logistics
Logistical activities: The functions of the logistical system transportation, inventory, warehousing, material handling, order processing , information handling and procurement.
The logistical competency is achieved by coordinating:
1. Network design
2. Information
3. Transportation
4. Inventory and
5. Warehousing, Material handling and packaging and order processing
Network design:
Typical logistics facilities are manufacturing plants, warehouses, cross-dock operations and retail stores. Determining how many of each type of facility are needed, their geographic locations and the work to be performed at each is a significant part of network design. It is also necessary to determine what inventory and how much to stock at each facility and where to assign customer orders for shipment. The network of facilities forms a structure from which logistical operations are performed. Thus the network incorporates information and transportation capabilities. Specific work, tasks related to processing customer orders, maintaining inventory and material handling are all performed within the network design framework.
Information:
Current technology is capable of handling the most demanding information requirements. If desired, information can obtain on a real-time basis. Managers are learning how to use such information tech to devise new and unique logistical solution.the technology is only as good as the quality information. Deficiencies in the quality of in formation can create countless operational problems. Typical deficiencies fall into two broad categories.
First of all, information received may be incorrect with respect to trends and events. Because a great deal of logistics takes place in anticipation of future requirements, an in accurate appraisal, or , forecast can cause inventory shortage or over commitment. Overly optimistic forecasts may results in improper inventory positioning.
Second, information related to order processing may be inaccurate with respect to a related to order processing may be inaccurate with respect to a specific customer’s requirement. The processing of an incorrect order creates all the cost logistics but typically does not result in sale. Indeed, logistics costs are often increased by the exposure of inventory return and if the sales opportunity still exists, the cost of once again trying to provide the desired service. Each error in the composition of information requirements erects potential disturbance for the total supply chain.
Forecasting and order management are two areas of logistical work that depend on information.
The logistics forecast is an effort to estimate future requirements; the forecast is used to guide the positioning of inventory to satisfy anticipated customer requirements. Logistics manager’s track record in forecasting is not impressive. Therefore, one of the main reasons managers use information’s to achieve positive control of logistical operations is their desire to replace forecasting in accuracy with faster response to customer requirements. Control concepts such as just-in –time(JIT),quick response(QR) and continuous replenishment(CR) represents approaches to positive logistical control made possible by the application of recently developed information tech. one of the main jobs of logistics managers is to plan and implement their firms strategy regarding the desired combination of forecasting and operational control.
Order management concerns the work involved in handling specific customer requirements. The customer order is the main transaction in logistics. Logistics serves both external and internal customers. External customers are those that consume the product or services for resale. Internal customers are organizational units within a firm that require logistical support to perform their designated work. The process of order management involves all aspects of managing customer requirements from initial order receipt to delivery, invoicing and often collection. The logistics capabilities of a firm can be only as good as its order management competency.
Transportation:
These three forms of transport are typically referred to as private, contract and common carriage. From the logistical system viewpoint, three factors are fundamental to transportation performance: cost, speed and consistency
Inventory:The objective is to achieve the desired customer service with the minimum inventory commitment, consistent with lowest total cost. Sound inventory management policy is based on five aspects of selective deployment:
• Customer segmentation.
Highly profitable customers constitute the core market for an enterprise. InvenAgni'story strategies need to be focused on meeting requirements of such core customers. The key to effective segmented logistics rests in the inventory priorities designed to support core customers.
• Product requirements.
Most enterprises experience a substantial variance in volume and profitability across product lines. If no restrictions are applied, a firm may find that less than 20% of all products marked account for more than 80% of total profit. While the so-called 80/20 rule or, Pareto principle is common, management can avoid excessive cost by implementing inventory strategies that consider fine –line product classification. A realistic assessment of which low-volume products should be carried is the key to avoiding excessive cost.Many enterprises find it desirable to hold slow-moving or, low-profit items at a central distribution warehouse. The actual delivery performance can be matched to customer importance when orders are received. Core customers may be serviced by fast, reliable air service, while other orders to fringe customers are delivered by less expensive ground transportation
• Transport integration.
Selection of the product assortment to be stocked at a specific facility has a direct impact on transportation performance. Most transportation rates are based on the volume and size of specific shipments. Thus, it may be sound strategy to stock sufficient products at a warehouse to be able to arrange consolidated shipments to a customer, or, graphical area. The corresponding savings in transportation may more than offset the increase cost of holding the inventory.
• Time-based requirements.
Commitments to deliver products rapidly to fulfill customer requirements are important drivers of logistics. Such time-based arrangement seeks to reduce overall inventories by developing the capability to respond rapidly to exact requirements of manufacturing, or, retail customers. If products and material’s can be delivered quickly, it may not be necessary to maintain inventories at manufacturing plants.
• Competitive performance.
Therefore, it may be necessary to position inventory in a specific warehouse to provide logistical service even if such commitment increases total cost. Sound inventory policies are essential to gain a customer service advantage, or, to neutralize a strength that a competitors enjoys.
The logistical competency is achieved by coordinating:
1. Network design
2. Information
3. Transportation
4. Inventory and
5. Warehousing, Material handling and packaging and order processing
Network design:
Typical logistics facilities are manufacturing plants, warehouses, cross-dock operations and retail stores. Determining how many of each type of facility are needed, their geographic locations and the work to be performed at each is a significant part of network design. It is also necessary to determine what inventory and how much to stock at each facility and where to assign customer orders for shipment. The network of facilities forms a structure from which logistical operations are performed. Thus the network incorporates information and transportation capabilities. Specific work, tasks related to processing customer orders, maintaining inventory and material handling are all performed within the network design framework.
Information:
Current technology is capable of handling the most demanding information requirements. If desired, information can obtain on a real-time basis. Managers are learning how to use such information tech to devise new and unique logistical solution.the technology is only as good as the quality information. Deficiencies in the quality of in formation can create countless operational problems. Typical deficiencies fall into two broad categories.
First of all, information received may be incorrect with respect to trends and events. Because a great deal of logistics takes place in anticipation of future requirements, an in accurate appraisal, or , forecast can cause inventory shortage or over commitment. Overly optimistic forecasts may results in improper inventory positioning.
Second, information related to order processing may be inaccurate with respect to a related to order processing may be inaccurate with respect to a specific customer’s requirement. The processing of an incorrect order creates all the cost logistics but typically does not result in sale. Indeed, logistics costs are often increased by the exposure of inventory return and if the sales opportunity still exists, the cost of once again trying to provide the desired service. Each error in the composition of information requirements erects potential disturbance for the total supply chain.
Forecasting and order management are two areas of logistical work that depend on information.
The logistics forecast is an effort to estimate future requirements; the forecast is used to guide the positioning of inventory to satisfy anticipated customer requirements. Logistics manager’s track record in forecasting is not impressive. Therefore, one of the main reasons managers use information’s to achieve positive control of logistical operations is their desire to replace forecasting in accuracy with faster response to customer requirements. Control concepts such as just-in –time(JIT),quick response(QR) and continuous replenishment(CR) represents approaches to positive logistical control made possible by the application of recently developed information tech. one of the main jobs of logistics managers is to plan and implement their firms strategy regarding the desired combination of forecasting and operational control.
Order management concerns the work involved in handling specific customer requirements. The customer order is the main transaction in logistics. Logistics serves both external and internal customers. External customers are those that consume the product or services for resale. Internal customers are organizational units within a firm that require logistical support to perform their designated work. The process of order management involves all aspects of managing customer requirements from initial order receipt to delivery, invoicing and often collection. The logistics capabilities of a firm can be only as good as its order management competency.
Transportation:
These three forms of transport are typically referred to as private, contract and common carriage. From the logistical system viewpoint, three factors are fundamental to transportation performance: cost, speed and consistency
Inventory:The objective is to achieve the desired customer service with the minimum inventory commitment, consistent with lowest total cost. Sound inventory management policy is based on five aspects of selective deployment:
• Customer segmentation.
Highly profitable customers constitute the core market for an enterprise. InvenAgni'story strategies need to be focused on meeting requirements of such core customers. The key to effective segmented logistics rests in the inventory priorities designed to support core customers.
• Product requirements.
Most enterprises experience a substantial variance in volume and profitability across product lines. If no restrictions are applied, a firm may find that less than 20% of all products marked account for more than 80% of total profit. While the so-called 80/20 rule or, Pareto principle is common, management can avoid excessive cost by implementing inventory strategies that consider fine –line product classification. A realistic assessment of which low-volume products should be carried is the key to avoiding excessive cost.Many enterprises find it desirable to hold slow-moving or, low-profit items at a central distribution warehouse. The actual delivery performance can be matched to customer importance when orders are received. Core customers may be serviced by fast, reliable air service, while other orders to fringe customers are delivered by less expensive ground transportation
• Transport integration.
Selection of the product assortment to be stocked at a specific facility has a direct impact on transportation performance. Most transportation rates are based on the volume and size of specific shipments. Thus, it may be sound strategy to stock sufficient products at a warehouse to be able to arrange consolidated shipments to a customer, or, graphical area. The corresponding savings in transportation may more than offset the increase cost of holding the inventory.
• Time-based requirements.
Commitments to deliver products rapidly to fulfill customer requirements are important drivers of logistics. Such time-based arrangement seeks to reduce overall inventories by developing the capability to respond rapidly to exact requirements of manufacturing, or, retail customers. If products and material’s can be delivered quickly, it may not be necessary to maintain inventories at manufacturing plants.
• Competitive performance.
Therefore, it may be necessary to position inventory in a specific warehouse to provide logistical service even if such commitment increases total cost. Sound inventory policies are essential to gain a customer service advantage, or, to neutralize a strength that a competitors enjoys.
