Source: Adapted from Logistics Management & Distribution.
Logistical Improvements, Manufacturing Sector, 1960s to 2010s
A share of the improvements of manufacturing can be linked
with productivity improvements such as for labor (e.g.
outsourcing or offshoring) and capital (e.g. equipment). Another
share is linked with improvement of the supply chains
and the logistics supporting manufacturing. While cycle time requirements substantially decreased from the
1960s through the 1980s (from more than a month to one week), this came at the expense of growing logistics
costs, notably inventory costs. From that point, the major achievements
were related to productivity gains in distribution, accompanied by a
reduction of cycle time requirements, but as importantly, of
inventory costs. In some highly efficient facilities, the warehousing function went down
as far as 15 minutes' worth of parts in inventory, but this is
still more the exception than the rule. The retail
sector was also experiencing a diffusion of logistical
management where inventory in stores are kept at a minimum and re-supplied
on a daily basis. Logistics remains a balancing act, which is supply
chain specific, between the level of responsiveness of
production (cycle time) and
the level of responsiveness of distribution,
notably inventory levels to be maintained to meet the customers'
orders (lead time). High inventory levels enable to respond to
orders quickly (low lead time), but at a higher cost.