Logistics And Supply Chain

In the following article, we will discuss the logistics and supply chain, as well as the functions and objectives of this activity.

We define logistics as a business activity whose main objective is the planning and management of all operations that are directly related to the flow of raw materials, semi-finished products, and finished products, from their origin to the final consumer.

The logistics and activities play a key role in managing the activities of storage and transport, as these serve as liaisons between production centers and markets that are separated by time and distance.

Within the supply chain, logistics is used for the planning, management and control of the Affordable Storage Cost of goods, as well as the necessary services and the flow of information generated, which goes from the point of origin of the product to the point of consumption, and whose objective is to cover the demand of consumers.

Logistics And Supply Chain Functions

In the logistics process, we find a series of stages that happen in the chain and that depend as much on the nature of the product itself as on the main activity of the companies, that is, commercial, industrial or services. As a general rule, two channels are used so that the product can reach the final consumer:

1. Provisioning channel: in this channel, the products are transferred from the extraction center to the distribution or factory warehouse.
2. Distribution channel: when the product is moved from the warehouse or factory to the point of sale.

Functions Of Logistics In Industrial Companies

In industrial companies, the logistics functions are divided into 4 groups.

Provisioning

The provisioning function consists of supplying the production centers with the raw materials, elements or pieces that best respond to the rhythm and volume of production, guaranteeing the minimum cost.

Production

It involves organising all the means of production: physical (factories and machinery), human (adequate and efficient personnel) and processing or processing activities (packaging, handling, and storage).

Commercial Distribution

It is the coordination between the means of transport and the warehouse. Within the warehouse, logistics activities are focused on studying the optimal location of the premises, the distribution of spaces, the placement of products in the right place, the management of stocks, etc. When transport logistics is applied, the criteria for selecting the means and optimising the routes are established.

Services Post-Sale

The logistics activities in terms of after-sales service are focused on the management of orders and returns, studying the needs of the customer, in establishing the after-sales services of durable products, etc.

Functions Of Logistics In Commercial Companies

The logistic functions in commercial companies are, basically, of distribution and provisioning. The activities related to the flow of goods (storage and transport) depend on factors such as objectives established for each section or area of the company, organisation, and size of the company itself, etc.

Logistics Functions In Service Companies

The supplies that the service companies need are the goods that they acquire to carry out the activity they carry out and how they are used; generally, they are not stored.

For example, in hotels and restaurants, the supplies they purchase are for daily consumption (food, beverages...) or for use (clothes, crockery, glassware...) and the quantities they store are minimal, to cover unforeseen events.

Objectives Of Logistics

As the main objective, logistics seeks to satisfy the demand for the best conditions of services, quality, and cost.

Guarantee, on the one hand, the quality of the product and/or service, which will provide a competitive advantage and cost reduction, which will increase the company's profit. For this reason, logistics is responsible for managing the necessary means (premises, means of transport, computer management programs...) and mobilise the most appropriate human and financial resources.

The objectives that are achieved with good logistics planning are:

1. Acquire the materials in the most suitable conditions, in this way we avoid carrying out unpacking, preparation and subsequent adaptation operations.
2. Reduce transportation costs, by grouping loads and minimising stages and distances along the route.
3. Reduce the handling costs, trying to change the merchandise to bind the least number of times.
4. Reduce the stock classification groups, as well as minimise the volume, space and number of storage areas.
5. Reduce the number of revisions and inventory control, making the necessary and as easy and comfortable as possible.

In the following logistics and supply chain article, we will discuss the concept of reverse logistics and cross-docking.