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Logistics






 

1. Logistics is the organized movement of materials and, sometimes people. The term was first associated with the military but gradually spread to cover business activities. Logistics implies that a number of separate activities are coordinated. In 1991 the Council of Logistics Management, a trade organization based in the United States, defined logistics as: “the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.” Logistics also can be thought of as transportation after taking into account all the related activities that are considered in making decisions about moving materials.

2. Separate activities or functions, all of which fall under a business firm’s logistics “umbrella, ” include customer service, demand forecasting, documentation flow, interplant movements, inventory management, order processing, packaging, parts and service support, plant and warehouse site selection, production scheduling, purchasing, returned products, salvage scrap disposal, traffic management, and warehouse and distribution centre management. These activities must be planned and executed in coordination with each other.

3. Planning and arranging, and buying the transportation services needed to move a firm’s freight is known as traffic management. It is probably the most important element of logistics. The traffic manager is concerned with freight consolidation, carrier rates and charges, carrier selection, documentation, tracing and expediting, loss and damage claims, diversion and reconsignment, demurrage and detention, and movements of hazardous materials. Freight consolidation means the assembling of many smaller shipments into a smaller number of large shipments.

4. First, the company must decide which mode – water, rail, truck, or air – to use for each segment of traffic it handles. Once the modal choice is made, the traffic manager must choose which carrier firm or firms should get the business. After the selection is made and contract signed, the carriers’ performance is monitored to make certain that its quality does not deteriorate. Documentation is the preparation and handling of all the documents accompanying a shipment, most must be completed before shipping. In the late 20th century, computers and electronic data interchange (EDI) have made documentation less of a burden. Tracing and expediting are related; both involve paying attention to a shipment that is in the carrier’s hands. Tracing is the effort to find a delayed or misplaced shipment. Expediting is an attempt to have a specific shipment move faster than normal through the carrier’s system because it is needed immediately by the consignee. Loss and damage claims reflect the carrier’s responsibility to deliver merchandise in good order. If packages are missing or damaged, the shipper must determine which of these problems were the carrier’s fault and attempt to collect the amount of the damages from the carrier. Diversion and reconsignment cover the practice of starting freight on its way and then deciding to alter its destination. A customer may ask that the freight en route be delivered to the warehouse in city B rather than in city A. In this case, the shipper’s traffic manager has the shipment diverted from city A to city B; reconsigned goods are rerouted after delivery to their original destination. Demurrage and detention reflect the traffic manager’s responsibility to load and unload carrier equipment promptly. If he does not, then the carrier assesses daily detention or demurrage charges until the traffic manager’s firm frees the carrier’s equipment. This is to prevent the shippers and consignees from using the carrier’s equipment as warehouses.

5. Hazardous materials movements require special attention. Sometimes only certain routes, warehouses, and vehicular equipment can be used. Containers and vehicles have special markings, and additional documentation is needed to accompany the shipment.

 

 






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