In recent years, the concept of integrated logistics has become so widespread that it has replaced the traditional concept of logistics. The latter indicated the transfer of raw materials and finished products from one place to another. Nowadays, however, industrial logistics can no longer include logistics that deals only with the movement of materials and goods. What then is meant by integrated logistics ? We try to clarify it in this dedicated in-depth study.
What is integrated logistics: significance
The definition of integrated logistics, in some respects, seems identical to that of logistics. However, it contains a fundamental difference: the integration of each step, both with the design phase and the control phase. In other words, integrated logistics not only deals with everything related to traditional logistics, but also connects with the production, marketing, and all other departments of the company. Integrated logistics is therefore even more focused on optimizing costs and production time, as well as improving quality.
To date, however, there is no clear definition of integrated logistics.
There is the Council of Logistics Management definition that reads:
“Logistics is the process of planning, implementing and controlling the efficient and effective flow and storage of raw materials, semi-finished and finished products and related information from the point of origin to the point of consumption in order to meet customers’ needs.”
If we want to give a definition of integrated logistics system, we can say that integrated logistics is a unique business management process that governs the flow of materials, information and goods from the point of origin to the point of arrival, in which all management activities are interconnected and interdependent.
The architecture of integrated logistics
Thearchitecture of integrated logistics on the one hand provides for the proper management of warehouses, transportation and materials. On the other hand, it integrates with different functions of the business process. For example:
- Production function
- production plan
- Optimization of material supply flows
- organization of storage areas
- material handling systems
- power function
- selection and control of suppliers
- procurement planning
- marketing function
- proper definition of services
- packaging design
- marketing campaign design
To these, then, depending on the production process, numerous others can be added. In any case, variation in each will inevitably change logistical processes as well. Integrated logistics, therefore, proceeds precisely with a view to logistics efficiency and logistics cost reduction.
Management and measurement in integrated logistics
The work of logistics professionals, particularly in an integrated logistics system, never stops. Not only with regard to the proper performance of typical tasks but rather to constantly monitor the efficiency and cost-effectiveness of the entire logistics system. To this end, constant measurement of achievements is essential in the industry, particularly in an integrated system.
In this regard, technicians take into account a number of indicators for measurements, which are:
- volume: measures workloads (e.g., number of orders handled, managers, etc.);
- effectiveness: indicates the quality of the process (e.g., customer evaluation);
- efficiency: measures the costs and resources to perform a given process.
Therefore, in building an efficient logistics system, it is necessary to use professionals in the field who are able to evaluate these and many other parameters.
All compartments are essential rings.