Every company, no matter how large or small, has to get material into its plant for processing and products out for distribution. The means by which these things happen is logistics. Proper and timely movement of goods and services has become so important in the manufacturing process that there are divisions and specialists in most companies to handle the tasks.
The process has become far more than ordering items and taking delivery at a specified location. Logistics includes putting an item, form or electronic marker in a single bin location among perhaps tens of thousands of others. Today, products are followed by electronic tagging that includes the packaging item and even microscopic coding put into the product itself. All these items help secure logistical plans and routes.
A major part of logistics is inventory control, which today includes a complex set of formulas for quantity and location of items, automatic quality checks and special packaging. Just In Time procedures are part of quality systems that require inventory to come in the door no sooner than expected. Another complex formula determines how many parts to put on the shelf at one time, and when to reorder. This inventory control method is tightly tied to logistics.
Most large companies use a mix of their own vehicles and a contractor’s (called third-party) vehicles to ship and deliver items. The goods that are made for sale by a company are primary products, but a factory uses many other goods, often called Maintenance, Repair and Operating goods, or MRO. They range from cleaning supplies to lubricating oil, and everything in between. They all need shipping and receiving schedules, inventory control and replacement schedules. These fall in the category of logistics.
When we see a price increase for items we buy every day, from milk to pens to gasoline, one of the reasons is almost always “the high cost of transportation.” Recently, most of that increase is blamed on diesel and other fuel prices, but in fact complicated logistical transportation grids also cost more. More trucks, trains and airplanes are competing for space in warehouses, on the roads and in the air. When was the last time anyone saw an interstate empty of trucks or an airport not packed with planes?
The transportation grid that is so complex requires experts to dispatch and receive these shipments. Behind every book of CD bought online and received at home to enjoy in a couple of days is a vast warehousing and logistical marvel: the fulfillment center. Companies like Amazon.com use hundreds of miles of conveyor and hundreds of forklifts to move millions of items every year, fulfilling orders by the thousands an hour. These centers need supplies, too: repair and maintenance items, and places to receive them and store them.
The conveyors are marvels in themselves. They are programmed by powerful computers to divert packages as they come by, reading electronic bar codes at lighting speeds and sending the package through dozens of tentacles of the conveyor maze. Finally, packages slide to a halt a few feet from the truck that will take them out.
Competition for transportation contracts, third-party logistics and warehousing is fierce. Time is the critical commodity – even more that monetary cost in many cases – that fuels a faster and faster cycle of logistical completion.
To learn more about career in operations management here is a link to our recent article on MBA and its effect on earnings vs experience.
Operations Manager.com Education Specialist