BBA-III_Logistic Management_Intro/History/Def/Scope etc.

Logistic Management

Origin of Logistics:

·          The concept of “Logistics” started many years before Christ and was used by Greek generals (Leon the Wise, Alexander the Great) in order to describe all the procedures for the army’s procurement on food, clothing, ammunition, etc.

·         Alexander the Great was a big fan of the mobility of his troops and he didn’t want his troops to stay in one place waiting for supplies from Macedonia. Thus, he tried to resolve the issues of supplies by using supplies from the local resources of his defeated enemies.  

·         For many years, logistics were always an issue in war affairs. Kingdoms and generals with strategic planning on logistics were those who won the war.  World War II was the major motivation of logistics to increase recognition and emphasis, following the clear importance of their contribution toward the Allied victory.  

·         Starting from the early ‘60s, many factors, such as deregulation, competitive pressures, information technology, globalization, profit leverage, etc., contributed to the increase of logistics science in the form we know it today.

The Scope of Logistics in Business:

Logistics / Supply Chain in a business aim to the following contributions:

·         Achieve maximum customer service level

·         Ensure high product quality

·         Achieve minimum (possible) cost

·         Be flexible in the constant market changes

Logistics management tries to have the “right product”, in the “right quantity”, at the “right place”, at the “right time”, with the “right cost”.

Logistics management must balance 2 basic targets:  

1.      Quality of Service  

2.      Low Cost.

What is Logistics (Defining Logistics)?

Logistics = Supply + Materials management + Distribution

Logistics is the . . . “process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.“

-Council of Logistics Management.

What is Supply Chain Management?

The ‘supply chain’ encompasses all activities associated with the flow and transformation of goods from the raw materials stage to the end user (along with the associated information flow).

Supply Chain Management is the… “integration of these activities, through improved supply chain relationships, to achieve a sustainable competitive advantage“

-Robert B. Hanfield & Ernest L. Nichols Jr., Introduction to Supply Chain Management.

The ‘physical supply channel’ refers to the time and space gap between a firm’s immediate material sources and its processing points.

 The ‘physical distribution channel’ refers to the time and space gap between a firm’s processing points and its customers

Four KEY PLAYERS:

1. Suppliers – Vendors

 2. Manufacturers

3. Wholesalers (& Retailers)

 4. Customers

Key components of Logistics – Key activities

The logistics activities can be classified into A) core and B) supporting.

The core activities take place in every supply channel (as can be seen from the figure).

 They contribute the most to the total cost of logistics or they are essential to the effective coordination and completion of the logistics task.

These are mentioned below:

 1. Customer service

 2. Transportation

 3. Inventory management

 4. Information flows and order processing

Key components of Logistics –

Support activities:

 Support activities vary from company to company.

A comprehensive list includes:

1. Warehousing (Space determination, stock layout, configuration, stock placement)

 2. Materials handling ( equipment selection & replacement policies, order-picking procedures, stock storage & retrieval)

3. Purchasing (supply source selection, purchase timing, purchase quantities)

4. Protective packaging (designed for handling, storage, protection from loss/damage)

5. Cooperate with production/operations (specify aggregate quantities, sequence & time production output, schedule supplies)

 6. Information maintenance (info collection, storage & manipulation, data analysis, control procedures).

The Role of Logistics in an Organization:

Logistics in an organization is considered as a continuation of marketing.

 Logistics play a critical role in each of the three critical elements of the marketing concept (customer satisfaction, integrated effort/systems approach and corporate profit) in several ways.

Note: These notes can be used as reference material for given topics. I shall be updating ALL topics gradually.

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