LOGISTICAL CHAIN MANAGEMENT

Logistical Chain Management

Logistical Chain Management

Introduction to Logistics and Logistic Chain Management

Logistics is the method of designing, applying and controlling the efficient, cost-effective flow and storage of raw components, in- process inventory, completed items and associated data from issue of origin to issue of utilization for the reason of conforming to clientele requirements

The mission of logistics is to get the right goods or services to the right place, at the right time, and in the desired condition and quantity in relation to customers order. A logistic chain is defined as a set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer.

Significance of Logistic Chain Management

It is important to realize that implicit within this definition is the facts that logistic chains exist whether they are managed or not. Thus we draw a distinction between logistic chains as phenomena that exist in business and the management of those logistic chains. The former is simply something that exists, whereas the latter takes overt management efforts by the organizations within the logistic chain. (Cooper, Lambert, & Pagh, 1997)

Thus, a company possesses a logistic chain orientation if its management sees the implications of managing the upstream and downstream flows of products, services, finances, and information across their suppliers and their customers. A company does not have a logistic chain orientation if it only sees the systemic, strategic implications in one direction. The firm with the logistics management system may implement individual, disjointed logistic chain tactics, but this is not logistic chain management unless they are coordinated (a strategic orientation) over the logistic chain (a systemic orientation). (Hines, T. 2004)

In other words, logistic chain management is the implementation of a logistic chain orientation across suppliers and customers. Companies implementing SCM must first have a logistic chain orientation. Stated differently, a logistic chain orientation is a management philosophy, and logistic chain management is the sum total of all the overt management actions undertaken to realize that philosophy. (Ketchen, & Hult, 2006)

An example of logistic chain management applied to medical practice involves scheduled surgery. In an unmanaged logistic chain, on the day of the surgery the head surgical nurse must gather all the surgical supplies from around the hospital for each operation—a time-consuming wasteful use of the head surgical nurse's time that often also results in the ...