Concept of Logistics

concept of logistics

In a manufacturing enterprise, the business process starts with the flow of material from the suppliers to the manufacturing plant and then to the customer through the distribution channel. Traditionally in the functional organisation, the business process consists of discrete activities such as procurement, manufacturing, and distribution under the control of the respective departments. The departments may excel in their respective functions, but as an organisation, their performance may be dismal. This might happen because of three reasons:

  • A lack of coordination in their activities
  • Different goals to cherish
  • No single agency could control them to cherish a common goal

Read also: Distribution Channel

The concept of logistics is based on the system approach. The flow of material from a supplier to a manufacturing plant and finally to the end customer is viewed as a single chain, ensuring efficiency and effectiveness in sequential activities to achieve the objective of customer satisfaction at a reduced cost.

Logistics recognises that all the activities of material movement across the business process are interdependent and need close coordination. These activities are to be managed as a system and not as functional silos. The functional areas of logistics, termed “Logistics Mix” by Martin Christopher, consist of:

Information flow

Order registration
Order checking and editing
Order processing
Coordination

Warehousing

Material storage
Load unitizing and material handling
Size selection and network planning
Order picking and filling
Dispatch documentation

Read also: Concept of warehouse

Inventory control

Material requirement planning
Inventory level decision for customer service objectives

Packaging

For handling and damage prevention
For communication
For inter-modal transportation

Read also:  Distribution Channel

Transportation

Route planning
Mode selection
Vehicle scheduling

Read also: Basic cost elements in transportation

The objective of logistics is to facilitate the flow of material across the supply chain of an enterprise so as to cost effectively make available the right product at the right place at the right time. Logistics has to achieve the two polemic goals of customer satisfaction and least cost. This is possible only when all the logistics functions are working as a unified system to achieve the common goal. I hope your concept of logistics is more clear now.

2 thoughts on “Concept of Logistics

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.