The evolution and role of Logistics in Business Chapter 1
International Logistics The process of planning, implementing and controlling the flow and storage of goods, services and related information from a point of origin to a point of consumption located in a different country
Evolution Demand forecasting Purchasing Requirements planning Production planning Manufacturing inventory Warehousing Materials handling Industrial packaging Finished goods inventory Distribution planning Order processing Transportation Customer service Strategic planning Information technology Marketing sales Materials Management Logistics (1990) Supply Chain(2000) Physical Distribution
Role of logistics in business Logistics adds value to facilitate sales Logistics expenditure range from 5% to 35% of sales Firms are interested in achieving logistical competency to gain competitive advantage
Activity centers in Logistics Transportation (inbound/outbound) Warehousing Inventory Unitization(packaging and packing) Material handling Communications
The entire activity can be divided into 1. Inventory flow (material based) 2. Information flow ( electronic based)
Characteristics of an organization with effective logistical competency Alternative logistical capabilities Flexibility according to the need and demand Time based performance Operational control Postponement capabilities Commitment to perfect service
Logistical service is measured in terms of Availability Operational capability and performance Service reliabilty
Costs involved in the logistics operation of a firm 1. Costs of planning and managing the logistics system 2. Transportation of supplies to the plant 3. Transportation of finished goods throughout the distribution system 4. Receiving, inspecting and putting supplies in the storage 5. Maintaining inventories 6. Processing customers orders 7. Packaging 8. Maintaining warehouses 9. Providing customer service
Value measures Ability to meet quoted delivery date Prompt and comprehensible quotation Provision of technical advice for problem solving Discount structure on list prices Technical after sales service Easy of contact with person in authority Replacement guarantee Wide range of services Extended credit facilities Order cycle time Order accuracy Order completeness Order condition