INTRODUCTION:

Definition

LOGISTICS IS THE ART AND SCIENCE OF MANAGEMENT, ENGINEERING AND

TECHNICAL ACTIVITIES CONCERNED WITH REQUIREMENTS, DESIGN AND
SUPPLYING, MAINTAINING RESOURCES TO SUPPORT OBJECTIVES, PLANS AND
OPERATION.

The logistics management takes into consideration every facility that has an impact on
cost. It plays an important role in making the product conform to customer
requirements. Also it involves efficient integration of suppliers, manufacturers,
warehouses and stores and encompasses the firms activities at many levels, from the
strategic level through the tactical to the operational level.

Logistics is a challenging and important activity because it serves as an integrating or

boundary spanning function. It links suppliers with customers and it integrates
functional entities across a company. With the ever-growing competition in todays
market place it becomes necessary for a firm to use its resources to focus on strategic
opportunities. This includes several internal factors like management style, culture,
human resources, facilities and several external factors like technology, globalization
and competition. This is where the concept of logistics plays a major role, i.e. it helps
to leverage certain advantages the firm has in the marketplace.

ROLE OF LOGISTICS:

Lets us now have a look at how logistics works. It is important to recognize the
importance of a dynamic balance between the minute details and the main elements
involved in a product. The Role of Logistics is to maintain that balance. Once the firm
realizes the importance of logistics it is necessary that the firm make full and efficient
use of logistics. The first step is to create a buyer value for the customer and a
strategic value for the firm.

The customer is the most important asset for a company. He drives the entire supply
chain including manufacturing, marketing and logistics. Hence it is important for a
firm to have a clear understanding of what the customer demands and to keep up to
the customers expectations. Once a company has a clear understanding of its
customers requirements it must device a strategy on how to use logistics to achieve it.
This means that the company has to have a clear understanding or assessment of
companys strategic direction.
Now lets take a look at the various steps involved in a logistics strategy development
and planning process.

Visioning: this includes the systematic development of an organizational consensus

regarding the key inputs to the logistics planning process as well as identification of
the potential alternative logistics approaches. This is an important step for the
following reasons:

The Nature of Logistics The growing flows of freight have been a fundamental
component of contemporary changes in economic systems at the global, regional and
local scales. These changes are not merely quantitative with more freight in
circulation, but also structural and operational. Structural changes mainly involve
manufacturing systems with their expanded geography of production,
while operational changes mainly concern freight transportation with its geography of
distribution, namely intermodal transport systems. As such, the fundamental question
does not necessarily reside in the nature, origins and destinations of freight
movements, but how this freight is moving. New modes of production are
concomitant with new modes of distribution, which brings forward the realm of
logistics; the science of physical distribution.

Logistics involves a wide set of activities dedicated to the

transformation and distribution of goods, from raw material sourcing
to final market distribution as well as the related information flows.
Derived from Greek logistics (to reason logically), the word is
polygenic. In the Nineteenth century the military referred to it as the
art of combining all means of transport, revictualling and sheltering
of troops. In a contemporary setting, it refers to the set
of operations required for goods to be made available on markets or
to specific locations.

The application of logistics enables a greater efficiency of movements with an

appropriate choice of modes, terminals, routes and scheduling. The implied purpose of
logistics is to make available goods, raw materials and commodities, fulfilling four
major requirements related to order, delivery, quality and cost fulfillment. Logistics is
thus a multidimensional value added activity including production, location, time and
control of elements of the supply chain. It thus enables a better managerial level of
space-time relations and as such an important aspect of transport geography. Logistics
acts as the material and organizational support of globalization requiring a complex
set of decisions to be made concerning an array of issues such as the location of
Physical distribution is the range of activities involved in the
movement of goods from points of production to final points of sale
and consumption. It must insure that the mobility requirements of
supply chains are entirely met. Physical distribution includes all the
functions of movement and handling of goods, particularly
transportation services (trucking, freight rail, air freight, inland
waterways, marine shipping, and pipelines), transshipment and
warehousing services (e.g. consignment, storage, inventory
management), trade, wholesale and, in principle, retail.
Conventionally, all these activities are assumed to be derived from
materials management demands.

Materials management considers all the activities involved in the

manufacturing of commodities in all their stages of production along
a supply chain. It includes production and marketing activities such
as production planning, demand forecasting, purchasing and
inventory management. Materials management must insure that the
requirements of supply chains are met by dealing with a wide array
of parts for assembly and raw materials, including packaging (for
transport and retailing) and, ultimately, recycling and reusing
discarded goods and commodities. All these activities are assumed
to be inducing physical distribution demands.

which logistics are coordinated. Facility or a group of facilities that perform

consolidation, warehousing, packaging, decomposition and other functions linked
with handling freight. Their main purpose is to provide value-added services to
freight, which is stored for relatively shorts periods of time (days or weeks). DCs are
often in proximity to major transport routes or terminals. They can also perform light
manufacturing activities such as assembly and labeling. A warehouse is a facility
designed to store goods for longer periods of time. Therefore, a distribution center
tends to focus on the demand while a warehouse is more driven by the supply.
Since it would be highly impractical to ship directly goods from producers to
retailers, distribution centers essentially act as a buffer where products are assembled,
sometimes from other distribution centers, and then shipped in batches. Distribution
centers are established in part to deal with to different forms of asynchronisms in
freight distribution such as different paces of production and consumption.
Distribution centers commonly have a market area in which they offer a service
window defined by delivery frequency and response time to order. This structure
looks much like a hub-and-spoke network.The wide array of activities involved in
logistics, from transportation to warehousing and management, have respective costs.
Once compiled, they express the burden that logistics impose on distribution systems
and the economies they support, which is known as the total logistics costs. Costs are
however not the only consideration in supply chain management since supply chains
can also be differentiated by time, reliability and risk level. The nature and efficiency
of distribution systems is strongly related to the nature of the economy in which they
operate.Worldwide logistics expenditures represent about 10-15% of the total world
GDP. In economies dependent on the extraction of raw materials, logistical costs are
comparatively higher than for service economies since transport costs account for a
larger share of the total added value of goods. For the transport of commodities,
logistics costs are commonly in the range of 20 to 50% of their total costs.The
emergence of logistics in contemporary supply chains is based upon continuous
improvementsin transport and inventory management costs, leading to lower cycle
and lead times.
Cycle time. The amount of time required from the receipt of an order to when this
order is completed (assembled) and ready for delivery. Often labeled as the
completion rate and is mostly linked with the function of production in the
manufacturing sector; its level of responsiveness.
Lead time. The time it takes for an order to be fulfilled, which includes preparation,
packing and delivery to a designed location. Often labeled as the arrival rate and is
mostly linked with the function of distribution, mainly its efficiency and reliability; its
level of responsiveness.

Before the emergence of online purchases, customers were rarely exposed to

the concepts of cycle times and lead times since goods were directly purchased
at a store. The customer was seeing the outcome of cycle and lead times, but
not the process. An online transaction, particularly if it concerns a complex and
customizable good (e.g. a computer) commonly includes the time it takes for
the order to be ready for shipment and the delivery time from the distribution
center to the customer's address.
BENCH MARKING: In simple terms bench marking means improving ourselves
learning from others.
Benchmarking is a business tool, used by the organization to bring improvement in
their performances by studying and learning from the best practices and analyzing the
processes of the leading organization to be successful. Benchmarking does not mean
that an organization has to copy the exact processes and the practices of those top
leading organization in the market. It means that those organization who want to
achieve the same standard, performance must bring some innovative idea and to adapt
it according to the needs of the company. This process can be applied to many
different levels and areas, ranging from the public sector of industry to the
manufacturing one. It is considered to be a dynamic process which evolves with the
experience of the company and applied to different cultural and organizational setting.

Benchmark in other way, means to preserve the same significance and essence in the
survey, research and manufacturing processes as that of the top notch companies. In
todays globalized world of business, this word has been used to denote about an
acceptable standard, specification and performance related to a product or service, a
company has to offer to the market and to its customers. Thus, organizations all
around the world are using benchmarking as a measure of maintaining effective
performance of the firm, simultaneously, a good image in the eyes of the customers.
By contrasting the processes and practices, an organization can actually get know
where and to what extent it lacks in meeting those standards, hence, strategies can be
developed in accordance to the areas of improvement, no wonder, somewhere in the
near future a particular modification can serve as a competitive advantage to the
company.

Key Steps

Based on the results of research, following are some of the main steps that a company
must keep in mind while bench marking:

Identify what to benchmark.

Select a team which will start the process of benchmarking.

Analyze the internal process of the organization.

Identify companies that would be used as benchmarks.

 Contact the companies that have been benchmarked.

Conduct visits to benchmark partner companies.

After analyzing the benchmarking findings, look for any performance gaps and
then redesign the benchmarks and finally adopt the benchmarking across the
organization.

Characteristics