The economy is based on logistics. In a logistic system that works, information, materials and money flow as in a cybernetic regulatory circuit. The result is greater profitability from the service and satisfaction of the target group.
Logistics means thinking, planning and directing in interconnected (networked) systems. The introduction of logistics is a task of the Management or top management of any organization and therefore, should only be done "top-down".
Activate profitability reserves in logistics
Service function "Logistics" and typical conflicts of goals in management
Purchases: it intends to make larger acquisitions, to negotiate better prices and favorable conditions with well-known suppliers and to produce lower administrative costs.
Production: aims at economy of scale with few productive variables, those that can be planned well in advance and are exposed to few unforeseen changes.
Sales: aim for good availability, high flexibility, speed of delivery (“tomorrow”), good customer service, variety of offer with individual delivery quantities.
Warehouse: it aims for low inventories and little variety of items in a small variety of packaging units, sufficient pre-programming, few emergencies and minimal routine changes. Dispatch: pretend large quantities at few delivery points and especially on pallets.
Finance / Controlling: aims to tie a low level of current assets in the warehouse and inventories, low costs and little decrease.
General Management: it aims for few fixed costs, high profit potentials and a quick return on investment.
The Logistics Goals
- In any business or other organization activity, goal achievement is found as a core task. Those who know the goals will find an easier path! Any organizational success is determined by a synergistic goal-oriented action, in which the human being, means and method. The more those involved with the main and partial goals can be identified, the less losses due to friction will be along this path. The optimum is that, independent of the hierarchy, each person recognizes and values their participation in the achievement of the goals. The more precise the definition of the goals, the better the process and deviations can be controlled. What goals does the logistics help to carry out?
Logistics Service Goals
- Logistics should ensure a reliable supply in accordance with the needs and requirements of the target group. A clear and goal-oriented organization by the main and secondary functions, allows the specialization of such functions in commercial, supply and production areas. they must be formulated in such a way that they are known to all involved, but at the same time they must be feasible and controllable. Cost and profitability goals can be easily calculated through cash flow. Different from service goals. They must be determined by the commercial area as “the ear of the target group”, permanently updated and prepared for the management of the Input / Output by a control unit. Service goals must be defined according to the needs of the target group.This follows from the expectations of the latter, by the solutions offered by competitors and by their own possibilities, competences and resources. Service elements: delivery capacity according to requirements (availability) + correct delivery according to type, quality, quantity, date (eventually time) and place.
Logistics Profitability Goals
- The lowest possible costs for fixed and current assets, therefore, maintain good liquidity and the lowest possible costs for the realization of the service elements. It will be the task of Strategic Controlling to prepare and report the comparative data from the Input / Output of the logistics system. Do you know the real and not hypothetical service requirements of your target group within the framework of the field of tensions of their expectations, supply of competitors and the realistic possibilities of the organization itself?
