Logistics Management

Logistics Management

Definition

Logistical management includes the design and administration of system to control the flow of material, WIP and finished inventory to support business unit strategy.

Overall goal of logistics is to achieve a targeted level of customer service at the lowest possible total cost.

LOGISTICAL TOTAL COST – includes the cost of physical distribution system and cost of logistical supply chain

PHYSICAL DISTRIBUTION SYSTEM cost includes

• Manufacturing
• Wholesale
• Inventory
• Transportation
• Administration

LOGISTICAL SUPPLY CHAIN cost includes

• Cost of inventory
• Production cost
• Service cost

Logistical Integration Hierarchy

Basic  Functions  Performance Cycle  competencies  strategic positioning (universal process)

Basic work – consists of specific job essential to logistical performance. E.g., order pricing/ truck driving. It involves many people.

Functional Areas – served as the organizational focus to perform and administer logistics work. E.g. Traffic dept  transportation. These are the area of logistics essential for operational excellence. The resources are to be integrated over function. It is a cross functional coordination.

Performance cycle

• Operational cycle for logistics execution
• Provides operational structure for logistics integration
• Linking basic work and function to complete order to delivery operation
• Logistical temporal integration

Logistical Competency

It is a relative measurement of firm’s capability to provide competitively superior customer service at lower possible cost. It is achieved through

• Alternative logistical capabilities
• Emphasizing flexibility
• Time based performance
• Operational control
• Postponement capabilities
• Commitment o perfect service performance