Concepts of Logistics in Contemporary Business
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Published: Wed, 06 Dec 2017
Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today’s business environment.
“Logistics means having the right thing, at the right place, at the right time.”
The procurement, maintenance, distribution, and replacement of personnel and materiel.
Distribution and logistics are concerned with product availability. Many have described this as getting the right products to the right place at the Right time.
Consumer beliefs and needs have altered. How consumers behave and what we demand have changed. Our willingness to wait to be satisfied has reduced and we expect instant product availability and gratification. It should be obvious from this that the supply or logistics system that gets products from production through retailing to consumption has also had to be transformed. Physical distribution and materials management have been replaced by logistics management and a subsequent concern for the whole supply chain. This consideration for the supply chain as a whole has involved the development of integrated supply chain management. More recently there has been a concern to ensure that channels of distribution and supply chains are both anticipatory (if appropriate) and reacting to consumer demand, at general and detailed segment levels.
Logistics is the bed rock of trade and business: – Without selling and or buying there can be no trade and business. Buying and or selling takes place only when goods are physically moved into and or away from the market. Logistics leads to customer satisfaction through superior customer services.
Logistic industry includes a wide range of services and tools for a business to carry on all its operations it includes services like transportation, packaging, ware housing and inventory.
In short logistics is most important and primarily necessary for any organisation strategy and its function, when the process of logistics is carried out accurately then not only the company reduces the production cost but also improves the efficiency of the company and increases customer satisfaction. Logistics is very essential for today’s highly and competitive corporate world.
To perform this study further it is necessary to understand how logistics have prevailed today’s business from point of origin to point of consumption. This literature review discovers the importance of logistics and its implications in today’s global business world.
Nobu Azumais Associate Professor in Marketing and Distribution Studies at the School of Business, he emphasizes the importance of the logistics in management studies by employing an interdisciplinary research approach.
Concepts of logistics
Concept of logistics is fairly new in the business world. Many business practises have evolved and the cost of logistics is 10% to 20 % to total cost of international purchase, there are two main phases which are important in transfer of materials are material management and physical distribution.
- Material management is timely movement of parts raw materials and supplies by the supplier.
- Firms finished products reaches to the consumers and termed as physical distribution.
Both phases involve process of storage. The main goal of logistics to coordinate all the efforts of the company to maintain a cost effective flow of finished goods.
Logistics gained importance
Through recent years logistics has gained importance because of the transportation cost grew rapidly due to rise in fuel prices, the activity of production reaching its peak, there was need of fundamental change in inventory, product line was proliferated, due computer technology, growing power of retailers was also a big reason for logistics to grow and due to globalisation and reduction in economic regulation. Due to very sophisticated pass traditional channel of distribution.
David Grant says evolving factors that make logistics critical for business success. With a marketing approach to logistics that prioritizes customer satisfaction from a variety of industries to illustrate effective logistics strategies
Activities of logistics
Logistics involves wide variety of activities and services which makes the working of the company easier and supports customer and satisfaction for both customers and suppliers.
- Demand forecast is done by logistics.
- Consumer service.
- Inventory control.
- Material handling.
- Part and service support.
- Salvage and scrap disposals.
- Transportation and trafficking.
- Planting and warehouse.
- Storage and order processing.
- Distribution and communication.
Logistics exists to satisfy customer requirements by facilitation relevant manufacturing and marketing operations, it is to balance the service expectation and cost expenditure to achieve business objectives it is basically measure in terms of ; –
- Operational performance and
- Service reliability.
Objectives of logistics
Logistics is a system having number of components which can be combined in different proportions to achieve a set objective. Objectives are physical distribution, physical supply, and controls of the logistics.
Ideal logistical system ensures supply to buyers.
- In correct quantity.
- At desired location.
- At required time.
- At useable condition.
- At low cost.
Logistics is a bed rock for any trade and business
Without buying and after buying without selling there can be no trade or business. Buying and selling takes place only where goods are move in or out in the market. If you take away logistics from business the business would eventually collapse.
Competitive edge of logistics
In the fiercely environment of competition of the world it provides the cutting edge. In the business where the survival of business is controlled by competition where there is no parameter of quality like performance and reliability, where brands are irrelevant, competitive edge is the availability of product and services in terms of time, place and quality.
Professor Alan McKinnon is Director of the Logistics Research Centre Alan has undertaken research on many different aspects of logistics has discussed in topics warehousing and the links between logistics and economic development in recent years say’s ‘that logistics is the foremost and prior requirement for any business to grow and nourish without which a business nor a country can grow.
Logistics leads to customer satisfaction
Through superior customer services like productivity, quality, cost, delivery, flexibility, safety, health, and environment organisational objectives are framed to meet customer expectations.
Logistics supports strong critical functions of operating and marketing
Strong and firm logistics enables an organization to move towards just in time production system for survival in highly competitive market.
Logistics is viewed as a competency that links an enterprise with its suppliers and customers. Information about a customer flows through sales activities to forecast and orders. As product and materials are procured a value added service inventory flow is initiated ultimately results in transfer of ownership of finished products to consumers. This type of logistics support system helps an organisation to keep a track on it orders and future supply forecast to meets its customer’s expectations.
In today’s era logistics not only plays the role of distribution and transportation but also supports tools like inventory management and just in time inventory, which allows the company access towards its production, surplus and scarcity.
Logistics controls and access the Inventory flow
Logistics and management is concerned to movement and storage of finished goods and materials from the initial process of purchase. This process adds value to by moving inventory where and when needed.
Logistical understandings have four areas.
- Physical distribution.
- Manufacturing support.
- Procurement of resources.
- Supply chain management.
Pietro Evangelista is researcher in logistics and supply chain management at the Naples Institute for Service Industry Research says that The need to improve information exchanged in the supply chain, the desire to increase customer satisfaction and the enlargement of the customer base are the three main enabling inventory factors
Logistics involved in supply chain management.
Supply chain management : it is the management of networks of inter connected business involved in ultimate provision of the product and services required by the end user consumer.
It is management of upstream and downstream linkages, in the different process and activities that produces values in form of services and product in relation with the consumer and supplier to deliver superior customers value at less cost to supply chain on whole.
It involves process like: –
- Supply chain planning.
- Warehousing and distribution.
- Delivery and installation after market.
Martin Christopher is Emeritus Professor of Marketing and Logistics at Cranfield school of Management. Martin Christopher’s particular research interests lie at the interface between marketing and logistics reflecting his belief that these two critical activities underpin superior supply chain performance.
Logistics creates value for manufacturer and suppliers throughout the world
The services in the sector of logistics are the key to in integrating manufacturers forecasting and supply chain management to its suppliers. It helps for the inventory forecast requirement in real time. It enables cost effective and robust supply chain.
- Reduces inventory and management investment cost.
- Improves delivery times.
- Co-ordinate multiple components more effectively.
- Provide visibility, reporting and control.
- Reduces high inventory investment.
Dr. Yuan Xing The thesis analysed and compared physical distribution service quality (PDSQ) in the online retail market for non-food products between pure player retailers, those that only sell over the Internet and traditional retailers, those that use the Internet to supplement their stores and thus sell through multiple channels. The exploration of PDSQ differences and reasons which caused them from both demand- and supply- side perspectives using in-depth interviews.
Logistics transforming business in today’s world
Logistics in the 21st century touches each and every aspect of the organisations daily operations, and today has grown into business speciality of its own. Logistics is not only about strategic planning and resource management but also how companies go about their day and what impact it has on us. As a business speciality the explosion of globalism has formulated the practice of logistics.
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