The Slovenia Times

The New Norm for Management

Nekategorizirano

5


A simple example can help illustrate the point. The average time elapsed from when a light bulb is produced until it is installed in a home in Europe is five months. Of that, 55 minutes goes to production, 11 hours is needed for shipping, and for the remaining five months and 29 days the bulb is stored somewhere. This means that it takes up space, costs money to store, and often - which is the worst part - it is not available to us when we need it. Logistics is the answer to such problems. Logistics and survival Logistics has a long history, even if we are talking about modern logistics. It was for military purposes that logistics first became important more than 5,000 years ago. The full importance of logistics was finally realized in the 1960's, when the survival of many companies came to depend upon them. Companies realized that logistics is not just a matter of technical problems, but of economic and business ones. Logistics was pushed into the background until a focus on logistics became necessary for survival in the modern economy. With the internationalization and globalization of production and sales, business conditions have changed a lot and logistics is becoming more and more important. There was a case in the 1960's, when around 80% of the distributors of pharmaceutical products went bankrupt. Later analysis showed that this was due to logistics problems. They were not able to adapt quickly enough to the new market conditions or to compete with those who were already using logistics solutions. Intermediate system Logistics is a way of thinking which leads to success when the whole process is handled as a whole. Logistics as a whole is a system with multiple interconnected layers. That's why logistics is often considered an intermediate system, connecting procurement, manufacturing and consumption. Thus we are talking about three different areas of logistics: procurement, manufacturing, and consumption or distribution logistics. Within these three areas there are also many subsystems; together they create a logistics chain with many flows: of goods, information, payments, etc. Logistics is the one thing connecting all these flows and segments; that's why it has a critical role in the structure of a company - one must stay aware of that. The time factor, a critical element in logistics, is becoming more and more important. We are talking about the "Just in Time" principle or any other model of supplying on time or with less stock. Taking time into consideration one can optimize complex systems of value creation, goods and information exchange, and payments. Lately, logistics has become more and more dependant on IT for tracking and identification systems support, especially with modern supply chain management (SCM). Logistics in Slovenia Where are logistics in Slovenia? It is often managed too incompletely - as procurement, manufacture, and warehouse or transport logistics. But, logistics must be thought of as a whole system, as a practice or a philosophy which enables companies to lower their operational costs and become more competitive. It comes as no surprise that there is more and more enthusiasm for logistics in Slovenia lately. The importance of logistics for Slovenia is quite high, considering the fact that 60% of Slovenia's exports go to important EU markets. Even if Slovenia has an almost ideal situation for developing logistics, and - within the area of logistics - transport options (as it enjoys a location at the junction of the important European V. and X. transport corridors), a lot of things are not going smoothly. The main problems are the lack of logistics knowledge, insufficient experience in logistics processes management and the lack of information support for logistics processes. If managers accept logistics as a system as a whole they will be adopting a philosophy that will ensure they retain the competitiveness of their company in the market. Such a philosophy means that managerial dreams of subordinating their company to the constant dynamic process of optimization no longer have to remain dreams. Nowadays management by logistics is a norm.

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