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Logistics, Distribution And Its Stages

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Logistics, Distribution And Its Stages

Logistics, Distribution And Its Stages - The definition of logistics is different from the notion of distribution or physical distribution even though it has almost the same meaning. Logistics is often referred to as physical distribution or distribution, business logistics, logistics management, supply chain management, or material management.

Physical Distribution Management 

Physical distribution management (physical distribution management) is to make sure the product arrives at the right place and at the right time. Physical distribution involves planning and controlling the physical flow of final materials and goods from the starting point to the point of use to meet customer needs at a profit. 

Physical distribution has the meaning of distributing finished goods from the time the order is received until the goods are shipped to consumers.

Logistics Management

According to Ballaou (1985), logistics management is the management of all move-store activities and activities related to points of acquisition and points of consumption/destination. consumption).

Bowersox, 1995 states that in a broad sense the scope of logistics includes everything related to the movement (of goods) from, to, and between existing facilities within the company.

Thus, logistics or logistic business has a broader meaning, which is not only discussing the distribution of goods from companies to consumers but also regarding the distribution of raw materials from suppliers to companies needed in the production process.

From this chart, it can be seen that physical distribution management has a close relationship with transportation, distribution planning, purchasing, order processing, inventory control, and warehousing.

Supply Chain Stages

a. Design

In designing a product, there are several things that must be considered:

Customer Relationship Management (CRM), which is an effort to get, add and retain customers. CRM is also the company's effort in finding its target market, to whom its products will be sold so that the company can design what kind of product it wants to produce, given that customer satisfaction is the main thing of the company's goals.

Customer Service Management (CSM), namely the company's efforts in providing information for consumers as well as obtaining information from consumers. Procurement of information for consumers includes: what products are provided, delivery schedules, etc. 

While information from consumers includes: the number of products to be ordered, product identification, when the product wants to be ordered, complaints or criticisms. With CSM, the company will be able to design the products it will produce.

Various information technologies are used in CRM implementation. For example, the Sales Force Automation (SFA) application can be used to automate the relationship between sellers and buyers by providing product and price information (Copra & Meindl, 2001). The system also enables detailed and real-time customer and product information.

Identification of Supplier, namely identifying a supplier or supplier. This is very important for SCM, suppliers, and customers are the two main keys in a supply chain. 

Suppliers are external companies that serve to provide materials needed by the parent company (our company), the suppliers we need are not only one company but many companies, so identifying companies that will become suppliers is very necessary, because the conditions of the automatic supplier will affect the company's conditions parent.

b. Procurement

Product procurement includes:

Demand Management, namely an effort to determine the needs of consumer products. This is related to forecasting consumer demand. CPFR (Collaborative Planning Forecasting and Replenishment). 

This forecast is used to estimate the amount and type of raw materials that must be purchased, shipment and delivery time for these raw materials, and the time required for the manufacturing process. Then the finished goods are stored in the warehouse until they are ordered by the distributor.

A good demand management system uses point-of-sale data from key customers to reduce uncertainty and provide efficient flow along the supply chain.

Manufacturing Flow Management is an effort to integrate consumer demand with supplier capabilities. This is necessary because the company must be able to anticipate the costs that will come out if it is unable to meet consumer demand, unmet market demand will reduce the level of customer confidence in the company.

In ERP there is a manufacturing module that records product flow throughout the manufacturing process and coordinates what is done for a part at a time. The product flow must be monitored through the use of information technology. This monitoring is carried out to provide assurance in the smooth flow of manufacturing.

Procurement is the effort to procure production factors (capital, labor, machinery and equipment, raw materials, information technology). Good relations with suppliers in procurement are needed to ensure a smooth flow of product delivery to consumers more economically. 

Companies must be able to collaborate with relevant suppliers, involve them in designing new products, evaluate supply risk, and so on.

Supplier relationship management is a process that determines how a company interacts with its suppliers. The purchasing function is developed through fast communication mechanisms such as electronic data interchange (EDI) and internet networks

c. Control 

The company must be able to control the business:

Customer Order Fulfillment (fulfillment of customer orders), the purpose of fulfilling orders here is the business of a supply chain manager in integrating all the necessary supplies from the supply chain process, from procuring materials from suppliers to goods to retailers. (retailers) and finally to the final consumer. 

This was done with the aim of producing a smooth and efficient process. Therefore, it is also necessary to have an external relationship, the company must be able to collaborate with supplier companies or retailers. 

Establishing relationships with retailers, for example, about the latest sales data and how much product stock they still have is important for the company.

As part of an ERP (Enterprise Resources Planning) system, the Order Fulfillment module is used to monitor the order fulfillment cycle and record the company's progress in satisfying requests. ERP is an operational information technology system that is used to collect information from all functions within the company. 

This ERP system monitors materials, orders, schedules, finished goods inventory, and other information in the company.

d. Production (Manufacturing)

Production is a series of process activities in producing raw materials into finished products. In this case, SCM transforms from raw materials into semi-finished goods then into finished goods (commodity).


Outsourcing, namely job transfer. The work of the parent company is divided into two: Core and Non-Core. Core competency is work that is directly related to the production process, while non-core competency is work that is not directly related to the production process so that this work can be transferred to another company. 

The transfer of work is carried out by borrowing employees from a vendor company (outsourcing company), the employee works at the parent company, only the employee comes from a vendor company/outsourcing company / supporting company. Then the parent company gives a fee to the supporting company, which will later be given as wages for the outsourcing employee.

Lean Manufacturing is a production process that emphasizes the efficiency and effectiveness of the production process. Efficiency is the ratio between the cost and time sacrificed with the success achieved, the less time and/or the cost sacrificed, the more efficient. 

Meanwhile, effectiveness is the achievement of targets by relying on all the infrastructure provided previously, if all the resources are reliable as a whole, it will be more effective.

Flexibility, which is the company's ability to respond to sudden changes in the production process, for example, changes in conditions or systems from suppliers, the company must anticipate in preventing lower capacity (shortage of supply).

In ERP there is a manufacturing module that records product flow throughout the manufacturing process and coordinates what is done for a part at a time. The product flow must be monitored through the use of information technology. This monitoring is carried out to provide assurance in the smooth flow of manufacturing.

e. Delivery (Distribution)

One scope of the supply chain, namely sending the finished product to the end consumer at the right time and place. This activity can be carried out by the company or submitted to a transportation service company. Companies must design the right distribution network by considering aspects of cost, aspects of flexibility, and aspects of the speed of response to customers.

f. Return

Is a process related to product return paths that are not in accordance with consumer specifications.

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