Basic Logistics Concept - Logistics and Supply Chain Management

Basic logistics concept

Logistics is a rapidly developing economic science. In this regard, its terminology and conceptual apparatus are constantly refined, supplemented and filled with new content.

In foreign and domestic literature, there are different approaches to the definition of the concept of logistics. Thus, the American Society of Logistics Engineers has proposed the following definition: logistics is the art and science of management, technology and technical activity, which involves planning, supplying and applying the means of transfer to implement the planned operations in the name of achieving the goal.

French experts treat logistics as a combination of different types of activities in order to obtain, with the least expenditure, the necessary quantity of products at the set time and in a specified place, in which there is a specific demand for this product.

In German science, logistics means the process of planning, implementing and monitoring efficient and cost-effective technologies for the movement and storage of materials, semi-finished products and finished products, as well as related information on the supply of goods from the place of production to the place of consumption in accordance with the requirements of the clientele.

United States scientific schools also do not have a single approach to the definition of logistics. The points of view of their individual representatives are given in Table. 1.1.

Table 1.1

Definitions of the concept of logistics by United States scientists and specialists

Scientific School

Author

Definition

St. Petersburg State University of Economics and Finance

V. Scherbakov, Doctor of Economics. Sciences, prof. and others

Logistics - "the science of managing material and related information, financial, service and other flows in order to optimize the functioning of economic systems based on the effective use of all types of resources"

St. Petersburg State University of Engineering and Economics

Lukinsky VS, Dr. of Tech. Sciences, prof. and others

Logistics is the science of managing material and related information, financial and service flows in the economic system from the point of origin to the point of consumption in order to achieve the goals of the system and with the optimal resource costs

Logistics - the tool for integrated management of material flow and associated information, financial flows and services, contributing to the achievement of the organization's goals with optimal costs.

State

University - "High School of Economics"

Sergeev VI, Doctor of Economics. Sciences, prof. and others

Logistics (in the broad sense) is the science of managing material flows, information, finance and services associated with them in a particular micro, meso or macroeconomic system in order to achieve the goals set for it with optimal resource costs.

Logistics (in the narrow sense of the word from the position of business) is a tool for the integrated management of material and related information and financial flows, as well as an accompanying service that helps to achieve the goals of organizing a business with optimal resource costs.

State University of Management

Anikin BA, Doctor of Economics. Sciences, prof.

Logistics - the science of "managing material flows from the primary source to the final consumer with the minimum costs associated with commodity circulation and the related information flow"

United States Economic University. GV Plekhanov (Plekhanov United States Power Academy)

Stepanov VI, Doctor of Economics. Sciences, prof.

Logistics - the "system of managing streaming processes, including the process of commodity circulation in various spheres of business entities"

Moscow State Automobile and Road Institute (Technical University)

Mirotin L. B., Dr. of Tech. Sciences, prof.

Logistics - the science of organizing joint activities of specialists of key functional divisions of the enterprise, as well as a group of companies for efficient promotion of products through the chain of "raw materials procurement - production - distribution - distribution"; based on the integration and coordination of the operations, procedures and functions performed within this process in order to minimize the overall resource costs

Rostov State Economic University (RINH)

Albekov. A.U., Doctor of Economics. Sciences, prof. and others

Logistics - the science of planning, controlling and managing the transportation, warehousing and other material and non-material operations performed in the process of bringing raw materials and materials to the production enterprise, in-plant processing of raw materials, materials and semi-finished products, bringing finished products to the consumer in accordance with the interests and requirements of the latter, as well as the transfer, storage and processing of relevant information. "

The scientific school of the Department of Commerce and Logistics of SPbGuEF (now SPbGEU) is guided by the following definition.

Logistics is the science of managing material and related information, financial, service and other flows in order to optimize the functioning of economic systems based on the effective use of all types of resources.

Despite the fact that logistical research of United States scientists and specialists reveals a wide range of opinions in the interpretation of logistics: from the practical (from the position of business) presentation of its essence as a management tool used to manage material and (or) service flows to a new scientific direction that considers the through organizational and analytical optimization of economic flows, one can single out the general that is contained in different points of view.

All experts agree that the object of the study in logistics is the managed thread and the threading process that generates it, and the subject organizational and economic relations that arise in connection with the formation and maintenance of traffic flows. This is what allows us to conclude that there is a single basic concept of logistics. Based on a common understanding of the concept, the basic concept of logistics is a system of views on the rationalization of economic activity by optimizing the flow processes and forms the basic logistics business idea .

The basic concept of logistics is not just a system of views, but a set of theories from different fields of knowledge, working to solve an economic problem that consists in organizing the flow of flows.

Logistics covers all stages of reproduction - supply, production of goods and services, sales, including transportation and storage - as a single process of transforming the subject of labor into a product of labor and considers this process from the position of flow. It manifests itself primarily at the level of an enterprise guided by the relevant business idea. However, modern logistics involves going beyond the reproduction cycle and expanding coverage to the scale of the life cycle of the product, which includes, in addition to the stages of reproduction, the stage of consumption of the product of labor and utilization. The logistics used for the development of entrepreneurship is called business logistics .

The main business idea of ​​logistics, which provides for the formation of a logistics approach to management with integrated coverage of processes that localize entrepreneurial activity by the organizational framework of the enterprise, is associated with cost savings.

In accordance with the classical formulation of the optimization problem, the objective function is to reduce the total costs on the process implementation line. Restrictions in this case can be: the factor of the territorial location of enterprises-suppliers and consumers (remoteness of production capacities from bases and storage depots, available modes of transport and modes of transportation, rates of forwarding, etc.); obligations under the supply contract (conditions for the acquisition of consignments of goods, the rhythm of delivery, packaging and packaging, etc.); technological regulations of production (the composition and structure of the technological process, the standards of preparation for production consumption, the formation of batches of raw materials, materials for workshops and workplaces, etc.), etc.

The logistical approach implies the rejection of an isolated consideration of costs at each separate stage, in each individual process and attempts to minimize them

in favor of finding the optimal combination

where С с - the cost of supply; C n - production costs; C p - distribution costs; Cx - costs for storage (warehousing); C T - transportation costs.

This formulation of the problem allows us to justify the optimization criterion using the Bellman principle of optimality : the decision that is made at each stage (within the boundaries of the stage or process) should be such that the contribution of the current stage plus the optimal contribution of all the subsequent stages in the aggregate were optimal.

It should be borne in mind that this task is invariant for all segments of the economy. On the scale of the national and regional economy, it is formulated as a general political idea - the economy should be economical, on the scale of the sectoral economy - as a strategic priority for managing the development of production, but first of all it is put and solved at the level of the main economic link - the enterprise for which the reduction of total costs is associated with the solution of the problem of increasing competitiveness, and on this basis - and increasing the market share.

Example

According to the largest analytical companies AMR Research, Forrester Research, the introduction of integrated logistics companies have the following competitive advantages:

• reducing the cost and processing time of the order from 20 to 40%;

• Reduced time to market to 15 to 30%;

• Reduction of procurement costs from 5 to 15%;

• Decrease in warehouse stocks from 20 to 40%;

• Reduction of production costs from 5 to 15%;

• increase in profits from 5 to 15%.

In accordance with the logistic concept of entrepreneurship adopted as a derivative of the basic concept, the enterprise management process is represented as a set of business projects - coordinated activities subordinated to the main strategy of the enterprise - strengthening its market position, as well as sustainable development characterized by maximizing profits on the long-term time horizon. With this approach, it becomes necessary to overcome the local way of thinking and implement complex solutions, readiness to introduce logistics innovations.

The logistics concept of the enterprise requires the establishment of new partnerships with buyers and suppliers. It also assumes the exclusion of all "excess" (from the point of view of core business) and fixing in your own business all "necessary" - solutions of this nature should be justified by the operation of the optimality principle described above.

Example

From January 1, 2010 ZAO "Pikalevsky Cement (owned by "Eurocement corpse" by Filaret Galchev) planned to exit from the so-called Pikalev chain. It is known that the company, which announced plans to switch to its own raw materials as far back as 2009, purchased equipment for production and developed a calcareous quarry in the Leningrad region, spending about 3 billion rubles on it, and also reduced consumption of the belite slime purchased from "BaselCement-Pikalyovo".

Prior to this, the enterprises of the city of Pikalevo worked in a single production chain: "Pikalevo Alumina Plant"; (PGZ), as well as Metachim (OOO UK Sevzaprom ) and Pikalevsky Cement & quot ;, purchasing from BaselCement-Pikalevo by-products - carbonate raw materials and belitic sludge, respectively. "BaselCement-Pikalyovo," owning PGZ, bought from "Phosagro", owned by "Apatit", nepheline concentrate.

Eurocement Group He announced plans to switch to his own raw materials in the spring of 2008 after "BaselCement" announced the conversion of the alumina plant into a cement plant and, accordingly, the refusal to supply belitic sludge to the "Pikalevsky cement".

According to the general director of ZAO "Construction Information Agency"; E. Botka, the raw material factor is not the most important in shaping the profitability of production. The profitability depends on the price of cement. When prices return to the level of 2008, at least $ 150 per ton, this will not seriously damage the buyer, and production will become profitable. And even with the launch of all the facilities in the North-West region, the volume of about 3-4 million tonnes per year will be consumed by the market, which means that with the release of the "Pikalevsky cement" From the chain, none of its members will be affected.

Logistics allows business entities to formulate a strategy to ensure their competitive advantage, based not on abstract orientation on the market, but on targeting a particular consumer.

Foreign analysts note that firms that have adopted the logistics concept and built their competitive strategy based on it, there is a significant improvement in the indicator, reflecting the ratio of profits from production and sales of goods and services to invested capital. At the same time, the double value of logistics is indicated, which consists in reducing costs and increasing the share of presence in the market.

Leading Western companies clearly perceive logistics as an important strategic factor in the development of their business and invest considerable sums in it. There was already an understanding that all fundamental principles of companies' activity should be subjected to critical analysis, while the management system itself is subject to reorganization.

The following transitions are based on the new transformations:

• From functions to processes. The functional structure of the organization is focused more on the use of resources, rather than on the creation of the final product. The efficiency of any company should be evaluated only from the point of view of satisfying the needs of customers at the expense of its profitable activity. This can be achieved through horizontal coordination within the company, the formation of intraeconomic links that constitute the basic processes of the enterprise. Developed before interaction with suppliers and consumers, they acquire a cross-functional character and determine the company's ability to conduct effective competition in the market;

• From profit to increased efficiency. In an environment where competition is the driving force behind development, contributing to a decline in profits, the emphasis is shifted to efficiency. Various indicators that characterize the use of materials, equipment, labor are analyzed from the viewpoint of reducing costs, and hence, increasing profitability in managing business;

• from goods to consumers. Satisfaction of customer requests is the goal of any commercial organization whose management structure must comply with it. Marketing product orientation (late 1960s - early 1970s) was insufficient and required supplementation with object orientation to a specific consumer, which became effective in the formation of detailed databases of consumers and suppliers of goods based on information technology. From the organizational point of view, this solution implies the management of markets, sales channels and customers, and in general - the so-called demand management, which is implemented as a cross-functional approach to customer service;

• From stocks to information. Direct sales information in real time reduces the need for projections and reduces the costs for inventories. This requires the development of information systems for the management of rapid response logistics;

• From transactions to relationships. In business, not so much the market share as its quality matters. Keeping existing customers and increasing their loyalty is more important than winning new ones. Increasingly widespread is the tendency of buyers to reduce the number of their suppliers with the approval of delivery schedules. The basis for such transformations is the idea of ​​partnerships between the supplier and the buyer to provide competitive advantages in the market. Logistics allows you to establish such relationships through the information structures of a virtual enterprise.

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