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.
Objectives
- Inventory cost reduction – carrying cost, ordering cost, transportation cost.
- Reliable and consistent delivery
- Freight economy
- Minimization of product damage
- Quick response
Functions
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.
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.- 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.
- 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, warehousing, order processing, protective packaging, and ultimate customers. The physical distribution function of logistics ensures zero defects services and prohibits stock outs by making the product available regularly with the minimum inventory level.
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