It is system-wide management of entire logistics chain as a single entity, instead of separate management of individual logistical functions.
The total logistics concept
The total logistics concept (TLC) aims to treat the many different elements that come under the broad category of distribution and logistics as one single integrated system. It is a recognition that the interrelationships between different elements, for example delivery transport and storage, need to be considered within the context of the broader supply chain. Thus, the total system should be considered and not just an individual element or subsystem in isolation.
Integrated Logistics
Integrated logistics is the one stop solution to the shipping and logistic requirements of the company. The fast and secured transportation is the key requirement of any business. The transportation of raw material as well as the finished products is the important part of the development of all businesses. The proper planning and arrangement of integrated logistics is therefore required to have the interrupted supply chain management. The integrated logistics ensure that you get the fully arranged logistics services like shipping, warehousing, trucking and stevedoring.
The warehousing need is the most basic need of any company as it is required for the storage of raw material as well as finished products. The proper inventory management is the key factor in producing the right quality finished product and the proper warehouse facility is therefore the most important requirement of any company. The warehouse space purchase and maintenance asks for a big investment budget but tie-up with integrated logistics service provider will protect you from all these hassles. The companies can outsource the warehouse space from integrated logistics service provider to store their inventories safely at low investment cost.
The shipping and trucking are also major issues affecting the timely and safe logistics. Various factors like weather conditions, government regulations and road conditions may decide the time and cost associated with the transportation. You can check for the tension free logistic solutions from the integrated logistics service providers so as to minimize the delays and costs. These people are professionals and have rich experience of handling turnkey solutions. They ship your cargo as per the government regulations and hence make sure that there are no major delays associated with delivery time. These agencies liaison with the government agencies and the local municipalities to make the shipping process easier and quicker. The specialized equipment is also for movement of overweight and oversize cargo. The extra-long shipments are also handled effectively with the help of such specialized equipment. The loading and unloading of these oversized cargo is also taken care of successfully. The customer can also seek urgent delivery of the material with the help of these logistic companies.
The integrated logistics systems can also be incorporated in the company itself where there is lot of movement on daily basis. This will call for an appointment of bigger staff with logistics experience. The company will also need to invest in specialized equipment and transportation systems. The investment required for all these would be huge and the human resource requirement would also be considerably high. The outsourcing of this service is therefore advisable for cost effective and efficient logistics. There are many companies that offer this service as per your budget. These companies have their websites and online tracking system that can be utilized to track your shipment from time to time. Many of these companies also offer online quotes to make the job easier. The cost depends on the type of shipment as well as the source and destination of the shipment.
Integrated Logistics Management
In recent years, the heightened intensity of retail competition has drastically changed the way retail companies operate their distribution systems. Also, every company is facing the pressure and are planning to digitally change the way they interact with customers. These changes include the application of integrated logistics, a concept to the analysis and design of supply chains and extensive use of information technology to gain a competitive edge.
Here are the three reasons how you can adapt an integrated logistics solution:
- Take a phased approach: It’s a phased approach comprising multiple projects that need to be prioritized according to your most pressing business needs. The stages involved include: identifying your transformation strategy, designing your new infrastructure and deploying the solution. This phase is based on a number of strategic imperatives, such as organizational strength, leadership, and execution, convergence, simplification and performance measurement.
- Establishing collaboration through connectivity: A neutral layer and a centralized system to bring visibility and better collaboration amongst the enterprises. Benefits include reduced and more viable costs, increased reliability, the ability to change suppliers as business needs a challenge.
- Know your processes and align them with your strategies: Get a detailed view of a process flow, data and then design a process flow, accordingly.
Cost Trade Offs
Cost trade-offs will provide a positive benefit to the logistics system as a whole. Such a trade-off may entail additional cost in one function but will provide a greater cost saving in another. The overall achievement will be a net gain to the system. This type of trade-off analysis is an important part of planning for logistics. Four different levels of trade-off have been identified, as
- Within distribution components: those trade-offs that occur within single functions. One example would be the decision to use random storage locations compared to fixed storage locations in a depot. The first of these provides better storage utilization but is more difficult for picking; the second is easier for picking but does not provide such good storage utilization.
- Between distribution components: those trade-off s between the different elements in distribution. To reverse the previous packaging example, a company might increase the strength and thus the cost of packaging but find greater savings through improvements in the warehousing and storage of the product (i.e. block stacking rather than a requirement for racking).
- Between company functions: there are a number of areas of interface between company functions where trade-off s can be made. An example is the trade-off between optimizing production run lengths and the associated warehousing costs of storing the finished product. Long production runs produce lower unit costs (and thus more cost-effective production) but mean that more product must be stored for a longer period (which is less cost-effective for warehousing).
- Between the company and external organizations: where a trade-off may be beneficial for two companies that are associated with each other. For example, a change from a manufacturer’s products being delivered direct to a retailer’s stores to delivery via the retailer’s distribution depot network might lead to mutual savings for the two companies.
Direct product profitability (DPP)
DPP is a technique of allocating all of the appropriate costs and allowances to a given product. All distribution costs (storage, transport, etc) are therefore assigned to a specific product rather than taking an average over a whole product range. Thus, in the same way that a budgetary system operates, the actual costs of distributing a product are monitored and compared to a standard cost determined using DPP. In this way, areas of inefficiency throughout the whole logistics operation can be identified. DPP techniques can identify the costs of specific products to individual customers and so provide invaluable information for effective marketing strategies.
MRP and DRP
Materials requirements planning (MRP) and distribution requirements planning (DRP) systems have been developed as sophisticated, computerized planning tools that aim to make the necessary materials or inventory available when needed. The concept originated with materials requirements planning, an inventory control technique for determining dependent demand for manufacturing supply. Subsequently, manufacturing resource planning (MRPII) was developed with the objective of improving productivity through the detailed planning and control of production resources. MRPII systems are based on an integrated approach to the whole manufacturing process from orders through production planning and control techniques to the purchasing and supply of materials. Distribution requirements planning is the application of MRPII techniques to the management of inventory and material flow–effective warehousing and transportation support.
DRP systems operate by breaking down the flow of material from the source of supply through the distribution network of depots and transportation modes. This is undertaken on a time-phased basis to ensure that the required goods ‘flow’ through the system and are available as and when required – at the right place, at the right time, one of the classic distribution definitions. Integrated systems of this nature require sophisticated, computerized information systems as their basis. The benefits of an effective system can be readily seen in terms of reduced freight, storage and inventory holding costs and improved customer service.
Just-in-time (JIT)
JIT originated as a new approach to manufacturing and has been successfully applied in many industries such as the automotive industry. It has significant implications for distribution and logistics. The overall concept of JIT is to provide a production system that eliminates all activities that neither add value to the final product nor allow for the continuous flow of material – in simple terms, that eliminates the costly and wasteful elements within a production process. The objectives of JIT are vitally linked to distribution and logistics, including as they do:
- the production of goods the customer wants;
- the production of goods when the customer wants them;
- the production of perfect-quality goods;
- the elimination of waste (labour, inventory, movement, space, etc).
There are a number of JIT techniques used to a greater or lesser extent by the generally large companies that have adopted the JIT philosophy. As with all such approaches, JIT has some negative points as well as the more positive ones listed above. It can, for example, lead to increased transport flows due to the need for smaller but more frequent deliveries of goods to the customer.