LOGISTICS IS THE ART AND SCIENCE OF MANAGEMENT, ENGINEERING AND TECHNICAL ACTIVITIES CONCERNED WITH REQUIREMENTS, DESIGN AND SUPPLYING, MAINTAINING RESOURCES TO SUPPORT OBJECTIVES, PLANS AND OPERATION.
— SOCIETY OF LOGISTICS ENGINEERS (SOLE) 1974.
Fierce competition in todays market has forced business enterprises to invest in and focus on supply chains. The growth in telecommunication and transportation technologies has led to further growth of the supply chain. The supply chain, also known as the logistics network, consists of suppliers, manufacturing centers, warehouses, distribution centers and retail outlets, as well as raw materials, work-in-process inventory and finished products that flow between the facilities.
The logistics management takes into consideration every facility that has an impact on cost. It plays an important role in making the product conform to customer requirements. Also it involves efficient integration of suppliers, manufacturers, warehouses and stores and encompasses the firms activities at many levels, from the strategic level through the tactical to the operational level.
Logistics is a challenging and important activity because it serves as an integrating or boundary spanning function. It links suppliers with customers and it integrates functional entities across a company. With the ever-growing competition in todays market place it becomes necessary for a firm to use its resources to focus on strategic opportunities. This includes several internal factors like management style, culture, human resources, facilities and several external factors like technology, globalization and competition. This is where the concept of logistics plays a major role, i.e. it helps to leverage certain advantages the firm has in the marketplace.
Lets us now have a look at how logistics works. It is important to recognize the importance of a dynamic balance between the minute details and the main elements involved in a product. The Role of Logistics is to maintain that balance. Once the firm realizes the importance of logistics it is necessary that the firm make full and efficient use of logistics. The first step is to create a buyer value for the customer and a strategic value for the firm.
The customer is the most important asset for a company. He drives the entire supply chain including manufacturing, marketing and logistics. Hence it is important for a firm to have a clear understanding of what the customer demands and to keep up to the customers expectations. Once a company has a clear understanding of its customers requirements it must device a strategy on how to use logistics to achieve it. This means that the company has to have a clear understanding or assessment of companys strategic direction.
Now lets take a look at the various steps involved in a logistics strategy development and planning process.
Visioning: this includes the systematic development of an organizational consensus regarding the key inputs to the logistics planning process as well as identification of the potential alternative logistics approaches. This is an important step for the following reasons:Helps to define a strategic direction to the company and also to get a clear understanding the role of logistics in it.Get a clear idea of the requirements of the various segments of customers.Have a look at the various factors that would affect the strategy of the company.Define alternative strategies and also the scope of the planning effort.Strategic analysis: this involves taking a look at the various components involved in the process and selecting the best logistics process among the alternatives. These components, which are to be reviewed, are revealed during he first step. This may include revamping the entire process to assessing how a single component can be used more effectively.
Planning: this involves the assembling of a plan that outlines the mission and goals for the logistics function and the programs and activities to achieve these goals. Logistics planning is an iterative process. The plans have to be redefined every year to improve the quality of performance.
Managing change: this involves effective management to implement enhanced ways of conducting business. The management should keeping changing the plans in accordance with the change in the market and also coach the organization to effectively embrace this change.
There are several factors that affect logistics. These issues need to be anticipated, prepared for and taken advantage of for a company to be successful in todays market. They are
External:GlobalisationTechnologyWorkforce 2000challenging nature of the work forceEnvironmental concernsInternal:Customer service and qualityThird party networksSupply chain managementChanges in management and organization styleListed below are some of the steps that could be followed to mitigate the above mentioned issues:
Performance:Better service for customersImproved productivityAssess just in time and quick response needsSystem structure:Better relationship with vendors, customers and third parties to more effectively manage the supply chainBetter relationship within and across the organizationTechnology integration:Better information systems that connect functions and organizationsCombine information and material handling systems for increased efficiency and effectiveness.