Logistics before and after production

The application of logistics concepts to production is called production logistics. It covers all activities connected to the supply of production processes and delivery of products to the distribution warehouse. In this system, one interesting question is how a production line can be supplied from a company’s own warehouse. For instance, can a system of unmanned vehicles supply the individual production steps? Or should every worker go to the warehouse and get the parts that he needs for the single product being assembled on his own workbench? Production logistics provides the answer about which approach is the best one.

Allocation of production logistics within the logistics system of an industrial company

Concept and scope of production logistics

On one hand, production logistics includes all activities connected to the supply of production processes with feedstock - e.g., raw, auxiliary and operating materials as well as semi-finished products and purchased parts. On the other, it comprises all activities related to the transfer of semi-finished and finished products to the distribution warehouse.
It is thus positioned between procurement- and distribution logistics and serves as the connecting stage. The interface to production logistics is formed by the incoming goods department or the provision of feedstock at the first stage of production. The transfer of finished products to the distribution warehouse or dispatch is the corresponding interface to distribution logistics [1].

Optimization through system and total cost orientation

The significance of system orientation in production logistics has often been neglected in the past. The interrelationship between production logistics and other logistics subsystems should be considered. An example is the delivery of production feedstock by suppliers directly to the first stage of production. In this instance, decisions in the area of production have a direct impact on the interface to procurement logistics.
Total cost orientation is of special importance particularly because of its close link to production and logistics processes. One typical example is measures to cut inventories in production. They generally result in reduced production lot sizes, more frequent changes of the products that are made and increased change-over times. As a result, higher lot size costs are juxtaposed against lower inventory costs [1].

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