Functions of logistics

What is Logistics?

“The service of providing the right resources at the right time and right place for efficient and effective performance of a goal-oriented activity, including consumption is called as logistics.”

In simple words, “Logistics is the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods- or service-producing network to fulfill customer requests; and utilizing the network to fulfill customer requests in timely way.”

Logistics is the support element of the enterprise. It helps in managing the movement and storage of:

  • Material into the enterprise.
  • Goods in the enterprise.
  • Finished goods from the enterprise.

Its focus should be upon its inbound logistics system (movement of material within the organization) and its outbound logistics system (meeting the requirements of its customers). The definition above accurately defines the logistics process but is too restrictive under the modern concept of logistics. Logistics, as a support element of the enterprise, incorporates activities beyond those identified in the preceding definition. Consider an example, the enterprise that introduces a new product or a significant change in the existing product. Support of the new product or feature may require training, the development of technical publications and the acquisition of spare parts and special tools or repair (test) equipment. These items also belong under the umbrella of logistics; thus our definition must be revised to include them.

This is the simplified definition of logistics, which states logistics objective clearly:

“Getting the right item to the right customer, in the right quantity, in the right condition, at the right place, at the right time and at the right cost.”

Functions of logistics:

Transportation management: Transportation enables the means of transfer of inventory given the location & network framework developed earlier. This involves the selecting the modes of transportation like Air, Water, Rail, Road & the decisions relating to outsourcing this activities to other agencies. Selection of the modes of transportation depends on the following factors:

  • Speed & reliability
  • loss& damage
  • Inventories
  • Freight rate
  • Market competitiveness
  • Company policy & customer influence
  • External market influences.

The aspects of transportation management is an essential factor

  1. Facility Location
  2. Transportation cost
  3. consistency.

Inventory management: Inventory management concerns with the decision regarding the amount of type & material stored at various facility location. These decisions will be affected by the decision made under the function of facility location & transportation e.g.: the location of warehouse & retail outlets.& modes of transport whether fast or slow will affect the quantity type of material to be stored at  facilities location.

Warehousing management: Warehousing provide the adequate space for the inventory at the right location, unpack aging, sorting, & consolidation of material & modification of material elements if required .the role of warehouse provide the economic & service benefit to the logistical system. Economic benefits: – movement consolidation, break bulk, cross-dock, processing /postpone movement & stock piling.  Service benefits are spot stocking, assortments, mixing & production supports.

Material Handling system: Material handling activities are required while unloading, moving & loading material at facilities. These include the variety of mechanical equipment like Conveyors, Forklift, Truck, and Crane. One of the considerations of effective material handling is the minimization of product damage during handling.

Packaging: It helps in achieving the objective of maintaining the material in the right condition through the logistics process. Packaging decision is impacted by requirement of other activities like protection & facilitation during transportation, material handing & storage as so ultimately customer requirements.

About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]
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