Basic concepts and tasks

of logistics in enterprise
INTERNATIONAL LOGISTICS

Contents
1.

Basic concepts and tasks of logistics in enterprise.

2.

Elements of logistic system in enterprise.

3.

Logistics management.

4.

The functional components of logistics management and their

features:

5.

Logistics automation

1. BASIC CONCEPTS AND

TASKS OF LOGISTICS IN
ENTERPRISE

4
Logistics is the process of planning, implementing and
controlling the efficient, cost effective flow and storage
of raw materials, in-process inventory, finished goods
and related information from point of origin to point of
consumption for the purpose of conforming to
customers requirements.
THE AMERICAN COUNCIL OF LOGISTICS MANAGEMENT

Other scientists define logistics as planning, implementing, and controlling

the physical flows of materials and finished goods from point of origin to point
of use to meet the customers need at a profit.

Objectives of logistics

Reduction of inventory: Inventory is one of the key factors, which can affect the
profit of an enterprise to a great extent. Logistics helps in maintaining inventory at
the lowest level, and thus achieving the customer goal. This is done through small,
but frequent supplies.

Economy of freight: Freight is a major source of cost in logistics. This can be reduced
by following measures like selecting the proper mode of transport, consolidation of
freight, route planning, long distance shipments etc.

Reliability and consistency in delivery performance: Material required by the

customer must be delivered on time, not ahead of the schedule or behind the
schedule.

Minimum damage to products.

Quicker and faster response.

Functions of logistics

Order Processing: It involves steps like checking the order for any deviations in the
agreed or negotiated terms, price, payment and delivery terms, checking if the materials
is available in stock, producing and scheduling the material for shortages, and also
giving acknowledgement to the owner, by indicating any deviations.

Inventory Planning and management: Activities like inventory forecasting, engineering

the order quantity, optimization the level of service, proper deployment of inventory etc.
are involved in this.

Warehousing: This serves as the place where the finished goods are stored before they
are sold to the customers finally. This is a major cost center and improper warehouse
management will create a host of problems.

Transportation: Helps in physical movement of the goods to the customers place. This is
done through various modes like rail, road, air, sea etc.

Packaging: A critical element in the physical distribution of the product, which also
influences the efficiency of the logistical system.

2. ELEMENTS OF LOGISTIC
SYSTEM IN ENTERPRISE

Elements of logistic system in

enterprise

Warehousing (Space determination, stock layout, configuration, stock

placement)

Materials handling ( equipment selection & replacement policies, orderpicking procedures, stock storage & retrieval)

Purchasing (supply source selection, purchase timing, purchase quantities)

Protective packaging (designed for handling, storage, protection from

loss/damage)

Cooperate with production/operations (specify aggregate quantities,

sequence & time production output, schedule supplies)

Information maintenance (info collection, storage & manipulation, data

analysis, control procedures)

3. LOGISTICS
MANAGEMENT

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Logistics management is a 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. Logistics
management helps companies reduce expenses and
enhance customer service.

The logistics management process begins with raw material

accumulation to the final stage of delivering goods to the destination.

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Elements of logistics management

Selecting appropriate vendors with the ability to

provide transportation facilities

Choosing the most effective routes for transportation

Discovering the most competent delivery method

Using software and IT resources to proficiently handle

related processes

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In logistics management, unwise decisions create multiple issues. For
example, deliveries that fail or are delayed lead to buyer
dissatisfaction. Damage of goods, due to careless transportation, is
another potential issue. Poor logistics planning gradually increases
expenses, and issues may arise from the implementation of ineffective
logistics software. Most of these problems occur due to improper
decisions related to outsourcing, such as selecting the wrong vendor
or carrying out delivery tasks without sufficient resources.

To resolve these issues, organizations should implement best logistic

management practices. Companies should focus on collaboration rather
than competition. Good collaboration among transportation providers,
buyers and vendors helps reduce expenses. Also, an efficient and safe
transportation provider is vital to business success.

4. THE FUNCTIONAL
COMPONENTS OF
LOGISTICS MANAGEMENT
AND THEIR FEATURES

The functional components of logistics

management and their features

Stocks logistics

Transport logistics

Procurement logistics

Sales (distribution) logistics

Logistics of production processes

Logistics of warehousing

Information logistics

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Stocks logistics

Stocks logistics is provided through inventory management system. An

important aspect of the logistics system functioning is to support the amount
of inventories at a level, which helps to ensure uninterrupted supply of
necessary material resources to all departments with compliance with
requirements of the economy of process of moving of the material flow. The
solution to this problem is achieved by means of forming inventory
management system.

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Stocks logistics

Inventory management system is a set of rules and parameters that define

the time and volume of purchases of products for restocking. In logistics, the
following basic inventory management system are used:
1. The inventory management system with fixed size of the order.
2. Inventory management system with fixed frequency of order.
3. The system with fixed periodicity of restocking to a set level.
4. The "minimum - maximum" system.

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Transport logistics

The tasks of transport logistics includes the following functions:

selecting of transport for transportation of goods (freight) according to their
commodity characteristics;
selecting the type of vehicle;
determining the optimal route;
selecting of transport carrier;
combined planning of transport processes at different modes of transport
(in case of multimodal transport) with specific commercial enterprises;
providing technological unity of transport and trade processes;
combined planning of the transport process with stock and trade processes.

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Transport logistics

Transportation tasks are solved by linear programming through the following

parameters:
minimizing the cost of transportation of goods from points of production to
points of trade;
minimizing the length of the route during transportation from one supplier to
several customers (circular transportation of goods between trading units);

minimizing timing of transportation of goods from points of production to

points of trade.

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Procurement logistics

Procurement logistics is a material flows management in the process of

providing material resources to enterprise; material flows management at the
stage of entering of products to the logistics system of enterprise, which is
carried out through subsystem procurement.
Any company, which processes material flows, is composed of service that
makes the purchase, delivery and temporary storing of items of work (supply
service), raw materials, semi-finished products, consumer goods.

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Procurement logistics
Key questions, which should be answered
in the process of providing the enterprise
with items of work, are traditional and
identified by logic of supply:

what should be purchased;

how it should be purchased;

where it should be purchased;

on what terms it should be purchased.

Logistics adds its own questions to the

traditional list of questions:

how systematically to link

procurement with production and
sales;

how systematically to link the activities

of the company with suppliers.

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Distribution (sales) logistics

Distribution logistics is an integral part of the logistics

system, which provides the most effective organization of
the distribution of manufactured products, covering the
entire chain of distribution systems: transportation,
warehousing, packaging, distribution between trading
units.

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Production logistics

The production logistics covers the functional area of direct production as the
manufacturing process, i.e. processes from the beginning of the production
process to moving of finished product to the subsystem in the logistics
distribution and marketing including transportation of raw materials,
components, etc., and industrial storage.
Production logistics aims to providing timely and comprehensive supply of
products under the contracts, to the organization of uninterrupted
technological process in accordance with orders and with minimizing total
costs of work in progress and production costs in general.

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Production logistics
We can distinguish three levels of objectives, which helps to create optimal logistics
production system:
The task of the first level is minimizing production costs, ensuring an uninterrupted
loading of workers and workplaces and uninterrupted moving of items of work in
production.
The objectives of the second level are the improving the organization of production
processes, implementation of basic principles of production organization.
The tasks of the third level is to guarantee of efficiency of the production system in a
given range of qualitative and quantitative indicators, to provide a full cycle of
management in its interconnections, i.e. providing of forecasting, valuation,
planning, organization, accounting, control, analysis, coordination, regulation,
promotion.

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Logistics of warehousing

Warehouse logistics covers all major functional areas

related to the organization of movement of material flows
at the micro level. Therefore logistics process in
warehouses is much broader than just the technological
process of freight processing.

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Logistics of warehousing

Conventionally logistics process in warehouses can be divided into three components:

1.

operations aimed at coordination of work with procurement service;

2.

operations directly related to cargo handling and clearance of documents

(unloading, inner warehouse transportation, warehousing, kitting of orders,
transportation and forwarding of orders, collection and delivery of empty goods
mediums, informational service of warehouse);

3.

operations aimed at coordination of work with sales service.

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Information logistics

Information logistics organizes data flow, which accompanies the material flow and it is
an essential element for the enterprise, which connects the supply, production and
sales.
The main objective of informational logistics is to create optimal logistics information
systems and their practical implementation with taking into account the characteristics
of the supply, production and distribution of specifically identified companies by using
modeling techniques.
It is important for commercial enterprise to have information for forecasting inventory
levels, because increasing of inventory amount leads to increasing of costs on storage
of goods.

5. LOGISTICS AUTOMATION

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Logistics automation is the application of computer
software and/or automated machinery to improve the
efficiency of logistics operations. Typically this refers to
operations within a warehouse or distribution center, with
broader tasks undertaken by supply chain management
systems and enterprise resource planning systems.

Hardware and software components of

logistics automation systems

Fixed machinery

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Automated cranes (also called automated storage and retrieval systems): provide the
ability to input and store a container of goods for later retrieval.
Conveyors: automated conveyors allow the input of containers in one area of the
warehouse, and either through hard coded rules or data input allow destination selection.
The container will later appear at the selected destination.
Sortation, or sorting systems: similar to conveyors but typically have higher capacity and can
divert containers more quickly. Typically used to distribute high volumes of small cartons to a
large set of locations.
Industrial robots: four to six axis industrial robots are used for packaging, commissioning and
order picking etc..
Typically all of these will automatically identify and track containers based upon barcodes,
or increasingly, RFID tags
AS/RS Automated Storage and Retrieval Systems.

Hardware and software components of

logistics automation systems

Motion check weighers.

Mobile technology

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Radio data terminals: these are hand held or truck mounted terminals which connect by
wireless to logistics automation software and provide instructions to operators moving
throughout the warehouse.

Software

Integration software: this provides overall control of the automation machinery.

Operational control software: provides low-level decision making.

Business Control software: provides higher level functionality.

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Benefits of logistics automation

A logistics automation system may provide the following:

Automated goods in processes

Automated Goods Retrieval for Orders: On receipt of orders, the automation

system is able to immediately locate goods

Automated dispatch processing: Combining knowledge of all orders placed at

the warehouse the automation system can assign picked goods into dispatch
units and then into outbound loads. Sortation systems and conveyors can then
move these onto the outgoing trailers

If needed, repackaging to ensure proper protection for further distribution or to

change the package format for specific retailers/customers.

Thank you for attention!