Logistics & Supply Chain Management

Logistics

Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics manages the flow of goods between the point of origin and the point of consumption to meet the requirements of customers or corporations. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items.

In military science, logistics is concerned with maintaining army supply lines while disrupting those of the enemy, since an armed force without resources and transportation is defenseless. Military logistics was already practiced in the ancient world and as the modern military has a significant need for logistics solutions, advanced implementations have been developed. In military logistics, logistics officers manage how and when to move resources to the places they are needed.

Logistics management is the part of supply chain management and supply chain engineering that plans, implements, and controls the efficient, effective forward, and reverse flow and storage of goods, services, and related information between the point of origin and point of consumption to meet customers’ requirements. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources is a common motivation in all logistics fields. A professional working in the field of logistics management is called a logistician.

Types:

Procurement logistics consists of activities such as market research, requirements planning, make-or-buy decisions, supplier management, ordering, and order controlling. The targets in procurement logistics might be contradictory: maximizing efficiency by concentrating on core competences, outsourcing while maintaining the autonomy of the company, or minimizing procurement costs while maximizing security within the supply process.

Advance Logistics consists of the activities required to set up or establish a plan for logistics activities to occur.

Global Logistics is technically the process of managing the “flow” of goods through what is called a supply chain, from its place of production to other parts of the world. This often requires an intermodal transport system, transport via ocean, air, rail, and truck. The effectiveness of global logistics is measured in the Logistics Performance Index.

Distribution logistics has, as main tasks, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Distribution logistics is necessary because the time, place, and quantity of production differ with the time, place, and quantity of consumption.

Disposal logistics has as its main function to reduce logistics cost(s) and enhance services related to the disposal of waste produced during the operation of a business.

Reverse logistics denotes all those operations related to the reuse of products and materials. The reverse logistics process includes the management and the sale of surpluses, as well as products being returned to vendors from buyers. Reverse logistics stands for all operations related to the reuse of products and materials. It is “the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. The opposite of reverse logistics is forward logistics.”

Green Logistics describes all attempts to measure and minimize the ecological impact of logistics activities. This includes all activities of the forward and reverse flows. This can be achieved through intermodal freight transport, path optimization, vehicle saturation and city logistics.

RAM Logistics: Combines both business logistics and military logistics since it is concerned with highly complicated technological systems for which Reliability, Availability and Maintainability are essential, ex: weapon systems and military supercomputers.

Asset Control Logistics: Companies in the retail channels, both organized retailers and suppliers, often deploy assets required for the display, preservation, promotion of their products. Some examples are refrigerators, stands, display monitors, seasonal equipment, poster stands & frames.

Logistics outsourcing

Logistics outsourcing involves a relationship between a company and an LSP (logistic service provider), which, compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, is characterized by a long-term orientation, and thus has a strategic nature.

Outsourcing does not have to be complete externalization to an LSP, but can also be partial:

• A single contract for supplying a specific service on occasion
• Creation of a spin-off
• Creation of a joint venture

Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself. According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in house. For example, if a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries. External 3PL providers have evolved from merely providing logistics capabilities to becoming real orchestrators of supply chains that create and sustain a competitive advantage, thus bringing about new levels of logistics outsourcing.

The concept of a fourth-party logistics (4PL) provider was first defined by Andersen Consulting (now Accenture) as an integrator that assembles the resources, planning capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third-party logistics (3PL) service provider targets a single function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor that manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer.

Supply Chain Management

In commerce, supply chain management (SCM) is the management of the flow of goods and services includes all processes that transform raw materials into final product between businesses and locations. This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.

Supply-chain management has been defined as the “design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally”. SCM practice draws heavily on industrial engineering, systems engineering, operations management, logistics, procurement, information technology and marketing, and strives for an integrated, multidisciplinary, multimethod approach. Marketing channels play an important role in supply-chain management. Current research in supply-chain management is concerned with topics related to sustainability and risk management, among others. An important concept discussed in SCM is supply chain resilience. Some suggest that the “people dimension” of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are topics that have, so far, been underrepresented on the research agenda. SCM is the broad range of activities required to plan, control and execute a product’s flow from materials to production to distribution in the most economical way possible. SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and capital in functions that broadly include demand planning, sourcing, production, inventory management and logistics or storage and transportation.

Although it has the same goals as supply chain engineering, supply chain management is focused on a more traditional management and business based approach, whereas supply chain engineering is focused on a mathematical model based one.

Functions:

Purchasing:

The activity of acquiring goods or services to accomplish the goals of an organization.

Inventory Management:

Activities employed in maintaining the optimum number or amount of each inventory item.

The objective of inventory management is to provide uninterrupted production, sales, and/or customer-service levels at the minimum cost. Since for many companies inventory is the largest item in the current assets category, inventory problems can and do contribute to losses or even business failures.

The management of inventory is a key function of any manufacturing company, whether domestic or foreign. Physical inventory is often one of the most signification assets of a company, and without it, a company would have no sales. It’s important to have the right product, at the right place at the right price, and inventory allows this to occur. In today’s global economy the inventory function has become more important and challenging as product can be produced and available anywhere in the world.  

Manufacturing:

The production of merchandise for use or sale using labour and machines, tools, chemical and biological processing, or formulation. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as aircraft, household appliances or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to end users and consumers.

The manufacturing function has received a lot of notice in the press as companies move various production operations overseers. Despite this, there are still many job opportunities available. These include:  production planner, production manager, corporate manager of production planning, plant manager, line operator, machine operator, QA analyst, or engineer.  Manufacturing will always play a key role in the US economy as many products will always be produced here.

Warehousing:

Performance of administrative and physical functions associated with storage of goods and materials. These functions include receipt, identification, inspection, verification, putting away, retrieval for issue, etc.

While many people view the function of warehousing as the simple process of storing products, it has evolved into a function that does more than that.   In today’s world of mass customization, the warehouse has evolved into a distribution centre, and even a facility to customize the final product via repacking, labelling or other physical conversion. The importance of these facilities has grown as it’s the final “stop” before moving to the customer.   Proper handling, storage and management of the products within these facilities must occur so that customer orders can be fulfilled with the right product at the right time.

Demand Planning:

The process of forecasting customer demand to drive execution of such demand by corporate supply chain and business management. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data and statistical techniques or current data from test markets. Demand forecasting may be used in production planning, inventory management, and at times in assessing future capacity requirements, or in making decisions on whether to enter a new market

Demand forecasting is predicting future demand for the product. In other words it refers to the prediction of probable demand for a product or a service on the basis of the past events and prevailing trends in the present.

Customer Service:

The process of ensuring customer satisfaction with a product or service. Often, customer service takes place while performing a transaction for the customer, such as making a sale or returning an item. Customer service can take the form of an in-person interaction, a phone call, self-service systems, or by other means.

While the customer service function appears to be at the end of the supply chain, it is definitely not the end of the process. This function is critical in that its works to meet the needs of the customer and ensure the customer receives what they want, when they want it. This function is sometimes the only point of contact a customer has with a customer so it’s imperative that they have the skills and knowledge to understand a customer’s needs and to meet those needs when possible.

Transportation:

Is the movement of people, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles and operations. Transport is important because it enables trade between persons, which is essential for the development of civilizations.

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