Tag: Logistics Activities

Understanding the Importance of Logistics Management

The concept of Logistics Management consists of the process of planning. Implementing and controlling the efficient flow of raw materials. Processed goods and finished goods and related information – from the point of origin to the point of consumption. With the aim of providing satisfaction to customers.

Speaking of logistics is not far from the name of the inventory. In the Big Indonesian Dictionary (KBBI), logistics means the procurement, maintenance, distribution, the supply of equipment, supplies, and employment.

The word logistics itself can be interpreted as procurement. Then logistics also has a close relationship with inventory management. Inventory management is an activity to maintain the amount of inventory.

Many people assume that Logistics is the same as the Warehouse. In fact, basically Logistics and warehouses are two different things. The warehouse is a place to store goods and is one form of logistics activities, while logistics means a broader process. Not just warehousing but also involves the acquisition of goods, handling, controlling, and shipping.

Information technology is one of the most important parts of Logistics Management. The development of Information and Technology today. Allows a company to find the product they want anytime and anywhere in the world.

Understanding Logistics Management

Logistics Management is one of the important components. Supply Chain Management which is used to meet customer demand through planning. Implementing, controlling the efficiency, and effectiveness of flow. Storage of goods, service services, and related information from the starting point to the destination point. Logistics Management can help companies reduce costs and improve service to customers (customers).

The Purpose of Logistics Management

Logistics Management Objectives can be divided into two, namely General Purpose and Special Purpose. The following explanation:

1. General Purpose

The general objectives of Logistics Management consist of Operational Objectives and Financial Objectives. Operational Objectives are intended so that the available inventory of goods has accuracy in quantity. And quality standards in accordance with quality management standards. While financial goals emphasize more on the efficiency of costs incurred.

2. Special Purpose

In essence, the Special Purpose of Logistics Management focuses more on achieving organizational goals effectively and efficiently.

Logistics Management which involves processing orders, warehousing, handling raw materials/products, packaging, and shipping methods is also a sector. That is growing very rapidly in the business world. Without the support of good Logistics Management. The company’s Production and Marketing activities will be very difficult to carry out.

Benefits of Logistics Management

In addition to having a goal, the Management system in Logistics also provides benefits, especially for companies. The benefits of having Logistics Management are as follows:

  • The company can carry out operational management activities properly
  • Companies can focus more on other fields of management because the needs of goods are available
  • Provide special facilities for storage and transportation facilities for the distribution of goods
  • Provide good service to customers and stakeholders (suppliers)
  • Maintain the availability of goods
  • Make it easy to get suppliers with good quality goods.
  • Make special delivery services
  • Anticipate problems that might occur quickly, precisely, and accurately
  • Providing information is more organized and runs smoothly
  • Build consumer confidence and foster customer loyalty to the company.

Logistics Management Activities

A well-implemented logistics management will help companies reduce costs and improve customer service. So that the company becomes more productive and increases company profits.

Logistics Management activities include:

1. Planning

The purpose of logistics planning means the process of one activity to think, examine. Calculate and formulate actions to be taken in the future relating to operational activities in managing logistics. The use of logistics, as well as organizing, and controlling logistics.

2. Organizing

Namely, the activities are undertaken to design and formulate formal structures as an effort to manage logistics. By carrying out activities of grouping, organizing. And distributing activities or tasks as well as the authority to each work unit or member of the organization.

3. Supervision

Supervision means an effort to maintain the implementation of every action. And activity in logistics management in accordance with a predetermined plan both related to the use of logistics. The process in progress, and the results and outputs of the logistics management which are forms of supervision.

4. Procurement

Have the intention of all activities to provide logistics in accordance with the needs both related to the type. And specifications of the amount of time and place with prices and sources that can be accounted for

5. Recording/Inventory

Inventory is an activity of providing data or all logistics owned, controlled, and managed by a company. Both for the results of its own manufacturing business, the purchase of gifts or grants.

6. Storage (storage)

This means that administrative and operational logistical management activity is related to the formulation. And the implementation of administrative work arrangements and the arrangement of goods in storage (warehouses).

7. Distribution

Distribution here means logistics management activities related to the distribution. And delivery of logistics to units that need it in accordance with a predetermined work system.

8. Maintenance

What is meant by maintenance here is an activity in the framework of managing logistics related to efforts. To maintain the technical condition of the usability. And results of logistics as well as to ensure the period of time. The use of goods reaches an optimal deadline.

9. Deletion

The intention is an activity to free logistics from liability that applies both physically. And administratively because the function of the logistics has been deemed ineffective or has no use-value.

Logistics Management System

The more complex the network in the supply chain (production location, warehousing, and consumer distance). The more dynamic the consumer demand, and the increasing competition. The company is required to make important decisions in a quick time and must consider all parties in the company.

Good decisions must be supported by reliable infrastructure and information. The point is that there is valid data available on time. As well as infrastructure that ensures information security from viruses and unauthorized interference from parties.

An information system is a system that functions to process data into information. Its function is to summarize data as input, the process by doing calculations, combining data elements. Up-dating and others, and obtaining information as output.

Information system elements include:

  1. Transaction processing information system
  2. Information system for managers
  3. Intelligence information system
  4. Decision support system

Logistics Management Information System is an information system that is integrated between humans and computers. Functions in inventory management in order to provide information for analysis, planning, operations, and control. In supporting management decision making in an organization.

RedERP, like an ERP system, makes it easy to manage business operations automatically and in an integrated way, from accounting. Procurement, inventory, and distribution systems to customers and sales management.

Definition and Logistics Activities

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.

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