Logistics Management

 Logistic is the process of planning, implementing and controlling the efficient, effective flow of goods storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.

Logistics exists to satisfy customer requirements by facilitating relevant manufacturing and marketing operation. The main responsibility of logistic is the geographical positioning of raw materials, work in process and finished inventories at the lowest possible cost. 
Creating logistics value is costly. Logistics accounts for one of the highest costs of doing business. Logistics expenditure normally ranges from 5% to 35% of sales depending on the type of business. Thus logistics even though very important for any business success is expensive. 

DEFINITIONS OF LOGISTICS MANAGEMENT 
Logistic management encompasses all materials flows management, from the inflow of purchased materials into works (i.e. materials planning of raw materials components and other products, transport of materials from suppliers to works, receiving and inspection and storage of materials) materials flow through manufacturing processes (i.e. materials issues and materials handling) and material flow to customers (physical distribution).

Materials Logistics physical distribution Management
(Relationship between logistics and other) 
Schmidt describes logistics management as: 
“The management (i.e. the planning, execution and control) of all factors that affect the material flow and the information about it, seen from the perspective of customer’s requirements for the purpose of achieving a high reliability, 
A high degree of completeness and a short delivery time” 
Institute of purchasing and supply define logistics as: 

“Logistics is the concept which seeks provide for the management and co-ordination of the activities within the supply chain from sourcing and acquisition through production, where appropriate, and on through distribution channels to the customer. The goal of logistics is the creation of competitive advantages through the simultaneous achievement of high customer service levels, optimum investment and value for money.”

According to Bowersox and Closs: Logistics management includes the design and administration of systems to control the flow of materials work in progress and finished inventory to support business unit strategy” 

From the above definitions, we conclude that-- 

(1) Logistics management is the function of managing the total flow of materials which includes movement of raw materials from suppliers, in process within the firm, and movement of finished goods to the customer. 
(2) Logistics management covers both physical flow of products as well as information flow covering reports and documentation relating to goods movement. 
(3) Logistics management evolves procedures that meet customer service at the minimum cost. 
(4) Logistic management achieves cost reduction by speeding the flow of materials, work-in-progress and finished products. 

ACTIVITIES OF THE LOGISTICS FUNCTIONS 
Logistics function consists of following sets of activities: 
(1) Order processing. Though this activity does not contribute much to, Total costs, yet it is treated important because of its contribution to lead time. 
(2) Transportation Management. Transportation involves--- 
? Firm’s own transport (if goods are to be collected) 
? Hiring of transport (if services of external firm are to be used) 
? Routing and load planning. 
? Selection of the most suitable of transport (i.e. rail, road, sea or air). 
? Packaging needed (i.e. loose, pallets or special). 
? Documentation required (especially if goods are arriving from overseas.) 
(3) Inventory management. Inventories require to be maintained to take care of needs between the time of demand and time of supply. Inventory management involved decisions concerning. 
? Buffer stocks. 
? Lead time. 
? Replenishment of stocks. 
(4) Warehousing. Is concerned with management of space to hold inventories and it involves such problems as: 
? Site selection. 
? Space determination. 
? Layout and design. 
? Receipts and issues and storage. 
? Preservation. 
(5) Materials handling is concerned with movement of product at the stocking point and it involves such decision as : 
? Smoothing of materials flow. 
? Selection of materials handling equipment. 
? Maintenance of materials handling equipment. 
(6) Packaging is concerned with design of packing of the product that ensures damage free movement of the product and is conducive to efficient handling and storage. 
(7) Acquisition is concerned with sourcing, planning and ordering of the product in order to ensure its availability in the right quantity, at the right time, at the right place and at the right cost. Acquisition, however, dose not includes other purchasing activities such as price negotiation, vendor rating etc. 
(8) Product scheduling is concerned with preparation of aggregate quantities to be produced in accordance with demands, actual as well as projected. Product scheduling, however, dose not include day-to-day detailed scheduling carried out by production planner. 
(9) Information system is a must for the successful implementation of logistics function. Database on customer location, sales volume, inventory levels, lead times etc. must be maintained. 

IMPROVING EFFECTIVENESS OF LOGISTICS MANAGEMENT: 
Five pillars to the effective logistics are: (i) Logistical network, (ii) Transport (iii) information, (iv) Inventory and (v) Warehousing, materials handling and packaging. 

(1) Logistical network include facilities such as manufacturing, warehouse, dealers and retail stores. The larger the geographical spread, the more complex the film’s logistical network. Superior logistical network, based on systematic analysis and determination of number of each type of facilities, their geographical location, specific work allocations etc. can be a very big competitive tool. 
(2) Information. Accurate forecasting and good order management are essential for the Systematic Inventory Management  and Contingency Replenishment (CR) and quick response (QR) to the customer. Timely information thus is the key to the logistical performance. Modern information technology, in the form of both hardware (faxes, mobile phones, e-mail) and software (Enterprise Resource Planning) have removed the deficiencies in information. 
(3) Transport. Cost, speed and reliability are key determinants of the effectiveness, whether it is a war or business. Since time is the essence, quality of transport performance becomes the critical factor. Further, as speed and cost of transport are inter-related, careful selection of the transport becomes essential for optimum cost. For example, faster transport costs mean more money but reduce inventories and improve customer service. 
(4) Inventory management. Good inventory management system must be put into place to achieve desired customer service with minimum inventory investment. Inventory policies must be carefully devised. Excessive inventories hide deficiencies (e.g. deficiencies of logistics network, poor quality of suppliers, interior purchase order management etc.) while too low inventories cause delay in order execution, slow response and deficient customer service. Selective treatment based on following principles generally lead to effective inventory management: 
? Enough quantity of high profit high volume products, demanded by the core customer, may be carried in stock while or negligible inventory may be kept of low-profit-low volume products purchased by a fringe of customers. 
? Core customers may be serviced by fast reliable air service while orders of other customers may be dispatched by surface transport. 
? Commitment to deliver product rapidly and timely (say within the declared period) must be preceded by enhanced capabilities of logistic network. 
? Commitment of rapid and consistent delivery should be intended to gain customer service advantage and to neutralize the strength that a competitor enjoys. 
(5) Warehousing, materials handling and packaging. The choice and location of the warehouse should be with a view to get closer to the core customers. Materials handling within the warehouse should be planned to ensure safe and speedy receipt, movement, storage and packaging of customer’s requirements