Understanding Logistics

Logistics is the art and science that regulates and controls the flow of goods, energy, information, and other resources. Such as products, services, and people. From sources of production to markets with the aim of optimizing the use of capital (Gunawan, 2014: 7). Manufacturing and marketing will be difficult without logistical support. Logistics also covers the integration of information, transportation, inventory, warehousing, reverse logistics, and packaging.

According to Christoper in his book “Logistics and Supply Chain Management (SCM)”. Logistics has a role in regulating the relationships that occur both in the process of production operations in the company. Or when the results of production are delivered to consumers. Where in the process the company must be able to maintain good relations. Between suppliers/suppliers as well as consumers. So that products can be delivered to consumers to have more value, of course by pressing the lowest possible cost. In addition to material benefits, by maintaining good relations with suppliers or consumers, the company will have other advantages. Namely: the company will get loyalty from suppliers and consumers. Where it will be able to facilitate the company to continue to grow.

While other definitions of logistics conveyed by Bloomberg in his book “Logistics Supply Chain Management”. Logistics is the process of planning, organizing, and controlling the flow of material. And services from suppliers to the last user/consumer. This integrated approach combines suppliers, inventory management. And integrated logistics and control of operations.

Logistics Activities

The following are activities that are included in logistical activities (Gunawan, 2014: 13).

a. Customer Service

Customer service is a process that takes place between buyers, sellers, and third parties. That generates added value for the exchange of products or services in the short term. Such as single or long-term transactions such as relationships based on contracts. This added value is also divided into each group of transactions or contracts. Which are better at the completion of the transaction than before the transaction. Thus, customer service is the process of providing important value-added benefits to the supply chain effectively.

b. Demand Forecasting (Demand Forecasting)

The demand forecast determines how much of each item produced by the company must be transported to various markets. Logistics management must also know where the demand came from. So that it can place and store the right amount of products in each market area. Accurate estimates of future requests allow logistics managers to provide resources (budget) for the activities. That will serve these requests.

c. Inventory Management

Inventory control activities (inventory control activity) are critical. Because it requires financial maintenance of sufficient inventory to meet customer needs with production needs. Raw materials and components, WIP (work in process). And the inventory of finished goods, all of them take up physical space, work time, and capital. The money invested in inventory in the company is:

  • Enables the company to achieve economies of scale.
  • Balance supply with demand.
  • Allows specialization of production.
  • Protect demand uncertainty and order cycles.
  • Act as a buffer/buffer between interfaces that are critical in the supply chain (supply chain). Buffers in the supply chain (supply chain).

d. Logistics Communications

Communication is a vital network between the entire logistics process and the company’s customers. Accurate communication at the right time is the basis of successful logistics management.

e. Material Handling

Material handling deals with every aspect of movement or flow of raw materials. Semi-finished goods, and finished goods in factories or warehouses.

The purpose of material handling is:

  1. Simplify and remove any handling systems that are possible.
  2. Minimize mileage.
  3. Minimize semi-finished goods
  4. Provides a simultaneous flow free of bottlenecks.
  5. Minimize losses due to disposal, damage, and theft.

The company incurs expenses when handling goods. If based on handling does not provide value for a product, it should be made to a minimum.

f. Order Processing (Order Processing)

The components of the order process (order processing) are divided into:

  • Operational elements (operational elements). Includes order entry or order changes, scheduling, preparation of shipping orders, and invoicing.
  • Communication elements. Includes order modifications, order status investigations, tracing, error correction, and product information requests.
  • Credit and collection elements (Credit and Collection Elements). Includes credit checks and processes and receipt or collection of accounts.

g. Packaging

Packaging has a dual role:

Protect the product from damage when it is stored or transported.
Proper packaging can make it easier to store and move products, thereby reducing material handling costs.

The specific functions of packaging containment, protection, division (apportionment), unitization, convenience, communication.

h. Components and service support (Parts and Service Support)

One of the company’s marketing activities is in providing post-sales services to customers. Such as providing replacement parts when the product is damaged or not functioning properly. This is very important for service activities and the logistics department is responsible for it. Ensuring that these parts are available when and where customers need them.

i. Site Location Selection and Plant/Warehouse Site Selection

Warehousing is an integral part of all logistics systems. That plays an important role in serving customers with a minimum total cost. Also a primary network between producers and customers. Which is used to store inventory during all parts of the logistics process.

j. Procurement/Purchasing

The purpose of purchasing:

  • Providing a continuous flow of materials, supplies, and services needed to run the organization.
  • Minimize inventory investment and losses
  • Maintain and improve quality
  • Finding or developing supplier capabilities
  • Standardize, where the possibility of goods purchased
  • Purchase the required goods and services at the lowest total cost level
  • Develop a competitive organizational position
  • Achieve harmony, productive work relationships with other functional areas in the organization
  • Perfecting purchase goals and possibly the lowest level of administrative costs.

k. Reverse Logistics

The handling of return goods in the form of salvage and scrap disposal. Is part of a process that is closely related to reverse logistics. And is a logistics component that requires more attention.

Returned items can be due to product damage, expiry, shipping errors, trade-ins, and other reasons. Reverse logistics costs tend to be higher than forwarding logistics costs.

l. Transportation

The transportation function is related to the outside and inside the logistics department. With finance (freight bills), engineering (ordering transportation equipment), inventory management (raw materials, finished warehouse components). Law (warehouse contracts and transportation equipment), production (on-time delivery), purchasing (supplier selection). Marketing/sales (customer service standards) receiving (claims, documentation), and warehousing (equipment supply, scheduling).

m. Warehousing & Storage

Products must be stored in a factory or somewhere before they are sold. The longer the time between production and consumption, the greater the level or amount of inventory needed.

Warehousing and storage activities include decisions on whether storage facilities should be self-owned, contracted, or leased. Planning and designing storage facilities, consideration of combined products, safety and maintenance procedures, training in productivity measurement personnel.