Page 48 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 2: Introduction to Logistic

also commonly used for inbound components and materials to manufacturing plants because Notes
the average shipment size is typically large.

2.5.3 Flexible Logistics System

The ideal logistical arrangement is a situation wherein the inherent benefits of echeloned and
direct structures are combined into a flexible logistics system. Anticipatory commitment of
inventory should ideally be postponed as long as possible. Inventory strategies often position
fast-moving products or materials in forward warehouses, while other, more risky or costly
items are stocked at a central location for direct distribution to customers. The basic service
commitment and the order size economics determine the most desirable and economical structure
to service a specific customer.
(a) Emergency Flexible Structure: Emergency flexible operations are pre-planned strategies to
resolve logistical failures. A typical emergency occurs when an assigned shipping facility
is out of stock or for some other reason cannot complete a customer’s order. For example,
a warehouse may be out of an item with no replenishment inventory scheduled to arrive
until after the customer’s specified order delivery date. To prohibit back-order or product
cancellation, a contingency operating policy may assign the total order, or at least those
items not available, for shipment from an alternative warehouse. The use of emergency
flexible operation procedures is typically based on the importance of the specific customer
or the critical nature of the product being ordered.

(b) Routine Flexible Structure: A flexible logistics capability that has gained popularity as a
result of improved communications involves procedures for serving specified customers
developed as part of the basic logistical system design. The flexible logistics rules and
decision scenarios specify alternative ways to meet service requirements, such as
assignment of different shipping facilities. A strategy that exploits routine flexible
operations may be justified in at least four different situations.

Task Find out why are market distribution operations typically more erratic than
manufacturing support and procurement operations?

Self Assessment

Fill in the blanks:
13. The use of …………………… usually implies that total cost analysis justifies stocking
some level of inventory or performing specific activities at consecutive levels of a supply
chain.
14. …………………… is typically required by manufacturing firms that have plants at different
geographical locations.
15. A …………………… that exploits routine flexible operations may be justified in at least
four different situations.

2.6 Supply Chain Synchronization

Synchronization is the ability to coordinate, organize and manage end-to-end supply chain
flows – products, services, information, and financials – in such a way that the supply chain

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