31-01-2013, 04:34 PM
Logistics
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Introduction
• Logistics
– Originated from the Greek work logistikos &
the Latin word logisticus
– Means the science of computing or
calculating
– Usage can be traced back to the 17th century
when it was probably used for the first time by
the French army
– Is considered to have originated in the
militarys' need to supply themselves with
arms, ammunition and rations as they moved
from their base to a forward position
– Gained importance during World War II in
army operations, covering movement of
supplies, troops and equipment
• In recent times Logistics has acquired wider
meaning & is used in business for the
movement of raw material from suppliers to the
manufacturers and finally the finished goods to
consumers
• Also referred to as physical distribution
Definition
• Philip Kotler defines Logistics as
“Planning, implementing and controlling the
physical flow of materials and finished goods from
point of origin to point of use to meet the
customer's need at a profit”
• The American Council of Logistics Management
defines Logistics as
“The process of planning, implementing &
controlling the efficient, cost effective flow &
storage of raw materials, in-process inventory,
finished goods and related information from point
of origin to point of consumption for the purpose of
conforming to customers' requirements”
Logistics – A System Concept
• In an organization business process
– Starts with flow of materials from suppliers
– Progresses to manufacturing
– Through distribution channels reaches customers
• Each department may excel at their respective
functions viz procurement, production & distribution
but may not excel as an organization
• Reasons
– Lack of coordination
– Departments pursue different goals
– No single agency that coordinates these activities
Inventory Management
– Is maintaining the requisite level of stocks to
meet customer requirements simultaneously
ensuring minimal carrying cost
– In the overall supply chain, inventory costs
indirectly chews profits because of inventory
carrying costs
– Average inventory carrying costs varies from
10% - 25% of the total inventory per year
– Two approaches to Inventory management
Cost approach
Customer satisfaction
Material Handling & Storage
– Considerations for material handling are
volumes to be handled, speed required for
material movement and level of service to be
offered to the customer
– Choice of storage system should maximise
space utilization (floor and cubic) in the
warehouse
– Material handling system should support the
storage system for speedy movement (storage
& retrieval) of goods in and out of the
warehouse
Manufacturing Logistics
• Manages the production cycle involving the following tasks
– Material planning
– In-house transport
– Storage
• Associated activities are in-house transport (transport of raw
material to the production line, transport of semi-finished
products to the next stage of production, transport finished
product to the stores), storage, packaging of goods
• Production logistics is becoming more important with
decreasing batch sizes allowing customer's demand to be
fulfilled efficiently
• Production Logistics must also address the issues of tracking
and tracing which are gaining importance due to product
safety and product reliability issues especially in the
automotive and medical industries