Logistic management: concept, types, goals and objectives

Logistic management is an integral part of the management of modern enterprises. This refers to the management of resource flows, bringing them to an optimal state in order to maximize profits and minimize costs.

Definition of a concept

Researchers and economists have not yet reached a consensus on the definition of the term. Having studied the popular theories of Russian scientists, we can distinguish several points. Logistic management is:

• The set of measures for the management of supply, production and marketing to achieve the goals and objectives of the enterprise, the main of which is maximizing profits.
• A tool by which the processes associated with the internal and external environment are managed.
• A set of activities that are aimed at achieving logistics goals.
• Impact on financial, economic and legal processes in an organization.
• The process of achieving goals through the use of labor, intellectual, material and other resources of the company.
• Activities aimed at maximizing profits through the sale of manufactured products or the provision of services.

Different researchers' views on logistics

Foreign scientists have paid a lot of attention and continue to pay attention to the study of the concepts and goals of logistics management. Naturally, their views on this issue were somewhat different. This is clearly presented in the table.

Main goals

The tasks of logistics management can be formulated as follows:

• the implementation of the logistics plan on time and in strictly specified volumes;
• bringing the logistics plan in line with marketing and production;
• maintaining a consistently high level of quality of logistics services;
• analysis of factors affecting end-user satisfaction;
• efficient use of fixed assets, investments and other sources of financing;
• maintaining high labor productivity through improved technology;
• bringing the technological base in the field of logistics in line with modern scientific and technological achievements;
• introduction of new information and computer technologies;
• conducting a financial audit of logistics operations;
• minimizing logistics costs;
• the study of the impact of the logistics system on the general state of affairs in the organization;
• search for suppliers and consumers of raw materials and finished products;
• coordination with other services of the organization.

Functions

We can distinguish the following main functions of logistics management:

• Backbone. Formation of a system of technologies to provide the production and management process with the necessary resources.
• Integrating. Logistics is designed to synchronize and coordinate the processes of marketing, storage and supply. The coordination of interests of participants in the logistics system should also be ensured.
• Regulatory. Ensures the functioning of the logistics system to the common interests of the organization. As a rule, this is expressed in minimizing costs.
• Resulting. Logistic activities are aimed at fulfilling the work plan (supplying a certain amount of products to a specific buyer on time).

Key Logistics Management Issues

Logistic management began to be studied as a separate component of the comparative management process recently. In this regard, many unresolved problems remain in this area. Here are the main ones:

• The need for strict control of general access to information resources at all stages of the organization.
• A mixed type of management in most domestic enterprises (that is, the organization simultaneously acts both as a consumer, and as a producer, and as a seller).
• Lack of government support and control over logistics processes.
• A huge number of intermediaries in the supply chain and lack of coordination between the links.

Basic principles

Logistic management at the enterprise should be carried out in accordance with the following principles:

• Synergy. The best results can be achieved only with the coordinated and coordinated work of all parts of the logistics chain.
• Dynamic. The logistics system must be constantly developed and improved.
• Completeness. The components of the logistics system must work closely.
• Initiative. The logistics system must promptly respond to events occurring in the internal and external environment.
• Expediency. It is worthwhile to selectively select structures and technologies. Their use should be appropriate and should be accompanied by minimal costs.

Principles of organizing logistics systems

In the process of practical activity and theoretical research, the basic principles of the formation of logistics systems were developed. This is what it is all about:

• Systems approach. This refers to consideration not of the elements of the logistics system, but of their close relationship with each other. That is, during optimization, work is not carried out on individual components, but on the system as a whole.
• Total costs. Logistic management takes into account the totality of material costs associated with the functioning of the chain.
• Global optimization. When improving the structure of the logistics system, modernization is carried out in all parts of the chain.
• Logistic coordination and integration. Management of logistics processes is aimed at achieving the coordinated participation of chain links in the implementation of target functions.
• Modeling of computer information support. In the modern world, the implementation of logistics is almost impossible without the use of modern technologies and computing tools.
• The principle of developing subsystems. For the full functioning of the logistics system, the implementation of the technical, organizational, economic, personnel, legal, environmental and other subsystems is necessary.
• Total quality management. It is necessary to ensure reliable operation of each link for the productive functioning of the system as a whole.
• Humanization of functions and technological solutions of the logistics management of the company. This refers to bringing the systems in line with environmental, cultural, ethical and social requirements.
• Stability and adaptability. The logistics system should work stably. At the same time, it must respond flexibly to changes in the industry.

Logistics Systems Properties

The logistics system has the following basic properties:

• Integrity with the ability to divide. All elements of the system work harmoniously, in a common rhythm, to achieve common goals. Nevertheless, each of the links can be considered and reorganized separately.
• The presence of connections. Inside the logistics system, a rigid and indestructible system of links between the links operates.
• Organization. Elements are strictly ordered, that is, they have an organizational structure.
• Efficiency The system must be capable of delivering the desired resource up to a specific time to a specific location. It is important to choose the best paths in order to minimize costs.
• Complexity. The system should be designed so as not to go out of balance as a result of the stochastic influence of the external environment. This is achieved due to the presence of a complex system of relationships between links.
• Integrativity. None of the links has a complete set of properties that are inherent in the system as a whole. Only in aggregate can they work productively.

Logistic management system

Material flows, the process of moving raw materials, the sale of finished goods - all this and much more is under the responsibility of the logistics manager. The components of the logistics management system are described in the table.

Basic concepts of logistics methodology

One of the essential conditions for the efficient operation of an enterprise is well-organized logistics. Logistic management is carried out in accordance with such key concepts:

• The concept of total costs. The logistics chain is seen as a holistic object, without detailing the links. It is believed that all costs are incurred at a time. The purpose of applying the concept is to find ways to minimize total costs.
• Prevention of local suboptimization. The essence of this concept is that the optimization of a single link in the network sometimes does not bring the desired results, but leads to an increase in costs. It is necessary to search for compromise options that are suitable for optimizing all elements of the system.
• Financial exchanges. Replacing some processes with others leads to the fact that some costs increase, while others decrease. It is necessary to find a combination in which the total costs are minimized.

Types of Logistic Analysis

The logistics management system includes an analytical link. Here are the types of analysis that can be distinguished:

• By goals and objectives: the definition of integrated indicators; assessment of business results; preparation of an information base for management decisions.
• By aspects: economic; financial; technical; functional value; problem oriented.
• According to the content of the program: comprehensive; local (link).
• By subjects: external; interior.
• By frequency and repeatability: one-time; regular.
• By the nature of decisions made: preliminary; current; final; operational; perspective.

Types of Logistic Flows

Logistic management in the management of an organization is inextricably linked with the concept of flows. They can be classified as follows:

• In relation to the system: internal; external.
• By degree of continuity: continuous (at each moment of time, a certain number of objects move along the trajectory); discrete (objects move at intervals in time).
• According to the degree of regularity: deterministic (defined at each moment in time); stochastic (have a random character).
• By degree of stability: stable; unstable.
• By the degree of variability: stationary (constant intensity in a steady process); non-stationary (variable intensity in an unsteady process).
• By the nature of the movement of elements: uniform; uneven.
• According to the degree of periodicity: periodic (occur with a certain temporal pattern); non-periodic (not subject to temporal patterns).
• According to the degree of correspondence of changes to a given rhythm: rhythmic; irregular.
• By degree of complexity: simple (consist of homogeneous objects); complex (composed of heterogeneous objects).
• According to the degree of controllability: manageable (respond to a control action); uncontrollable (not amenable to control).
• By the degree of ordering: laminar (mutual movement is deliberate, flows are regular and can change in time under the influence of fluctuations in the external environment); turbulent (mutual movement of elements chaotic).

Logistic Risks

Logistic management occupies one of the key positions in the organization’s management structure. Proper organization of this process is important due to the huge number of risks. Here are the main ones:

• commercial (disruption of deliveries, violation of the deadlines for fulfillment of obligations, unsustainable purchases, losses due to illiterate organization of transportation);
• unauthorized distribution of information (through carelessness, due to unprofessionalism or intentionally);
• loss of property due to unforeseen natural disasters (natural disasters, weather conditions);
• malicious intent (theft, property damage);
• ecological (harming the environment);
• the occurrence of civil liability for damage (which is caused in the process of performing logistics functions);
• technical (related to the operation of equipment);
• occupational safety (injury).

Successful Logistics

To achieve the desired results of the implementation of logistics management at the enterprise, three key conditions must be observed:

• Accurate and detailed wording of job titles and functional responsibilities of logistics personnel. Employee relationships, accountability, and boundaries of responsibility should also be indicated.
• A clear calculation of the number of logistics personnel at the moment and in the future. It is also necessary to outline the range of requirements for employees (education, knowledge, skills, work experience). To fulfill this condition, it is necessary to know the scope of work and the prospects for expansion.
• You need to choose a logistics manager who will correspond to the position. Wrong to choose a position for an employee.

Useful Logistics Literature

At domestic enterprises, unfortunately, the logistics management system is not well developed. In this regard, there is a need to obtain information from theoretical sources. Here are some publications you should pay attention to:

• Kozlov, Uvarov, Dolgov "Logistic management of the company."
• Mirotin, Bokov "Modern tools of logistic management".
• Waters "Logistics. Supply Chain Management."
• Samatova "Fundamentals of Logistics".
• Gordon, Karnaukhov "Logistics of product distribution."

These are the most popular and reliable sources of information on logistics management. They can learn a lot of new and useful.