Logistics Principles That Achieve Competitive Advantage

Since there are many competitors in the market today, the customer demands have changed and make the changes in market. All organizations have to react to the changing environment within which they are situated. The changes includes shortening product life-cycles; short purchase lead time; consist quality requirement; a multiple choices (including colour, type, etc.) of products and services to customers; create value and a quick response time to customers; the reduced cost due to the keen competition in the market, the sales price for all customers should also be lowered. A shift from a Push system to a Pull system to achieve order to cash; small order quantity; small lot size and a minimum inventory; consolidation of process (including the consolidation of network analysis and the transportation cost) and eliminate the wastes (including third party logistics, core competency and create value) to achieve ÐŽ§LeanЎЁ in the supply chain is also important. By the way, many organizations are developing and maintaining global manufacturing, logistics, and marketing alliances, so that a demand on information systems (i.e. I.T.) are increased because of requirements for extended communication, alternative languages, and process flexibility. A good information technology helps to devise new and unique logistical solutions and consequently becomes very important today.

a. Logistics is the process of planning, implementing, and controlling the efficient, effective flow and storage of raw materials in-process inventory, finished goods, services, and related information from point of origin to point of consumption (including inbound, outbound, internal, and external movements) for the purpose of conforming to customer requirements. The functions of logistics are combined into three primary operational areas, procurement concerned with purchasing and arranging inbound movement of materials, parts, finished inventory from suppliers; manufacturing support concentrates on managing work-in-process inventory between stages of manufacturing; physical distribution concerns movement of a finished product to customers.

Logistics activities connect and activate the objects in the supply chain. Supply Chain Management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying service requirements.

Today, Supply Chain Management and logistics are seen as a strategic capability encompassing all organizational activities. In many organizations they are accorded a degree of planning and co-ordination necessary to ensure added-value, reduced cost and the requisite customer service levels. Recently the emphases have turned toward: speed and shortening product life-cycles; strategic information flows; customer partnerships and relationships; cross-functionality; flow-through distribution; and business processes rather than functions.

Therefore, a Just-In-Time Approach is needed. There are some types of strategic partnering in supply chain management. The strategic partnering can improve service levels; improve forecast; decrease required inventory