THE FUNDAMENTAL OF LOGISTIC MANAGEMENT AND STRATEGY
This paper provides a basic but fundamental understanding of logistic primarily based on the book of “Logistics Management and Strategy” by Harrison and van Hoek. It will guide you through from the basic definition and concepts to the different supply chain strategies that exist, as well as providing a perception on the future logistic development. Explanation of principal terms like logistic, supply chain management and supply network is discussed, and important logistic systems like just-in-time, lean thinking and agile strategies are deliberated. Different ways of working together within the supply chain is debated, where there are different ways of sharing information and thus creating different relationships. A prediction of the future development of logistic is a more customer-responsive supply chain.
Logistic and supply chain management is vital for firms operating in the global market place today. Competition is increasing and by logistic competitive advantages can be gained. Different ways of competing through logistics will be examined as well as the management and strategies that need to be implemented in order for the whole supply chain to work. It is not only about machines and process but includes people and relationships that need to be managed as well. Where logistic management has often been in the shadow of an organization, this paper will provide knowledge on how important a functional logistic operations is for the firm‟s survival.
Definition and concepts
Harrison and van Hoek (2005) describe logistics as the task of managing material flow and information flow in a synchronous way without interruptions throughout the whole supply network. Managing logistics is accounted as one of the essential part of the overall activities of supply chain management (SCM). Material flow consist of controlling and managing the flow of material and products, while information flow mean sharing and spreading the demand data of end-customer throughout the supply network. Logistics has two aspects; a strategic long-term planning and a managerial short and medium term planning. (ibid.) Harrions and van Hoek (2005) mentions that many people tend to use the terms logistics and supply chain management interchangeable, while logistics is really only one of many tasks of supply chain management. Hines (1999) distinct the terms logistic and supply chain management, where logistic is order fulfillment and supply chain management include other support processes such as new product development and R&D as well as order fulfillment. Hines (1999) mean that supply chain management can be different in each industry where the key processes for an electrical distributor besides order fulfillment is supplier integration and new product introduction, and for a chemical manufacturer it can be customer support, cost management and quality and environmental management. Supply chain management implies the mission to coordinate the entire supply chain from the sourcing of raw material until the
finished product is delivered to the end-customer (Harrison and van Hoek 2005). Therefore the ultimate objective of SCM is to respond to the need of the end-customer and to satisfy their demands (ibid.). Additionally, it focuses on value innovation and the perceived customer value (Ericsson 2003). SCM involves planning, as in how many products should be bought, and controlling, as in sticking to the plan and avoid incidents (Harrison and van Hoek 2005). Rich and Hines (1997) as cited by Bruce et al. (2004) mention two perspectives of SCM – the internal supply chain (between departments) and external supply chain (between customerfirm-suppliers). Harrison and van Hoek (2005) explain that the supply chain consist of either few or many firms referred to as a partner, which is working with turning a basic commodity into a finished product that respond to a need...
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