Logistics Management

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Module 1
Introduction to Logistics and its interface with production and Marketing; Measures of Logistics; Physical distribution and logistics.

Introduction to Logistics
When total supply chain system is integrated over a firm, it is known as logistics •It is an integrated effort aimed at helping customer value at a lower cost. •Without logistical support, marketing and manufacturing departments cannot accomplish product in timely or fresh manner. •The value of logistics is evaluated when the inventory is correctly positioned to facilitate sale. It is very costly to create a logistical value. •A firm gains competitive advantage by providing customer with superior service through quality logistics. •Logistically leading firm have information system capability of monitoring logistical performance on a real time basis by giving them the capability to identify potential operational breakdowns and take corrective action prior to customer service failure Definitions

Council of logistics management defines logistics as the process of planning, implementing and controlling the efficient and effective flow of storage of goods, services and related information from the product point of origin to the point of consumption for the purpose of confronting the customer

According to Philip Kotler,” Logistics is defined as planning, implementing and controlling the physical flow of materials from the point of origin to the point of use, to meet customer needs at a profit.”

According to American Marketing Association, logistics may be defined as, “the management of all activities which facilitates movement and the coordination of supply and demand in the creation of time and place utility in goods.”

Logistics is an integration of information, transportation, inventory, warehousing, material handling and packaging. The operating responsibility of logistics is the geographical positioning of RM, WIP required at the lower possible cost. It is through logistical process that the material handling and product distribution takes place.

1.Inventory cost reduction – carrying cost, ordering cost, transportation cost. 2.Reliable and consistent delivery
3.Freight economy
4.Minimization of product damage
5.Quick response

The generic functions of logistics management are making available the required quantity of required quality products at the point of use as and when required at the least cost. In other words logistics management is concerned with the movement of goods from the point of inspection to the point of consumption.

1.Procurement function – it ensures smooth flow of raw materials, parts and components of specified quality and quantity from quality certified suppliers to the production centers. It includes identification of the inputs needed in terms of the quality specification and quantity requirement, study of sources for procurement, negotiations with them, final supply contract, order placement and shipment of inputs. 2.Production function – it deals with efficient and effective management of work in progress inventory and its flow between different stages of manufacturing. Hence this logistics function ensures timely availability of semi processed materials and components and inventory to support the production schedule. A set of logistic components is crucial at this stage comprise inputs inventory, production schedule, material handling, storage, temporary packaging if required, and final packaging if any. 3.Physical distribution function – it refers to the movement of finished goods for the last point of production to customers or end users. In other words this function of logistics facilitates marketing and sales performance of the enterprise by means of timely and economical product availability. Hence the major logistics component which comes under this function is inventory management of output products, transportation, distribution,...
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