Other Logistics-linked Activities

Order Fulfillment: Another activity area that logistics may control is order fulfillment, which generally consist of activities involved with receiving and completing customer orders. Initially, one might question why the logistics area would concern itself directly with order fulfillment. However, one important physical distribution factor is the time elapsing from the time when a customer decides to place an order for a product until the time those goods are actually delivered in a satisfactory condition, i.e. the lead time.

Forecasting: Another activity essential to the logistics area is inventory forecasting. Accurate forecasting of inventory requirements and materials and parts is essential to effective inventory control. This is particularly true in companies using a just-in-time (JIT) or materials requirement planning (MRP) approach to control their inventory. Logistics personnel should develop forecasts in those situation to ensure accuracy and effective control. Too frequently, forecasts developed by marketing staff reflects sales objectives rather than inventory requirements.

Production Planning: This area is closely related to forecasting in terms of effective inventory control. Once forecasts are developed and the current inventory on hand and usage are assessed, production managers can decide the number of units necessary to ensure adequate market coverage. However, in multiple product firms, production process timing and certain product line relationships require close coordination with logistics or actual control of production planning by logistics. The integration of production planning into logistics is becoming increasingly common in large companies.

Purchasing: This is another activity we can include in logistics. The basic rationale for including purchasing in logistics is that transportation costs relates directly to geographic location (distance) of raw materials and component parts purchased for a company's production needs. In terms of transportation and inventory costs, the quantities purchased would also affect logistics costs. Including purchasing within logistics area is primarily a matter of whether this more effectively coordinates and lowers costs for the company.

Customer Service: Another area of importance is customer service which is a complex topic and one that concerns other functional company areas. Customer service levels in many ways glue together with other logistics areas. Decisions about inventory, transportation and warehousing relate to customer service requirements. While customarily, the logistics area does not completely control customer service decisions, logistics plays an extremely important role in ensuring that the customer get the right product at the right place  and at the right time. Logistics decisions about product availability and inventory lead time are critical to customer service.

Site Location: Another area that is also important to logistics is plant and warehouse site location. A location change could alter time and place relationships between plants and markets or between supply points and plants. Such changes will eventually affect transportation rates and service, customer service, inventory requirements and possibly other areas as well. Therefore, the logistics manager is quite concerned about location decisions. In fact, plant locations is often as important as warehouse location. Transportation cost is also one of the important factor in deciding a location.

Other Activities: Other areas may be considered as part of logistics such as, parts and service support, return goods handling, salvage and scrap disposal indicate the reality of logistical activities managed in companies producing consumer durables or industrial products. Here, a very integrative approach is required. Logistics offers input into product design as well as into maintenance and supply services, since transportation and storage decisions affect those areas.