operator stacking warehouse of goods on pallets in
Allentown, Pennsylvania, in April 2004 One definition of business logistics speaks of "having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer". Business logistics incorporates all
industry sectors and aims to manage the fruition of
project life cycles,
supply chains, and resultant efficiencies. The term
business logistics has evolved since the 1960s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for professionals called supply chain logisticians. In business, logistics may have either an internal focus (inbound logistics) or an external focus (outbound logistics), covering the flow and storage of materials from point of origin to point of consumption, a key factor in
supply-chain management. The main functions of a qualified logistician include
inventory management,
purchasing, transportation,
warehousing, consultation, and the organizing and
planning of these activities. Logisticians combine professional knowledge of each of these functions to coordinate resources in an organization. There are two fundamentally different forms of logistics: one optimizes a steady flow of material through a network of transport links and storage nodes, while the other coordinates a
sequence of resources to carry out some
project, such as restructuring a warehouse. A
journey planner or
route optimization software is often used to solve the complex logistical problem of determining the most efficient delivery paths for a fleet of vehicles. These systems, which are a key component of an
intelligent transportation system, analyze factors like traffic, delivery windows, and vehicle capacity to create optimized routes that reduce fuel consumption and improve on-time performance.
Nodes of a distribution network A distribution network would require several intermediaries to bring consumer or industrial goods from manufacturers to a user. Intermediaries would markup the costs of the products during distribution, but benefit users by providing lower transportation costs than the manufacturers. The number of intermediaries required for the distribution network depends upon the types of goods being distributed. For example, consumer goods such as cosmetics and handicrafts may not require any intermediaries as they can be sold door-to-door or can be obtained from local flea markets. For industrial goods such as raw materials and equipment, intermediaries are not needed because manufacturers can sell a large number of goods to a user. Generally, there are three types of intermediaries, namely: agent/broker, wholesaler, and retailer. • Physical metrics used to evaluate inventory systems include stocking capacity, selectivity, superficial use, volumetric use, transport capacity, transport capacity use. • Monetary metrics used include space holding costs, such as building, shelving, and services, and handling costs, such as people, handling machinery, energy, and maintenance. Other metrics may present themselves in both physical or monetary form, such as the standard
inventory turnover.
Handling and order processing s, which serve a protective function, for transportation of luggage at the airport
Unit loads are combinations of individual items which are moved by handling systems, usually employing a
pallet of normed dimensions. Handling systems include: trans-pallet handlers, counterweight handler, retractable mast handler, bilateral handlers, trilateral handlers,
AGV and other handlers. Storage systems include: pile stocking, cell
racks (either static or movable), cantilever racks and gravity racks.
Order processing is a sequential process involving: processing withdrawal list, picking (selective removal of items from loading units), sorting (assembling items based on the destination), package formation (weighting, labeling, and packing), order consolidation (gathering packages into loading units for transportation, control and
bill of lading).
Picking can be both manual or automated. Manual picking can be both man-to-goods, i.e. operator using a cart or conveyor belt, or goods-to-man, i.e. the operator benefiting from the presence of a mini-load
ASRS, vertical or
horizontal carousel or from an Automatic Vertical Storage System (AVSS). Automatic picking is done either with
dispensers or depalletizing robots.
Sorting can be done manually through carts or conveyor belts, or automatically through
sorters.
Transportation Consolidating small shipments into large shipments can help to save transportation costs. There are three methods to do this: facility consolidation, multi-stop consolidation, and temporal consolidation. Facility consolidation uses the
economics of scale by transporting small shipments over short distances and large shipments over long distances. Multi-stop consolidation makes multiple stops to consolidate small shipments in the case of
less-than-truckload shipping. Temporal consolidation adjusts the shipping schedules forwards or backward so as to make a single large shipment rather than several small shipments over time.
Distribution resource planning (DRP) is similar to
MRP, except that it does not concern activities inside the nodes of the network but planning distribution when moving goods through the links of the network. Traditionally in logistics, configuration may be at the level of the warehouse (
node) or at level of the distribution system (
network). Regarding a single warehouse, besides the issue of designing and building the warehouse, configuration means solving a number of interrelated technical-economic problems: dimensioning
rack cells, choosing a
palletizing method (manual or through
robots), rack dimensioning and design, number of racks, number and typology of retrieval systems (e.g.
stacker cranes). Some important constraints have to be satisfied: fork and load beams resistance to
bending and proper placement of
sprinklers. Although
picking is more of a tactical planning decision than a configuration problem, it is important to take it into account when deciding the layout of the racks inside the warehouse and buying tools such as handlers and motorized carts since once those decisions are taken they will work as constraints when managing the warehouse, the same reasoning for
sorting when designing the conveyor system or installing automatic
dispensers. Configuration at the level of the distribution system concerns primarily the problem of
location of the nodes in geographic space and distribution of
capacity among the nodes. The first may be referred to as
facility location (with the special case of
site selection) while the latter to as capacity allocation. The problem of outsourcing typically arises at this level: the nodes of a
supply chain are very rarely owned by a single enterprise. Distribution networks can be characterized by numbers of levels, namely the number of intermediary nodes between
supplier and consumer: •
Direct store delivery, i.e. zero levels • One level network: central warehouse • Two level network: central and peripheral warehouses This distinction is more useful for modeling purposes, but it relates also to a tactical decision regarding
safety stocks: considering a two-level network, if safety inventory is kept only in peripheral warehouses then it is called a dependent system (from suppliers), if safety inventory is distributed among central and peripheral warehouses it is called an independent system (from suppliers).
Logistics outsourcing Logistics outsourcing involves a relationship between a company and an LSP (logistic service provider), who, when compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, and is characterized by a long-term orientation; thus the relationship has a strategic nature. Outsourcing does not have to be complete externalization to an LSP, but can also be partial: • A single contract for supplying a specific service on occasion • Creation of a
spin-off • Creation of a
joint venture Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself. In a horizontal alliance, these partners can benefit twofold. On one hand, they can "access tangible resources which are directly exploitable". In this example extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages can be achieved by combining resources. On the other hand, partners can "access intangible resources, which are not directly exploitable". This typically includes know-how and information and, in turn, innovation. == Logistics automation ==