What Are The Purpose, Functions And Principles Of Logistics?

At present, the use and development of logistics in the economy is due to modern achievements of scientific and technological progress, in particular the development of information technology and computer technology, due to which favorable consequences and economic results are obtained.
What Are The Purpose, Functions And Principles Of Logistics?


Logistics is the coordination of all activities

At present, the use and development of logistics in the economy is due to modern achievements of scientific and technological progress, in particular the development of information technology and computer technology, due to which favorable consequences and economic results are obtained.

Logistics allows you to optimize the flow of products and information inside and outside the enterprise. Logistics is a comprehensive planning and management of the materials flow‌, spare parts and finished products, including the necessary information flow, in order to minimize overall costs. Logistics is the coordination of all activities that contribute to the movement and coordination of supply and demand for goods at a certain place and at a given time.

Thus, logistics finds a place in a wide variety of areas and fields of activity, is necessary to achieve and maintain the competitiveness of market entities and the goods and services they offer. Learn more in the online course The Basics of Logistics‌.

Logistics is an important component of any business, which is directly or indirectly related to the transportation of certain resources. With proper optimization of all production and trade operations, the enterprise can not only improve its competitiveness, but also increase profitability.

Purpose of logistics

The purpose of logistics is the efficient management of material and related flows based on process optimization.

In the process of managing material flows in the economy, many different tasks are solved:

  1. forecasting of demand and production, traffic volume;
  2. determination of optimal volumes and directions of material flows;
  3. organization of warehousing, packaging, transportation and many others.

The main goal of logistics is to deliver raw materials first, and then finished products to the specified place in the required quantity at a certain time, at a minimum level of costs. It is considered to be achieved under the following conditions:

  • all necessary goods are in stock;
  • the costs of organizing the company's activities are minimal;
  • the order arrived at the right address;
  • delivery was carried out on time, without delay;
  • received the planned number of products;
  • the level of quality is met;

Rules may change depending on the nature of the business. For example, if it is necessary to draw up documents, on any mandatory conditions, etc.

Logistics functions

A function is understood as a set of actions that are homogeneous in terms of their goal, which is noticeably different from another set of actions that also have a defined goal. Therefore, the concept of logistics‌ function can be defined as a consolidated group of logistics operations aimed at realizing the goals of the logistics system.

Since the function is represented by a set of actions, it is obvious that they can be formalized as a logistic process that has its own goal and task.

The function of purchasing (supplying) materials, raw materials, semi-finished products, etc. aims at the complete satisfaction of the producer with material resources.

The purpose of the transportation function is to deliver materials, raw materials, semi-finished products, and finished products to their places of consumption on time.

The function of storage and preservation of material resources aims to ensure the efficient functioning of the warehouse economy.

The function of managing stocks of materials, raw materials, semi-finished products, and finished products aims to minimize the costs of preserving material resources due to their effective management‌.

The field of production also determined the function of logistics - production. Its purpose is to provide logistical support for production management. In the field of production, logistics is integrated with operational management, i.e. operations management.

The function of distribution and sales‌ aims at the integrative management of the logistics process of pushing finished products with accompanying service from manufacturers or wholesalers to end consumers.

Logistics principles

The main principle on which material flow management is built is consistency - the organization and implementation of procurement, storage, production, marketing and transportation as a single process and, as a result, accounting for logistics costs throughout the entire logistics chain. Along with consistency, the initial provisions (principles) of logistics include: complexity, scientific character, specificity, constructiveness, reliability and variability.

Let us briefly characterize each of the listed principles of logistics.

Complexity:

  • formation of all types of support (developed infrastructure) for the implementation of the movement of flows in specific conditions;
  • coordination of actions of direct and indirect participants in the movement of resources and products;
  • the implementation of centralized control over the fulfillment of the tasks facing the logistics structures of firms;
  • the desire of firms to work closely with external partners in the commodity chain and establish strong links between various divisions of firms within the framework of internal activities.

Scientific:

  • strengthening of the calculated beginning at all stages of flow control from planning and analysis, performing detailed calculations of all parameters of the flow trajectory;
  • recognition of the status of the most important resource of the company's logistics structures for qualified personnel.

Specificity:

  • a clear and accurate assessment of all resources used in the implementation of the logistics process: financial, labor, material, etc.
  • the implementation of the movement with the lowest costs of all types of resources;
  • management of logistics by accounting and calculation units or structural bodies, the results of which are measured by the profit received.

Constructiveness:

  • flow dispatching, continuous tracking of the movement and change of each flow object and operational adjustment of its movement;
  • careful identification of the details of all operations of logistics and transportation of goods.

Reliability:

  • ensuring the reliability and safety of traffic, redundant communications and technical means to change, if necessary, the trajectory of the flow;
  • wide use of modern technical means of movement and traffic control;
  • high speed and quality of information receipt and technology of its processing.

Variation:

  • the possibility of a flexible response of the company to fluctuations in demand and other disturbing effects of the external environment;
  • purposeful creation of reserve capacities, the loading of which is carried out in accordance with the previously developed reserve plans of the company.

When providing logistics services, it is important to take into account the features of the product life cycle. The logistics service system is one of the main components in the complex of factors that provide a competitive advantage for companies, achieved through maintaining the required level of customer service while reducing the cost of providing it.

Summarizing conclusions

Correct logistics is important for modern successful business, which involves the rationalization of companies' activities by optimizing flow processes in conditions of scarcity of both time and resources. In other words, the activities of organizations today require logistics of all the processes carried out.

Logistics processes consist of a set of proven logistics technologies that are improved during the practical activities of organizations. It is no secret that, with the most advanced technology, it is impossible to achieve high efficiency without creating an adequate system of managing material flows. Only the interaction of logistics and management can provide businesses with the opportunity to strengthen their competitiveness in the market due to the implementation of logistics technologies. This is exactly what a modern business concept‌ should be based on today.


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