The Importance of Continuity in the Logistics Industry

An effective logistics manager handles the flow of goods from the supply point to the point of consumption in a seamless and consistent fashion. These items can include material, food, animals, equipment, and liquids. It can also cover abstract items like information, time, energy, and particles. Logistics design is supported through a complimentary flow of management information and tools, including production, material handling, packaging, warehousing, transportation, inventory, and security. Logistics design may employ powerful simulation software, allowing managers to model, visualize, analyze, and optimize complex systems.

Inbound / Outbound Chain Risk

The interruption of a supply or delivery chain is the bane of managers within the logistics industry. A problem in any of the inbound logistics, including procurement, production, POS material, or asset control, can affect the total logistical system, particularly the outbound services such as distribution, after-sales, and disposal logistics. Any disruption of outbound services will ultimately reduce the utility of the system to end users.

The risk factors associated with chain disruption allow managers to understand the quality of inbound and outbound channels. The quality of the channels is assessed with such metrics as:

• On-time delivery rate
• Mean delivery delay time
• Errors in accurate transportation

These are all compliance measurements that allow managers to assess the quality of their logistical systems and target bottlenecks and other types of problem areas.

Dealing with Chain Interruptions

Managers in the logistics industry can mitigate the results of chain interruptions through various tools. Many of these come from assembly line theory. They include:

• Buffering – statistically-predictable, consistent delays can be handled with a buffer. With physical goods, a buffer can consist of an increase in inventory or an alternate storage facility. The optimal buffer size is determined by an acceptable limit of delay risk balanced against the cost of inventory. In this way, a channel with a 10% delivery error can be reduced to a 1% or better delivery error by using a buffer chosen according to the flow of goods.
• Redundant channels – the quality of a channel can be improved by an alternate channel. As an example, a manager in the materials logistics industry will often insist on multiple suppliers of a particular commodity in order to mitigate the risk of any single supplier. This can result in supplier competition which can reduce supply cost. On the other hand, a powerful supplier may refuse the opportunity for a non-exclusive chain.
• Bottleneck analysis – delays or interruption of a complex chain generally result at a single point in the chain. The overall chain flow is always determined by the weakest link. Inaccurate bottleneck analysis can lead a manager to make changes at an apparent problem point that yield no improvement in the overall progress. Proper analysis identifies key areas of improvement. This type of complex analysis often necessitates the use of analysis software to handle the large amount of diagnostic data.

Continuity Is Essential for Reputation

The clients of logistics systems remain unaware of the complexity of those systems. They judge the system effectiveness by their ability to get the right item, in the right quantity. It must also arrive in the right place in the right condition. In addition, it must cost the right price. By providing this continuity, a logistics system establishes a strong relationship for the provider.