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Logistics management is becoming more crucial as the dynamics of transportation and supply chain become more complicated. Distribution managers are called on to be logistics managers for a company’s entire supply chain. Management of this larger scope of logistics requires different skills, competencies and partners than the supply chain of the 20th century. Transportation in the modern age requires use of rail, trucking, air-freight and ocean sea freight. Logistics manager’s need to deal with multiple partners throughout the supply chain to optimize a company’s entire shipping, transportation and supply chain of both inbound and outbound freight.
With just in time and lean manufacturing competing with low cost manufacturing in the developing world, supply chain challenges for logistics manager’s is becoming increasingly complex. To ship items from overseas, materials must be shipped by air (airfreight) or sea and then have the same logistics challenges as domestically produced goods when determining in country transportation by air, rail or truck.
With smaller production lots and more frequent manufacturing to reduce working capital, logistics and transportation costs are becoming a larger percentage of a firm’s part costs. Logistics managers must constantly fight the battle between tying working capital up in cheaper large lot shipments and working its distribution channel and supply chain to deliver smaller lots at the same price. The transportation costs of the whole supply chain may be reduced by having distribution managers from the entire supply chain work together to reduce transportation and logistics costs. Having level loaded production and similar shipments will actually make the job of a logistics or distribution manager easier once the changes are fully implemented, but until the entire supply chain and shipping industry can meet the challenge of the modern logistics manager, transportation costs of the whole supply chain may actually go up.
As other industries start to implement the concepts of lean manufacturing, distribution costs . In Japan, traditionally suppliers are located very close to the producers of end products. In the modern supply chain, distribution managers must work to reduce logistics costs while still leveraging low cost manufacturing locations on the other side of the world. As end user demand changes, distribution managers must examine alternative channel partners and methods of transportation to optimize the entire supply chain. With late stage customization becoming standard in more industries (Dell etc.), final manufacturing locations are being placed closer to the end user to reduce transportation costs. The supply chain or logistics manager is increasingly enjoying a larger role as the decisions corporations make about sourcing, shipping and supply chain are increasingly becoming more critical to the strength of the companies business model and its ability to compete long term.
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