Transport Logistics

1.2.6. Integration of logistics

As industrial activities extend globally, logistics will involve more material and information

flows throughout a supply chain from sources to customers, which extends beyond national borders. In

restructuring supply chains, logistics need to be managed as an integrated process that seeks to

optimise these flows. If all firms involved in a particular supply chain optimise their logistics systems

independently of other firms in that chain, the management of flows across the whole chain is likely to

be sub-optimal. Integrated logistics attempts to overcome this problem.

This concept of integrated logistics extends functional management to include customers,

suppliers and manufacturers. Companies can no longer afford to focus on supply-side efficiency alone,

they need to use their business strategy to drive them towards integration of their demand and supply

sides to build a platform for achieving a competitive advantage. This involves the complete set of

activities and organisations relevant to production and distribution, as well as their connecting supply

links. It suggests an underlying structure of activities operating within a process of material and

product flow. Decisions made in each area impact others so that it becomes a single, interdependent

system.