INVESTIGATING THE RELATIONSHIP BETWEEN RISK MANAGEMENT

02-08-17 cheapnisha 0 comment

INVESTIGATING THE RELATIONSHIP BETWEEN RISK MANAGEMENT

Interim Report

INVESTIGATING THE RELATIONSHIP BETWEEN RISK MANAGEMENT IN LOGISTICS AND FIRM COMPETITIVENESS USING SIMULATION

Final Year Project

Engineering and Applied Science School

1.0 Introduction

INVESTIGATING THE RELATIONSHIP BETWEEN RISK MANAGEMENTOne of the greatest reasons organizations need to manage logistics is the configuration of the distribution network whereby by the number and location of various suppliers is monitored and maintained effectively. This is important to minimize risks related to logistics and logistics. Furthermore, the configuration manages the distribution centres, warehouses, and customers. Apart from configuration, Logistics Management (LM) plays a key role in conveying a distribution strategy. In this case, LM ensures that there is a working strategy on whether to use decentralized or centralized distribution system or whether to have direct shipment of goods in addition to assessing the applicability of cross docking and the push or pull strategies. In addition to managing distribution by organizations, logistics management, through the coordination of LM and other aspects of the logistic management (SCM), is important to ensure integration of technology system – for instance building processes and systems – that ensure sharing of valuable information. This shared information may include forecasts, demand and supply signals and the transportation and inventory cycles. Without a functional logistics management strategy, companies are less likely to gain competitive advantage.

For instance, logistics management includes the general scope of logistic, distribution, warehousing and information; an integration of different companies specializing in the manufacture or sale of different types of products (Myerson, 2012) logistic and logistics may be used interchangeably but in essence, logistics refer to the internal supply arrangements of an individual company while logistics is generally external. Rushton, Croucher, and Baker (2014) contend that logistic management when well managed should be able to support and coordinate all the activities that see the movement and storage of unprocessed goods (raw materials), inventory of the work in progress activities and movement and storage of processed goods from manufacturers to consumers. Thus, logistic management involves warehousing (storage) and transportation (movement) logistics (Connelly, Ketchen, and Hult, 2013).

This study, in attempt to understand logistics management, borrows more from military science philosophy where the term is associated with the practice of planning and coordinating various activities of the logistic including movement, housing (warehousing) and supplying (Rodrigue, Slack and Comtois, 2013). From this perspective, logistics has also been used to mean the coordination of processes involved in transporting goods from the points of origin (manufacture) to consumers (Lun, Lai, Wong and Cheng, 2014). It is therefore a broad activity involving the procurement, supply, distribution, and maintenance of goods as they await delivery to the final consumers (Rushton, 2010). An easier interpretation is derived from Tee, Chew and Demidenko (2011), who argues that logistics is all that is done to manage the flow of goods between the origin point and the consumption point so that that the goods can meet the needs and requirements of customers or corporates. In this study, logistics is a part of the logistic process that is mainly mandated to manage the flow funds, goods, and information between suppliers, intermediaries such as shippers and final consumers. This study is conducted to investigate the relationship between risk management strategies in logistics and logistics, and the performance of a firm in terms of competitiveness. A case study of John Lewis is used to conceptualize logistics/logistic risks and firm’s competitiveness.

John Lewis is a type of chain store that operates in Great Britain owned by John Lewis and other partners. It was first established in 1864 in London, Oxford Street. Since 1925, the chain has been operating on its policy of Never Knowingly undersold. Currently, the chain store operates about 43 stores based in Wales, England and Scotland and additional 10 stores are operated locally. The largest store in the chain is that in Cardiff and is operated through partnership in the outskirts of London. The chain store performs significantly well and has attracted attention from English authorities. For instance, in 2008, the store at the oxford street won a Royal award from the queen titled ‘suppliers of haberdashery and house hold goods. Similar awards were won in 2007 as suppliers of household fancy goods. As at the start 2013, John Lewis’ had revenues totalling to £4.060 billion with an operating income of £226 million (John Lewis Partnership, 2012). Being a big company, John Lewis in 2013 had 38,100 employees.

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