Introduction into Logistics notes

Topics: Supply chain management, Supply chain, Logistics Pages: 102 (21353 words) Published: October 22, 2013
Logistics: principles and practice
Ch. 1,2,3,4,5,6,8
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Logistics: Principles and practice
1. Logistics subsystems
1.1 Introduction to logistics
Organizations often face problems caused either by:
-Suppliers:
-Delivering goods late
-Delivering wrong goods
-Delivering shipment to wrong address
-Providing bad service after goods have arrived
-Own fault:
-Bad lay-out in warehouse
-Inventory fails to correspond with its administration
-Machines kept idle because they lack raw materials
-Clients:
-Complaining about missing goods on delivery
-Refusing to pay, because order has been delivered incomplete Logistics:
-Wide field of activity, practical discipline
-All problems related to managing flow of goods
-Often identified most closely with trade and transport
-Internal flow of goods to travel smoothly from supplier to customer at lowest possible cost -Prime concern: customer service
History
Dictionary of military logistics:
“All preparations and actions required to provide troops with goods and supplies in most efficient manner to have them fighting under most favourable circumstances.” Other definition:
“The art of moving, quartering and supplying troops.”
Quartering=providing shelter or ‘lodging’ ->derives from French word logis->logistics Logistics means more than just looking after flow of goods
Now:
-Encompasses movement of both goods and information
-Flow of money is an essential component
Effectiveness most vital to military, no expense or effort spared to ensure it Initially business community didn’t see how they could apply military logistics to commerce ->Involved in world wars->became more or less forced to start using logistic process ->Took years before enterprises started using logistics as means to improve company results Manufacturers focused on:

-Making goods at lowest possible cost
->Made efficiency far more important to them
-Nearly unlimited market demand
-Average working wage was major cost factor
Formal definition from European Logistics Association(ELA):
“Logistics entails the organization, planning, control and execution of the flow of goods from development and purchasing, through manufacturing and distribution to the consumer(end user), up to and including the reverse flow. The aim is to meet market demand at lowest cost and best use of capital, and build long-term relationships with customers.”

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1.2 Historical development of logistics
Logistics important tool, enables to satisfy customer demand: -Short delivery times
-Meeting specific requirements to customize products
-Optimal stock management etc.
->Logistics function can’t be a follower of events
Broadening scope of logistics->boundaries fading between functional areas in organizations: -Improving market performance not just problem for marketing -Enhancing supply of products not just purchasing problem

-Turnover rate of capital tied up in inventory merely a problem concerning finance Development path directly matches structure of book

Scope of logistics broadened->field itself expanded
->Methods used to benefit service providers, non-profit organizations etc. ->Number of links involved in processing chain severely reduced=>faster Development in construction industry:
-Twice as many projects->build twice as fast
->Construction site looks like assembly line
Back in early days:
-Thinking in terms of efficiency used to be good enough for good management -Keeping costs down was main concern->mass production
->Large series->long delivery times->demand for better logistics -Trend in efficiency-based thinking lasted for years in West -Arrival of low-priced products from Japan...
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