Business Operations in Your Organization: A Systems View
For this paper the writer has to pay attention to details and use the template that is provided. The paper
contains three sections and the writer must clearly respond to all the three sections. The writer will have
to chose a company to use for this paper. APA 6th edition will be require for this paper and the writer
must properly format the paper. Another very important aspect is that the writer must read carefully the
entire requirement before attempting the responds so as to properly understand the requirements of the
assignment. Use subheadings as indicated in the template and also harmoniously link all sections
together. As mentioned earlier, the writer must use the provided template to complete this assignment.
Business Operations in Your Organization: A Systems View
For this paper, you will develop a systems perspective of business operations in your organization, or the
organization you have chosen to use as an appropriate subject for analysis, as a whole.
Your task is to show how the business operations in your organization, or the organization you have
chosen as an exemplar, can be brought into harmony, generating the smooth flow of information and
materials throughout the value network for the benefit of customers and the competitive success of the
organization. A key element of the Praxis Paper is the identification and framing of an organizational
problem that relates to the course topics such as
- Inventory, Transportation, and Warehousing.
- Trends in Supply Management
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 2
- Developing Market Specific Supply Chain Strategies
- Outsourcing and the Extended Organization
- Innovation and Change.
Your research should lead you to identify possible solutions to the problem(s) you identify. You will apply
knowledge gained in the course in order to present advantages and disadvantages of various approaches
to the problem(s) with the goal of generating the smooth flow of information and materials throughout the
value network in order to increase the organization’s competitive success.
Business Operations in Your Organization: A Systems View
Nowadays, the fiscal environment is typified by rising costs of raw materials, high
inflation risk, and even strong volatility. These factors have an impact on the strategies of firms
that operate in the very competitive manufacturing and transport logistics sectors. This paper is
focused on Avon Corporation; the scope of logistics spans the entire company. This paper has 3
sections. Section A provides a discussion of the significance of effective logistics management in
smoothing the flow of materials, lowering the costs of inventory, and facilitating responsiveness
in the supply chain. Section B covers an analysis of the outsourcing of capabilities to realize
optimal coordination of inter-functional operational processes as well as inter-organizational
collaboration across the entire value chain. In Section C, a strategy is developed and presented
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 3
for executing change within Avon Corporation in order to bring a transformation that would
secure competitive advantage through improved performance, coordination, as well as
innovation.
Avon Corporation
Avon Corporation is the selected organization. Avon is a major global beauty corporation
and one of the biggest direct sellers worldwide and makes almost $10 billion in yearly revenue
(Avon, 2015). Avon’s product line consists of home products, fashion products, as well as beauty
products. The company has several famous brand names including Advance Techniques,
ANEW, mark, Skin-So-Soft, Avon Color, and Avon Naturals (Avon, 2015). Avon is an
international corporation which is entrenched in tradition with a vision of being a corporation
which best knows and meets the service, product, as well as self-fulfillment requirements of
ladies all over the world (Avon, 2015).
Section A: Importance of effective logistics management
Logistics management basically entails controlling and supervising the movement of
goods. Logistics management is understood as that component of supply chain management
which is involved with planning, implementing, and controlling the effective, efficient reverse
and forward flow and storage of services and goods between the points of origin and
consumption so as to satisfy the wants and requirements of customers (Christopher, 2008). The
subject of logistics management involves many dissimilar factors. Effective logistics
management is vital in smoothing the flow of materials, reducing costs of inventory, and
enabling responsiveness throughout the supply chain.
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 4
The scope of logistics spans the whole company. Through logistics management,
customers are satisfied through the coordination of material as well as information flow (Aitken,
2008). Some of the factors that have to be taken into account in logistics management include
materials handling, transportation management, order fulfillment, as well as inventory and
freight management (Christopher, 2008). Effective logistics management operations have to
yield four main results: improve customer service; decrease the overall costs of transportation;
improve the operating cost structure; and raise revenue. Effective management of business
logistics is of great importance in meeting customer expectations and keeping costs low.
According to Wallin, Rungtusanatham and Rabinovich (2006), effective logistics management
offers a vital opportunity for companies to achieve cost savings since a lot of organizations
mention transportation and logistics as key generators of production-related costs.
The present fiscal environment is typified by mounting costs of raw materials, high
inflation risk, and strong volatility. These factors have a direct impact on the corporate strategies
of business organizations that operate in this very competitive sector. This implies that efficient
logistics becomes a key element of ensuring the competitiveness of these companies through: (i)
reducing the levels of stock to achieve more efficiency. (ii) Effective coordination all through the
supply chain: in essence, communication between the sales department and procurement
department is vital to pass on all the increases in production and purchase costs. (iii) Guarantee
of tailor-made, quick, and quality services in order to attain competitive advantage over the
competitors (Varila, Seppänen & Suomala, 2007).
Effective logistics management entails managing the flow of materials including the
movement of raw materials from various suppliers of the company, in-process within the
company, as well as movement of finished products to consumers. One way in which costs of
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 5
inventory are reduced is through quickening the flow of the various raw-materials used, work-in-
progress, as well as finished goods (Christopher, 2008). Improving the effectiveness of logistics
management encompasses 5 key pillars. These are information; logistical network; materials
handling, warehousing, and packaging; transport; and inventory. Logistical network: this
comprises various facilities including retail stores, warehouse, manufacturing, and dealers. The
bigger the geographical stretch, the more intricate an organization’s logistical network will be
(Varila, Seppänen & Suomala, 2007). For Avon Corporation, superior logistical network that is
based upon methodical analysis and determination of the number of facilities, their exact work
allocations, and geographical position could be an important competitive tool.
Transport: dependability, speed, and cost are vital determinants of the effectiveness.
Given that time is crucial, the quality of transport performance is a critical factor. In addition,
since cost and speed are interconnected, it is important to carefully select the transport since this
is vital for optimal cost. For instance, quicker transport is costly but reduces inventories and
improves customer service (Christopher, 2008). Information: correct prediction and proper order
management are vital for the systematic inventory management Just-In-Time and Contingency
Replenishment as well as quick response to the client (Simpson & Power, 2005). As such, timely
information is essential to logistical performance. At Avon, deficiencies in information are
removed by using email, faxes, phones, and Enterprise Resource Planning Software. Inventory
management: a proper inventory management system has to be deployed in order to attain the
desired level of customer service with least inventory investment. Products should be delivered
timely and fast (Aitken, 2008). Avon should be committed to consistent and rapid delivery to
gain customer service advantage. Materials handling, warehousing, and packaging:
warehouses should be located in a site where the company can be nearer to its main clientele.
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 6
Materials handling in the warehouse must be planned to ensure quick and safe receiving,
movement, storage, as well as packaging of client’s requirements (Christopher, 2008).
Section B: Analysis of the outsourcing of capabilities
For Avon Corporation, the outsourcing of capabilities can help to attain optimal
coordination of inter-functional operational processes and inter-organizational collaboration
across the entire value chain. By outsourcing logistics for instance, the transportation logistics
company can act as Avon’s logistics department and handle the following functions:
procurement – the transportation logistics firm can engage in carrier rate negotiations as well as
selection (Christopher, 2008). Execution: the logistics firm will handle Avon’s daily movement
of cargo, including consignment tender, performance management, exception resolution, and
service monitoring; planning: the transport logistics firm will handle Avon’s strategic network
evaluation and optimization; and administration – the transport logistics company will also
handle claims management, contract administration, invoicing, reporting, as well as freight bill
audit and payment. A third party logistics company can provide a wide range of modes for the
manufacturer – Avon Corporation – ranging from ocean and air to rail and over-the-road
intermodal (Landstar, 2015). Through this kind of outsourcing, Avon Corporation can easily
attain optimal coordination of inter-functional operational processes and inter-organizational
collaboration across the entire value chain.
According to Aitken (2008), outsourcing of capabilities could enable workforce
reduction, operational flexibility, cost reduction, reduced cycle times, freedom from restraining
labor environments, expanded geographical coverage, improved responsiveness, as well as
logistics management and technology issues. Outsourcing of capabilities is basically an
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 7
important measure for cutting costs. Nonetheless, by outsourcing capabilities, Avon can gain
capabilities it currently lacks in-house or it can strengthen the capabilities it currently has, for
everything from introducing new women’s products into the marketplace faster to developing
top-notch talent and enabling business model innovation (Varila, Seppänen & Suomala, 2007).
Outsourcing of capabilities helps in improving the competitive position of an
organization since it ensures that functions and processes are obtained at the right cost and from
the right source. Business organizations can leverage outsourcing for more processes and attain
various objectives such as improved quality, costs, or capabilities (Landstar, 2015). Through the
strategic use of outsourcing of capabilities, Avon can attain a long-term competitive advantage
that may not only improve quality and lower costs and, but also drive innovation, improve
productivity, open-up new markets for its women products, provide new revenue sources, and
deliver a sustainable cost advantage. Equally important, outsourcing of capabilities will help
Avon Corporation in optimizing the performance of its several manufacturing facilities. For a
manufacturer such as Avon Corporation, the following outsourcing solutions can considerably
help it to attain optimal coordination of inter-functional operational processes and inter-
organizational collaboration across the entire value chain: supply chain planning and execution,
after sales and support, marketing and order management, new product development, and
operations (Aitken, 2008).
Business organizations generally profit when they are focused on their core business and
the area of their best proficiency, for instance manufacturing of goods, importing, and/or sale of
their merchandise. A small number of business organizations are actually proficient in
distribution and warehousing as Third Party Logistics companies or 3PL are (Simpson & Power,
2005). Manufacturers like Avon Corporation who create a strong relationship with reliable Third
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 8
Party Logistics companies are able to lower their transportation costs, simplify their supply chain
management, and improve their capability of delivering products to their clients when required.
As companies seek increased competitiveness as well as success in the current
international marketplace, many of them are in fact pursuing the tendency of increased
outsourcing of capabilities and have seen the necessity for new types of relationships with
suppliers (Landstar, 2015). Establishing new relationships with cheaper and better suppliers and
suppliers who provide high quality materials will allow Avon to save costs of materials and
develop products that are actually of higher quality. Companies establish their outsourcing
relationship needs and their needs for new suppliers, and then find and select the right suppliers
and vendors. Outsourcing of capabilities is essentially a management tool which alters a
company’s organizational structure and a business transformation process which could provide
an important opportunity for improved performance (Christopher, 2008).
Section C: Strategy for implementing change in the organization – Implement lean logistics
The strategy for implementing change in Avon Corporation to bring about a
transformation that would secure competitive advantage by means of improved performance,
coordination, as well as innovation entails adopting the lean approach in logistics and supply
chain. Lean logistics helps in identifying and eliminating the wasteful activities in the supply
chain so as to increase speed and flow of materials. Lean logistics, as Simpson and Power (2005)
reported, is a method of driving the costs down considerably while allowing the company to
increase its output as well as sales.
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 9
The rationale of adopting a lean supply chain is basically to meet the 4Rs: inventory
which is in fact: the right merchandise, at the right place, in the right condition, and lastly in the
right quantity. The activities which support the aforementioned 4Rs add value and this is
applicable both to the movement of information and product. On the other hand, activities which
add no value are considered as waste. Lean is the way that an appropriately designed and
operated supply chain has to function (Simpson & Power, 2005). A lean supply chain is
simplified to decrease and eradicate waste or the non-value added activities to the entire supply
chain flow and also to the products that move in the supply chain. This in turn smoothes the flow
of materials, reduces inventory costs, and facilitates responsiveness throughout the supply the
chain. Wastes could be measured in inventory, time, and needless costs. Generally, value added
activities contribute to efficiently bringing the finished product to the client. The supply chain
and the inventory therein must flow; any activities that stop the flow must create value (Simpson
& Power, 2005).
Landstar (2015) pointed out that business organizations are in a continuous cycle which
drives them to improve their business to maintain their competitive advantage. The bottom line is
that every company wants to reduce its costs, reduce time consumption, and reduce inventory.
Although there are several techniques of achieving this, lean logistics is one method which has
demonstrated over the years to significantly improve a company’s efficiency (Landstar, 2015).
For business organizations such as Avon Corporation that work to decrease costs whilst
improving their performance, the lean approach is suitable to them. By applying the lean
approach, Avon can achieve efficient and smooth flow of materials throughout the supply chain.
Lean logistics will provides Avon Corporation with the capacity to decrease inventory
carrying costs, free up cash, and get rid of substantial indirect costs that are associated with
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 10
supplies, materials, as well as assets logistics. Lean logistics is of major importance in reducing
inventory costs (Aitken, 2008). It is notable that inventory service costs, storage costs, capital
costs, as well as risk costs all serve to reduce Avon’s profitability. Through lean logistics, the
company can reduce all these costs. In essence, lean logistics results in greater efficiencies given
that transportation efficiencies allow an increase in cargos managed and cargo density. There is
also reduced inventory, improved lead-time dependability, and increased turns (Aitken, 2008).
In lean logistics approach, the main factors include the following: defining the focus
areas and core competencies in logistics; absolute integration of the supply chain levels; and
optimizing the logistics process interfaces and integration of logistics processes. Other factors
are system approach; continuous application of the lean system to the back-to-back logistics
chain; as well as continuous standardization and restructuring of the IT structures basing upon
the lean/system approach (Aitken, 2008). For Avon Corporation, the benefits will include
reduced costs of supply chain and making supply chain more flexible; increased process stability
and transparency; as well as increased flexibility and responsiveness of the company’s supply
chain. By being efficient, Avon Corporation will respond to the market requirements adequately
(O’Reilly, 2010).
Conclusion
In conclusion, effective logistics management operations improve customer service,
decrease the overall costs of transportation, improve the operating cost structure, and improve
the company’s revenue. Effective management of business logistics is of great importance in
reducing the levels of stock to achieve more efficiency and improve the flow of materials.
Outsourcing of capabilities could aid in labor force reduction, operational flexibility, cost
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 11
reduction, reduced cycle times, expanded geographical coverage, and improved responsiveness.
Avon Corporation can adopt lean logistics to gain competitive advantage.
References
Aitken, J., (2008). Supply Chain Integration within the Context of a Supplier Association”,
Cranfield University PHD Thesis. Cited in Christopher, M., (1998), “Logistics and
Supply Chain Management. Strategies for Reducing Cost and Improving Service”,
Financial Times Pitman Publishing, London.
Avon. (2015). Avon: The Company for Women. Retrieved from
http://www.avoncompany.com/aboutavon/index.html
Christopher, M., (2008), “Logistics and Supply Chain Management. Strategies for Reducing
Cost and Improving Service”, Financial Times Pitman Publishing, London
BUSINESS OPERATIONS IN MY ORGANIZATION: A SYSTEMS VIEW 12
Landstar. (2015). Outsourced Logistics. Retrieved from
http://www.landstar.com/Solutions/Outsourced-Logistics
O’Reilly, J. (2010). Managing Inventory: From Fat to Lean. Madison, WI: Aberdeen Group.
Simpson, D. F., & Power, D. J. (2005). Use the supply relationship to develop lean and green
suppliers. Supply Chain Management, 10(1). Retrieved from ABI/INFORM Global
database.
Varila, M., Seppänen, M., & Suomala, P. (2007). Detailed cost modelling: A case study in
warehouse logistics. International Journal of Physical Distribution & Logistics
Management, 37(3). Retrieved from ABI/INFORM Global database.
Wallin, C., Rungtusanatham, M. J., & Rabinovich, E. (2006). What is the “right” inventory
management approach for a purchased item? International Journal of Operations &
Production Management, 26(1/2). Retrieved from ABI/INFORM Global database.
