Logistics comprises interdependent components that also make up what we call logistics activities.
There could be several activities within a firm’s logistics activities, but the most common ones are:
- costumer response
- inventory planning and management
- Information processing
- Demand forecasting
Various organizations or companies draw from any number of activities to accomplish their key focus. For most firms, the key is to have a logistics management system that helps provide satisfaction to customers.
They may also want to integrate activities that keep them ahead of the competition- a factor that sees many adopt additional functions within their logistics system.
Let’s look at five of these activities that are core to any firm or business.
Customer response logistics involves the development of a customer service policy (CSP). This links to customer feedback, order entry (OE), and order processing (OP), with the aim being to have a CSP that reduces lost sales to a bare minimum.
Inventory Planning and Management
Inventory planning and management (IP&M) is a function of logistics that seeks to keep inventory costs as low as possible. Through strategies like forecasting, and service level optimization, IP&M works towards satisfying what the firm has in its CSP.
Supply involves inventory building via procurement or production. Here the firm wants to meet its inventory planning targets through activities like sourcing and purchase order processing. In logistics, supply is about cutting total acquisition costs (TAC) to a minimum.
Transportation forms a key aspect of logistics and essentially links the various functions. We use our transport strategies to link CSP to inventory, supply, and warehousing.
A transportation plan comes into play once the other aspects are in place and will focus on shipment methods, last-mile delivery, and freight and fleet management among others.
Companies plan their logistics around many activities and warehousing forms one of the key components. This function can be handled internally or outsourced. Proper warehousing management always cuts costs and compliments the achievement of the targets set in the CSP.