Unit. 12 IntegratedLogisticssManagement
Unit. 12 Integrated Logistics Management
IntegratedLogisticsManagementToday,more and more companies are adoptingthe concept of integrated logistics management.This concept recognizesthat providing bettercustomer service and trimming distribution costsreguiresteamwork,both inside the company andamong all the marketing channel organizations.Insidethe company,the various functionaldepartments mustwork closelytogethertomaximizethecompany'sownlogisticsperformance.The company must also integrateitslogisticssystemwiththose ofits suppliersandcustomers to maximize the performance of theentiredistributionsystem
Integrated Logistics Management ◼ Today, more and more companies are adopting the concept of integrated logistics management. This concept recognizes that providing better customer service and trimming distribution costs requires teamwork, both inside the company and among all the marketing channel organizations. Inside the company, the various functional departments must work closely together to maximize the company’s own logistics performance .The company must also integrate its logistics system with those of its suppliers and customers to maximize the performance of the entire distribution system
IntegratedLogisticsManagementConcept Recognizes that ProvidingBetterCustomer Service andTrimming Distribution CostsReguiresTeamwork,Both Inside theCompany andAmong All the Marketing ChannelOrganizationsCross-FunctionalTeamworkinside the CompanyBuilding Channel PartnershipsIntegrated Logistics
3 Concept Recognizes that Providing Better Customer Service and Trimming Distribution Costs Requires Teamwork, Both Inside the Company and Among All the Marketing Channel Organizations. Cross-Functional Teamwork inside the Company Building Channel Partnerships Integrated Logistics Integrated Logistics Management
Cross-Functional Teamwork Inside the CompanyInmostcompanies,responsibilityforvariouslogistics activities is assigned to many differentfunctional units-marketing,sales,finance,manufacturing,purchasing.Too often,eachfunction tries to optimize its own logisticsperformance without regard for the activities ofthe other functions.However,transportationinventory,warehousing,and order processingactivities interact,often in an inverse way.Forexample,lower inventory levels reduceinventorycarrying costs.From stock-outs,backordersspecialproduction runs,and costly fast-freightshipments
Cross-Functional Teamwork Inside the Company In most companies, responsibility for various logistics activities is assigned to many different functional units—marketing, sales, finance, manufacturing, purchasing. Too often, each function tries to optimize its own logistics performance without regard for the activities of the other functions. However, transportation, inventory, warehousing, and order processing activities interact, often in an inverse way. For example, lower inventory levels reduce inventory carrying costs. From stock-outs, backorders, special production runs, and costly fast-freight shipments
Becausedistributionactivities involve strongtrade-offs,decisions by different functions mustbe coordinated to achieve superior overalllogisticsperformance.Thus,thegoal of integrated logisticsmanagement is to harmonize all of thecompany's distribution decisions. Close workingrelationships among functionscan beachieved inseveral ways.Some companies have createdpermanent logistics committeesmade up ofmanagers responsible for different physicaldistribution activities.These committees meetoftento set policies forimproving overall logisticsperformance
◼ Because distribution activities involve strong trade–offs, decisions by different functions must be coordinated to achieve superior overall logistics performance. ◼ Thus, the goal of integrated logistics management is to harmonize all of the company’s distribution decisions. Close working relationships among functions can be achieved in several ways. Some companies have created permanent logistics committees made up of managers responsible for different physical distribution activities. These committees meet often to set policies for improving overall logistics performance