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Logistics Logistics has become an integral part of supply chain management.  Five years ago, the core focus of supply chain management was ... thumbnail 1 summary


Logistics has become an integral part of supply chain management.  Five years ago, the core focus of supply chain management was streamlining material movement within the factory and ensuring that the right material was in front of the machine at the right time.  There was very little focus on the logistical movement of material since most of the supply came from suppliers who were located in and around the factory.  This, in fact, used to be a central premise of Just-In-Time Manufacturing that stated that material suppliers had to be located within a few miles of the assembly line, so they could supply material in smaller quantities and more frequently. 

Today, the entire manufacturing environment has been completely transformed.  Globalization and outsourcing has created a scenario where critical parts and many sub-assemblies are being manufactured in different parts of the world and then shipped into the manufacturing location.  To be competitive, manufacturers have realized that they need to get these parts assembled in countries where the cost of labor is significantly lower than in the United States.  This trend has forced companies to invest in their logistics to ensure that their shipped materials arrive on time.  Over time, Logistics has also branched into several unique areas of focus including warehousing, purchasing, shipment tracking and inventory management. This trend has also introduced a new entity in logistics management called the third party logistics provider or 3PLs.  These firms specialized in outsourced logistics services, where they manage the shipment pick and delivery on behalf of the manufacturer and ensure that the consignment is shipped through the most optimal route, taking both cost and time into consideration.  3PLs are also able to provide economies of scale, since they can combine multiple orders across different customers into a single shipment.  3PLs can also decide on alternate routes for shipments in case of delays at various receiving locations. 

3PLs have also started to offer their customers various sophisticated services including bar coding, track and trace capabilities and inventory hubs. 

Bar-coding involves the process of labeling consignments with machine readable bars that can be scanned at the point of origin, in transit location and final destination.  This allows for easier transactions and handling of goods.

Track and trace involves the tracking of shipments as it moves from one logistics point to another.  This information is then fed back into a web interface that can be accessed by customers.  Track and trace systems can perform highly complex calculations like computing re-routing of shipments in case of delays, sending alerts to various users and monitoring real-time shipment information.

Inventory hub management or 3PL managed inventory is a specialized form of logistics management where the 3PLs store inventory on behalf of their suppliers.  This inventory is usually stored in hubs that are located near the manufacturing facility.  When parts are required of suppliers in international locations, 3PLs pick and ship the parts into the inventory hub.  These parts are held until required by the manufacturer. 

Some of the prominent 3PLs today are Ryder, Hanjin Logistics, Penske Logistics, ZIM Logistics, BAX Global, UPS and FedEx.  Between them, they account for billions of dollars worth of material movement

In any type of business whether it be a daycare, or a billion dollar retail franchise, one thing is common throughout.  In each business, the owner is delivering a product or service to a customer.  Many companies focus solely on the value and profitability of the product itself.  This is obviously important but it isn't the only thing that is important.  How the product or service is delivered is also important.  Whatever your company is selling should arrive to the customer on time, ready to use and in exactly the condition that you promised.  This may seem like an obvious prerequisite to running a successful business and it is, but it can be much more difficult that it sounds.  The process of delivering a service from the originator to the customer is sometimes tedious and sometimes nearly impossible.  This is why any business of a reasonable size should have an automated logistical system. 

The benefits of an automated logistical system are far too many too list here.  First of all, as long the system is set up carefully, there is no chance of human error.  A computer won't promise a customer a product will arrive in 2 hours when it is 5 hours from the customer's location.  A second benefit is that an automated logistical system is much cheaper than having people monitor and make deliveries manually.  For instance, if we take a large retail store such as Target or Wal-Mart, the benefit to them of using an automated logistical system is immeasurable.  When any retail store decides to purchase items, it is done automatically.  It saves them hundreds and maybe even thousands of dollars a day, to order it automatically then to have people physically go up and down the isles and the warehouses checking if there is any of a particular product left and then calling a supplier on the phone and speaking the names of all the products that are needed.  Even the smallest companies use automated logistical systems.  These systems aren't always extremely sophisticated but they are still automated.  If a smaller company only makes a few sales of a particular product, it will still have designed a program that allows an automated order to be sent to its supplier for the product to be replenished.  Doing saves time and money that will be wasted manually ordering everything and will eliminate mistakes.  Automated logistical systems are beginning to be the norm in today's business world and that will continue to be the case.  This will make small companies become more competitive and will eliminate wasted excess inventory and employees spending their valuable (and expensive) time doing work that could be easily done by an automated system.  

Automating logistics is a very important part of a company's growth.  Using an automated system is much more efficient than doing the work manually and is part of the evolution of a company from a start-up to a successful corporation.  Automated logistics will cause less employment but in the long run will cause companies to be more efficient and will lower prices.

Design and Logistics

When many people who are in charge of logistics look at how to improve their work, they are mostly concerned with speeding up the transportation of parts and decreasing machine time.  One thing that many logistics people forget is that the actual design of the product can make a difference to how difficult it is to produce and machine.  A good design not only focuses on how well the product will appear to the consumer on the open market, but it also places importance on how easy it is to machine the product.  Many of the things that logistics managers worry about such as machine time and process automation, the design engineer should worry about also.  When designing a particular product, the level of difficulty for machining and the easiness of implementing an automated machining process should be considered.  

There are countless ways in which a designer can design his product so that the design has a positive influence on that particular logistical process.  First, the designer can control which materials the product is made from.  This is the possibly the biggest impact the designer can have on the logistics process.  If the designer picks materials that are easy to machine and easy to acquire then this will obviously affect the logistics process positively.  When the designer picks the proper materials, he can reduce machine usage time, reduce machine set up time and minimize transportation costs of materials.  Therefore, if we look at the design process in depth we can clearly see that the design engineers have a huge influence on how smoothly the logistical system can run. 

A simple example of this would be that suppose that the design engineer is making plans for the production of mechanical pencils.  Now besides the basic design criteria of price range and large variances in quality (the difference between a forty cent Bic pencil and a seven dollar Dr. Grip pencil) there are enormous characteristics of the pencil that the design engineer can control that will affect the logistics process of the production of this particular product.  The designer controls what material the pen is made out of, he controls how big it is, he controls how many parts there are and he controls the shape of the part.  Having a flashy cap, may seem like a minor improvement to make the pen more aesthetically appealing, but in fact it may be a major impedance to the quick, cheap and effective manufacture of the pen.  There are countless other small tradeoffs that the designer can make that would make the logistical process much easier.  The designer could use acrylic instead of garolite for inside parts of the pen and he could use steel instead of aluminum for the frame of the pen.  

Many people believe that logistics is solely in the hands of those who are specifically assigned to look over the particular production system.  However, this is simply not the case, logistics is in the hands of everybody who has a part in the design of a product.  Design for manufacture and for assembly are big parts of the design process and can not be ignored when looking at the logistical and manufacturing process.