is the function responsible for the flow of materials from suppliers into an organisation, through operations within the organisation, and then out to customers.
Supply chain management, however, is about managing the flow of materials, components and information throughout the total pipeline from raw materials to end user, and is based on effective customer/supplier relationships to ensure quality, delivery, cost and flexibility can be improved throughout the supply chain.
This integration will result in a reduction in the total cost of logistics rather than the cost of each activity. This is due to the improved flow of material and information, improved transport and ...view middle of the document...
are all the things that an organisation moves to create its products.
These materials can be both tangible (such as raw materials) and intangible (such as information).
A SUPPLY CHAIN
There are many possible structures for supply chains, but the simplest view has materials converging on an organisation through tiers of suppliers, and products diverging through tiers of customers.
consists of the series of activities and organisations that materials move through on their journey from initial suppliers to final customers each of which somehow adds value to the product.
Benefits of well-designed supply chains:
● Producers locate operations in the best locations, regardless of the locations of their customers
● By concentrating operations in large facilities, producers can get economies of scale.
● Producers do not keep large stocks of finished goods, as these are held further down the supply chain nearer to customers.
● Wholesalers place large orders, and producers pass on lower unit costs in price discounts.
● Wholesalers keep stocks from many suppliers, giving retailers a choice of goods.
● Wholesalers are near to retailers and have short lead times.
● Retailers carry less stock as wholesalers provide reliable deliveries.
● Retailers can have small operations, giving a responsive service near to customers.
● Transport is simpler, with fewer, larger deliveries reducing costs.
● Organisations can develop expertise in specific types of operation.
ACTIVITIES OF LOGISTICS
● Procurement or purchasing
● Inward transport or traffic
● Warehousing or stores
● Stock control
● Order picking
● Materials handling
● Outward transport
● Physical distribution management
● Recycling, returns and waste disposal.
● Communication (flow of information).
sales forecasting, production scheduling, customer service management, overseas liaison, third party operations, and so on.
The overall AIM OF LOGISTICS is to achieve high customer satisfaction. It must provide a high quality service with low – or acceptable – costs. We can phrase this balance in terms of perceived customer value. Logistics adds value by making products available in the right place and at the right time.
Summarising the importance
Logistics has the awkward combination of being both essential and expensive. It affects customer satisfaction, the perceived value of products, operating costs, profit and just about every other measure of performance.
As well as potential savings, many other factors are encouraging organisations to improve the management of their supply chains. The following list suggests some of these pressures:
● Customers are more knowledgeable, and demand higher quality, lower costs and better service.
● Competition is getting fiercer, and organisations must look at every opportunity to
● There is changing power in the supply chain. Very large retail chains,...