‘It’s all about best service at lowest cost’

CHRIS RICHARDS IT IS fashionable these days to talk about logistics in the same breath as supply chain management. This is understandable because the two are inextricably linked. Logistics may be considered as the “tools” that people and the organisations involved in supply chains utilise to correct or improve the performance of supply chain activity. In the manufacturing industry the traditional sequence of a company’s overall production and delivery process began with the purchase and supply of materials and/or components. This was followed by the production and/or processing activities. Finally there was the transport of finished goods to customers/wholesalers etc. Modern day business management has not changed this sequence but has developed a more co-ordinated approach, the main aim of which is to achieve the highest levels of customer service at the lowest possible cost. In the manufacturing context, for example, a co-ordinated logistics strategy would examine issues like manufacturing locations, transport methods between manufacturing points, stockholding policies and management systems to see how they could be integrated to create the best possible economic outcome. To quote a well-known writer on the subject, Martin Christopher states that “logistics management is primarily concerned with optimisation within the organisation whilst supply chain management recognises that internal integration by itself is not sufficient”. To the average freight forwarder this is all quite lofty stuff. Quite different from merely adding the word “logistics” to the name of a company! To most, logistics remains a synonym for warehousing. To find how much more value is hidden in the term is a challenge for forwarding management.