Logistics is inextricably integral to business of any kind, big, small
and medium either in terms of volume or value. It means the objective of
logistics in the ultimate analysis cannot be different from the objective of
business: satisfaction of the consumer. Of course, it is said that satisfaction must
not be the goal but delighting the customer must guide the business
operations.
Logistics deals with the movements of the products from the point of
origin to the point of consumption; it means it is based on what is now being
called Supply Chain. In the Supply
Chain, there will be intermediaries from the place of origin of product to the
place of consumption, the number of intermediaries dependent on the nature of
business in general. Movement of the products from intermediaries to other
intermediaries till the final destination must be smooth without hassles and
hurdles. If any movement between two
intermediaries is delayed, the entire supply chain will have the consequences
often impacting the logistics cost. And the hiked logistics cost is generally
passed on to the end-user, the customer. It means the customer has to pay more
for the same product or same service for no fault of his. And he does not like
it. This explains the importance of
satisfaction of the consumer. This again
points to the fact that the entire operation of the supply chain and the
logistics movements must achieve with no hitches the operational objectives.
The major operational objectives are rapid response, minimum variance, minimum
inventory, movement consolidation, quality, and life-cycle support.
We shall briefly look into these operational objectives.
Rapid response
It refers to the efficiency of a firm to take the product or service
to the customer in the shortest time. To respond at the quickest is to be ready
with the product for transport. Earlier,
this necessity drove the firm to stock products in anticipation of demand thus
having a swelling inventory. Information Technology has now brought in a
radical change in the inventory management. Accuracy and Speed are the greatest
merits of the IT, among other things. From the customer expressing his requirement
to the supply of the product to his requirement from the firm, with the support
of the IT, time has become shortened to the maximum. If decision on the part of
the buyer is quick and immediate, the rest of the business process takes not
much time. In such a context, a firm must be efficient enough to respond to the
customer for his requirements at the shortest time. Rapid response satisfies
the customer as his need is fulfilled and it also builds the brand image of the
company.
Other objectives we will look into in our next session.
