LOGISTICS & OPERATIONS MANAGEMENT 2 - Essay Example

LOGISTICS & OPERATIONS MANAGEMENT 2 In changing economic environment marked by globalization processes, the role of has been changed. In general, the emphasis behind a logistics approach is to view the movement of products, as they pass through the manufacturing process and eventually to the customer, as a total system. Thus instead of marketing, production, distribution and purchasing - all working away oblivious to the others, and each trying to optimize its individual efforts - the logistics concept suggests that it may be necessary for some or all of these areas to operate suboptimally in order that the whole system may be more effective.

There are a wide range of definitions based on main logistics functions within organizational and production processes. Taking into account business definition, "logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment " (Logistix Partners Oy, Helsinki, FI, 1996, cited What is logistics 2005). Another definition reflects overall purpose of logistics and states that: "Logistics means having the right thing, at the right place, at the right time" (What is logistics 2005).

The latter definition is more appropriate for today's business environment because it reflects the nature of business itself and customers expectations typical for present day economics. For many years, production inefficiencies have been criticized and scrutinized in order to increase productivity. There has been little close examination of possible savings in the area of physical distribution, now known as logistics. There is a movement towards a closer analysis of all aspects of logistics.

This is particularly important where selling and distribution costs are high (Barnett, 1996). Not many companies have paid attention to the importance of the logistics effort as being a positive factor in contributing to profitability through its impact on customer service. The idea behind the logistics is evolving and today this concept concerns systems, and it rejects the traditional ideas that each activity (marketing, production, purchasing, and distribution) should try to optimize their own set of logistic activities, while disregarding the involvement of others in the flow of materials.

Looking at the concept from a total viewpoint, may indicate that some parts of the system can operate at less that the optimum in order to make the whole system more effective. For example the production manager may need to schedule shorter runs, or the transport manager more frequent deliveries, if it benefits the total logistics system. Acceptance of the logistics concept implies a recognition of the fact that an action affecting one part may affect all others. The importance of 'place' is simple: if a product is not available when and where a customer wants it, it will surely fail in the market.

Taking into account changing role of logistics it is possible to say logistics means a system which incorporates such areas as planning, implementation and controlling of products according to changing demands of customers, internal and external factors and cultural preferences. Also, it is important to note that today logistics means the total flow of information and materials into, through and out of the system. In future, the role of logistics as the main tool of strategic management will increase.

Logistics helps to tailor customer service strategies in order to meet the precise needs of customers playing the role of a powerful tool of differentiation and leading to enduring competitive advantage (Chase, Jacobs, 2003). Understanding customers' service preferences based on cultural and social dimensions is the starting point for re-engineering logistics processes to ensure greater cost-effectiveness (Aquilon, 1997); thus customers' service preferences should be the starting point for the development of logistics and supply chain strategies.

The challenge to the organization then becomes one of how to re-engineer processes and to restructure conventional, functional systems to achieve these service goals at minimum cost.References1. Aquilon, Malin. Cultural dimensions in logistics management: a case study from the European automotive industry. Supply Chain Management: An International Journal, Jun 1997, 2 (2), pp. 76 - 872. Barnett H. Operations management. Macmillan, London. 1996.3. Chase R.B., Jacobs R.F. Operations Management for Competitive Advantage, Hill/Irwin; 10 edition, 2003.4. What is logistics 2005.

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