In terms of logistical systems, design and administration, each organisation must simultaneously achieve at least 6 operational objectives. These include:
1. Rapid response
It is concerned with affirms ability to satisfy customers service requirement in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery of required inventory.
Rapid response capability shifts operational emphasis from an anticipatory posture based on customer requirements on shipment to shipment basis.
2. Minimum variance
Variance is any unexpected event that disrupts system performance and may result system performance and may result from any aspect of logistical operations. Delays in expected times of customer order receipt and unexpected disruption in manufacturing,
goods arriving damaged at a customer‘s location or delivery to an incorrect location or result in a time disruption in operations that must be resolved. Potential reduction of variance relates to both internal and external operations. In traditional solutions to accommodating variance is to establish safety stock or high cost, premium transportation to the extent that logistical variances are minimized, productivity improves as a result of economic operations.
3. Minimum Inventory
Total commitment is the financial value of inventory deployed through the logistical system. Turn velocity involves the rate of inventory usage over time. High turn rates coupled with inventory availability means that assets devolved to inventory are being effectively utilised, the objective would be to reduce inventory deployment. While the goals of eliminating all inventory is attractive, it‘s important to remember that inventory can and does facilitate some important benefits in a logistical system. The objective is
to reduce and manage inventory to the lowest level while achieving operational objectives.
4. Movement consolidation
One of the most significant logistical costs is transportation. Transportation cost is directly related to the type of product, size for shipment and distance. To reduce transportation costs, it is desirable to achieve movement consolidation. As a general rule, the larger the overall shipment and the longer the distance it‘s transported, the lower the transportation cost per unit.
5. Quality improvement
Total Quality Management has become a major commitment throughout all facets of industry. If a product becomes defective, service promises are not kept. Little if any value is added by the logistics.
Logistics itself must perform to demanding quality standards. The quality challenge is magnified by:
• Logistical operations must be performed across vast geographic area
• Logistical operations must be performed out of a supervisors vision
E.g. reworking a customer‘s order as a result of incorrect shipment or in transit damage is far more costly than performing it right the first time.
6. Life cycle support
Few items are sold without some guarantee that the product will perform as advertised over a specified period. Product recall is a critical competency resulting from increasingly rigid quality standards, product expiration dating and responsibility for hazardous consequences. The most significant aspect of reverse logistical operations is the need for maximum control when a potential liability exists. Lifecycle support in modern terms means cradle to cradle support.