Concept of Logistics Management
Concept of Logistics Management
To comprehend the notion of managing logistics, one should take note that every operation that aids the flow of product, starting from the acquisition of raw materials to its final consumption, and the process of transferring information to set the manufacturing process into motion is referred to as logistics. The aim of logistics is to ensure that there is adequate quality customer service at reasonable costs.
The nature of logistics can be divided into two parts: The first is that physical supply (or materials management) is the process of moving raw materials from the plant. Secondly, physical distribution is the transportation of final products from the factory to consumers.
Strategically managing the storage and transportation of components, materials, and final goods from the manufacturer to the business and finally on to customers is referred to by the name of logistic management. This encompasses all the transportation of goods and materials to, through, and out of an organization.
Let’s look at how to comprehend the concept of logistics management step by step:
Logistics of Distribution or Marketing
According to the concept of logistics management, the logistics function itself can be described as supportive. The logistics of transportation, inventory, warehouse material handling, packaging, and information technology are all interconnected. The marketing logistics involve making sure that the product is delivered to the appropriate buyer at the appropriate time and in the appropriate location.
Physical distribution is the storage of goods once they have been manufactured, but prior to their consumption, and the transportation of these products to consumers or users at the end. Merchant middlemen and producers have the responsibility for tasks related to physical distribution, like storage (warehousing) and the transformation and control of inventory.
Since they constitute the largest proportion of total expenses, they therefore need to be executed efficiently. Physical distribution expenses can only be overshadowed by the expense of labour and raw materials as a percentage of the total price of the commodities. The economies of the industry will help in decreasing the total cost of products and generating more revenue.
Physical supply is mostly focused on handling materials, including the purchase of materials, transport, and storage, as well as inventory control and managing information.
Physical distribution tasks can be classified into two types:
(1) Primary functions:
(a) Transportation
B) Warehousing
c) Order fulfilment
D) Insuring that inventory is tracked
(2) Extracurricular Activities:
A) packaging of products
2.) The handling of the product
C) Purchase
D) Planned product
(e) Data management
Actual distribution is the procedure of transporting an item to a buyer that includes every step involved in the physical transport of items from the producers to the customer. Supply chain management is a different term used to describe it.
Management of Integrated Logistics
Within the concept of logistics management, it is founded upon a broad view of the flow of commodities and material processes from the source to the consumer point. It acknowledges the interconnections, interdependencies, and connections between the many functions that are involved in moving from the source to the end users, requiring management to consider the implications of managing the whole process rather than just a single element of it.
The management of logistics is focused on the coordination and integration of marketing operations so that they can provide the most efficient service to customers at the point of sale. While managers have utilized logistical processes in the military to refine procedures for delivery that are particular to the time and location of delivery, there’s a gap for civilians when it comes to integrating military logistics requirements.
Marketing Logistics’ Objectives
The main objectives of marketing logistics is to facilitate the supply of resources into the manufacturing system, and also to deliver products to other consumers and channel members with speed and efficiency in a way that is in line with the quality of service customers demand.
These are other objectives:
1. To Save Money:
Reduce costs by organising the physical organization of the system and determining the most efficient quantity and position of warehouses. This can be done by optimizing material handling, increasing stock turnover and shipping goods in sealed containers, resolving the inefficient order processing processes etc.
2. Enhance Customer Service:
Promotional activities of the company can be accelerated through the strengthening of physical distribution system, which results in better sales.
To increase sales:A firm’s revenues could be increased by making sure of that goods are available and implementing strategies to speed up ordering.
3. Gaining a Competitive Advantage:
An organization can get advantages over its competitors by offering better customer support by scheduling for quick and consistent delivery, eliminating issues with processing orders, and providing items that are not damaged.
4. Create an Efficient Communication System:
Salespeople can shift orders on a regular basis, and respond to customer inquiries in a timely manner thanks to the logistics department.
Concept of Logistics Management
1. Designing a Network
Manufacturing facilities for logistical services include and warehousing. They also handle materials distribution, and post-sale services. One of the primary tasks of logistics management is designing networks. It’s essential to know what number and locations types of infrastructure are required in order to perform logistics tasks.
Selecting a top local network is an initial step to gain an edge in competition. A well-designed infrastructure and the network is closely connected to the efficiency of logistics.
2. System of Information
Two important areas that depend on information:
a) Forecasting Sales:
Forecasting sales is a method used to anticipate future needs in logistics. It assists in managing inventory by fulfilling the needs of customers when they are needed.
B) The Order Processing
For logistics, the customer’s orders are crucial. External and internal customers need logistics support. Customers who are external utilize the goods or services in addition to the trade partners that purchase products for resale.
Internal customers comprise the firm’s organizational departments. The more efficient the company’s logistics system is constructed to be, the more sensitive is to the accuracy of data. Unreliable data and processing issues can have a devastating effect in the efficiency of logistical processes.
3. Transportation
It helps in the transportation of production materials and the transportation of goods to customers.
When it comes to transport performance there are two primary factors to take into account:
a) Price:
It’s the cost to transport two places along with the cost of administration and inventory-in-transit. Therefore, logistics structures should be designed so that they make the most efficient utilization of transportation.
b) Quickness:
It’s how long that it takes to perform the specific action.
Speed of transport and costs are related by two methods:
- Rates higher for speedier service.
- A shorter interval of time means more efficient delivery. In the end you must strike the right balance between speed and price.
C) Transportation Methods:
Three types of transport available:
1. Surface or Land Transport:
It includes both rail and road railway transportation. Road transportation is capable of providing door-to-door service.
2. Transportation by Water:
It includes both the interior as well as the coastal waterways by canals and rivers. The most cost-effective way to travel is through this technique.
3. Air Transportation:
The transport of freight is done via aeroplanes. It’s a costly method of transport that’s employed to deliver essential and costly products.
Different transportation modes’ ability to meet the requirements:
- Road transport is ideal for moving goods of moderate size and weight, over small distances. It also provides point-topoint services. This is often employed to transport perishable products such as fruits, vegetables as well as milk and other milk-related items.
- The rail transportation system is the most effective method for moving large objects over large distances within the nation. Rail travels more quickly than air, land and even water.
- Shipping by water is ideal to transport large and low-cost goods that are able to withstand transportation and handling hazards and also in situations where speed is of paramount significance.
- The air transport method is ideal to transport perishable, precious smaller and lighter objects like gold jewelry, pharmaceuticals, as well as spare parts in cases where the time of delivery is crucial or when alternative modes of transport are not available.
4. Warehousing
This involves establishing appropriate ways to store the items until they’re required by the customer. The storage allows for commodities to be available to buyers at any time and wherever they’re wanted by placing the items in a variety of warehouses across the nation. This creates a sense of urgency in that it stores items from the time they are made until they are needed by buyers.
The below are the main functions of a store:
The term “warehouse” can be described as the place where goods are kept or stored. Warehousing can be a vital business activity that involves large-scale production and distribution. When the seasons are lean Warehouses help businesses by keeping their stocks in good condition.
They’re in charge of the following tasks:
- Time utility creation
- Items that are not used up are stored in a safe environment
- Consistent supply of goods and services
- Price stabilization
- Theft, fire and other risks security
- Labelling, packaging Labelling, packaging
5. Handling of Materials
Material handling is a part of every phase of the logistics process, which includes the production process, storage, transportation as well as packaging. If we think of material handling in terms of marketing is the transportation of goods following its departure from the production facility, however before it’s transported to a transportation manner and then delivered to a customer’s place of residence.
In the end the word refers to product handling between the plant and the warehouse, and product movements inside the warehouse, transfer from the warehouse the point at which it can be loaded onto the vehicle transporting it then to the resellers and clients.
Material handling is an essential aspect of logistics that it is not to be ignored. The handling of materials must be limited to the minimal level because they require an investment in capital along with a substantial labor cost. Facilities’ networks serve as the basis for executing operations in a logistical structure that is able to meet the requirements of clients.
To ensure efficient loading and unloading materials handling is crucial. Material handling makes sure that the products get delivered, transferred separated, and arranged so that they can meet the demands of distributors and customers in warehouse operation.
The following rules should be adhered to when constructing an equipment for handling materials:
- Storage and handling equipment is required to be homologized.
- Based on the needs of the business The system must be designed to provide the highest constant flow of products.
- Equipment handling should be operated properly.
6. Purchasing
It involves the purchase of items and other supplies from other sources. Resources planning, supply sourcing and negotiation, as well as order placing inbound transportation, receipt as well as inspections, warehouse handling, and quality inspection are the main tasks carried out by it.
The department is responsible for cooperating with suppliers in order to enhance schedules, supply stability, the hedging process, as well as speculation, and also conducting studies that lead to the development of innovative programs or sources. Its main goal is to aid manufacturers and businesses that resell their products with timely purchase for the lowest price that is possible.
7. Inventory Control
It is the process of transporting as well as storage for raw material as well as the final products. The process begins with the transfer of raw materials or components from a manufacturer and finishes with the shipment of an unfinished or finished product to the customer.
In transferring goods when and wherever it is required this process can add the value. The inventory of work-in-process processes must be moved so that it can be assembled and gain value in every stage.
The principal objective of managing inventory is to satisfy market demand, i.e., create sales, and satisfy customer requests. Thus, inventory are kept in mind of the market’s demand, which is usually based on estimates of sales. The management also takes into account two additional aspects: the quantity of inventory that is required to satisfy current demand and distribution system’s capability to provide all the necessary inventory in time.
To ensure the smooth operation of the company, a certain amount of working-in-progress and materials and final products are needed. If inventory is deemed as a resource that is not being used however, it’s not feasible to remove it. The goal of inventory control is to keep it at an appropriate level that is, where the expenses of maintaining inventory and keeping inventories in reserve are equivalent.
The process of deciding on which and the amount of certain items are required to keep in the stockroom is called inventory control. It also determines the quantity and timeframe of the various items which must be purchased. The purpose of inventory management is to decrease the cost of inventory as well as ensure that manufacturing processes are protected from harm.
Control of inventory must perform the following tasks to reach this goal:
- Determine which products must be stored
- Decide when to stock up and replenish and the amount of stock to keep
- Keep accurate documents
- Take away any items that are not in use anymore
8. Labelling and Packaging
Logistics would be incomplete without labelling and packaging. Packaging is the act that involves designing the right packaging for products. Packaging’s importance has increased in recent times due to intense competition in the market and improvements in the quality of living.
The packaging of a product protects it throughout its travels from buyer to the seller, and sometimes, in its time in the hands of the consumer. The majority of packaged products can be handled with ease. Packaging can make it easier to market the product. Packaging acts as a salesperson for the manufacturer particularly in locations in which self-service, automated vending or other ways for retail sales are standard.
Sometimes, packages are properly packaged so that the purchaser receives quality products. Because of the absence of sealing, fraudulent retailers may offer duplicate items to customers.
The process of labelling involves marking the identification of the packaging of a product. The label could be a inside a container or that is directly affixed to the item. The label may contain information including the manufacturer and grade, as well as the price as well as expiration and production dates, etc.
9. Processing Orders
It outlines the steps which must be adhered to so that the company can fulfill customers order quickly, accurately and effectively. The process of receiving, filling, and the assembly of orders to be executed is all a part of the procedure. When customers make an order, they start the order process in which there is a stream of goods and details. When the seller receives an order, then assembles the products, then ships the items to the buyer as well as other components of the ordering process.
The method used by the marketing department of processing orders from customers has consequences on the service it provides to customers. Because of delays, customers are inclined to move their orders to vendors who are able to deliver their goods promptly.
In this way it is essential that the manager for marketing understand the basics of logistics management. They should also consider what the most efficient way to handle orders to keep customers and create repeat business. Fast order processing could aid the business in saving money on other areas of distribution physical, including inventory management, storage, as well as transport.
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