Logistics

Logistics can be considered as a tool for getting the products and services where they are needed and when they are desired. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible.

Many haulage organizations in Europe include the word " logistics" in their company name. The largest privately owned British haulage company is Eddie Stobart Ltd.

Logistic flow. Steady-state flow systems are usually optimized for one of several goals: avoid shortages of the object (in military systems, especially for fuel and ammunition), minimize transportation cost, minimum time to obtain an object, or minimum total storage (time and amount) of objects (to minimize the interest losses of in-storage inventory). Logistic flow is particularly important in just in time manufacturing in which great emphasis is placed on minimizing inventory.

A recent trend in large distribution chains is to assign these goals to individual stock items, rather than optimizing the entire system for one goal. This is possible because the plans usually describe stock amounts to be stored at particular locations, and these vary depending on the strategy.

The basic method of optimizing a steady-state distribution system is to use a minimum spanning tree to characterize the transport network, and then place storage locations at the nodes, sized to handle the minimum, average, or maximum demand of items.

Quite often, the demand is limited by the transportation capacity out of the node's storage location. When the transportation out of a storage node exceeds its storage or incoming capacity, the storage is useful only to even out the amount of transportation per unit of time, to reduce peak loads on the transportation system.

Logistics as a concept is considered to evolve from the military movements of this world. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘ Logistikas ’ who were responsible for financial and supply distribution matters. Also the Oxford dictionary defines Logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.” The Iraq war was a dramatic example of the importance of logistics. It had become very necessary for the USA and its allies to move huge amounts of men, materials and equipment over great distances. Logistics was successfully used for this effective movement. The defeat of the British in the American War of Independence, and the defeat of Rommel in World War II, was largely attributed to logistics failure.

Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and is the science of process and incorporates all industry sectors. The goal of logistic work is to manage the fruition of project life cycles, supply chains and resultant efficiencies.

Importance and need of logistics management in today’s business. Logistics management deals with the coordination of resources in an organization. Logistics management focuses on the organization as a whole and not on individual units and departments while deciding about the allocation of resources. The resources may be in the form of men, machines, materials, money and time. Logistics management helps in the efficient use and deployment of the scarce resources. In absence of effective logistics management, there will be a depletion of various meager resources.

In developing countries like India, projects do not succeed because of lack of attention to logistics management. Due to this, there is a delay in the implementation of the projects. There is also uneven distribution of goods and services. In certain areas, there is excess of goods and services available, while in certain other areas, they are scarce. There is general inefficiency, uncertainty and instability in rendering services to the public.

Depending on the type of business, the expenditure on logistics can be anything between 5 and 35 percent of the sales. The cost of logistics management is therefore found to be high by certain industries. Because of this high cost, they are reluctant to implement logistics management. But, if adequate attention is paid to logistics, cost reduction can be effected in various departments. This is because logistics suggests the use of efficient means of transport, locating areas where cheaper materials are available, determining the correct quantities to be dispatched to market areas so that there is no scarcity or surplus felt in those areas etc.

In case a problem arises, logistics management would investigate the problem and resolve the same on the basis of costs and benefits to the organization as a whole and not to any particular department or unit. For example, to manufacture any product with zero defects would mean high cost of production, which the customer may not be willing to pay. At the same time, if the finished product contains a lot of defectives, the customers would be unwilling to buy such products. Logistics management tries to find out the permitted standards of allowable defects in the finished products without any loss in the market share. This information is passed on to the production departments, which fix standards for production.

Another type of interface problem is caused when for example the marketing department considers that it is responsible only for the sale of the finished product. On the other hand, the production department may feel that the moment the goods are loaded on to the vehicle, its responsibility ceases. Such rigid compartmentalization of responsibilities and roles is definitely not desirable. This leads to neglect of activities in the interface areas which affects the overall efficiency of the organization.

Logistics management does away with the ambiguity in the definition of the responsibilities of individuals, units and departments in an organization. It focuses on areas of possible inefficiency and ensures that all areas are effectively managed. It brings about co-ordination between units and departments.

https://en.wikipedia.org/wiki/Logistics