Question

8. Logistics encompasses a relatively large number of managerial activities. Discuss five of these activities and why they are important to logistics systems.

Answer 1

Transportation is a very important activity in the logistics system and is often the largest logistics cost. A major focus in logistics is on the physical movement or flow of goods and on the network that moves the product. It is important to note that transportation is an important component of the overall supply chain since it is the physical link among the various companies in the supply chain.

Storage has tradeoff relationship with transportation. It involves two separate but closely related activities: inventory management and warehousing. A direct relationship exists between transportation and the level of inventory and number of warehouse required.

Packaging protects the product during transportation and storage and includes materials such as corrugated cardboard boxes, stretch wrap, banding, bags, and so on. The type of transportation mode selected affects packaging requirements. Companies have significantly reduced their packaging waste by using alternate materials and reducing the amount of packaging materials. This is an important sustainability issue. Materials handling is important in warehouse design and efficient warehouse operations.

Materials handling is concerned with mechanical equipment used for short-distance movement and includes equipment such as conveyors, forklift trucks, overhead cranes, and automated storage and retrieval systems (ASRS). The materials handing designs must be coordinated in order to ensure congruity between the types of equipment used and the storage devices they are moving. This type of coordination is also essential among and between all organizations in a supply chain.

Inventory control has two dimensions: assuring adequate inventory levels and certifying inventory accuracy. Assuring adequate inventory levels requires monitoring current inventory levels and placing replenishment orders or scheduling production to bring inventory levels up to a predetermined level. To assure that the actual physical inventory levels match those shown in the information system, cycle counts are taken of selected items every period throughout the year.