Logistics Management Assignment: Business Case Analysis of Unilever
Question
Task: Supply Chain Management (SCM) has a crucial role in facilitating the production, marketing, logistics and purchasing processes of an organization since it may focus on the management’s attempts to maintain or build competitiveness in changing environment. Case studies will be chosen on the method to explore contemporary issues and the reasons for SCM in the pharmaceutical manufacturing industry and logistics activities. It further tried to recommend solutions to mitigate those issues to increase the effectiveness of the pharmaceutical supply chains. Unpredictable lead time, no proper guideline or standards in custom for pharmaceutical product regulations, lack of temperature control in warehouses at custom, underutilization of human resources consuming, delaying duty waiver and other regulatory approval and guidelines without any grace period, technical knowledge gap of employees for R&D, and challenge from generic competitor products from other countries were identified as the major drawbacks in SCM process of pharmaceutical supply chains. Further, failure to identify correct raw materials suppliers, issue of Minimum Order Quantity (MOQ), buffer stock maintenance issues, no proper reverse logistics management procedures, shortage of approved vehicles for transportation, finding of trustworthy local packing materials suppliers, forecasting errors, and communication gap or language barrier of employees also slower the effectiveness of supply chains. According to the COVID-19 Pandemic, the global COVID-19 outbreak is leading to an acute and drastic shortage of essential supplies, including personal protective equipment, diagnostics, and clinical management. Take in your consideration the Responding to COVID-19 Supply Chain Risks—Insights from logistics and Supply Chain Management.
Logistics Management Assignment:
Choose an organization of your choice in pharmaceutical or other any industry and use it to support your explanations when answering the following tasks.
Task1.
T1.1. Critically examines the relationship between supply chain management (SCM), Logistics Management (LM), and organizational business objectives.
T1.2. Explain the importance of effective logistics and supply chain management in achieving organizational objectives.
T1.3. Explain the link between supply chain management and business functions in an organization.
T1.4. Discuss the key drivers for achieving an integrated Logistics strategy in an organization.
Task2
T2.1. Analyze the use information technology to optimize inbound/outbound logistics activities in an organization
T2.2. Evaluate the effectiveness of logistics strategies used by an organization to maintain effective customer relationship management
T2.3. Use information technology to create and maintain logistics strategies and to develop an organization’s relationship with its suppliers and customers
T2.4. Develop systems to maintain an organization’s relationship with its suppliers and customers with effective logistics strategy and planning
Task3.
T3.1. Evaluate the role of information technology in logistics and supply chain technology in COVID-19 era
T3.2. Assess how information technology could assist integration of different parts of the logistics and supply chain of an organization with COVID-19 risks
T3.3. Evaluate how information technology has contributed to the management of the logistics and supply chain of an organization which support effective digital transformation dealing with COVID-19 circumstances
T3.4. Assess the effectiveness of information technology in managing the logistics and supply chain of an organization and how IT technologies support achieving organizational goals
Task4.
T4.1. Verify and explain the role of logistics and procurement, inventory, and warehouse in supply chain management
T4.2. Explain the role of transportation and physical distribution in logistics activities and supply chain management in an organization
T4.3. Evaluate the impact of effective inventory and warehouse practices in an organization, using examples
T4.4. Discuss the factors that must be considered when improving logistics and procurement, inventory and warehouses practices in an organization
Task 5
T5.1. Establish a plan of a strategy to improve an organization’s logistics and supply chain
T5.2. Apply a plan to improve an organization’s Logistics strategy through all organizational levels and how to be aligned between them
T5.3. Assess how a logistics and supply chain improvement strategy will benefit overall business performance in an organization
T5.4. Explain how barriers will be overcome in an organization when implementing a logistics supply chain improvement strategy
Answer
Introduction
As per the research on logistics management assignment, business organizations across the globe function optimally due to the cohesion of various internal departments that are entailed within the system (Ketchen and Craighead 2020 p. 1335). Entities require and adapt specific systematic procedures to ensure the smooth functioning of services. Business entities whether it's a manufacturing plant or retail industry or any other industry, irrespective of the sectors concerned have to strike a balance between the supply inflow and the demand outflow to ensure uninterrupted flow of services of the organisation (Schönsleben, 2018). This is done through the use of various methodologies and techniques developed over the years and suited according to the scale of the business operations.
Background of the organisation
Unilever global is a British multinational consumer goods business entity that deals in several food, beauty, personal care and pet food products. It was established in 1929 by the merger of the Margarine Unie and Lever brothers. Presently, it owns over 400 brands and operates in around 190 countries (Unilever. 2021).
Overview of Logistics in businesses across sectors
As discussed above business entities need to strike a balance between the supply inflow and demand outflow to ensure smooth functioning of services. The objective of balance is achieved through various processes such as warehouse maintenance, inventory management, development of effective logistics and similar other processes. As evidenced by Kain and Verma (2018, p. 3811), logistics play an important role in ensuring the equivalence between the supply and demand chain of businesses across sectors.
Task 1
1. Critical analysis of the relationship between supply chain management (SCM), Logistics Management (LM), and organizational business objectives.
In terms of Unilever, the management of the supply chain amalgamates to services, goods, information, capital along with the objectives of the business. Hence, the objectives of Unilever being a significant conglomerate are to serve the globe with superior goods and services in which the supply chain management and logistics management works altogether.Logistics management is a part of SCM, which deals in the transportation and logistics of goods and services on the supply and demand sides of businesses (Tien et al., 2019). SCM in terms of Unilever has been performed by the major business by initiating the progress of raw materials importing and exporting amid the world. In the wider perspective, it includes the overall business operations and goals. The objectives of Unilever are to offer significant services and goods to their consumers via excellent management of logistics. The deliverance of goods by businesses such as Unilever depends on the LM and SCM along with the organizational goals of the business. The essence of SCM lies with the outlining, implementing, and effective storage of goods between in terms of Unilever, the initiation and final processes, however, LM essence can be described with ensuring the on-time delivery of products within the specified time limit (Armani, et al., 2020 p. 404). The functioning of both SCM and LM in sync with each other is significant to ensure equivalence in the demand and supply chain of businesses. Unilever which is an end to end product manufacturer and seller has to ensure that both services work coherently in sync with each other to meet its organizational agenda of enhanced sales and profitability.
Figure 1: Supply Chain Management
(Source : Armani, et al., 2020 p. 404)
2. Explanation of the significance of effective logistics and supply chain management in achieving organizational objectives
As has been discussed above SCM involves the management of the movement of goods including, raw materials, manufacturing processes and delivery of finished products. It is vital to note here that the coherent functioning of this chain is essential to manage all business processes effectively. Unilever is a product-based company, and to ensure fulfilment of its product demand in the market it has to keep its supply of raw materials and manufacturing processes functioning to mitigate chances of inventory shortage at retail outlets and on the demand side of its customers (Barczak et al., 2019 p. 815). To ensure this objective it has to develop an SCM management technique and keep innovating it to meet its rise in sales and changed business dynamics. With effective logistics and supply chain management in place, Unilever can get an overview of its operational costs and find ways to reduce them which can help to maximise its overall revenue. It can ensure replenishing of the inventories at warehouses on a timely basis, achieve better revenue per sale and optimize its delivery services.
3. Explanation of the link between supply chain management and business functions in an organization.
As mentioned by Liao and Wang (2018, p. 44), SCM is a vital part of any business entity irrespective of its sector of operation. The wide arena under the scrutiny of SCM starting from the initial phase to the end of on-time delivery to customers defines the complete module of a business organization. The lack of an effective SCM methodology in place can mean failure in inventory management, which could affect the sales of the company. Failure to provide timely replenishment of raw material products can hinder the manufacturing process and thus delay the whole process of inventory management and can subsequently lead to failure in meeting the prospective of consumer demands. For an organisation like Unilever SCM is the driver of its operations. An SCM methodology in Unileverensures that the orders of warehouses are met on time, raw material supply is adequate for continued production of goods, the old stock gets cleared on a regular basis, order quantity is decided after taking consideration of the demand in the market and the availability of previous inventory in the warehouse (Harrison et al., 2019). This helps it to optimize its whole value chain in relevance to the market demands. The decision-making process is smoothened and more credible due to its basis on quantifiable data.
4. Discussion on the key drivers for achieving an integrated Logistics strategy in an organization
As mentioned by Ishida (2020, p. 150), the key drivers to ensure integrated logistics management in an organization are storage and warehousing, packaging, inventory management, transport and information flow system. The manufacturers are required to work at their peak efficiency, to ensure unhindered supply irrespective of the market demand, however, the consumption speed of the product in the markets can vary and so, the surplus goods need to be stored in warehouses (Copacino, 2019). Since there is a time gap between the production of goods and their consumption, effective packaging needs to be ensured for maintaining the quality of the goods. Inventory management at optimal intervals ensures the right proportions of stock in the hold and regulates the flow of goods within the supply-demand chain. Transport and information flow systems work in cohesion with each other in relevance to the stock information and warehouse order needs.
Task 2
1. Analysis of the use of information technology to optimize inbound/outbound logistics activities in an organization
As opined by Langley et al.,(2020), Information technology used by Unilever in its SCM management has helped it to optimize its inbound and outbound logistics activities to optimal levels. The use of IT inUnilever’s SCM ensures better route planning, real-time tracking, and automates the entire inbound logistic process. Since not a single logistics partner can ensure delivery of varied raw materials at every geographical location, hence use of IT can ensure better third-party logistics management through analysis of Unilever’s historical data. The use of IT in Unilever allows tracking of the whole route of the inbound logistics service by the manufacturers and retailers and hence helps them in planning their productions and sales accordingly. Electronic proof of delivery is another added feature of this technology adaptation that enhances the authenticity and credibility of the whole logistics process.
Figure 2 : Components of SCM
(Source : Langley et al.,2020)
2. Evaluation of the effectiveness of logistics strategies used by an organization to maintain effective customer relationship management
SCM and CRM although seem two very different aspects on the surface, however, the two are co-dependent on each other and failure to meet the requirements at one end can hinder the processes at the other end. The use of CRM in SCM is meant to acquire, enhance, and retain customer relationships in an effective way (Goodarzian et al., 2021 p.7528). The integration of CRM into SCM provides the company with a better idea of its achievable objectives or goals. For instance, the company might want to enhance customer services or increase sales or efficiency, hence the clarity of the objective to be achieved is to be made at the initiating stage, of which CRM is a vital part because the consumer is at the serving end of the entire process to be carried out. Unilever incorporates the agenda of customer satisfaction through meeting product demands and subsequently its organisational agenda of enhanced sales by building better rapport with the customers. This is carried out through the use of effective logistics strategies to maintain good and timely services at the consumer end.
3. Analysis of the use of information technology to create and maintain logistics strategies and to develop an organization’s relationship with its suppliers and customers Information technology integration in SCM and CRM services adds value and effectiveness to the whole process, as, this allows for real-time data management, and tracking of logistics, with easy shipments (Gong et al., 2019 p.3459). The supply side of the organization needs a continuous supply of raw materials and the use of IT ensures that these demands are adequately met on time. It induces the factor of quantisation of data, thus providing a deeper insight into the warehouse processes. IT usage ensures buffer stock maintenance and plays a deciding role in the determination of Minimum order quantity, as per the relevant data of stock availability. The induction of IT incorporates various technological processes such as electronic data interchange, barcoding and scanner, stock keeping unit and data information management, RFID, route optimisation and last mail delivery tracking. Electronic data interchange allows the management of Unilever to effectively manage stocks at different warehouses and outlets. Barcoding and scanner facilities in Unileverhelps in the segregation of products in a categorised manner since Unilever deals in a range of products. Stock keeping unit and data information management are parts of inventory management processes, the route optimisation techniques help in reducing operational costs by choosing a better route for logistic movement as suited to the requirements of the product and quantity of transport. RFID systems in Unileverallow non-contact reading and are beneficial in manufacturing processes where barcodes are not applicable (Remko 2020, p. 350).
4. Developing systems to maintain an organization’s relationship with its suppliers and customers with effective logistics strategy and planning
The optimal functioning of a business entity is ensured through effective cohesion within various systems within an organisation. This relates to developing and constantly renovating the systems so created to meet the changing demands of the business environment. As it has been evident through the above discussions how an effective balance between the suppliers and customers is essential for optimal operations of a companysuch as Unilever, the role of logistics is vital in this process (Viet et al., 2018 p.70). Logistics ensures timely delivery of raw materials at the supply end and ensures good quality customer relations through enhancing service quality by timely delivery of goods and services. The SCM involves the use of third party logistics services hence a system has to be put in place for effective planning and strategizing logistics movement.
Figure 3 : Functioning of Inventory management
(Source : Viet et al., 2018 p.70))
Task 3
1. Evaluation of the role of information technology in logistics and supply chain technology in the COVID-19 era
Global shutdowns have impacted the SCM methodologies of every organisation worldwide. Earlier Unilever used to carry logistics and supply related services through dependency on manpower and software systems (Shabbir et al., 2019 p. 654). However, technology adoption has deepened during the pandemic era and has also proved its effectiveness in managing the entire cycle. During lockdowns availability of the workforce was reduced by several extents as employees preferred moving back to their native places, organisations faced the brunt of such scenarios. Demands of products have increased due to panic buying and buffer stocks were loosening, IT systems usagein Unilever helped provide suppliers with real-time logistic movement information and plan the relinquishing of their inventories accordingly. Transport services were impacted as there were restrictions imposed on movement, hence in this scenario buffer stock has to be used judiciously and the use of IT services helps strategize the options accordingly.
2. Assessing how information technology could assist the integration of different parts of the logistics and supply chain of an organization with COVID-19 risks Unilever being one of the colossal businesses globally the incorporation of information technology in the company in terms of logistics management generates the entire progress and improves its efficacies during the risks of Covid-19. As mentioned by Bilovodskaet al., (2018 p.11), storage and warehousing processes in Unilever need to be updated regularly to ensure their adequate replenishment as per the supply and demand perspective, this can be done effectively through the combined use of IT and workforce. Development of an effective packaging in Unilever has been designed to ensure the safe transportation of goods can be done through the use of IT. Lack of workforce during the Covid-19, increased the workloads of inventory management, hence the use of an automation process for this system, shall ease the process. Transport and information flow in Unilever had to be regulated in real-time to meet supply and demand needs during the pandemic.
3. Evaluation of how information technology has contributed to the management of the logistics and supply chain of an organization which have supported effective digital transformation in dealing with COVID-19 circumstances
Digital services were adopted at a fast pace during the pandemic era, by every business sector across the globe. The incorporation of technology into the systems of organisations automated the processes and enhanced their respective productivities thus adding up to the overall organisational productivity (Li, et al., 2020 p. 261). Unilever used digital technology as a tool to enrich its existing customer base and ensure the uninterrupted flow of products into the consumer's hands. Unilever tied up with various e-commerce platforms to clear its buffer stock, which has been lying unused due to the global shutdowns induced by the pandemic. Digital technology not only enriched the customer base of Unilever but also revolutionised the marketing strategies in use by it. Since Unilever is a global company hence, during the pandemic cargo, services between nations were restricted and timely updating of stocks seemed difficult hence, in such a scenario advance orders were made to keep additional buffer stocks for future needs. The determination of order quantity was made through data analysis of previous sale records by use of digital systems.As mentioned by Scott et al., (2018 p.176)Logistics and supply chain management processesin Unilever were automated and efficiently altered to align with the changing needs of the business dynamics during the covid-19 era.
4. Assessing the effectiveness of information technology in managing the logistics and supply chain of an organization and how IT technologies support the achievement organizational goals
As evidenced by Khan and Wisner (2019 p. 14) the use of IT technologies in logistics management and SCM ensures stock replenishment at the optimal time. It is essential to strike balance between the supply chain and product delivery on the demand side and this can be done by enhancing the processes in Unilever in terms of inventory management. Induction of technological processes in database management systems of warehouses, benefits in getting the right idea about the Minimum stock order, the quantity of buffer stock, and similar other information. The efficient functioning of SCM and LM in Unilever makes the entire processes of organisational systems smooth and effective, which is reflected in the rise of sales due to the meeting of equivalence between demand and supply side. Thus, it benefits in achieving organisational goals of enhanced sales and profitability.
Task 4
1. Verification and explanation of the role of logistics and procurement, inventory, and warehouse in supply chain management
Logistics are a part of SCM and their functioning is vital for carrying out several processes of the supply chain. The continuous supply of raw material to manufacturing plants is essential to ensure the availability of products and for maintaining the buffer stock, irrespective of the consumer demand trends. Similarly, the delivery of finished products to warehouses on a timely basis is significant for the updation of inventory and procurement of goods as per requirements and consumer demandsofUnilever. The failure to achieve this can misbalance the whole ecosystem of SCM, and it can be verified by the trends evident during the pandemic when stores were out of stock for goods due to the unavailability of logistics services. Inventory management processes revolve around logistics, for instance, if it is found that a certain product is out of stock or is available in limited quantity, an order needs to be placed. Subsequently, optimal inventory management ensures the security of market goals by aligning its stocks with the goals and also keeps finances in check by controlling the flow of stock.
2. Explanation of the role of transportation and physical distribution in logistics activities and supply chain management in an organization
In Unilever, just as Logistics is a part of SCM, similarly, transportation is a part of logistics and its significance is equated with the former comparison. Physical distribution is a comprehensive process and entails customer service, inventory control, packaging, processing and transportation of finished goods and raw materials. Both of the above two processes are parts of SCM which are being utilized in Unilever. Physical distribution and transportation have a broader perspective of the application and were parts of the marketing in Unilever mix primarily. However, due to Unilever’s extensive scope, they were defined and developed as a separate part of the SCM. Logistics was mainly centred on the handling of inbound services in Unilever however, with changing times the need to incorporate outbound services in alignment with the meeting of customer requirements and inclusion of aspects such as customer satisfaction led to the induction of physical distribution systems. It helps to align the entire logistics process in Unilever in terms of inbound and outbound activities of Unilever in accordance with the customer requirements and ensures effective SCM in Unilever.
3. Evaluation of the impact of effective inventory and warehouse practices in an organization, with examples
Unilever utilises perpetual and periodic methods of inventory management, and additionally, it also implements just in time inventory management models to ensure the availability of goods to consumers on time (Waters 2021). The implementation of JIT in Unilevermitigatesthe possibility of increased holding time of stock and consequent costs in the firm’s inventory management. Although the JIT model has several advantages in Unilever’stransport services that can be affected due to several factors beyond organizational control, hence warehousing of goods is also essential and it is ensured by the application of the perpetual and periodic modelin Unilever. This can be understood better with the help of an example for instance considering the variety of products sold by Unilever it has to warehouse its seasonal goods as per market conditions and to meet the demands of these products it has to ensure inventory is filled with buffer stock before the advent of seasonal demands, to gain enhanced sales.
4. Discussion of the factors that must be considered when improving logistics and procurement, inventory and warehouses practices in an organization
As evidenced by Saberi et al.,(2019, p. 2117)The various factors that are to be taken into considerationbyUnilever to improve logistics and warehousing practices are the use of efficient third party services in alignment with the transport and storage requirements of the goods, and an efficient information flow system to ensure that procurement of goods is being done on time. Thirdly, the updation of buffer stock or inventory in Unilevershould be done according to the local market requirements this enables the availability of goods at other locations whereUnileveris in demand, and thus minimises operational costs of storage and other facilities.
Task 5
1. Establishing a plan or a strategy to improve the organization’s logistics and supply chain
Unilever can consider the use of the Minimum order quantity model to ensure that the product is supplied to the retail outlets are in line with the respective market demands. Also, the use of FIFO and LIFO is an essential induction into the existing logistics model. The FIFO or First in First out ensures the old inventory is cleared first, which in turn helps to keep Unilever's inventory afresh. Whereas the Last in First out model ensures sale of items on a priority basis, in relevance to the time of their degradation period, this helps prevent rotting of food productsin the warehouses of Unilever. The implementation of this can help reduce losses for Unilevermade on the count of unused stocks and the supply side of the logistics chain.
Figure 4 :Techniques of Inventory management
(Source :Saberi et al., 2019, p. 2117 )
2. Applying the plan to improve the organization’s Logistics strategy through all organizational levels and how to be aligned between them
The implementation of the above planin Unilever can be made through the use of information systems and barcoding facilities. The use of information in Unilevercan ensure data analysis and market study to assimilate data about the demands of a geographic location and hence preparation of minimum order value accordingly. Similarly, FIFO and LIFO methods of logistics management can be made through encoding the goods uniquely to manage their inflow and outflow adequately. The various organization levelsin Unilever need to adapt their functions accordingly, marketing of goods should be focussed on areas with low sales and must be altered to meet the geographical requirements. The data of low sales can be garnered through the information systems implemented to manage logisticsin Unilever.
3. Assessing how the logistics and supply chain improvement strategy will benefit overall business performance in the organization
As mentioned by Ivanov and Das (2020, p. 100) effective management of SCM and LM can ensure a deeper insight into the current market trends of Unilever products, which can be segmented as per the product category. An analysis of the information systems and inventory data can help in Unileverin getting an overall view of the market trends which it can utilise to alter and adapt its marketing strategies. Secondly, in-depth data of route management and warehouse stock can help optimise its logistics and SCM services to make the availability of its products on the basis of priority in a geographical location. This can help it reduce its operational costs of Unileverand also mitigate the chances of products turning bad due to holding for a longer period of time. The effects of the implementation of this plan are going to reflect in the cash flow statements of Unilever.
4. Explanation of how barriers will be overcome in the organization on implementation of the logistics supply chain improvement strategy
As mentioned by Luckstead et al., (2021, p. 400) the major barriers faced by in Unileverin the management of SCM are mainly customer service management, controlling of operational costs, risk management, and maintaining supplier relationships. The functioning of all these in sync with each other is significant to maintain an optimal workflow within Unilever. The application of the above-described plan can help mitigate the operational failure that can be caused due to the above-mentioned barriers. Information systems provide real-time data to customers for tracking their delivery service hence improving CRM, the chances of controlling operational costs and risk management can be done through the use of route mapping, FIFO and LIFO methods effectivelyby utilizingin Unilever. Supplier relationships are to be maintained through opening more lines of communication and induction of transparent practices into the logistics management servicesofUnilever.
Conclusion
The above study entails a discussion on the significance of logistics services and supply chain management of business firms. SCM and LM are coherently linked with each other; their interdependence is reflected in the operational management of businesses. In the current changing dynamics of businesses, the SCM role is very vital. There has been the induction of several uncontrollable factors in businesses, over the past two years and has affected operations of global companies like Unilever severely. To meet the rising demands of goods in an uncertain and restricted supply-side scenario has proven to be an uphill task. Induction of technology into the SCM system quantises the complete process with induction of transparency factor in operations. Businesses need to adapt their methodologies to align with the changing business dynamics of the current scenario. Unilever is a global company and the complete process of its SCM needs to be optimised for mitigating losses and the impact of unknown factors reducing operational costs of the firm. Through analysis of various factors in the above study, a detailed study of the supply chain management and logistics in relevance to the operations of Unilever and the impact of Covid-19 on its SCM technique with recommendations has been discussed.
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