1. Explain both the role of logistics and how the common modes of transportation
ID: 2747445 • Letter: 1
Question
1. Explain both the role of logistics and how the common modes of transportation impact supply, along with a description and some pros and cons.
2. Explain how suppliers establish a price in a cost and market approach for customers. Further, what is the solution to correcting both of these if they are not the best approach?
3. Articulate the legal reasons we have procurement as a functional group within an organization, Further, define who is allowed to buy or enter into an agreement, and under what circumstances.
Explanation / Answer
(1). Logistics is is one of the most important functions under supply chain management within a company.Logistics is that part of supply chain management that plan,implement,control the effective and efficient,forward and backward flow and storage of goods and services between the point of origin and the point of cunsumption in order to meet the customer needs.Hence selection of a good logistics is critical for supply chain competitiveness.
Roles of logistics in supply:
To practice effective and cost efficient logistics management,an organization must have a responsive and economical transportation network.The common modes of transportation includes:
(1).Road transport: Road transport is the most commonly used mode of transport for various companys,mostly doing dealing with domestic market.
Advantages:
Disadvantages:
(2). Air transport:It is commonly used by companies which work with short lead time and need to travel a long distance.
Advantages:
Disadvantage:
(3). Rail transportation: Rail transportation use trains to transport goods and mostly used for bulk shipment of products.
Advantages:
Disadvantages:
(4). Water transport: It uses ships and large commercial vessels that carry large quantity of bulk and heavy products at a time
Advantages:
Disadvantages:
(2) Suplliers use a cost based or market based pricing method to establish a price for the customers.
In market approach to price determination the supplier sets the product price on the basis of customer expectations and demand.They analyze the customer's percieved value for the product and on the basis of that analysis the supplier estimates how much the customer is willing to pay for the product.suppliers use market based pricing method when they face huge competition in the market.Customers donot see much difference betwwen their product and the product of the competitor.The customers,then prefer to buy the product with the lower price.
In cost based approach to price determination for suppliers the price is determined on the basis of cost.Here the supplier see the cost first and then consider how high the price he can charge based on the estimate of customer demand.This method mostly aims at profitability.This approach to pricing assumes that the supplier can differenciate its product from its competitor.supplier set the price as high as he reasonably can in order to maximize profit to the maximum.
If the cost and market approach for pricing is not the best approach for a supplier ,as a sollution, he can use other pricing methods like competition based pricing,value pricing,target return pricing,giong rate pricing,transfer pricing as per his convenience.
(3) The legal reason we have procurement as a functional group within an organization is:
A buyer in procurement is a personnel or an individual designated by an authorised official to undertake all activities necessary for the procurement of goods and services in accordance with the applicable rules and regulations,policies and procedures.
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