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What is Logistics Management? Meaning, Basic Functions, Examples & Strategies| AIMS Education
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Logistics it is defined as the Art and
Science of obtaining producing and
distributing material and product in the
proper place and improper quantities
Logistics management it is the part of
Supply Chain management that plans
implements and controls the efficient
effective forward and reverse flow and
storage of goods services and related
information between the point of origin
and the point of consumption in order to
requirements difference between supply
chain and Logistics transforming a raw
material into products and getting it to
customers is supply chain whereas
movement of materials in the supply
supply chain is
logistics the seven RS of logistics the
most popular concepts of logistics
management is the concept of the seven
RS it is concerned with getting the
right product in the right quantity in
the right condition at the right place
at the right time to the right customer
and at the right
price Logistics functions following the
areas of logistics management contribute
to an integrated approach to Logistics
within Supply Chain management
Transportation many modes of
transportation play a role in the
movement of goods through Supply chains
via air Rail Road water or pipeline
selecting the most efficient combination
improves the value created for customers
customers
warehousing when inventory is not on the
move between locations it may have to
spend some time in a warehouse
warehousing is the activities related to
receiving storing and shipping materials
to and from production or distribution
locations third and fourth-party
Logistics third-party Logistics
providers actually perform or manage one
or more Logistics Services fourth party
providers are Logistics Specialists and
play the role of general contractor by
taking over the entire Logistics
function for an
organization reverse Logistics it is a
way to handle the return Reuse Recycling
or disposal of products that make the
supplier Logistics value proposition
managers must be able to balance
Logistics costs against the appropriate
level of customer service Logistics are
usually managed as an integrated effort
to achieve customer satisfaction at the
lowest total cost therefore service and
cost minimization are two key elements
in logistics value
proposition Logistics goals and
strategies Logistics shares the goal of
Supply Chain management to meet customer
requirements there are a number of
logistics goals that most experts agree
on respond rapidly to changes in the
market or customer orders minimize
variances in logistics service minimize
inventory to reduce costs consolidate
product mve movent by grouping shipments
maintain high quality and engage in
continuous Improvement and support the
entire product life cycle and the
reverse Logistics supply
chain an effective Logistics strategy
depends on the following tactics
coordinating functions that is
transportation management integrating
the supply chain substituting
information for inventory reducing
supply chain Partners to an effective
minimum number
risks substituting information for
inventory it is one of the tactics used
to design effective Logistics strategy
it requires taking a series of steps to
construct the logistics
Network step one locate in the right
countries first identify all
geographical locations and then analyze
your forward and reverse chains to see
if selecting different Geographic
locations could make the logistics
function more efficient and
effective step two develop an effective
export import strategy determine the
volume of freight and units that are
imports and exports and decide where to
place inventory for strategic
Advantage step three select Warehouse
locations determine the number of
warehouses calculate optimal distance
from markets and establish the most
effective placement of warehouses around
the world
World step four select Transportation
modes and carriers determine the mix of
Transportation modes that will most
efficiently connect suppliers producers
warehouses Distributors and
customers step five select the right
number of Partners select the minimum
number of firms Freight forwarders and
third or fourth party Logistics to
manage forward and reverse
Logistics step six develop date
of-the-art Information Systems it
reduces inventory costs by accurately
and rapidly tracking demand information
goods substituting information for
inventory it is another tactic used to
design effective Logistics strategy
physical inventory can be replaced by
better information in the following ways
improve Communications talk with
suppliers regularly and discuss plans
with them collaborate with suppliers use
continuous Improvement tools and share
observations about Trends track
inventory precisely it could be done by
using GPS and barcode systems keep
inventory in transit it reduces
inventory costs for example cross
docking use postponement centers avoid
filling warehouses with the wrong mix of
finished goods by setting up
postponement centers to delay product
assembly until an actual order has been
received mix shipments to match customer
needs match deliveries more precisely to
customer needs by mixing different skews
on the same pallet and by mixing pallets
from different
suppliers and don't wait in line at
Customs reduce the time spent in customs
by clearing Freight while still on the
air reducing supply chain Partners to an
effective number the more Partners there
are in the chain the more difficult and
expensive the chain is to manage
consider a supply chain of three
echelons between Factory and customers
two Factory warehouses nine wholesale
warehouses and 350 retail stores
reducing the number of Partners reduces
operating costs cycle time and inventory
holding costs when consider reducing the
logistic Partners look for an entire
etalon such as all the wholesale
warehouses or factory warehouses but if
you eliminate all Partners you would be
back to the vertical integration
strategy pooling risks when
manufacturers and retailers experience
High variability in demand for their
products they can pull together common
inventory components associated with a
broad family of products to buffer the
overall burden of having to deploy
inventory for each discrete product
this is called pooling risks this
reduces storage costs and risks of
stockouts by consolidating stock in centralized
centralized
warehouses flow of goods and information
these flows exist in each supply chain
Enterprise must have internal process
integration and collaboration between
functions as well as alignment and
integration across the supply chain
customer information flows through the
Enterprise via orders sales activity and
forecasts value added flow of goods
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