Mastering Logistics: Achieving Efficiency and Effectiveness

Logistics is the process that ensures that ‘the right item in the right quantity at the right time at the right place for the right price in the right condition is delivered to the right customer’. This involves planning, implementing as well as controlling of the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer & legal requirements. (Wikipedia. 2008). The first use of the word logistics was to define an Armed Forces’ operation to supply a war zone with troops, supplies and equipment.

The term has since moved from the war zone to the business arena. A customer buying an item in a store may not be aware of the amount of work involved in availing that item on the shelf. It takes logistics for the business operators to consider factors that impact on customer choice such as packaging, price, service and reliability.

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Logistics is so pervasive in every day life such that one journal put it that for a business ‘…logistics is not just a functional activity but a framework; not an operational function but a planning mechanism; it is a way of thinking.

(Crystal 2003). Businesses have to appreciate logistics in order to succeed. Where would businesses be if they failed to make use of the five key principles of logistics which are: foresight, efficiency, cooperation, simplicity and agility? Just as an army without resources and transportation is defenseless; a company without a logistics strategy can not make a comfortable bottomline.

To satisfy customers, a manager has to have a good mental picture of the supply chain. Business environmental conditions keep the supply chain fluctuating.

Therefore a firm has to create a ‘logistics strategy’ that defines a cost effective path in the movement of materials, goods and services in the course of business. (About. com 2008). For example, a fast food restaurant like McDonalds would be overwhelmed if it did not operate within a time tested logistics model. The managers should be able to forecast – have the ability to analyze and plan for future logistical constraints in the areas of personnel, materials, services and equipment. Otherwise it may have problems procuring for example; ground beef which is in short supply during some months of the year.

Logistics efficiency is key to customer satisfaction. The firm has to look for ways of ‘achieving the maximum level of support for the least logistics effort and making the best use of finite resources even if it means duplication and redundancy to achieve operational effectiveness. It may take extra waiters during peak season who may be laid off during off season this has to be planned. All players in the supply chain right from raw material to manufacture to transport to the point of sell have to cooperate. Otherwise there can be a costly whiplash due to delays, over supplying and so on.

A logistics strategy should take account of simplicity. All logistical operations should be simple to carry out. Complicated ones consume time and distort the flow of items in the chain. Finally the logistics structure should be agile. This is the ability to respond to the unexpected and adjust rapidly. This involves valuing resourceful personnel, optimum use of resources, ability to adjust and readjust resources to keep pace with changing times, and the provision of sufficient resources needed to get the job done.

Advertising, differentiated products, and better technology are some ways businesses are using to have a competitive edge when fighting for shrinking market share. These strategies are however distanced from the object of the firm’s effort to increase sales volume-the customer. A business that knows its logistics is directly solving issues that lead to loss of customers. By doing this they not only retain old ones but get new ones.

References:

1. About. com. (2008). Logistics Network Design Principles.
2. Retrieved May 28, 2008, from About. com: http://logistics. about. com/od/planningthelndproject/a/lnd_project. htm Wikipedia. (2008).
3. Logistics. Retrieved May 28, 2008, from Wikipedia: http://en. wikipedia. org/wiki/Logistics Crystal, G. (2003).
4. ‘What is logistics? ’ International Journal of Physical Distribution & Logistics Management.
5. Retrieved May 19, 2010, from www. wisegeek. com/what-is-logistics. htm> Countryman & McDaniel. ‘The Logistics Chain:How Does International Transport Work? ’
6. Retrieved May 19, 2010, from www. cargolaw. com/logistics. html -