1. Did it surprise you that logistics can be such an important component in a country’s economic system? Why or why not? Logistics plays a key role in the economy in two significant ways. First, logistics is one of the major expenditures for businesses, thereby affecting and being affected by other economic activities. In the United States, for example, logistics contributed approximately 10.3 percent of GDI in 1996. U.S. industry spent approximately $451 billion on transportation of freight and about $311 billion on warehousing, storage and carrying inventory. These and other logistics expenses added up to about $797 billion. Second, logistics supports the movement and flow of many economic transactions; it is an important activity in facilitating the sale of virtually all goods and services. To understand this role from a systems perspective, consider that if goods do not arrive on time, customers cannot buy them. If goods do not arrive in the proper place, or in the proper condition, no sale can be made. Thus, all economic activity throughout the supply chain will suffer. One of the fundamental ways that logistics adds value is by creating utility. From an economic standpoint, utility represents the value or usefulness that an item or service has in fulfilling a want or need.
There are four types of utility: form, possession, Time, and place. The later two, time and place utility, are intimately supported by logistics. And the below information clarifies how logistics industry already affected economics: Industry reports suggest that in the year 2002, revenues earned by the logistics industry equaled USD$910 billion. As much as USD$571 billion was earned as revenue from transportation, USD$ 298 billion was earned from warehousing, USD$41 billion was from services related to logistics industry. Federal Reserve recorded a growth of 4% in the gross domestic product or the GDP in the year 2004, owing to revenues earned by the logistics industry. With the advent of latest and sophisticated know how, the logistics industry has a bright future ahead. 2. Due to technical problems, Toyota had recalled various models of their cars in the international market. This in return had a severe impact on their strategic and operational thinking and planning. From a logistics management perspective, describe how the logistics function can contribute to overcome Toyota’s recall crisis.
Logistics department should start dealing with new suppliers to provide its parts and establish supplier’s evaluation process to assure the standard. And specify the quantity of cars sold to consumers & their locations by knowing distribution channels for assembly points, distributors, agents, wholesalers to consumers.
Logistic should coordinate with warehouses department & production to check the availability of stock to face the problem and start put production plan with production department to increase the productivity. On the other hand logistics must work on that
•The parts ordering group at a plant notices a pattern of short shipments •Create quality control group at a plant detects a sudden change in parts defects (One team at the incoming warehouse, one at production area & one at the dispatch warehouse) •Notify distributers & agents to inform consumers about a problem then start to recall cars. •Ship the spare parts to its factories in the world very quickly. •Provide maintenance center with spare parts to fix the recalled cars through dealing with suppliers to provide these parts quickly. •Setup a strong capable customer service base to could receive, analyze and escalate any problem tightly.