Answers to Contemporary Logistics

1)   Explain the benefits and disadvantages for outsourcing supply logistics operations and management to 3PLs.
2)    Which logistical functions are most commonly outsourced to 3PLs and why? Give examples.
3)    Explain ERP and the advantages of ERP systems. What are the benefits of ERPs in talking to other SW applications?
4)    Explain how RFID tags are used to reduce shrinkage. What are the benefits and disadvantages in using RFID for monitoring the movement of supply chain management goods throughout the supply chain?
5)    Discuss reverse logistics including its definition and its process flow.
6)    How does reverse logistics relate to a company being socially responsible and how is reverse logistics related to service recovery? 
7)    What is the relationship between demand management, order management and customer service? 
8)    In looking at demand management explain the difference in independent demand, dependent demand and derived demand. Explain how CRM (Customer Relationship Management) systems are related to demand management and how can they be used in demand management? 
9)    Define and distinguish between possession, form, time, and place utility. Give a “real world” example for each one.
10)  In the readings, Flint and Gammelgaard shared that creating superior logistics service quality involved managing at least nine service-related elements that pertain to either order placement or order receipt. Choose four of the nine listed and explain why they are important and how service quality can be negatively impacted if the element went lacking.
Bonus: 5 points.
Why is supplier collaboration and at times systems integration beneficial in building supplier relationships? In our readings, Sheth and Sharma shared examples of the benefits of supplier relationships with Eastman Kodak, Ford Motor Company, Levi Strauss, DuPont, McKesson, and Bose Corporation. Choose one of the examples that was shared and explain how logistical saving was achieved by supplier relationships and why you think this was effective.

Answer 1.

3PL Companies are Third Party Logistics companies employed for processes of warehousing, inventory management, transportation and the host of other value-added services (Lieb & Kendrick, 2002). The key benefits of such actions are as follows; 
  • 3PL providers generally contain a vast network which typically are more advantageous than the in house supply chains and post outsourcing the company can leverage on each step of the supply chain in most cost effective and efficient way
  • Outsourcing helps the company in focusing more on its core business rather spending resources in getting logistics sorted etc 
  • Outsourcing the logistics and management to 3PLs helps in saving effective time and provides convenience 
  • Outsourcing helps in gaining industry expertise and also in achieving scalability and the flexibility 
  • Lastly, continuous optimization is achieved once logistics and specific management functions are outsourced 
The key disadvantages of such outsourcing are as follows; 
  • The loss of direct control over one’s logistic chain and depending on the 3PL operations
  • Convenience comes at a price, therefore, a company can safe manpower and time in outsourcing its logistics management, but it is a costly affair 
  • Risk of loss of reputation
  • Choosing the wrong 3PL partner can prove to be detrimental for the company 

Answer 2.

The main functions for which companies use 3PL are for – transportation functions, warehousing functions, global services, information technology solutions etc. 
Namely, in the case of transportation, 3PLs help companies by providing solutions to – transportations outsourced to that of asset based carriers; management of private fleets; services of small packaging and big boxes; transportation solutions outsourced to brokers which are non asset based; consolidation services; improvement of services and management of transportation costs; bill payments of freight and auditing; reverse logistics, green logistics and the host of sustainability services. Similarly, examples of warehousing management when outsourced consist of the following examples – basic functions of warehousing, fulfilment of orders, processing of returns, cross docking, recruitment and management of labours etc (Lieb & Lieb, 2010). 

Answer 3.

ERP or Enterprise Resource Planning is an integrated framework of management of core business processes, conducted in real time and mediated by technology and software (Harwood, 2017). The main advantages of ERP lies in – complete visibility of all the key business processes; automatic as well as coherent management of work flow; unified reporting system done in real time and connected to every business process; business intelligence functionalities provide overall strategic insights into the problem areas; e-commerce integration helps in live tracking and processing; customization is possible as per the nature of business operations; manpower can be focused on doing core businesses and helps in an improved reporting, mobility and streamlining of processes. 
    More than being a benefit, ERP’s connectivity to other SW acts as a need and depends on the philosophy of the company. If an integrated and pervasive ERP is present in the system of the company, then the level of talking to other SWs is minimal and can be limited to mere downloading and summarizing. Manual entry of data should be avoided as that can result in unintentional errors. Having an ERP makes the data very fast, less creation of errors and business running becomes more nimble and flexible. 

Answer 4.

Shrinkage refers to the loss of inventory (physical) through theft or inadequate management of inventory information. RFID helps in real time tracking of all items under it, and thus helps in preventing shrinkage as real time, automatic information reaches the company the moment any inventory item is moved from its place (Attaran, 2007). 
    The main advantages of RFID are as follows;
  • RFID tags are easily installable, and are small and hence can be used to track the smallest of goods 
  • RFID tags cannot be easily replicated and hence is more secure 
  • RFID enables the supply chain management of the company in maintaining real time updates and also facilitates the transportation and logistics of products 
  • RFID tags reduces theft, shop lifting and mis-placement of inventories 
The key disadvantages of RFID are as follows;
  • It is a very costly affair to install RFID system in an organization operations
  • When tags are installed in metal / liquid products, reading becomes a problem as these items reflect the radio waves 
  • Interference occurs when forklifts and walkie-talkies are operated 
  • The frequencies of RFID are not globally standardized which makes it difficult for international shipping and other organizations to be aware of individual country operations 
  • It is an invasive technology 

Answer 5.

Reverse logistics is defined as the process of movement of goods from their final destinations for value addition or disposal and includes remanufacturing as well as refurbishing activities. The process flow of reverse logistics starts from obtaining the product from its final destination, then reusing it, repairing it and finally remanufacturing it (Chaudhuri, Mohanty, & Singh, 2013). 

Answer 6.

Reverse logistics is about refurbishing and remanufacturing and deals with up-cycling of end products, which helps in lowering of wastage and carbon footprint, thereby making the company more environmentally and socially responsible and consist of greener operations. 
    Service recovery in the form of warranty recovery, repairing, value recovery, product recalls, redistribution, refurbishment, returns of product/service contracts and end of the life recycling occurs (Cousins, Lawson, & Squire, 2006). 

Answer 7.

Demand management is the process by which the organization conducts environment scanning and forecasts the potential demands and thereby undertakes actions by which such demand can be managed. Therefore, demand management is about determining what the customer wants. Order management occurs when the customer has already placed the order, and now the organization is undertaking actions by which the customer obtains the product whose order has been placed. Lastly, customer service is the act of delivering the product to the customer and taking care of servicing / maintenance or after sales issues if they arise (Chase, 2016). 

Answer 8.

Independent demand is the demand for finished products. Dependent demand is the demand for component parts or the subassemblies. Derived demand is the demand for a specific service or product which is a consequence of a specific demand for something else. 
    CRM is linked to demand management, as it is an integral part of the latter. Demand management is conducted by a company through customer order management and supplier management and finally customer delivery (Boyer & Verma, 2009). CRM helps in demand management in obtaining information about such customers, conducting customizations if required, delivery of the product / service to the customers and finally after sales service. 

Answer 9.

Possession utility refers to the usefulness which a customer gains from possessing that product. Eg – credit cards 
Form utility refers to the product exists in the form which can be used by the customers and is valuable to him. Eg- Pizza 
Time utility refers to possessing the products when it is required by the customers. Eg – Movie tickets 
Place utility refers to possessing the products in places where they are needed by the customers. Eg – food items in a supermarket chain 

Answer 10.

The four specific service related elements chosen for superior logistics quality of service are – information quality, order accuracy, order quality and order timeliness (Mentzer, Myers, & Stank, 2007). These aspects are chosen as – if information quality is wrong or defective, then the order produced would not be as per the choice of the customer; order accuracy ensures that the right customizations pertains to the right order; order quality depicts the quality of the server product/ service and lastly timeliness is another important aspect which makes the process complete. Hence, as a result of this, a prospective customer obtains the right item, right customizations, high quality and timely delivery.

Bonus Answer 11.

Supplier collaboration and integration are beneficial, as such helps in increasing the volume of sales from downstream buyers, increase in the number of referrals, lowering of the operational costs, new process and products innovations, risk sharing and cost sharing, improved efficiency and effectiveness, growth of markets and lastly, increase in the market shares. 
    Supplier collaboration results in the joint development of specific capabilities for both the market as well as the supplier in order to reduce the costs, improvements of processes and further innovations of products/ services and this has what exactly happened in the case of Levi Strauss, the iconic denim-wear manufacturer. Levi’s started the program “race to the top” for creating sustainable supply chains and it entered a partnership with World Bank, to rewards its suppliers by providing low cost financing options when the suppliers improve their corporate responsibility and sustainability. This benefits both the partners as suppliers get access to vast raw materials and Levis produces sustainable, greener and low cost products (Rao, 2015).

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Attaran, M. (2007). RFID: An enabler of supply chain operations. Supply Chain Management - An International Journal , 249-257.
Boyer, K., & Verma, R. (2009). Operations & Supply Chain Management for the 21st Century. US: Cengage Learning.
Chase, W. (2016). Next Generation Demand Management. US: John Wiley & Sons.
Chaudhuri, A., Mohanty, B., & Singh, K. (2013). Supply Chain Risk Assessment During New Product Development - A Group Decision Making Approach Using Numeric and Linguistic Data. International Journal of Production Research , 2790 - 2804.
Cousins, P., Lawson, B., & Squire, B. (2006). Supply Chain Management: Theory and Practice - the emergence of an academic discipline. International Journal of Operations & Production Management , 697-702.
Harwood, S. (2017). ERP - The Implementation Cycle. US: Routledge.
Lieb, K., & Lieb, R. (2010). Environmental Sustainability in the third party logistics. International Journal of Physical Distribution & Logistics Management , 40 (7), 524 - 533.
Lieb, R., & Kendrick, S. (2002). The use of third party logistics services by large american manufacturers- the 2002 survey. Supply Chain Forum : An International Journal , 3 (2), 2 - 10.
Mentzer, T., Myers, B., & Stank, P. (2007). Handbook of Global Supply Chain Management. US: SAGE.
Rao, L. (2015). What Surprising Thing Do Levi’s and Patagonia Have in Common? US: GT Nexus.

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