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Mike P. Clarke: Centre for Logistics and Transportation,Cranfield School of Management, Cranfield University, Bedfordshire, UK
Introduction
This article describes concepts for "virtual logistics". With virtual logistics the physical and information aspects of logistics operations are treated independently from each other. In such operations, ownership and control of resources is effected through Internet (or intranet) applications rather than direct physical control, and resources can, thereby, be owned and utilised remotely. This removes numerous operating constraints, and allows for the more efficient design of logistics networks.
Virtual logistics allows for economies of scale to be realised through the use of shared resources, while still retaining the benefits of single user control. Increased resource utilisation is made possible through the more flexible allocation of resources to demand and lead time reduction is made possible through the improved management of operational priorities.
Horizontal integration of supply chains is achieved through the physical consolidation of complementary product flows; and vertical integration of supply chains is achieved through the logical treatment of individual supply chains as independent processes.
A further benefit of virtual logistics is the greater availability of operational information which would have benefits for: scheduling; forecasting; accounting; and marketing.
Background
It is a general perception in logistics that assets such as stock or vehicles need to exist physically, and need to be identifiable as discrete entities, in order to be of value in a system. In actual fact this is not always the case. What matters is not where the asset is, or in what form it is in, but whether the relevant asset can be made available when required. The location of that asset is often only of secondary importance, and it might not matter if an asset is still to be delivered, sourced, or even manufactured; providing it can be made available when required.
By treating logistics systems in strict physical terms we impose constraints on them which can restrict their flexibility and can limit the utilisation of resources. This problem is overcome with virtual logistics where assets are treated in terms of their availability, not their identity or their physical form. This provides much greater flexibility in how systems are designed, how resources are sourced, and how assets are utilised.
Virtual logistics allows logistics resources to...