Activity-based costing seeks to relate all relevant expenses to the value adding activities performed. For example, costs are assigned to a customer or product to reflect all relevant activity cost independent of when and where they occur. The fundamental concept of activity-based costing is that expenses need to be assigned to the activity that consumes a resource rather than to an organizational or budget unit. For example, two products produced in the same manufacturing facility, may require different assembling and handling procedures. One product may need an assembly or packaging operations that requires additional equipment or labor. If total equipment and labor costs are allocated to the products on the basis of sales or units produced than both items will be charged for the additional assembly and packaging operations required by only one of them. In case of logistics, the key event is a customer order and related activities and Continue reading
Logistics Basics
3 Important Categories of Logistics
Logistics is the process of accurately interpreting customer requirements or orders or marketing strategy, as also providing manufacturing operations support, with precise execution of the process of reaching the product material from the point of origin to the point of requirement consumption ensuring suitable care of the product material throughout to avoid damage deterioration, continuously ensuring the lowest possible cost throughout the process. Logistics is concerned with getting products and services where they are needed when they are desired. The responsibility of logistics is the temporal and spatial positioning of raw materials, work in progress, and finished inventories when and where required. Integrated logistics support, when properly understood and applied, can provide the means to identify and resolve many logistic problems, frequently before they developed. Logistics, in the broadest sense of the word, can be considered as scope of activity comprised of three major areas or subsets. Subsistence logistics, Operation Continue reading
Concept of Export Packing
The aim of every exporter must be to ensure that the goods arrive safely in the hands of the consumer. The fact that the goods are fully insured is in excuse for not bothering to check whether damage or pilferage occurs during the transit. Whilst the payment of the insurance claim may satisfy the buyer financially, it will not satisfy him mentally. The buyer orders the goods because he can sell them, before the vessel arrives. If he receives only a part of what he has handed in a salable condition, he will probably lose the goodwill of his customers and, in consequences, will blame the exporter. Distinction Between Packing and Packaging There is distinction between the terms export packing and packaging. Packaging refers to the job of providing specialized containers for the packing of goods. Packing is used for the general operation of putting goods into containers for shipment Continue reading
Importance of Logistics in Business
The importance of logistics systems lies in the fact that it leads to ultimate consummation of the sales contract. The buyer is not interested in the promises of the seller that he can supply goods at competitive price but that he actually does so. Delivery according to the contract is essential to fulfilling the commercial and legal requirements. In the event of failure to comply with the stipulated supply of period, the seller may not only get his sale amount back, but may also be legally penalized, if the sales contract so specifies. There is no doubt that better delivery schedule is a good promotional strategy when buyers are reluctant to invest in warehousing and keeping higher level of inventories. Similarly, better and/or timely delivery helps in getting repeat orders through creation of goodwill for the supplier. Thus, as effective logistics system contributes immensely to the achievements of the business Continue reading