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.
**Any problem...I am just a call away...
:-) Amit Arya.
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