LogisticsManagementandCostReduction

1.3LogisticsManagement
1.3.1TheMeaningofLogisticsManagement
CLMhasdefinedLogisticsManagementasthefollowing:
Istheprocessofplanning,implementing,andcontrollingtheefficient,effectiveflowand
storageofgoods,services,andrelatedinformationfromthepointoforigintothepointof
consumptionforthepurposeofconformingtocustomerrequirements,notethatthis
definitionincludesinbound,outbound,internal,andexternalmovements,andreturnof
materialsforanenvironmentalpurposes.[1].
Istheprocessofplanning,implementing,andcontrollingtheefficient,costeffectiveflow
andstorageofrawmaterials,inprocessinventory,finishedgoodsandrelatedinformation
fromthepointoforigintothepointofconsumptionforthepurposeofmeetingofthe
customerrequirements[1].
1.3.2TheImportanceofLogisticsManagement
Logisticsistheoneimportantfunctioninbusinesstoday.Nomarketing,manufacturing
orprojectexecutioncanbesucceedingwithoutlogisticssupport.
Logisticsiscomparativelyanewterm,butnottheoperation.Logisticshasexistedsince
thebeginningofthecivilization.Rawmaterialandfinishedproductsarealwaysmoved
frompointtoanotherinasmallscale.Thingsbegantochangewiththeadvancein
transportation.Populationbegantomovefromruraltourbanareasandtobusiness
centers.Nolongerdidpeopleliveneartotheproductioncenters,nordidproductiontake
placenearresidencecenters.Thegeographicaldistancebetweentheproductionpointand
consumptionpointincreased.
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.

Anotherfactorhascomeintoplayrecently.Sincetheearly1990's,thebusinessscenehas
changed.Theglobalization,thefreemarketandthecompetitionhasrequiredthatthe
customergetstherightmaterial,attherighttime,attherightpointandintheright
condition at the lowest cost.
Logisticsisaboutcreatingvalues valuesforcustomersandsuppliersofthe
organization, and value for the organizations stakeholders.Valueinlogisticsis
expressedintermsoftimeandplace.Productsandserviceshavenovalueunlesstheyare
inthepossessionofthecustomerswhen(time)where(place)theywishtoconsumethem.
Logisticshasbecomeandincreasinglyimportantvalueaddingprocessforanumberof
reasons:
1. Costsaresignificant.
2. Supplyanddistributionlinearelengthening.
3. Logisticsisimportanttostrategy.
4. Logisticsaddssignificantcustomervalue.
5. Customersincreasinglywantquickandcustomizedresponse.
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1.3.3LogisticsActivities
Logisticsactivitiestobemanagedvaryfromorganizationtoanotherdependonthe
structureofeachorganization, managements honest differences of opinion about
whatconstituteslogisticsandtheimportanceofindividualactivitiestoitsoperations.
AccordingtotheCLMthecomponentsofatypicallogisticssystemarecustomer
service,demandforecasting,distributioncommunications,inventorycontrol,material
handling,orderprocessing,partsandservicesupport,plantandwarehousesite
selection(locationanalysis),purchasing,packaging,returngoodshandling,salvage
andscrapdisposal,trafficandtransportation,andwarehousingandstorage.
Thelogisticscomponentsareusuallydividedintokeyandsupportingactivities,along
withsomeofdecisionsassociatedwitheachactivity.
Fromthisresearchviewpointmaterialhandlingconsideredasaoneofthekey
activitiesinasteelplantwhichmustbemanagedunderlogisticsorganizationsto
achievelogisticsobjectives.
1.3.3.1TheKeyActivities
1CustomerServiceStandards
Customerwantsandneeds.
Customerresponsetoservice.
Settingcustomerlevel[6]
2Transportation.
Modeandtransportserviceselection.
Freightconsolidation.
Carrierrouting.
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Vehiclescheduling.
Equipmentselection.
Claimsprocessing.
Rateauditing[6]
3InventoryManagement:
Rawmaterialandfinishedgoodsstockingpolicies.
Shorttermsalesforecasting.
Productmixatstockingpoints.
Number,sizeandlocationofstockingpoints.
Justintime,pushandpullstrategies[6]
4MaterialHandling:
Determineinputsandoutputs.
Orderpickingprocedures.
Equipmentselection.
Equipmentreplacementpolicies.
Stockstorageandretrieval[6].
5Informationflowsandorderprocessing:
Salesorderinventoryinterfaceprocedures.
Orderinformationtransmittalmethods.
Orderingrules.[6].

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1.3.3.2TheSupportActivities
1Warehousing:
Spacedetermination.
Stocklayoutanddockdesign.
Warehouseconfiguration.
Stockplacement[6].
2Purchasing:
Purchasingpolicies.
Supplysourceselection.
Purchasetiming.
Purchasequantities[6].
3Protectivepackagingdesign
Handling.
Storage.
Protectionfromlossanddamage[6].
4Cooperationwithproductionandoperations:
Specificationsofaggregatequantities.
Sequenceandtimeproductionoutput[6].

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5Informationmaintenance:
Informationcollection,storage,andmanipulation.
Dataanalysis.
Controlprocedures[6].
6Otheractivities:
After salespartsandservicessupport.
Maintenancefunctions.
Returngoodshandling.
Recyclingoperations[6].

Whattiesalloftheseactivitiesorfunctionstogetheristheirabilitytoimpact
customersatisfaction.Topmanagementshouldutilizelogisticsasawaytointegrate
theseactivitiesandkeepthemfocusedonthecustomerratherthanontheinternal
processes.Byintegratingtheseactivitiesintoacustomerfocusedlogisticssystem,
theorganizationcandevelopasustainableadvantagethatisverydifficultfora
competitortoimitate.