Phones in
hand, Instagrammers might seek inspiration from people and brands in their feeds, direct message friends for
opinions while shopping, make purchases through Shopping on Instagram and post stories to show off what
they buy. So how can marketers harness those touchpoints?
With a focus on how Instagram drives action, Facebook IQ commissioned two studies to learn from people who
turn to the platform regularly. The research revealed that Instagram is a platform that goes beyond awareness
generation – it drives sales. In fact, 54% of people surveyed say that they made a purchase either in the moment
or after seeing a product or service on Instagram.
The research and findings in this article are based on two extensive research studies. First, Facebook
commissioned LRWTonic to conduct a qualitative study consisting of in-depth, hour-long interviews with 70
people aged 18 and older who used Instagram multiple times a day across nine countries (Australia, Brazil,
Canada, Germany, France, Japan, Korea, United Kingdom, United States). That qualitative data helped inform a
quantitative study commissioned by Facebook from Ipsos, administered as a survey of 21,000 people aged 1364 who used Instagram at least once a week across 13 countries (Argentina, Australia, Brazil, Canada,
Germany, France, India, Italy, Japan, Korea, Turkey, United Kingdom, United States). Survey response styles
might vary across countries due to cultural differences, but scale anchors remained fixed within each country.
For example, Japan respondents may tend to answer questions more conservatively than respondents in Brazil.
Simply by being on Instagram, brands can make a positive impression on potential shoppers. People surveyed
say that they perceive brands on Instagram as popular (78%), creative (77%), entertaining (76%) and relevant
(74%). Those top associations stayed relatively consistent across the globe, with a few differences, such as
Japan, where people put informative as their second most-perceived quality.
Instagram plays a key role at every step of the purchase process. People use the platform to discover what's
trending, research products before buying and decide whether or not to make a purchase – and each of these
moments offer touchpoints on Instagram where marketers can drive action.
Brand-led communications can have a particularly strong impact on people's shopping journeys. In fact, when
we asked people how brand content can help them on Instagram, 42% said that it helps with discovering
products or services, and 44% said that it can help them find new information about a product or service.
Additionally, 41% of people surveyed said that a brand's content helps them research the product or service.
People interviewed also expressed a desire to hear from brands in their own voices.
The people we surveyed said they find product information in a number of ways on Instagram. For example,
Joy, a 44-year-old woman in the US, clicks on the "Learn More" button to be taken to the brand's website, while
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Lauren, a 29-year-old woman in Canada, reads comments on brand posts when looking for product reviews.
Sometimes people use Instagram like a shop window, like Julia, a 20-year-old woman in Brazil, who looks at
the different ways people wear their clothes, then checks the hashtags for more brand information. Instagram
allows marketers to connect with customers in an immersive way, making shopping actionable and facilitating
brand communications throughout the consumer journey.
Q. 4 What advantage does DRP have over a fair share method of inventory deployment?
The advantages of distribution requirements planning (DRP) pertain to the following:

DRP always connects to the current inventory and forecasts of field demand to manufacturing’s MPS and
MRP. DRP allows for a fully integrated system and a continuous flow of information throughout the
network. This pushes for a much more efficient and adequate production process/flow that ultimately cut
costs and waste within a manufacturing operation.

DRP is also accurately able to anticipate future requirements in the field. This enables for decreased
inventory and costs within an operation and ultimately increases the organization’s profit. Anticipation of
future requirements is by far one of the most beneficial aspects pertaining to distribution requirements
planning (DRP).

DRP matches material supply to demand, once again ultimately matching inventory to the customer service
requirements and cutting costs within an operation. DRP also pushes for faster decision making, utilization
of demand forecasting, planning initiation accuracy, and enhances overall customer service.
Utilizing DRP within a manufacturing operation is absolutely essential for manufacturing facilities that are
seeking to increase overall effectiveness, utilization, cut costs, and increase profits. A software that can aid with
effective implementation and utilization of DRP is PlanetTogether’s Advanced Planning and Scheduling (APS)
Software. PlanetTogether’s Advanced Planning and Scheduling (APS) Software offers thorough insight into a
manufacturing operation and how to improve the production process as a whole. APS has become a necessity
for many operations around the globe and operations are reaping the benefits and maintaining a competitive
edge within an operation.
Advanced Planning and Scheduling Software
Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing
operations due to customer demand for increased product mix and fast delivery combined with downward cost
pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack
planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners
save time while providing greater agility in updating ever-changing priorities, production schedules, and
inventory plans.

Create optimized schedules balancing production efficiency and delivery performance

Maximize output on bottleneck resources to increase revenue
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
Synchronize supply with demand to reduce inventories

Provide company-wide visibility to capacity

Enable scenario data-driven decision making
Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations
to the next level of production efficiency, taking advantage of the operational data you already have in your
ERP.
Q. 5 Discuss and illustrate the economics justification for establishing a warehouse.
The reverse logistics process entails the movement of goods from the point of consumption back to the point of
origin for the purpose of either recapturing value or proper disposal of wastes.
Optimization of the reverse logistics process in the warehouse aims to minimize the cost and time associated
with processing returned goods, reduce the inventory levels of returned products, decrease the disposal time of
the products, and maximize customer satisfaction.
When done successfully, this can lead to more loyal customers, increased sales, and a possible competitive edge
in the marketplace.
A) Dedicate an Area for Returns and Categorize the Items As They Arrive
The first step when optimizing your reverse logistics process is to have an area dedicated to storing returned
items. If you want to handle returns efficiently, you might want to consider expanding or optimizing your
warehouse space. Research from CBRE estimates that the reverse logistics process will require an additional
15% to 20% over the space needed for traditional processes due to the unpredictable volume of returned items.
Once you have a specialized area for returns, it’s important to sort them by category. You can use the three-bin
system – restock, discard, and return to supplier – to keep your stocks organized and ensure that each item is
routed to its appropriate destination.
B) Determine Your KPIs to Evaluate Your Performance
A key performance indicator (KPI) is a tool to help you measure the success of your warehouse optimization
initiatives. The following KPIs will allow you to closely monitor your reverse logistics process and determine
how to achieve a cost-effective operation.
1. Return Rate
The is the rate at which sold items are being returned, and it is most effectively used when the items are
segmented by reason for return.
By this method, warehouse managers can analyze the causes for high return rates according to the given reason
for return. For instance, when there is a high return rate due to incorrect products sent to customers, this could
indicate problems in the picking process of the warehouse.
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2. Cost Per Return or Exchange
There are several costs that are involved in the returns process, including inspection, sorting, and reverse pickup. This KPI will help determine how much is spent per returned or exchanged item.
3. No Fault Found Rate
No fault found rate is a KPI used to determine the percentage of returned items that have no defects. These
items are easier to put back in the inventory and sell as unboxed or “good as new” items.
4. Total Cost of Repair or Refurbishment
Another KPI that should be tracked in order to optimize the reverse logistics process is the cost of repair or
refurbishment for each returned product.
If you find that the costs are high for this metric, this means that you have to find alternative methods to reduce
the costs for repair and refurbishment.
5. Scrap Rate
This is the percentage of returned products that need to be disposed of or used as scrap. The scrap rate needs to
be kept to a minimum as this can be a source of high costs to the company.
C) Establish a Strict Policy for Return
Customer returns are almost inevitable, but a strict policy for return can potentially alleviate the amount of
unpredictable returns. Given this, it’s important for the clients of warehouses and distribution centers to
establish a strict return policy for customers so as to effect more control over the reverse logistics process.
These policies could include charging additional costs for collecting returned items or a shorter period of
accepting returns.
A strict return policy not only indicates confidence in the supplier but also helps reduce the amount of returns in
warehouses. It also increases the likelihood of the item reaching the warehouse in a good condition.
D) Consider Adopting Warehouse Mobility Solutions and Wearable Warehouse Technology
Technology is a key component when optimizing warehouse processes. And when it comes to the reverse
logistics process, the use of warehouse mobility solutions and wearables might be the most appropriate solution.
The use of handheld scanners, for instance, will allow warehouse workers to save time and energy over
manually checking each returned item. At the same time, this warehouse technology decreases the probability
of human error.
Furthermore, the adoption of wearables, particularly voice headsets, enables hands-free communication. Having
two free hands allows warehouse workers to carefully check and identify the condition of each returned item as
well as potentially improving warehouse safety.
The reverse logistics process presents a constant challenge for the warehouse industry, but it also creates a great
opportunity to obtain a competitive advantage. Successful management of this process can maximize revenues,
reduce costs, increase customer satisfaction, and help you stay ahead of the competition. We hope these
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practices will help you streamline your reverse logistics process and enable you to manage returns effectively.
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