Global Logistics in Manufactoring

Is logistics management primarily of interest to manufacturing firms

The following essay will discuss whether logistics management is primarily of interest to manufacturing firms by examining the scope of logistics management, its role in the manufacturing sector and assessing the value of logistics management in the areas of humanitarian disaster relief and in military operations.

Logistics Management

Logistics management can be defined as a set of interlinked processes used to connect all aspects of the supply chain to support the flow of information, funds and the transformation of raw materials to final products or services. Fugate et al offer that the value of logistics management is measured in what value the end customer places on the services or products they receive less the cost of delivering the services or producing the products (Fugate et al, 2012).

Manufacturing Industry

Logistics management in the manufacturing sector has become increasingly important as multinationals look to take advantage of an increased level of globalization. Spillan et al suggest that for multinationals to succeed in a global environment they must utilise the tools provided by logistics in managing the cultural, physical, legal and distribution processes (Spillan et al, 2013).

Globalization made it possible for firms to access and operate from markets where costs were considerably lower than their domestic markets. Initially this meant that manufacturing firms had to operate internationally as a way of remaining competitive by accessing the lower material, production and labour costs (Chueng et al., 2010 as cited in Fugate et al, 2012). Multinationals entering the global market place encountered new challenges that the extended lead time from production to market introduced where the outcome was the need to hold higher inventory throughout the supply chain.

Manufacturing firms turned to logistics management to help them solve this problem where in turn logistics introduced the concept of total cost management (TCM) to the industry. Logistics assist the firms to assess their supply chain as a whole and account for the trade-offs as well as to reduce costs further through creation of scale of economies enabling improved purchasing results (Han et al., 2008 as cited in Fugate et al, 2012).

In the manufacturing sector, logistics has evolved from being a solution to globalization issues to being a competitive differentiator that customers extract value from (Forslund, 2007 as cited in Fugate et al, 2012). Manufacturing firms are now not only just competing on product but are also competing on supply chain versus supply chain which supports why logistics management is of a very serious interest to the manufacturing industry.

Humanitarian Disaster Relief

A 2009 figure placed global disasters at between 350-400 instances, impacting in excess of 200 million people at an estimated cost of USD200 Billion (Rodriguez et al., 2009 as cited in Tatham and Houghton., 2011). Humanitarian disaster relief involves the sourcing of the necessary people, information and materials at specific locations that are often logistically constrained at the right time with very short notice (Whiting and Ayala-Ostrom, 2009).

Disaster Relief is somewhat unique in that the demand problem requiring a logistics management solution is often unique and has little lead time. Severe disasters will often result in the breakdown of society supporting systems for example transportation infrastructure, communications, housing and basic humanitarian needs such as food and water sources (Tatham and Houghton., 2011). Responding to the disaster is simple, responding to disaster cost effectively and efficiently requires solutions only available through logistics management, and the cost of not responding quickly would be additional deaths and the abandonment of law & order.