Business Logistics & SCM

Get to Know about Logistics and the Industry

Supply Chain Management / Logistics ??? May 20, 2008

Filed under: Business Logistics,Logistics,Supply Chain Management — SUKUMARAN @ 9:03 pm

What is Supply Chain Management?

Since the term “supply chain” contains the word “supply”, many people naturally assume that supply chain must have something to do with suppliers (i.e. purchasing or procurement). While it is true that supply chain management does encompass the purchasing and procurement functions, supply chain management actually extends well beyond those areas. Supply chain management is the practice of manufacturing and distributing physical goods as efficiently as possible.

Supply chain management encompasses the entire process of manufacturing and distributing physical goods, from supplier’s supplier to customer’s customer. Business functions that are within the realm of supply chain management include: forecasting and planning, procurement and purchasing, manufacturing and assembly, warehousing and distribution, shipping and transportation, returns and refurbishment, inventory management and order management. Or, stated more simply, supply chain management includes the functions: plan, buy, make, store, move, sell and return.

For example, let’s look at [a very simplified version of] the processes that created the computer monitor upon which you are probably reading this text. The monitor was most likely assembled using components supplied by many companies in several different countries. The circuit boards and computer chips that control the monitor’s functions may have been manufactured in Singapore or Malaysia. The CRT may have been manufactured in Mexico. The plastic casing may have been injection-molded in China. And the final assembly of those components may have taken place in Texas. What if the Texas plant is ready to assemble 1,000 monitors, but the plastic casings didn’t arrive from China in time? And what if a computer company (e.g. Compaq) is waiting for those monitors so they can package them together with 1,000 computers? And what if a major customer of Compaq’s, such as Best Buy, has already run ads to promote those computer packages because Best Buy was counting on having them delivered tomorrow? In this scenario, the whole system just broke down, and is going to cause a lot of embarrassment, not to mention a lot of money, to Compaq and Best Buy, and is going to leave a lot of end consumers very disappointed, just because a little injection molding company in China didn’t deliver some components in time.

“Couldn’t the monitor assembler in Texas just buy a lot of plastic casings ahead of time and store them in a warehouse until they’re needed?” Yes, but inventory costs money; a lot of money. And what if that Texas assembler also bought all of the other components well ahead of time and stored them in warehouses until they’re needed? Now we need to add the cost of extra warehousing space to the equation, which actually is paltry in comparison to the cost of all that inventory just sitting in warehouses collecting dust and becoming obsolete. And what if each of the component manufacturers also adopted the same philosophy and stored raw materials in warehouses close to their facilities in Singapore, Mexico, etc.? With that methodology of inventory management, the cost of manufacturing that monitor could easily double, which means that the price the end consumer has to pay at Best Buy would double.

But, with good supply chain management, the Texas assembler can be assured of having the right components available in the right place at the right time without the need for storing massive quantities of expensive “safety stock” inventory. Supply chain management is all about making that process, from sourcing those components to delivering the finished goods to the customer, more efficient (i.e. lower cost) and reliable.

What is Logistics?

Logistics is the portion of supply chain management that encompasses distribution, transportation and inventory management. To put it in context with the simplified description given above regarding the supply chain management functions of plan, buy, make, store, move, sell and return, logistics is the “store” and “move” functions.

It is not unusual for transportation costs alone to be more than 10% of revenue. For many companies, transportation is the single largest cost element on their financial statements. Transportation costs are often double the expense of warehousing and inventory carrying costs (which means that warehousing and inventory costs can be 5% of revenue, which is no small matter). And every dollar saved in transportation costs goes straight to the bottom line. So, why don’t corporations focus more attention on streamlining logistics to reduce costs?


What people say about Logistics June 13, 2007

Filed under: Business Logistics,Logistics — SUKUMARAN @ 3:05 pm

What is Logistics — Joint Publication 1-02, Department of Defense Dictionary of Military and Associated Terms –

The science of planning and carrying out the movement and maintenance of forces. In its most comprehensive sense, those aspects of military operations which deal with: design and development, acquisition, storage, movement, distribution, maintenance, vacuation, and disposition of materiel; movement, evacuation, and hospitalization of personnel; acquisition or construction, main-
tenance, operation, and disposition of facilities; and acquisition or furnishing of services.

From Joint Publication 4.0, Doctrine for Logistic Support of Joint Operations ( 6 April 2000 )

The science of logistics concerns the integration of strategic, operational, and tactical sustainment efforts within the theater, while cheduling the mobilization and deployment of units, personnel, equipment, and supplies in support of the employment concept of a geographic combatant commander. The relative combat power that military forces can bring to bear against an enemy is
constrained by a nation’s capability to plan for, gain access to, and deliver forces and materiel to the required points of application across the range of military operations.

Supply is the function of acquiring, managing, receiving, storing, and issuing the materiel required by forces.

Maintenance includes actions taken to keep materiel in a serviceable condition or to upgrade its capability.

Transportation is the movement of units, personnel, equipment, and supplies from the point of origin to the final destination.

Civil engineering provides the construction, operation, maintenance, damage repair, and reconstitution of facilities, roads, and utilities and logistic infrastructure.

Health services includes medical evacuation, hospitalization, medical logistics, medical laboratory services, blood management, vector control, preventive medicine services, veterinary services, and dental services.

Other services are nonmaterial support activities provided by Service personnel and the logistic community that are essential to force support. For each of the above functional areas, the combatant commander should consider these four elements of the joint theater logistic process: procurement and contracting, distribution, sustainment, and disposition and disposal.

(From “Word Origins and Their Romantic Stories” by Wilfred Funk, Litt. D.)

“In addition to Tactics and Strategy, the French invented a third military science which they called Logistique, our Logistics. This
is the business of moving, supplying and quartering soldiers. It stems from the French Loger, which means to quarter”, that is, “to find lodgings.”.”

(From “Logistics in World War II – Final Report of the Army Service Forces” published by the Center of Military History (p. 251))

“The security of the United States presents a complex problem in logistic preparedness. How should we plan, and how can we organize for national security? What should be the place of logistics in the organization? What should be the relationship of logistic agencies to the combat arms and to other Government agencies? What is the best internal organization for accomplishing logistic functions? How shall we provide for the continuous research and development of new weapons; for adequate quantities of equip-
ment and sufficient numbers of trained forces to meet sudden attack; for rapid manpower, industrial, and Government mobilization?

These are questions for which we must find satisfactory answers. They must be approached objectively, intelligently, and with courage. It is inevitable that the human tendencies to revert to old habits of thought and action, to promote segmentary interest, to protect the established order, to resist change, to be swayed by sentiment, will exert powerful influences. These tendencies have
no place in our efforts to insure our Nation’s security. Realism demands that we rise above lesser motivations and loyalties and work always for the highest good of the Nation.”

Quote from A.C. P. Wavell, Speaking Generally, (London, 1946) page 78-9

“The more I see of war, the more I realize how it all depends on administration and transportation… It takes little skill or imagination to see where you would like your army to be and when; it takes much knowledge and hard work to know where you can place our forces and whether you can maintain them there. A real knowledge of supply and movement factors must be the basis of every leader’s plan; only then can he know how and when to take risks with those factors, and battles are won only by taking risks.”

Lt Col George C. Thorpe, Pure Logistics, 1917

Logistics…”embraces not merely the traditional functions of supply and transportation in the field, but also war finance, ship con-
struction, munitions manufacture and other aspects of war economy.”

General Dwight D. Eisenhower

You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics.

General Antoine Henri Jomini, Precis de l’Art de la Guerre (The Art of War), 1838

Logistics comprises the means and arrangements which work out the plans of strategy and tactics. Strategy decides where to act; logistics brings the troops to this point.

General Antoine Henri Jomini

Logistics is the “practical art of moving armies.”

Thomas Jefferson
Experience has taught me that manufacturers are now as necessary to our independence as to our comfort.

Joint Pub 4-0, Doctrine for Logistics Support of Joint Operations, Sep 25, 1992
Seldom will all logistics principles exert equal influence; usually one or two will dominate in any given situation. Identifying those principles that have priority in a specific situation is essential to establishing effective support.

Admiral Hyman Rickover
To inquire if and where we made mistakes is not to apologize. War is replete with mistakes because it is full of improvisations. In war we are always doing something for the first time. It would be a miracle if what we improvised under the stress of war should be perfect.

Benjamin Franklin
A little neglect may breed mischief: for want of a nail the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost.

Capt John P. Laverdure, Scott Air Force Base, HQ Air Mobility Command, 1996
You realize when shoeing the horse that the shoe may be thrown–possibly causing the horse to run, so you have a mule on
standby to get the rider to the war.

Capt John P. Laverdure, Scott Air Force Base, HQ Air Mobility Command, 1996
Logistics Planning – The wisdom to realize when working on plan A, you’ll run into conflicts in executing plan B and being properly
prepared, and successfully executing plan E.M. Cox

Lean forward. It’s always better to fall on your face than on your backside.
Behind every great leader there was an even greater logistician.
RADM Henry E. Eccles, USN, Ret, Logistics in the National Defense, 1959
The programs of training and exercises form the final test of logistics readiness. Since the majority of junior officers and enlisted
men in the logistics services are specialized in a technical field, sound technical training is their fundamental preparation for war.
In addition, however, specific attention must be paid to the development of fundamental discipline, leadership, and personal versa-
tility which are so vital to efficient logistics service under wartime conditions.

James A. Huston, The Sinews of War: Army Logistics 1775-1953, 1966
“Logistics…in the broadest sense, the three big M’s of warfare–material, movement, and maintenance. If international politics is
‘the art of the possible,’ and war is its instrument, logistics is the art of defining and extending the possible. It provides the sub-
stance that physically permits an army to live and move and have its being.”

Captain A.T. Mahan, Armaments and Arbitration, 1912
Logistics…as vital to military success as daily food is to daily work.

Air Force Manual 1-1, Basic Aerospace Doctrine of the United States Air Force, Essay T, March 1992
The ideal for all military forces is to reduce their logistical requirements to necessities only.

Joint Pub 1, Joint Warfare of the U.S. Armed Forces, November 1991
Logistics sets the campaign’s operational limits.
Rear Admiral Henry Eccles, U.S. Navy
The essence of flexibility is in the mind of the commander; the substance of flexibility is in logistics.

Logistics must be simple–everyone thinks they’re an expert.

My logisticians are a humorless lot…they know if my campaign fails, they are the first ones I will slay.

CLM-National What It’s All About
Logistics: The Profession – As a business professional with a vested career interest in the field of logistics, you are a part of a
highly dynamic profession: current global developments and technological innovations are impacting logistics today as never
before. While the logistics function’s contributions to a firm’s competitive strength have often been “invisible” in the past, many fac-
tors have coalesced to heighten its importance and visibility in the 1990s and beyond.

Dwight D. Eisenhower, British Army Doctrine Publication, Volume 3, Logistics (June 1996) p. 1-2
Throughout the struggle, it was in his logistic inability to maintain his armies in the field that the enemy’s fatal weakness lay. Cour-
age his forces had in full measure, but courage was not enough. Reinforcements failed to arrive, weapons, ammunition and food
alike ran short, and the dearth of fuel caused their powers of tactical mobility to dwindle to the vanishing point. In the last stages of
the campaign they could do little more than wait for the Allied advance to sweep over them.

Lt Gen Alfred M. Gray, Jr., Marine Corps Gazette (July 1987)
As we select our forces and plan our operations,….(w)e must understand how logistics can impact on our concepts of operation…
Commanders must base all their concepts of operations on what they know they can do logistically.

Tom Clancy, Red Storm Rising
The tactics…no, amateurs discuss tactics,…. Professional soldiers study logistics.


Origin of the Word: Logistics

Filed under: Logistics — SUKUMARAN @ 2:48 pm

From “Word Origins and Their Romantic Stories” by Wilfred Funk, Litt. D.)
“In addition to Tactics and Strategy, the French invented a third military science which they called Logistique, our Logistics. This is the business of moving, supplying and quartering soldiers. It stems from the French Loger, which means
“to quarter”, that is, “to find lodgings.”.”


Logistics: A Multi-Dimension Discipline May 10, 2007

Filed under: Logistics — SUKUMARAN @ 8:20 pm

Business Logistics:
Definition[1] :Business Logistics is defined as a business planning framework for the management of material, service, information and capital flows.

Definition [2]: The science of planning, design, and support of business operations of procurement, purchasing, inventory, warehousing, distribution, transportation, customer support, financial and human resources. — (MDC, LogLink / LogisticsWorld, 1997)

Definition [3]: Business Logistics is defined as a scientific technique in which evaluation is used to control inventory, production, sales, management, and staff in order to keep a solid capital and monetary flow. In logistics engineering, all aspects of a company’s work progress are studied.

Acquisition Logistics:
Definition [1]: Acquisition logistics covers everything involved in acquiring logistics support equipment and personnel for a new weapons system for the military. This includes identifying, designing, defining, developing, producing, delivering and installing the new weapons system.

Definition [2]: Acquisition Logistics is everything involved in acquiring logistics support equipment and personnel for a new weapons system. The formal definition is “the process of systematically identifying, defining, designing, developing, producing, acquiring, delivering, installing, and upgrading logistics support capability requirements through the acquisition process for Air Force systems, subsystems, and equipment. — (Reference: Air Force Institute of Technology, Graduate School of Acquisition and Logistics.)

Military Logistics
The science of planning and carrying out the movement and maintenance of forces…. those aspects of military operations that deal with the design and development, acquisition, storage, movement, distribution, maintenance, evacuation and disposition of material; movement, evacuation, and hospitalization of personnel; acquisition of construction, maintenance, operation and disposition of facilities; and acquisition of furnishing of services. — (JCS Pub 1-02 excerpt)