Final Project Submission – Logistics Improvement Plan

 From the beginning, business merchants have attempted to determine the profitability of their activities. Product cost, which is almost equivalent to the cost of goods sold with income, is the biggest expense for processing companies. If production costs increase, there will be an increase in supply income. However, low production costs do not necessarily promise a high profit. A business might high fixed costs, such as rent, or so low to an extent a company produces less superior products which no customer will be interested with. For instance, FedEx Company has secured international transportation services as per Ritter, Barrett & Wilson (2007) and has incurred losses in their process of the high cost of production over a long period of time.

Below is a fish-bone diagram showing the causes of increased production cost at FedEx Company.

Increased cost of living

High house rents

Increased co

Diminishing returns

Increased costs of labor and raw material

Diminishing returns

The law of diminishing returns shows the occurrence that if variable inputs are increased beyond a certain point, the marginal quantity produced starts to decrease.

Increased cost of labor and raw material

Consequently, when the cost of manpower and the raw material rise, there is an increase in production cost so that the profit is recovered during production.

Increased cost of living

Increase costs of living increase the cost of production. When most commodities in the market increase, the cost of producing those items goes up as a market demand. For example, FedEx Company has to increase its services cost to meet the market demand only if all other companies offer their services at higher costs.

High house rent

FedEx Company has to meet the rental obligations. Therefore, for them to settle this mentioned fact, they have to increase product and service cost. For instance, customers have to buy an item despite the price if the living cost is high because they have to use the product.

On the other hand, on the contrary, proper improvement of management reduces production cost (Edwards & United States, 2011).

The before-after-flowchart below shows some of the existing and proposed logistics processes at FedEx Company.

According to Bragg (2010), the following discussions narrows down to each element in the flowchart;

· Timely payment of the working staff

This element improves worker motives and FedEx at large has met this obligation hence increasing its profits. The workers are always assured of earlier salary.

· Reduced production costs

The cost of service delivery is decreased at this firm and therefore, they have attracted a huge number of customers.

· Timely delivery of goods and services.

Customers prefer their goods and services delivered on time. This company has achieved this through well-serviced delivery vehicles and other transportation or shipping machines.

· Improved Utility.

From our knowledge of the definition of Utility, it is the ability of goods and services to satisfy human needs. FedEx Company provides quality service delivery hence fulfilling its customer’s desire.

· Better payment of the management personnel

This characteristic, just like timely payment increase worker’s to work extra hard and hence improving the company’s conduct with customers.

· Increased number of working staff

This element enables full utilization of available resources to maximize service delivery.

· Faster response to market conditions

Besides shipping and freight services by this company, it also delivers parcels and documents. This point, however, shows the firm's flexibility in market demand.

· Improved security and privacy of products and services

The customer is always guaranteed with good company conduct with secure service offered. This goes hand in hand with goods delivered in their original state and not tampered with.

For instance, cost aspects of a business organization are highly determined by the above points.

Conclusion

It can be deduced that all the elements discussed above have a great impact on a company organization. They clearly determine the prosperity of a firm if they are met efficiently. According to the facts outlined above, profit is highly attainable. It is therefore recommended that all companies and organizations set attainable policies or laws, analyze market condition, visualize customer preferences and implement better logistic processes to smooth flow in the business industry. More so, they respect international and state business laws to avoid inconveniences just like what FedEx Company does. It can clearly be noted from their prosperity in the business sector globally.

References

Bragg, S. M. (2010). Cost reduction analysis: Tools and strategies. Hoboken, NJ: John Wiley & Sons.

Edwards, J. E., & United States. (2011). DOD's 2010 Comprehensive Inventory Management Improvement Plan addressed statutory requirements but faces implementation challenges. Washington, DC: U.S. Govt. Accountability Office.

Greater Boston Manufacturing Partnership. (2011). Change (over) is good: Cut costs and increase flexibility through setup reduction. Boston, Mass.: GBMP.

Ritter, L., Barrett, J. M., & Wilson, R. A. (2007). Securing global transportation networks: A total security management approach. New York: McGraw-Hill.