To better understand the similarities and differences in the nature of physical distribution, manufacturing support and procurement performance cycle are discussed below.
1) Procurement cycle (Inbound):-
Procurement is concerned with purchasing and arranging inbound movement of materials, parts and/or finished inventory from supplier to manufacturing and assembly plants, warehouses or retail stores. The acquisition process is called purchasing in manufacturing organization, in government organisation it is called procurement and in retailing and whole selling it is called buying. All these three term namely purchasing procurement and buying are referred to as inbound logistics. These activities are related to product and materials from outside suppliers.
It includes-
(i)Resource planning,
(ii) Supply sourcing, negation,
(iii)Order placement,
(iv) Quality assurance,
(v) Inbound transportation,
(vi) Receiving and inspection
(vii) Storage and handling.
2) Manufacturing support performance cycle:-
The manufacturing support performance cycles provides production logistics. Manufacturing can be viewed as being positioned between the physical distribution and procurement operations of firm. Manufacturing logistical support has the primary objective of establishing and maintaining an orderly and economic flow of materials and work in process inventory to support production schedules.
The isolation of manufacturing support as a distinct operating area is a relatively new concept in logistic management. The justification for focusing on performance cycles to support manufacturing is found in the unique requirements and operational constraints of modern production strategies. It is important to once again stress that the mission of logistics manufacturing support is to facilitate the what, where, and when of production, not the how.
Manufacturing support is significantly different when compared with either physical distribution or procurement. Manufacturing support logistics is typically captive to firm, whereas the other two performance areas must deal with behavioural uncertainty of external customers and suppliers. Even in situation when contract manufacturing is used to augment internal capacity, overall control is greater than in the other two operating areas.
Within a typical manufacturing organization, procurement provides materials and externally manufactured components when and where needed. Once a firm's manufacturing operation is initiated, subsequent requirements for interplant movements of materials or semi finished products are classified as manufacturing support.
When a firm has multiple plants that specialize in specific production activities, the manufacturing support system may require a vast network of performance cycles manufacturing support operations, as contrasted to either physical distribution or procurement, are limited to movement under internal management control.
3) Physical Distribution Performance Cycle (Outbound Logistics):-
Physical distribution operations involve processing and delivering customer order. Physical distribution is integral to marketing and sales performance because it provides timely and economical product availability. The overall process of gaining and maintaining customers can be broadly divided into transaction creating like advertising and selling and physical fulfilment activities.
From the logistical prospective physical distribution links a firm with its customers. It resolves marketing and manufacturing initiatives into an integrated effort. The interface between marketing and manufacturing can be conflictive. On the other hand marketing is dedicated to delighting customers. The expectation is that zero defect service will be achieved and customer focused marketing efforts will be supported.