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Principles of Logistics and Supply Chain Management

Executive Summary

Business is one of the economic factors that are useful in every countrys economy. Business is the exchange of goods and service, and it has a monetary value. In business, people deal with goods from different countries through monetary exchange. In economics, goods are physical or tangible items, such as food and clothing. There are two types of goods: the producer goods and the consumer goods. Producer goods are the resources, which the producer needs in order to produce other goods, which are now the consumer goods. Consumer goods are ready for use, such as clothing, bread, and many others. These goods pass through a large chain before they reach the manufacture and the last person, who is the consumer. This is referred to the chain of distribution. These goods are reserved in the owners warehouses. A warehouse can also be referred to as a distribution center. A distribution center is a building that is used to store products, which are later being re-redistributed. These centres are equipped to suit the nature of the products or goods, which are stored inside. A distribution center can be equipped with air conditioners, refrigerators, and other equipment, which can be used in order to preserve goods. A distribution center can also be referred to as a fulfilment center, a bulk break center, a cross-dock facility, and package handling center. Most of the goods cannot stay for a long time in the warehouses, because of their nature. Some goods, such as food, are perishable; thus, they do not last long. Some can even stay for a long time, because of their durable nature.

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Distribution centres carry out different operations, which are meant to ensure that goods are well-handled. They also ensure that the goods will reach the consumer in a good condition and at the right time. The functions of the distribution centres include: cross docking, consolidation and break-bulk, sorting, and reverse logistics. Cross-docking means unloading the materials from the trucks or carriage in the bulk. It is done by moving loads from one carriage to another with no warehousing. In the retail business, cross-docking operations utilize staging areas, where mixed goods are sorted, consolidated, and kept, until the outbound delivery is finished and ready for transit.

Consolidation is the process, whereby one or more companies merge in order to become one big company. When a company wants to expand or when it is running bankrupt, it can opt to join another company. Breaking bulk is a process, where suppliers may wish to sell goods in small quantities. Sorting is the term used in business. It meana selecting a wide range of mixed good and putting them according to their kind. Sorting is done in order to be able to identify goods in a simpler manner when packing or selling them.

Background and Business Environment

Kimberley-Clark, Kelloggs, and BMW are some of the organizations, which have been analysed. They adopted the distribution centers as means of ensuring that they achieve the target of their service proposition. Kimberly Clark Company was formed in the year 1872. It started with US dollars 30,000 as the capital. This companys first business was operating paper mill. In the year 1914, this company developed cellu cotton, which was a substitute to be used by the army of the United States. The cellu cotton was used as surgical cotton. After six years, this company introduced a disposable napkin, handkerchief, and Kotex. In 1924, Clark and Kimberly joined the New York Times Company. They build a newsprint mill in Ontario, Canada, and Kapuskasing. Two years later, the company went to public as Kimberly-Clark. During 1950s, the firm expanded internationally. It opened plants in Germany, Mexico, and the United Kingdom. In 1960s, it started operations in seventeen others foreign locations.

The Kimberly Company formed Midwest Express Airlines from its flight department in the year 1984. The Kimberly-Clarks headquarters moved from Neenah, Wisconsin to Irving, Texas. In 1991, the joined companies sold their paper mills in Ontario and Kapuskasing. In the year 1994, they jointly ventured into production of personal care products in Argentina. They also bought the feminine hygiene units of Schickedanz, Germany and Handan Comfort and Beauty Group, China. In 1995, Kimberly-Clark bought Scott Paper. The company sold 50% of its stakeholder in Canadas Scott paper to forest Product Company in 1997. This company bought diaper operations in Spain and Portugal. In 1999, the company bought Ballard Medical Products. Kimberly-Clark bought S-K Corporation in Taiwan in the year 2000, and became one of the largest manufacturers of consumer-packaged items. Later on the company bought Scott Paper Corporation in Taiwan, joined two companies, which formed Kimberly-Clark Taiwan. In 2001, the company purchased Linostar and Italian diaper maker. It announced that it was closing four Latin manufacturing Plants in America. In 2002, Kimberly-Clark bought Paper Packing rival in Australia. In 2003, the company bought Polish Tissue-maker. The chief Executive officer and the chairperson started implementing world business plan.

The BMW Company started in 1917, as a business entity, which was known as Rapp Motorenwerke aircraft. The BMW has stopped producing the aircraft engines following the end of the 1st world war in 1918, with the orders of Versailles Armistice Treaty. In 1923, this company changed to Motor vehicle. Dixi was the first car to be launched by the BMW Company. In 1930s the business began producing aircraft engines for Luftwaffe. The automotive division of BMW was straining financially by the year 1959. They managed to control a majority of the shareholders of the BMW Aktiengesellschaft since 1959, which owned approximately 46% of the stock. In the year 1966, the BMW Company acquired the Hans Glans Company, which was based in Dingolfing, Germany. BMW acquired a large stake in California in 1992, based on the industrial design studio Design works in the USA, which the company acquired fully in 1995. The company also bought a British Rover Group, which consisted of the Land Rover, Rover, and MG brands, and had owned it for six years. The MG and Rover brands were disposed to the Phoenix Consortium, which formed MG Rover. In 2001, BMW retained the rights to build the new Mini, which was launched. In 2009, the chief designer, Chris Bangle, left BMW. Bangle was replaced by Adrian Van Hooydonk. In 2012, BMW was announced as the most known company in the world. In 2010, the BMW manufactured 1,366,838 four-wheeled vehicles and 112,271 motorcycles.

Kelloggs company was formed in February 1906, by Will Keith Kellogg. It was formed as the Battle Creek Toasted Corn Flake Company. After the high production of this company, it was highly marketed and the name was changed to Kellogg Company in 1922. In 1930, this company announced a change in the working hours of its factories in order to help those people, who lived in depression. From the years 1969 to 1977, the company acquired small businesses, such as Pure Packaged Food, Salad Food, and many others. In 1983, the U.S. market share went low by 36.7%, which made this company improve. In 1983, it was able to convince people to consume the cereal in the U.S, and grew at a high rate. In 1988, this company had spread to the various parts of the world. It also introduced some new products, such as Biscuits, Crispix, Raisin Square, and Nutrition-grain. Kellogg was announced as the largest acquisition in 2001. It has also acquired many firms and property. It became the second largest snack food company.

Analysis of the Study

The three organizations, which have been discussed, have had a good chain of distribution for their products. In business, distribution of goods and services is one of the major operations. Goods must be distributed in order to reach the producers or consumers. The three organizations centres of distribution have played a big role in ensuring that their goods have reached the consumers at the right time. They have established their companies in the different parts of the world, which has led to a good chain of distribution. They have also established distribution centres in the different countries, which have made their business activities be successful. The three discussed organizations are known to hire the qualified personnel, who have humble knowledge in distribution. This has resulted in achievement of the organizations goals. Proper storage facilities together with good transportation system can also be considered as the base of the organizations success. These organizations have also put in place modern methods of communication, a factor that made them successful. These factors have indicated the importance of warehousing, transportation chains, as well as communication in distribution.

Logistic Value Proposition

Logistics is a term used in the business field. It refers to the process of ensuring that the right goods are in the right place and at the right time when they are needed. Logistic value proposition is used to mean something that matters to customers. It should be physical and should explain the benefits and answers that customers will gain with the producer. It shows why business clients choose to work with the particular organization and not with its competitors. Value proposition is sometimes based on the certain requirements, such as low price. It assumes the cycle time, service, and stock impact of supply chain. Pricing of all the commodities is the determining factor. The cost of goods can only lower at a limit. The low pricing proposition can create a bad image about the supply chain and the customer can choose to wait for low pricing lather than acting straight away. This proposition can change the supply chain organization from its primary purpose with both long-term and short-term effects. Though it affects the supply chain, it is strategically weak.

Information Technology and Business

A current factor that can be considered in business is the information technology. Information technology is the application of telecommunication facilities and computers to store, transmit, retrieve, and control data, especially in businesses and enterprises. Information technology is also used for computer networks. It can also include other information distribution technologies, which include telephones and televisions. It is also a study to develop, apply, design, and implement computer information systems. The duties of the people, who work in this field, are: software development, installation, network administration, planning, and management of organizations technology life cycle. The information technology has made the business operations easier, and it has also reduced the human utility, which reduces the companys expenses.

Distribution Centres Adding Value to the Organizations

The distribution centres have added value to the various organizations, which have adopted them. It has become easier for these centres to supply their products all over the globe. Distribution centres have also enhanced the time, by which the products reach the consumers. Before the adoption of these centres, people used the warehouses to store their goods, what was a bit difficult in the process of clearing and forwarding of goods in the warehouses. Consumers sometimes do not acquire goods at the time when they need them. Distribution centres are also well equipped with the necessary facilities to ensure that the goods are in good condition, especially the perishable ones. Such facilities include refrigerators, air conditioners, and cold rooms. These are the facilities that ensure that perishable goods are fresh until the time they reach the consumer. In the distribution centres, goods of all natures are considered and stored in a good condition. Management ensures that there are no pests, dump environment, or anything that can harm the goods stored. These standards are maintained in order to make sure that the organization delivers goods in the right standards, as demanded by the customers. If these standards are not set and maintained, the organization will undergo a loss and may even lose some clients.

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Key Findings

Business consists of a wide range of operations. In order to attain the target of the business, one sacrifice is needed. Many people, who have excelled in businesses, have had ups and downs, but they never gave up. The intention of any business organization is to offer the best quality product, earn revenue, and acquire a big number of customers. However, these can only be achieved, if commitment and professionalism are applied. All the successful organizations and companies have applied good strategies in order to reach their target. In the todays world the countries, which are known to be powerful and rich, have ventured in all types of businesses and have invested in all the countries in the world. These business activities have increased these countries economy. Today, with the help of information technology, good transport system, and advanced skills, it is easy to conduct business globally. People should be taught on the ways to venture in business and also be guided on the best business management skills. The government should also improve the transportation system, which is one of the major factors in business. Roads and air transport should be improved. It is also evident that the governments all over the world are offering support to the business personnel. This is because business activities give the revenue to the government, create employment, and improve the economy of a country. For the perishable goods, the distribution centres should be well equipped with the necessary storage facilities such as refrigerators, air coolers, and others. International businesses should also be considered. Companies such as BMW, Kimberly Clark, Kelloggs, and others have succeeded internationally. However, there are factors to be considered by the producers and suppliers of goods and services. These are the factors, which can affect the condition of goods and also the consumers. Every business wants to have many customers. These activities should be well observed for the success of every business.

BMW is one of the organizations that have been discussed before. This is a company that deals with the production of motor vehicles. The companys background is well explained, and it is seen to be a very large organisation. It has ventured in many parts of the world, and it has also purchased many companies. The chain of distribution is well observed and their items are able to reach the willing buyer. Businesses need a good management, good exploitation of resources, especially in producer goods, skilled labour, and a good way of keeping records.

In the current world the businesses have grown rapidly. In the marketing of ones product, there are four factors that should be considered. These factors are product, price, promotion, and place. These factors can also be referred to as marketing mix. These factors should be considered in order to target the customers. A product must be of the best quality, which customers will like. If a product is not up to the standards, the consumers may chose to go for another homogenous product. This causes harm to the businesss stability. This can also lead to established clients diverting to the competitors of an organization. Pricing is the process of fixing a certain value to a certain product. If the price is very high, a customer may not be able to afford the product. It is important for the people, who sell goods, to fix reasonable and affordable prices to the targeted group. Place is another factor that should be considered, while starting on a business. Different communities and different people will use a different product. There are some products, which are known to be consumed by certain people. In the establishment of the business, a seller or a supplier should move the business to the place, where the targeted group is found. For this reason, it is essential for a business organization to set up the industry or distribution center in a place, which is near to the targeted people. This factor is meant to reduce transportation cost and increase profits. As a result, the price of a product will also be low. For example, there are goods, which are known to be used by the young people. In case of these types of goods, the seller should move to the urban areas, where there is high population of the young people.

Promotion is an activity meant to increase the volume of sales of a particular product. It involves gifts to the person, who buys many goods, or an additional item to the person, who buys a certain good. This has also played a big role in the business field. Information technology is a vital factor that has led to an increased growth rate of business activities. People have managed to do business online, which has led to reduced business expenses. It has also increased international trade. People from different countries along the world have carried on business activities without necessarily having to travel from one country to another. This has made the international business become interesting, cheap, and easy. Goods are able to reach consumers at the right time through the commerce.

Communications and information technology has also played a very vital role in the modern business. People are able to order the goods through telephone, emails, and other methods of information delivery. Entrepreneurship is the process of coming up with the new business ideas. People, who have big companies all over the world, started from being entrepreneurs. They came up with the new business ideas, which have developed to the big companies. These have increased the living standards of many people. One persons business idea has changed the style of living of many others. Many goods from the different companies, such as Kimberly, have helped generations of people. Through these projects, peoples health and hygiene have been observed. Many people all over the world have secured jobs from the different companies, which were started by one or more different people. People should exploit their ideas, which later might help them, and also many other people.

Capital is one of the major necessities in order to start a business. The amount of money that is used to start a business is known as capital. People claim to have business ideas; unfortunately, they do not have enough capital. However, in the globe today one does not need to have a lot of money in order to implement a business idea. This is as a result of different ways of acquiring capital, such as loans, grants, and partnering with other organizations. There are many companies, which have enough money to invest, but lack the ideas to be implemented. Grants are nowadays available from governmental and nongovernmental organizations. There are so many organizations all over the world that help people to acquire loans and pay later with no or small interest. Entrepreneurs should try their best and acquire these loans in order to start implementing their business ideas. These opportunities are affordable to all the individuals, who have new ideas. However, it is important for all people, who are intending to venture in business, to learn from experienced people and business institutions. Training, as well as advice from the experienced people, will enable them to deploy best distribution channels and exploit all business opportunities. For existing organizations, such as BMW, it is important to hire personnel, who have learnt and qualified on modern business management.


In conclusion, business is the major activity that have developed the economy of the different countries. People have managed to acquire goods and services through business. Distribution centres or warehouses have also played a very big role in the chain of distribution. People have also been able to purchase goods either in small or big quantities according to ones ability. It is essential for the government to support investors and set good business environment in their countries. To be able to distribute the resources from their origin to other parts of the world business, distribution and supply chains are vital.


Organizations should consider the future situation of their business, as well as the current situation. In the todays world business entities are in the constant competition of who will outdo the others. For this reason, an organization should consider the emerging issues, which have a big impact. Information technology should not be ignored by any organization, which is looking forward to being better placed in the future. The information technology is improving from year to year, and the organizations should adopt this technology for the future of their business. There are some latest tools in the information technology, which are helping the organizations to grow. These include computers and hand phones. These are the portable devices that can be used to strike deals in a simple and cheap way.

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