Maximizing Logistics Mgmt: Procurement & Beyond
| Element of Logistics | Definition | Role in Logistics |
|---|---|---|
| Procurement | Process of acquiring goods or services from an external source. | Ensures availability of desired material for manufacturing in the optimal quantity; critical part of inbound logistics. |
| Transportation | Involves the movement of goods from one place to another. | Most expensive part of the logistics process, determines the speed and efficiency of the delivery of goods. |
| Storage | Refers to storing goods in a warehouse or other facility. | Ensures goods are safely and securely stowed until needed; part of inventory management. |
| Inventory Carrying Costs | Costs associated with storing and managing inventory like storage, insurance, and handling costs. | Can be reduced by reducing amount of inventory held, improving inventory management efficiency and reducing associated costs. |
| Logistics | Management of the flow of goods and services from the point of origin to the point of consumption. | Integral part of any business, ensuring efficient and cost-effective movement of products. |
| Inventory Management | Involves monitoring and controlling the storage of stocks. | Key part of reducing inventory carrying costs through efficient management; may affect transportation costs as well. |
| Inbound Logistics | Involves activities related to material movement from suppliers to buyers. | Includes transportation and storage, ensuring smooth flow of inputs for manufacturing. |
| Outbound Logistics | Involves activities related to the movement of the finished product to the customer. | Includes transportation and storage, ensuring smooth delivery of products to customers. |
| Freight Charges | Costs involved in transporting goods from one place to another. | Could increase with increased transportation frequency but may be offset by reductions in inventory carrying costs. |
| Mode of Transport | Method by which goods are moved (e.g., by sea, air, rail or road). | Determines speed and cost of transportation; depending on size, weight of goods, shipping distance, and transport costs. |
This article discussed the role of procurement and transportation in logistics and the importance of inventory carrying costs. Procurement is responsible for ensuring the availability of the right materials in the right quantities, while transportation is the most expensive part of the logistics process.
Inventory carrying costs refer to the costs associated with storing and managing inventory and can be reduced by reducing the amount of inventory held, increasing the efficiency of inventory management, and using the right mode of transportation.
Introduction
Procurement: What It Is & Its Role in Logistics
Transportation & Storage: The Focus of Logistics
Procurement & Inventory Carrying Costs
Conclusion
Introduction: Logistics is an essential part of the supply chain process and can be defined as the management of the flow of goods and services from the point of origin to the point of consumption. It is an essential element of any business, as it ensures the efficient and cost-effective movement of products from the supplier to the customer. Logistics involves various activities such as procurement, transportation, storage, and inventory management. The focus of this article is to discuss the role of procurement and transportation in logistics, as well as the importance of inventory carrying costs.
Procurement: What It Is & Its Role in Logistics
Procurement is the process of acquiring goods or services from an external source. It is also known as buying or purchasing activity and is an integral part of logistics. The material movement from suppliers to buyers comes under the purview of inbound logistics. The raw material, components, parts, and consumables required for manufacturing operations should be available at the plant at the start of production schedules. The logistics activities include transportation and storage.
Procurement is responsible for ensuring the availability of desired material for manufacturing in the correct quantity. Frequent but small lot sizes are planned to save on inventory carrying costs. However, with an increased transportation frequency, the freight charges may go up, which may be offset by savings on inventory carrying costs.
Transportation & Storage: The Focus of Logistics
Transportation and storage are the two main components of logistics. Transportation involves the movement of goods from one place to another, while storage refers to storing goods in a warehouse or other facility. Transportation is the most expensive part of the logistics process and is responsible for most of the logistics costs.
Transportation is an essential factor in logistics, as it determines the speed and efficiency of the delivery of goods. The mode of transportation used is determined by the size and weight of the goods, the distance they need to travel, and the cost of transport. Storage is also essential in logistics, as it ensures that goods are stored in a safe and secure environment until they are needed.
Procurement & Inventory Carrying Costs
Procurement and inventory carrying costs are two crucial elements of logistics. Procurement ensures that suitable materials are available in the right quantities, while inventory carrying costs refer to the costs associated with storing and managing inventory.
Inventory carrying costs are the costs associated with holding and managing inventory. These costs include storage, insurance, handling, and other costs associated with managing inventory. Inventory carrying costs can be reduced by reducing the amount of inventory held, increasing the efficiency of inventory management, and reducing the costs associated with inventory management.
Conclusion: In conclusion, procurement and transportation are two essential elements of logistics. Procurement ensures the availability of desired material for manufacturing in the correct quantity. At the same time, transportation is responsible for the efficient and cost-effective movement of goods from the supplier to the customer.
Additionally, inventory carrying costs are an essential factor in logistics, as they can be reduced by reducing the amount of inventory held, increasing the efficiency of inventory management, and reducing the costs associated with inventory management.
Efficient logistics management starts with effective procurement and extends far beyond.
Related Course: Logistics Certificate Programs Online
The article emphasizes the vital roles of procurement, transportation, and control over inventory carrying costs in the logistics sector. Procurement guarantees the availability of optimal materials for manufacturing in the right volume. Transportation, the priciest aspect of the logistics process, is crucial for the efficient, cost-effective movement of products from the supplier to the customer. Inventory carrying costs, which involve storage, insurance, handling, and other management expenses, can be diminished by reducing the amount of inventory held, improving inventory management efficiency, and selecting cost-effective transportation types. For individuals seeking to enhance their understanding and skills in these areas, obtaining a supply chain management certificate could be beneficial.
Yu Payne is an American professional who believes in personal growth. After studying The Art & Science of Transformational from Erickson College, she continuously seeks out new trainings to improve herself. She has been producing content for the IIENSTITU Blog since 2021. Her work has been featured on various platforms, including but not limited to: ThriveGlobal, TinyBuddha, and Addicted2Success. Yu aspires to help others reach their full potential and live their best lives.
