Logistics and Procurement Chapter 2

MBA 571

Assignment 2

Q.3 Why are customer relationship operations are typically more erratic than manufacturing support or procurement operations

Customer or market relationship operations are typically more erratic because they are initiated by the customer, whose behavior cannot be controlled by the firm. It involves customer expectation, satisfaction, demand and perception which a firm don’t have as much control over comparing to that of manufacture and procurement operations.  Customer relationship operation also involves uncertainty due to erratic demands and random ordering from customer which is not typical in terms of manufacturing support or procurement operations.

Manufacturing and procurement operations on the other hand, are initiated by the firm and considered to be within the firm’s span of control. It involves maintaining logistics, implantation of work in process, inventory, scheduling, timely availability of materials, components, etc as these things flow between stages of manufacturing. It basically involves inbound activities of a firm which provides opportunity of for specialization and efficiency. However, better communications between the logistics organization and customers can reduce the uncertainty and erratic nature of market-distribution operations.

Q4Describe the logistics value proposition. Be specific regarding specific customer accommodation and cost.

Essentially the focus of logistic value proposition is to achieve customer satisfaction at the lowest total cost, thus creating value. Logistical value proposition can be described as a cost framework that aims to match operating competency and commitment to meet the individual of selected group of customers’ expectation and requirement. An ideal logistical network must have high customer response with low operational variance/cost and minimum inventory commitment. However these combination will vary depending on different groups. A well designed and operated logistical system should help firm to achieve competitive advantage while satisfying customer at a lower cost.

Q5 Describe fundamental similarities and differences between procurement, manufacturing and customer relationship management performance cycle as they relate to logistical control.

Procurement performance cycle involves of numerous activities that maintain the flow of materials, component or finished goods into the manufacturing or distribution facility. The scope of the procurement activities are limited. Although similar to customer order processing cycle, shipment are generally larger and cycles often require much more time. Maintaining raw materials inventory is sometimes less expensive relative to finished goods, since time of delivery and material security is often less sensitive issues into the facility than out to the customer. Another difference is that the number of suppliers of a firm is generally less than number of customers making procurement cycle more direct.