Page 168 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

Unit 7: Logistics and Characteristics of Modes of Transportation

2. Physical distribution or management of finished goods from the factory to the customers. Notes
3. Logistical controls for managing the logistics system; these help in the efficient co-
ordination of physical supply and distribution sub-systems.

The aim of an ideal logistic system is to ensure flow of supply to the customer:
1. In the right quantity
2. At the required location
3. At the required time

4. In a usable condition
5. At the lowest total cost
Thus, the objectives encompass efforts to coordinate physical distribution and material
management in order to save money.

Task Study the Barriers to Internal Logistics Integration with reference to a particular
company of your choice?

7.6 Critical Elements of Logistics System

Logistics comprises the following fundamental elements:
1. Transportation
2. Warehousing
3. Inventory Management
4. Packing and Utilization, and
5. Information & Communication
Given a facility network and information capability, transportation is the operational area of
logistics that geographically positions inventory. Due to its fundamental importance and visible
cost, transportation has received considerable managerial attention over the years. Firms, big
and small, have managers responsible for transportation. Finding and managing the needed
transportation mix is a main responsibility of logistics.
Network of the functional areas of logistics – information, transportation, and inventory – can
be engineered into a variety of different operational arrangements. Each arrangement will have
the potential to achieve a level of customer service at cost; these three functions combine to
create a system solution for integrated logistics. The final functions of logistics namely –
warehousing, material handling and packaging – also represent an integral part of an operating
solution. These functions do not have the independent status of the three previously mentioned.
Warehousing, material handling and packaging are an integral part of other logistics areas.
Merchandise typically needs to be warehoused at selected times during the logistics process.
Transportation vehicles require material handling for efficient loading and unloading. The
individual products are most efficiently handled when packaged together into shipping cartons
or other types of containers.
Logistics is viewed as the competency that links a firm with its customers and suppliers.
Information from and about customers flows through the firm in the form of sales activity,
forecasts and orders. The whole process is viewed in terms of two interrelated efforts, inventory
flow and information flow.

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