Logistics Essay Example | Topics and Well Written Essays - 1500 words

Logistics - Essay ExampleIt, in a manufacturing enterprise, consists of raw materials, work in progress and correct products. While the transportation cost of entry may not be significantly variant, there is a significant variation in the cost incurred in storage of inventory. While some of the cost pertain in dealing in and wariness of inventory are accounted for in the benefits associated with having the inventory, some of the touch on costs are considered as wastes. Inventory therefore has its advantages in the form of derived benefits while it is at the same era associated with a number of disadvantages that includes induced unnecessary costs. One of the disadvantages of inventory, and which induces costs is the processes that are involved in the range of inventory in an institution. Goldsby and Martichenko for example explains the sumitional costs of managing inventory as a disadvantage that an organization has to endure in rear to obtain a set of inventory and finall y transfer them to their depute of demand. Every set of inventory held by BMW will therefore induce an extra cost to an entity on top of the cost of the goods. The accessoryal costs such as the costs incurred when the inventory is received, housed, paid for, and check are examples of expenses that BMW is most likely to incur when dealing in inventory (Goldsby and Martichenko, 2005, p. 20). Such costs add up to operational costs, costs of sales and consequently reduce an organizations profit margin. state an appropriate level of inventory at a particular time is however associated with satisfaction of consumers present(prenominal) demand for commodities (Goldsby and Martichenko, 2005, p. 20). A stock of goods allows BMW to deliver commodities at customers demand instead of arranging for the commodities after an order is placed. Maintaining inventory is therefore associated with both advantages and disadvantages. Another advantage of inventory that may prompt for endurance of the involved costs of its maintenance is the security of continuous supplement of commodities to BMWs consumers. This is because suppliers are not expected to regularly avail commodities in the supply chain. Seasonality or disrupted operations may also cut tally flow of commodities from a supplier. Similarly, disruption in supply chain activities such as transportation systems may limit access of commodities down the supply chain. Maintained inventory can therefore allow BMW to be able to absorb short-term disruption in supply chain to ensure continuous supply of products down a supply chain. While it adds to the costs on an organization, it also facilitates customer utility by ensuring ready availability of commodities at consumers demand (Goldsby and Martichenko, 2005, p. 20). Inventory management through customer relation management and supplier relations management is another process that monitors and influences inventory decisions by establishing reliable links upon which plan ning can be made for a continuous supply chain with minimum inventory costs. This ensures that BMW stocks inventory for immediate future needs of its commodities, by the consumers. Similarly, developed relations with both suppliers and consumers identifies needs for value addition and facilitates reduction of costs in distribution through eliminating unnecessary costs (Lambert, 2008, p. 295 Cope and Brown,