Thursday, March 5, 2009

international material management

international material management is a part of international logistics.
we first should know what is logistics?

Logistics is new unique, it never stops! Logistics is happening around the globe
24 hours a days Seven days a week during fifty-two weeks a year. Few areas of business
involve the complexity or span the geography typical of logistics. Logistics is concerned
with getting products and services where they are needed whenever they are desired.
Most consumers take a high level of logistical competency for granted. When they go to
store, they expect products to be available and fresh.
It is rather difficult to visualize any marketing or manufacturing without logistical
Modern logistics is also a paradox. Logistics has been performed since the beginning of
civilization: it’s hardly new. However implementing best practice of logistics has become
one of the most exciting and challenging operational areas of business and public sector
According to Council of logistics management:
“Logistics is the process of planning, implementing and controlling the
efficient, effective flow and storage of goods, services and related
information from point of origin to point of consumption for the purpose of
conforming the customer requirement”.
Logistical management includes the design and administration of systems to controls the
flow of material, work- in – process, and finished inventory to support business unit
Logistics is the designing and managing of a system in order to control the flow of
material throughout a corporation. This is a very important part of an international
company because of geographical barriers. Logistics of an international company
includes movement of raw materials, coordinating flows into and out of different
countries, choices of transportation, cost of the transportation, packaging the product for
shipment, storing the product, and managing the entire process.

Functions of Logistics
(A)Material Handling
Demand forecasting
Requirement Planning Materials
Production Planning Management
Manufacturing Inventory

(2)Physical Distribution
Finished goods Inventory
Distribution Planning
Order Processing
Customer Service
(3) Warehousing
(4) Industrial Packaging
(5) Material Handling

The concept of logistics is fairly new in the business world. The theoretical development
was not used until 1966. Since then, many business practices have evolved and logistics
currently costs between 10 and 25 percent of the total cost of an international purchase.
There are two main phases that are important in the movement of materials: material
management and physical distribution;
Materials management is the timely movement of raw materials, parts, and
The physical distribution is the movement of the firm's finished products to the
Both phases involve every stage of the process including storage. The ultimate goal of
logistics is:
"To coordinate all efforts of the company to maintain a cost effective flow of goods."
Word, ’Logistics’ is derived from French word ‘loger’, which means art of war pertaining
to movement and supply of armies.
o A military concept
o Fighting a war requires:
a. Setting of an objective
b. Meticulous planning to achieve the objective
c. Troops properly deployed
d. Supply line consisting weaponry, food, medical assistance, etc. maintained
o Plan should be such that there is minimum loss to men & material
Like fighting a war in the battlefield, the marketing managers also need a suitable
logistics plan that is capable of satisfying the company objective of meeting
profitably the demand of targeted customers.
Inbound logistics + Material Management + Physical Distribution =Logistics
Now we will discuss each and every term in this above summation
Inbound logistics covers the movement of materials received from
Material management describes the movements of material &
components within a firm
Physical distribution refers to movement of goods outward from the end
of the assembly line to the costumer.
Supply- chain management is somewhat larger than logistics and it links
logistics more directly within the user’s total communication network &
with the firm engineering staff. It includes manufacturer and suppliers but
also transporters, warehouses, retailers and customers themselves.Logistics Management
Raw Material
In-Process Inventory
Finished Goods
These are the systems through which products goes from suppliers to customers.
Logistics activities
Customers Service
Demand forecasting
Distribution communication
Inventory Control
Material Handling
Order Processing
Part & Service Support
Plant and Warehouse side selection
Return goods handling
Salvage & scrap disposal
Traffic & transportation
Warehousing & Storage
Outputs of Logistics
Marketing Orientation
Time & Place Utility
Efficient Movement to Customer
Proprietary asset
Logistics has gained importance due to 8 trends
Transportation cost rose rapidly due to the rise in fuel prices
Production efficiency was reaching a peak
Fundamental change in inventory philosophy
Product line proliferated
Computer technology
Increased use or computers
Increased public concern of products Growth of several new, large retail chains or
mass merchandise with large demands & very sophisticated logistics services, by
pass traditional channel & distribution.
Reduction in economic regulation
Growing power of retailers

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