Logistics Management Essay For Philips Electronics Singapore Pte. Ltd.

Introduction Outline the background and purpose of this report (about 100 words) and rovide key information about the selected organization . 
The Interfaces Determine the areas in which logistics and three core functional areas. namely production, marketing, accounting and finance of the selected organization might interface. Apply logistical theories and concepts. Diagrams are permitted to help explain concepts . 
Order Cycle Analyze the effectiveness and efficiency of current order processing system of the selected organization and Recommend improvement by applying logistical theories and concepts. Diagrams are permitted to help explain concepts . 

the effectiveness and efficiency of current inv nt anagement &give of the selected organization and improvement by management theories and concepts. Diagrams are permitted to help explain concepts

The Interface

This business report is compiled to study the logistics department of Philips Electronics Singapore Pts. Ltd., how this department interfaces with various other core functions of the company. The report will cover the logistics management process of the company and further analysing them to identify improvement areas.

Logistics management in a company is a process that involves planning, implementing, controlling the flow and storage of products and services from the point of origin to the customer. There are a few reasons to measure logistics, one is for reduction in operating cost, for revenue growth and for enhancing the shareholder value. Analysis of the operating cost helps to control expenses and identify areas of improvement in asset management, Service improvement in logistics activities helps in retaining valuable customers and logistics performance is directly linked to the shareholder investments and market value of the firm.

Philips Electronics Singapore Pte. Ltd. manufactures electronic products which include sound and vision products, personal care products, domestic appliances, child care products, lighting equipment’s, healthcare products and accessories. The company was incorporated in 1951 and was earlier known as Philips Consumer Communications Asia Pacific Pte. Ltd. As a manufacturer, the goals of Philips Electronics Singapore are also to continuously grow and attain a competitive edge by continuously delivering innovative products while minimizing the cost (Philips Team, 2017).

Logistics includes a wide range of areas and interlinked tasks. Money invested in an organization supply chain function affects almost every department of the organization. This can be said in terms of the process flow and the tasks linkage with one or the other department, which also increases the interdepartmental coordination. An internal functional integration is important so as to produce and deliver as per customer demands. Before the concept of Integrated Logistics, the companies considered production and marketing as the core functions and all others as support functions. But, with this concept coming in, the interface increased and few of the responsibilities gets co-managed by production, marketing and logistics departments (Tseng & Yue, 2005).

Interface with the shippers at warehouse happens when product has to reach to the customers, an interface with the finance and accounts happens to bill payments, similarly with the customer support function happens to order processing status. Below is the description of ways how the logistics department interfaces with the core functions of Philips Electronics.

Saving costs from one or the other way in supply chain, like Kaizen, implementation in Philips, could explore reaching out to the previously unattainable markets, which increases the opportunity to grow their sales and increase the customers.

Business process management has a wide focus on managing relationships, wherein it measures its success in terms of business transactions with the customers through order fulfillments. Thus, raising an awareness about customer retention. Its economic theory, means that, to have a cost effective method, it is always better to have multiple transactions with the same customer rather than obtaining a new customer.

Accounting plays a very important role in supply chain function, could be in terms of budgeting, contract negotiations, freight bill audits or checking of billing errors, contracts with carriers, management of shipments where service failures are included, etc. For completion of all these tasks, there always occurs an interface of finance and accounts with logistics function. The Finance Controller also plays a vital role in costs involved in logistics department.

Sales and Marketing

The production of required product plays a vital role with logistics. Production covers the plant activities, material manipulations, quality control which includes having almost no defects while producing the product, and maintenance of machines (Bowman, 2000). The logistics function deals with providing the required material from suppliers on time, for production department to function properly and once the product is ready, the logistics transfers the product to warehouse and then to the customer. The logistics department also plans and manages the inventory to according enable production to function without any delays.

                                           

The order cycle management refers to various steps an organization takes to fulfil a customer's order which starts from receiving the order until it gets delivered to the customer.

The company thrives to achieve perfect order metrics which is to deliver the complete and undamaged order on time with complete paperwork. This perfect order metrics help to measure the efficiency of order fulfilment process (Oracle, 2013).  

The below chart shows the general order cycle management flow step by step at Philips.

                                      

As a Logistics Manager at Philips, some challenges identified in the order cycle process are mostly in the planning part, like demand and inventory planning, logistics planning. Hence, the planning needs to be made more robust so as to improve the efficiency and effectiveness of this process (Horning & McCann, 2003).

Demand planning can be dealt with forming a better interface with the marketing function to understand in advance what the demand for a product might occur in near future. Inventory planning can be made better have a better know how about the stocks and increasing visibility once the order is placed so that backorders and delays gets prevented, and logistics planning needs to be done simultaneously while the products are being prepared, to do all pre-work about shipping time, documentation, precautions to be taken for careful delivery of product without causing any damages.

One recommendation is to have a robust automated ERP in place, like SAP, which would drastically improve the interdepartmental coordination and help in better planning. All manual errors would completely get eliminated, resulting in a scheduled alignment and delivery of process and products. This will significantly improve the effectiveness and efficiency. This is a long term improvement method as the technology implementation would take around a year to start working full-fledged (Sain and Company, 2014).

Considering the above mentioned factors, certain immediate actions can be taken which does not involve huge investments and make the most out of the systems already in place.

Inventory classification for rapid handling - Grouping of inventory on the basis of fast moving and slow moving items. This will give a better visibility to the stock levels and also cut down the time taken to process and fulfil the orders. This also saves the labour cost in the warehouse.

Finance and Accounts

System integration to increase visibility of order fulfilment - For a quick order fulfilment, a better visibility is required of demand forecasting, sales, inventory and logistics. All this requires an integration between sales order management system and the inventory and logistics system. Until the SAP gets implemented, the functional coordination and integration should be improved by using the current ERP system. This particular integration would provide better reporting for analysis and would also help with decision making.

Process Automation - Until the SAP implementation happens, all processes can be automated, for example, a process can be set up to ensure the details of inventory gets entered into the system as soon as the inventory movements are done in and out the warehouse. This would help provide a more accurate data for future orders (Ozalp, 2010).  

Philips has a constantly changing product inventories, and hence the company keeps struggling to increase its product visibility. Workers at Philips manufacturing and distribution centers scan the product barcodes manually using a barcode reader to get retrieve inventory details. These details were then updated in the ERP system. As the process is manual, it leads to errors and discrepancies. These manual processes of scanning, packaging, stacking, etc. are prone to errors and very time consuming. The discrepancies lead to process inefficiency and the employees of the customer support department had no clarity how to respond to the changing requests and track deliveries, they had no clear understanding about the inventory status, the order status or if it is out for delivery then where has it reached. Hence the performance of the customer support function was also getting hampered due to the interlinked tasks.

Inventory management is one of the areas where Philips need to improve on, to get high volume integrated circuits which would enable them to quickly revert to the customer demands, eliminate errors and minimize wastes.

It is very important for the company to improve the efficiency and enhance the customer service so as to gain confidence with their customers and sustain the further business with them. Keeping the goals in mind, it is crucial to streamline information management processes like capturing of inventory data, both at the production facility and at the logistics facility, to speed up the inventory management processes and increase the accuracy of its data, and update the ERP system accurately (Li, 2014).  

To achieve the above mentioned analysis, a better system is required which has state-of-the-art real-time inventory tracking. This on demand business concept helps to integrate end-to-end processes across the business along with the key suppliers, customers and stakeholders. As Philips has its manufacturing and logistics facilities at various geographical locations, it is a lot more important to have an integrated system that can assist the employees to work efficiently without errors. A real-time connection can be leveraged between production sites and the distribution facilities, giving a clearer picture of order and inventory status.

• This will improve customer service through enhancing delivery reliability and will bring a reduction in cycle time by converting logistics processes into real-time management capabilities (Witt, 2006).
• Palletisation process would be streamlined, which would also reduce the cycle time and improve the response rate.
• Inventory sorting and tracking turnaround time will drastically reduce through the use of automated system.
• Real-time inventory, stock and location management would result in space optimization and also help to plan the shipments better (Mukharji, Israelit, & Faelli, 2011).

A real-time system holds significant benefits for Philips inventory management. It would automatically track the order movement from production site to the distribution centre. The manual scanning process completely gets eliminated leading to saving time due to no cross checking and repackaging interventions. The product can be tracked at each and every step from the time it leaves the production site and gets delivered at the distribution centre, leading to streamlined order and inventory management process as well as improved performance of customer support employees.

Conclusion:

Services and products of a company are the main factors that differentiate that company from the others in the market and that differentiating factor makes them a winner among the competitors. For many of these companies the differentiating factor is the logistics management of that company. For attaining excellence in logistics management, the companies need to ensure that the critical supply chain processes are aligned with business objectives and strategies. This alignment also extends to the internal functions as marketing, production, finance and accounts, and to the external partners, like customers, suppliers and third party vendors, so as to achieve similar expectations.

A streamlined process flow happening within the department and with other departments is very critical to achieve effective and efficient logistics management. Even a single gap or errors affect performance of all interlinked functions. Thus, an automated process that eliminates all possibilities of errors is the most efficient and cost effective method to attain sustainable logistics management function and gain a competitive edge in the market. The approach needs to be correct at the first place to have real value when the information gets acted upon to achieve the goal of excelling the effectiveness and efficiency in logistics performance to a level of customer satisfaction.

References:

Bowman, R. (2000). Finance and Logistics: Across the Great Divide. Retrieved from https://www.supplychainbrain.com/content/latest-content/single-article/article/finance-and-logistics-across-the-great-divide/

Horning, F., & McCann, J. (2003, January). Cycle Time Reduction Gives Life to Productivity. Retrieved from https://www.inboundlogistics.com/cms/article/cycle-time-reduction-gives-life-to-productivity/

Li, X. (2014). Operations Management of Logistics and Supply Chain: Issues and Directions. Discrete Dynamics in Nature and Society, 1-7. Retrieved from https://www.hindawi.com/journals/ddns/2014/701938/

Mukharji, P., Israelit, S., & Faelli, F. (2011, June). Ten ways to improve inventory management. Retrieved from https://www.bain.com/publications/articles/ten-ways-to-improve-your-inventory-management-wsj.aspx

Oracle. (2013). 7 Understanding the Process Integration for Order Lifecycle Management. Retrieved from https://docs.oracle.com/cd/E38316_01/doc.114/e37675/com_olm_overview.htm

Ozalp, I. (2010). A new approach in logistics management: just in time-logistics (jit-l). international journal of business and management studies, 2(1), 1-9. Retrieved from https://www.sobiad.org/ejournals/journal_ijbm/arhieves/2010_1/05inan_ozalp.pdf

Philips Team. (2017). Company Profile: About Royal Philips. Retrieved from www.philips.com.sg: https://www.philips.com.sg/a-w/about-philips/company-profile.html

Sain and Company. (2014). Inventory Management. Retrieved from https://online.wsj.com/public/resources/documents/CAPABILITY0706.pdf

Tseng, Y., & Yue, W. (2005). Te role of transportation in logistics chain. Retrieved from https://www.siam.org/journals/plagiary/1657.pdf

Witt, C. (2006, September). Improve Inventory Data Accuracy. Retrieved from https://www.mhlnews.com/facilities-management/improve-inventory-data-accuracy