The Value Of Integration In Logistics

Many logistic problems arising in supply chain management, distribution and inventory management call for the integration of different components of the production/distribution system which have to be coordinated in such a way that a common objective, which can be the cost minimization or the revenue maximization, is optimized. Thus, in order to find the best management policy, one should be able to tackle the problem as a whole and to find an integrated policy that is aimed at optimizing the system behavior. However, known practices as well as the scientific literature have shown a major attitude in proposing strategies that are aimed at decomposing the system in parts and then proposing optimal policies for each single part. This clearly leads to a strategy that is far from being optimal for the global system. The aim of this work is to focus on the advantages that integrated policies can provide when used to handle production, inventory and distribution problems. We will present some cases that are mainly dealing with distribution problems and show the strategies proposed in the literature. We will also present a study on a distribution system where the inventory and the distribution costs have to be minimized.