Integrated Logistics System

A system where, as much as possible, the separate steps of the logistics cycle are carried out for all products within one system procurement, storage, and transportation are coordinated through a single office. With the beginning of the 1980s, especially mid-1980s, there has been a phenomenal change in the business scenario due to a sea change in the external and internal environment. That is why, in order to survive in the competitive market place and retail market dominantly managers were of the opinion that is the need of the hour to develop an integrated logistics system which will be an interface of the procurement function, production function and physical distribution function of the total logistics management system with an intention to achieve the following objectives: a) To ensure better customer service by appropriate value addition for superior customer values b) To ensure higher productivity and further curtailment of logistics cost by means of synergy between the different business functions and particularly all the three logistical functions. c) To avoid a repetition of similar types of logistical functions by different departments at different levels and the development of a professional integrated approach. d) To properly monitor the performance of the existing logistics system so that a continuous improvement in the system can be made possible in time. The basic concept of integrated logistics is shown in the following. Logistics is viewed as the competency that links an enterprise with its customers and suppliers. Customer information will flow through the enterprise in the form of sales activity, forecasts, and orders. The information is refined into specific manufacturing and purchasing plans. As products and materials are procured, a value-added inventory flow is initiated that ultimately results in ownership transfer of finished products to customers. Thus, the process is viewed in terms of two interrelated efforts, inventory flow and information flow.

Inventory Flow

Customers

Physical Distribution

Manufacturing Support

Procurement

Suppliers

Information Flow

The internal operations in isolation are useful to elaborate the fundamental importance of integrating all the functions and work involved in logistics. To be fully effective in todays competitive environment, firms must expand their integrated behavior to incorporate customers and suppliers. This extension, through external integration, is referred to as Supply Chain Management. The basic process is not restricted to for-profit business, nor is it unique to manufacturing firms. Information systems have now become the driving force forcing companies to reconsider their relationships with customers as well as suppliers. Supply chain integration implies process integration, both upstream and downstream. Business process integration means collaborative working between buyers and suppliers, joint product development, common systems and shared information. In the extended enterprise the aim is to crate seamless, end-to-end process so that innovative products are created and delivered to market at higher levels of quality, in shorter time-frames but at a price which in real terms is significantly less than it has ever been in the past. Successful integration of a process such as logistics requires managers to look beyond their organizational structure and facilitate cross-functional coordination.