Reasons why Forecasting is Essential for an Organization to Improve its Logistics and Supply Chain Management

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Forecasting is critical for an organization's logistics and supply chain management since it reduces costs and increases savings. Because of the contemporary environment's characteristics, there is an increasing need for businesses to analyze and plan their demand, as well as integrate supply with demand. According to Christopher (2016), technology businesses can save approximately $0.9 million and $1.58 million by eliminating one percent under-forecasting and over-forecasting inaccuracy. The saving could be obtained when the error is decreased by just one percent. However, it is crucial to note that during the initial stages of development companies can reduce error by more than one percent.

Question 1b: Three main Types of Forecasting used within the Context of Supply Chain

The main types of forecasts used within the context of the supply chain include qualitative forecasting technique. This approach is based on judgmental or initiative evaluation and is appropriate in a situation where information is not available, irrelevant, or limited (Christopher, 2016). Common types of this technique are panel consensus, personal insights, market research, sales force estimates, Delphi method, and visionary forecasting. The second approach of forecasting is quantitative forecasting technique which involves the use of historical information on demand to project future demand. Common methods under this procedure are intrinsic and extrinsic procedures. Lastly is the trend forecasting model which is used when there is a definite downward and upward pattern in sales data.

Question 1c: How a Business can Improve its Forecasting Abilities

To improve the forecasting abilities, businesses need to frequently review their level of forecasting to help establish whether the forecast accuracy is appropriate (Christopher, 2016). Additionally, companies should seek the services of individuals with easy access to market information to input their expertise into the process. Moreover, it is necessary for the process to be periodically measured and the outcome reported to the stakeholders.

Question 2a: Description of 3PL

3PL stands for third-party logistics which refers to a company that offers outsourced logistics services to the client businesses for all or part of their supply chain management functions (Perotti, Micheli, & Cagno, 2015). The logistics services provided by the 3PLs include inventory control, warehousing, e-commerce support, order fulfilment, and transportation management. Most third-party logistics companies strive to meet the requirements of their regional or local markets. Therefore, there exist key differences based on their capabilities and service offering.

Question 2b: The information Required from a 3PL to Demonstrate its Ability to meet a Company's Requirements

In order to determine whether a third-party logistics company can meet the requirements of an establishment, the business will seek information which include the location of the warehouse; there is need to gather information on the warehouse specifications such as its size (Perotti, Micheli, & Cagno, 2015). One may also have to find out if it is situated close to a port, airport or railway, available space, room for expansion among others. Another area that also has to be looked into is the IT system issues which include thinks like warehouse management system, yard management system, and tracking freight system. Moreover, the businesses will also assess the file transfer abilities and system availability.

Other areas where information has to be obtained include the third-party logistics company's flexibility. Such data might include the ability to handle emergency or rush orders, over time, and its cost, and capability to add staff. It is also vital to the company's communication method for transferring information and even its qualification (Perotti, Micheli, & Cagno, 2015). That is, its accreditations, the period it has been in the business, customer comments about its services, staff qualifications, and if the firm is asset or non-asset based. Additionally, it is essential to know the 3PL price structure before it can be contracted.

Question 3a: Description of Humanitarian Logistics

Humanitarian logistics is a section of logistics that deals with warehousing of supplies and organizing delivery during complex emergencies or natural disasters to the affected communities and area (Özdamar & Ertem, 2015). Though they have been used mostly in the commercial supply chain, one of the most significant tools today in disaster relief activities is logistics. The fundamental task of humanitarian logistics includes obtaining and distributing supplies and services at the recommended place while at the same time make sure of best value for money. The suppliers include items such as temporary housing and medicine, water, and food among others.

Question 3b: Description of the Roles of Six Key Players in the Humanitarian Aid Supply Network that should Collaborate to Provide Humanitarian Support in the Times of Disaster

There are six key players in the humanitarian aid supply network comprises people with particular expertise in various fields. The players include the government, the military, aid agencies, donors, non-governmental organizations, and private sector companies. The government has a responsibility to activate the humanitarian logistics stream in the case of occurrence of a disaster (Özdamar & Ertem, 2015). They have the mandate to mobilize resource and begin the operation. The military through the soldiers assist in many ways like installation of hospitals and camps and repairing the routs and telecommunication. Aid agencies on their part provide both material and financial support to the government to help minimize the effects of a disaster.

Donors give the most significant proportion of funding needed for major relief agencies. The money donated goes into supporting the humanitarian activities (Özdamar & Ertem, 2015). They also provide goods and services for free, especially when performing logistics operations. The non-governmental organizations also offer both financial and material support and can work on a local, national or international level. Finally, the private sector companies play various roles such collection of donations from wellwishers and offering donations.

Question 4: Ways in which Information Technology is used to Improve Supply Chain and Logistics Efficiency and Effectiveness

Information Technology has been used in different ways to improve supply chain and logistics efficiency and effectiveness including computerized shipping and tracking. There are internet based software that allows for simplification of the supply process and significantly reduce shipping errors. For example, software such as Flash View enables savvy proprietors to combine all features of their supply chain in single place (Dyckhoff, Lackes, & Reese, 2004). IT has also been used in Radio Frequency Identification (RFID). When FRID chips place on products, the business owners can track their inventory. The improved product visibility facilitates detection of order anomalies, and employees can immediately fix the mistakes hence efficiency in the supply chain. Companies also use social media to streamline supply chain. Many establishments use social media to enhance the visibility of the business. Approximate 70 percent of companies utilize social media a component of their supply chain management and marketing strategy. Social media allows for more open interaction with clients, improve product demand, provide time-efficient and cost-effective marketing strategies, raises the overall productivity, and minimize operational costs.

IT simplifies the supply chain. It helps remove the many and unnecessary intermediaries within the supply chain it simple and making possible direct communication with the manufacturers (Dyckhoff, Lackes, & Reese, 2004). Simplifying the supply chain assists in the elimination of worthless links, enhance efficiency, and minimize expenditures. Last though not least, IT allows for Electronic Data Interchange (EDI) whereby there is a computer-to-computer transfer of business information in a standard format. EDI leads to better customer service, improved billing, reduced paperwork, increased productivity, and cost efficiency among others.


Christopher, M. (2016). Logistics & supply chain management. United Kingdom: FT Publishing International.

Dyckhoff, H., Lackes, R., & Reese, J. (2004). Supply chain management and reverse logistics. New York: Springer

Özdamar, L., & Ertem, M. A. (2015). Models, solutions and enabling technologies in humanitarian logistics. European Journal of Operational Research, 244(1), 55-65.

Perotti, S., Micheli, G. J., & Cagno, E. (2015). Motivations and barriers to the adoption of green supply chain practices among 3PLs. International Journal of Logistics Systems and Management, 20(2), 179-198.

June 06, 2023

Economics Business

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