Thursday, 21 August 2014

The Logistical Relationship with Production within the firm?

One of the main interfaces found between logistics and production is the length of the production lines. Often the production department will support the use of long runs on individual products, to spread the fixed costs over many more units to reduce the production costs per product. However these long production lines will have an effect on inventory as it will generate a large amount of products that need to be stored.

The logistics department will be responsible for the storage and the tracking of the large inventory that are a result of long production lines. These products will often increase the inventory carrying costs. By increasing the use of the postponement concept (involving delaying the value adding activities such as assembly and packing to the last moments) is also part of the interface between logistics and production. Now many forms of the value adding process take place in the warehouse departments, such as labelling and packing, whereas once these activities took place at the production plant. Therefore the warehousing will need to be able to accommodate these activities and have the right equipment and layout in order to do so.

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