LOGISTIC AND INVENTORY MANAGEMENT

1. OVERVIEW OF LOGISTICS MANAGEMENT

Logistics is the process of strategically managing both the movement and storage of goods and materials from the source to the point of ultimate consumption and the associated information flow.

It involves integration of information, transportation, inventory, warehousing, material handling and packaging. Logistics management can be defined as supply chain management component that is used to meet customer demands through the planning, control and implementation of the effective movement and storage of related information, goods and services from origin to destination. It includes the design and administration of systems to control the flow of materials, work in process and finished inventory to support business unit strategy.
The overall goal of logistics is to achieve a targeted level of customer service at the lowest possible total cost. World class logistics firms create a competitive edge by providing customers with superior service/ information systems to monitor logistics performance on real time basis,
identifying potential operational breakdowns and taking corrective action prior to customer service failure. In a nutshell Logistics management tries to have the ―right product‖, in the ―right
quantity‖, at the ―right place‖, at the ―right time‖, with the ―right cost‖.
Inbound logistics - This is a primary activity in the value chain. It covers the movement of materials and other related activities from suppliers to the organization. Inbound activities include: receiving, storing, materials handling, warehousing, inventory control, vehicle
scheduling and returns to suppliers.
• Receiving: This involves receipt, authentication, inspection and recording of stock upon
the arrival at the premise.
• Storing: This involve physical holding of the stocks or supplies in store awaiting issue or
transport to customers.
• Material handling: Involve coordination of the function of planning and controlling of
materials flow including physical handling by forklifts clines etc.
• Vehicle scheduling: This is assigning vehicles the routes and the consignment. It entails timing and assignment of the required man-power.
• Returns to suppliers: This involves arrangement to return damaged, sub-standard excess
and those supplies that don‘t meet the specifications of the buyer.
Outbound logistics - This is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user. The primary activities in line with outbound logistics include: warehousing, sales and marketing, delivery of the finished goods and most importantly after sales service.
Reverse logistics - This is the process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or
proper disposal. The two principal drivers of interest in reverse logistics have been the increased importance attached to the environmental aspects of waste disposal and recognition of the potential returns that can be obtained from the reuse of products or parts or the recycling of materials. Reverse
logistics may also apply to goods sent to distributors on a sale or return basis unused materials to be returned to stores from contracts or project sites or from subcontractors. The main activities of reverse logistics include collection of returnable items, their inspection and separation and the application of a range of disposition options, including repair, reconditioning, upgrading, remanufacture, demanufacture (parts reclamation) and recycling. Disposition logic also includes channel or routing logic- that is the returned items and components can be sent back to the customer, routed to a warehouse or production or sold in secondary markets. 

1.1. Concepts in logistics management

i. Systems concept
It is based on all functions of an organisation working together in order to maximise benefit. This concept sometimes requires certain components of the organisation to operate sub optimally in order to achieve maximum goals of the organisation.
ii. Total cost concept
Logistics focuses on coordination of inbound logistics and material management as well as cost efficient distribution while supporting the customer service goals. All of these activities are connected in many different ways and often logistics managers use the total cost approach to find the most cost effective solution. The main objective is to find the lowest cost options that will still provide the support for the customer service goals.
iii. Total distribution concept
It is a recognition that the interrelationship between different elements e.g. delivery transport and storage need to be considered within the context of the broader supply chain. It is the art of directing the flow of materials and supply of products to the user. It includes the total flow of raw materials, user products, supply and information flows that helps to control materials
movement. Total distribution costs are costs incurred in moving goods from point of production to point of consumption.
iv. After tax concept
A variation of the total cost concept that is aimed to determine the after tax profit.
v. Trade off concept
This concept links the system together in a way that is very efficient but can have tradeoffs that might be inefficient. The advantages of such high efficiency must be weighed against the risks involved