Logistics Planning

Logistics Planning

Introduction

Supply chain management allows the process of implementing, planning, and controlling the operations and procedures of the supply chain in an efficient and effective way. SCM includes the storage and all movements of work-in-process inventory, raw materials, and finished goods starting from the point-of-origin and ending at the point-of-consumption. The planning processes of SCM are partly aimed at devising the most applicable configurations of supply chain (Burt et. al, 2003). Besides the setup of facility location, other areas such as procurement, inventory, production, routing, and distribution also need to be considered according to the type of facility that is being set up, such as a manufacturing facility, retailer or distributor.

Customers' influence on driving location and its effects on logistics planning

The customer decides the location based on what type of business he wants to conduct such as manufacturing, retail or distribution. The location decisions take into account factors such as: social and political issues, new markets, patterns of investment and trade, regulatory requirements, infrastructure, consumer demand expectations, availability and cost of resources, and supply of labor.

Location Decisions have a great impact on the planning of logistics as the location of facilities involves allocation of resources for duration of long term. Once the facility location is decided, then planning for logistics is done based on the available paths by which the product and services will flow towards the final customer. These decisions are of importance to a company as they outline the main strategy for reaching customer markets, and have a significant impact on cost, revenue, and service levels (Dolgui et. al, 2005).

Customers drive the locations decisions to a great extent which is why the research area of facility location is firmly established in supply chain management and has immense importance when it comes to operations research. Various books and papers can be studied to examine the importance of facility location the context of supply chain. Specific codes have been created by the American Mathematical Society (AMS) for catering to location problems. Even then, there is a lot to be considered when it comes to making the location decisions and deciding the application of location models in different scenarios (Dolgui et. al, 2005). The development of supply chain management started and operations research was integrated into SCM (Burt et. al, 2003). As a result of this process, models of facility location were formulated and linked to the context of supply chain, including reverse logistics.

There are many questions that need to be considered and answered during the phase of development, such as the properties of the facility location model that need to be fulfilled in order for it to be acceptable within the context of supply chain (Ghiani et. al, 2004). Consideration needs to be given to see if there are more facility location models that can be used in the context of supply chain. The decision of facility locations greatly depends upon the nature of the facility. The facility will have different requirement for location depending on ...