Page 23 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Self Assessment

State whether the following statements are true or false:
13. The time required to convert raw material or inventory purchases into sales revenue is
referred to as cash-to-cash conversion.

14. Dead net pricing means that all discounts and allowances are factored in the selling price.
15. A transaction view of traditional business operations results in a series of independent
transactions buffered by inventory.

1.6 Logistics in 21st Century

The changing business strategies in the 21st century drive the logistics management in enterprises.
Implementation of relationship logistics model in the process of logistics management provide
enterprises speed, flexibility and efficiency in their logistics functions.
In 21st century digital technologies enable the development of new economic models. Gradual
reduction in the production costs effects demand and supply equilibrium. Reduction in costs
leads to increase in supply. In this case, new marketing and distribution methods are required to
meet the demand. As a result of successful logistics management faster flow of goods and
services is achieved. In economies based on digital technologies payment systems are transferred
to the electronic environment. It is possible to reach millions of people at the same time in the
digital environment. Development of digital economy enables faster and more efficient sharing
of information and thus the quality of logistics process improves.

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Caution In digital environment it is ensured for all units of corporation to operate over a
database system together with the suppliers and distribution channels.

New developments in internet area influence the market structure, consumption choices and
competition in business world. As the organization structures of corporations get more simplified
their logistics systems become elastic and quicker. The organization structures operating at
7 days 24 hours are becoming widespread. Markets now are more global and personal. Since
customers are more informed about the developments, they desire to buy higher quality at a
lower price. In digital environment everything is carried out “just in time”. “Just in time”
advertisement, “just in time” communication, and “just in time” delivery are becoming everyday
concepts used by the marketing managers. Somewhat digital technologies mean reaching millions
of people at the same time. So, as a result of the increasing importance of customers, corporations
concentrate on the customer oriented marketing concept.

1.6.1 Information Technology and Logistics Management in 21st Century

Developing digital technology has enabled the boundaries to be removed in the world trade
and increased competition has brought about the necessity of delivery of right product to the
customer at the right time, at best price and with minimum cost. Distribution and logistics have
been conceived as much important as the high quality standards of the product. It has been
accepted that the way of providing the most appropriate and quickest distribution that takes a
product from its production line and delivers it to the customer’s shelf is as much important as
producing that product. Corporations have discovered the logistics as the most effective
competitive element in the conditions of the increased competition.

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