Importance of Logistic Management
Logistics it is defined as the art and science of obtaining producing and distributing material and product in the proper place and improper quantities. Logistics management it is the parts of supply chain management that plans implements and controls the efficient effective forward and reverse flow and storage of goods services and related information between the points of origin and the points of consumption in order to meet customers’ requirements. Difference between supply chain and logistics transforming a raw material into products and getting it to customers is supply chain whereas movement of materials in the supply chain is logistics the seven hours of logistics. The most popular concepts of logistics management is the concept of the seven ARS.
It is concerned with getting the right product in the right quantity in the right condition at the right place at the right time to the right customer and at the right price. Logistics functions following the areas of logistics management contribute to an integrated approach to logistics within supply chain management transportation. Many modes of transportation play a role in the movement of goods through supply chains via air,rail, road, water or pipeline selecting the most efficient combination improves the value created for customers warehousing. When inventory is not on the move between locations it may have to spend some time in a warehouse. Warehousing is the activities related to receiving storing and shipping materials to and from production or distribution locations third and fourth party logistics. Third party logistics providers actually perform or manage one or more logistics services. Fourth party providers are logistics specialists and play the role of general contractor by taking over the entire logistics function for an organization.
Reverse logistics it is a way to handle the return reuse recycling or disposal of products that make the reverse journey from the customer to the supplier. Logistics value proposition managers must be able to balance logistics costs against the appropriate level of customer service. Logistics are usually managed as an integrated effort to achieve customer satisfaction at the lowest. Total cost therefore service and cost minimization are two key elements in logistics. Value proposition logistics goals and strategies logistics shares the goal of supply chain management to meet customer requirements there are a number of logistics goals. The most experts agree on respond rapidly to changes in the market or customer orders minimize variances in logistics service minimize inventory to reduce costs consolidate product movement by grouping shipments maintain high quality and engage in continuous improvement and support .
The entire product life cycle and the reverse logistics supply chain an effective logistics strategy depends on the following tactics. Coordinating functions that is transportation management integrating the supply chain substituting information for inventory reducing supply chain partners to an effective minimum number and pooling risks substituting information for inventory it is one of the tactics used to design effective logistics strategy it requires taking a series of steps to construct the logistics network.
Step 1 locates in the right countries first identify all geographical locations and then analyze your forward and reverse chains to see if selecting different geographic locations could make the logistics function more efficient and effective.
Step2 to develop an effective export import strategy determine the volume of freight and units that are imports and exports and decide where to place inventory for strategic advantage.
Step 3 select warehouse locations determine the number of warehouses calculate optimal distance from markets and establish the most effective placement of warehouses around the world.
Step 4 select transportation modes and carriers determine the mix of transportation modes that will most efficiently connect suppliers producers warehouses distributors and customers.
Step 5 select the right number of partners select the minimum number of firms freight forwarders and third or fourth party logistics to manage forward and reverse logistics.
Step 6 develops state-of-the-art information systems it reduces inventory costs by accurately and rapidly tracking demand information and the location of goods substituting information for inventory it is another tactic used to design effective logistics strategy physical inventory can be replaced by better information in the following ways improve communications talk with suppliers regularly and discuss plans with them collaborate with suppliers use continuous improvement tools and share observations about trends track inventory precisely it could be done by using GPS and bar-code systems keep inventory in transit it reduces inventory costs for example cross docking use postponement centers avoid filling.
Warehouses with the wrong mix have finished goods by setting up postponement centers to delay product assembly until an actual order has been received mix shipments to match customer needs match deliveries more precisely to customer needs by mixing different SKU’s on the same pallet and by mixing pallets from different suppliers and don’t wait. In line at customs reduce the time spent in customs by clearing freight while still on the water or in the air reducing supply chain partners to an effective number the more partners there are in the chain the more difficult and expensive.
The chain is to manage consider a supply chain of three excellence between factory and customers two factory warehouses nine wholesale warehouses and 350 retail stores reducing the number of partners reduces operating costs cycle time and inventory holding costs when consider reducing the logistic partners look for an entire epsilon such as all the wholesale warehouses or factory warehouses but if you eliminate all partners as you would be back to the vertical integration strategy pooling risks when manufacturers and retailers experience high variability in demand for their products they can pull together common inventory components associated with a broad family of products to buffer the overall burden of having to deploy inventory for each discrete product this is called pooling risks this reduces storage costs and risks of stock outs by consolidating stock in centralized warehouses flow of goods and information these flows exist in each supply chain Enterprise must have internal process integration and collaboration between functions as well as alignment and integration across the supply chain customer information flows through the enterprise via orders sales activity and forecasts value-added flow of goods begins as products and materials are procured you.