LOGISTICAL FUNCTIONS

LOGISTICAL FUNCTIONS [components of logistics or elements of logistics]

1. Information management Management is appreciating importance of information as an element of logistics of late, now. The role of information is vital in order processing. Quality of information is critical as error in composition of information requirement creates potential disturbance in the supply chain. Incorrect order processing due to erroneous information will result into product recall and reshipment if the sales opportunity still exists. Faster and quality information flow from customer to processor results into cost effective logistics. Forecasting and order management are two areas of logistical work dependent on information. Forecasting is an effort to estimate future requirements to position inventory or assets devoted to inventory. As forecasting becomes unreliable in a fast changing environment, control strategies like JIT, Quick Response and Continuous Replenishment came into being. Now it is the task of the logistics function to use information technology to strengthen operation control and forecasting to the best advantage of the organization. Leading firms typically have information systems capable of monitoring logistical performance on a real time basis giving them the capability to identify potential operational breakdowns and take corrective actions prior to customer service failure. LOGISTICS FUNCTIONS INVENTORY - When to order? How much to order? Just In Time TRANSPORTATION - Water, Road, Rail, Pipeline & Air In situations where timely corrective action is not possible, customers can be notified in advance and thereby taking the surprise out of forthcoming service failures

2. Inventory control Keeping the stock levels in such a position, so that neither stock out nor stock piling takes place is Inventory control. While formulating inventory policies find out 20% of the products marketed that account for 80% of the profit.

3. Transportation Transportation is the most visible of all elements of logistics and high contributor to logistics expenditure. Costs of transportation are mainly as follows

a. Movement costs: money paid for moving material across geographical terrain b. Preservation costs: money spent on preserving the material during transit c. Cost of idle asset: inventory is unavailable for conversion during transit. This results into costs for organization d. Administration costs: money spent on administration

Transportation is accomplished in three ways a. One’s own fleet – private carriage b. Contract with specialists on long term basis – contract carriage c. Contract on individual shipment basis – common carriage

Expectations from transportation service are a. minimum cost – transportation costs are explained earlier b. Speed: speed of transport means the speed with which goods reach the destination. c. Consistency: consistency in speed is achieving the same speed over a long period of time.

Consistency reflects on the reliability of carrier. Any unexpected variance can play havoc with logistics. Modern information technology has made continuous tracking of consignments possible. This takes the element of surprise out. IT has helped logistics managers to seek out ways and means to improve speed and consistency. What is becoming important is a combination of speed and consistency. Requirement of speed depends on type of industry. In some situations speed may not be important. Then transportation service offering high speed increases cost. So logistics managers have to strike a balance between service and cost. Three important aspects of transportation are facility location, transportation cost and consistency. Design of logistics system should consider total costs rather than elemental cost of transportation

4. Warehousing Warehousing is holding material before dispatch after it is produced. Although warehousing is conventionally considered to be a storage facility, it plays a much higher role from logistics viewpoint. It is perceived to be a switching facility rather than a storage facility. Warehouse ownership can be private, public or third party contract. Warehouse provides economic and service benefits to the logistical system. Economic benefits are Movement Consolidation, Break-bulk, Cross-dock, Processing/Postponement & stock piling. Service benefits are spot stocking, assortment, mixing & production support

5. Material handling Material handling covers receiving, moving, storing, dispatching activities. It has an 8 impact on cost [capital as well as running], quality and safety. One of the principles of material handling is minimum movement. Commonly used material handling equipment are forklifts, EOT Cranes, hoists, pulley blocks, trolleys, railroad cars, conveyers, ropes and slings etc.

6. Packaging Packaging is done to make handling and transporting cost effective. It protects the product in transit and handling. Packing is expected to facilitate lifting and moving by providing easy access to forks or hooks. Packing is also expected to display universal symbols and other instructions for handling. Eg. pallets and containers, wooden boxes, wrapping etc. Types of packaging: consumer packaging and industrial packaging Consumer packaging - There is no focus on logistics. Importance is given to marketing appeal and packaging the finished product. Industrial packaging importance is given to logistics considerations handling and moving. Individual parts are packed in cartons or bags and grouped together as master cartons. Master cartons are grouped into units for handling. This concept leads to unitization and subsequently to containerization.?