Page 41 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes
Example: Inventory typically needs to be warehoused at selected times during the
logistics process.
Transportation vehicles require materials handling for efficient loading and unloading. Finally,
individual products are most efficiently handled when packaged together into shipping cartons
or other unit loads.

2.3.5 Facility Network Design

Classical economics neglected the importance of facility location and overall network design to
efficient business operations. When economists originally discussed supply-and-demand
relationships, facility location and transportation cost differentials were assumed either
nonexistent or equal among competitors. In business operations, however, the number, size,
and geographical relationship of facilities used to perform logistical operations directly impacts
customer service capability and cost. Facility network design is a primary responsibility of
logistical management, since a firm’s facility structure is used to ship products and materials to
customers. Typical logistics facilities are manufacturing plants, warehouses, cross-dock operations,
and retail stores.

Self Assessment

Fill in the blanks:
7. The …………………… requirements of a firm are directly linked to the facility network
and the desired level of customer service.
8. …………………… is the operational area of logistics that geographically moves and
positions inventory.
9. Facility …………………… is a primary responsibility of logistical management, since a
firm’s facility structure is used to ship products and materials to customers.
2.4 Logistical Operations

The conceptualization of integrated logistics is illustrated in the shaded area of the figure below.
Logistics is viewed as the competency that links an enterprise with its customers and suppliers.
Information from and about customers flows through the enterprise in the form of sales activity,
forecasts and orders. The information is refined into specific manufacturing and purchasing
plans. As products and materials are procured, a value-added inventory flow is initiated that
ultimately results in ownership transfer of finished products to customers. Thus, the process is
viewed in terms of two interrelated efforts, inventory flow and information flow. Prior to
discussing each flow in greater detail, two observations are in order.

Figure 2.4: Integrated Logistic

Source: Reji Ismail (2008), “Logistics Management,” Excel Books

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