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Dr. Zoran IVANOVSKI, Associate proffesor European university - Republic of Macedonia
Abstract There is a distinct need for the inclusion of the topic of “Logistics” into ongoing initiatives of the Government of the Republic of Macedonia in order to faster the economic development of the country and at the same time to stay on the track to the EU and NATO. Logistics and its role as an enabler, revenue generator, as well as an inhibiter, play a key and critical role in commerce and government. Its insertion into the investment environment will provide critical connectivity between several major components of government and industry that are associated with manufacturing, regulation, trade, and distribution, to name a few areas. In the global economy customer-oriented business environment, superior supply chain performance is a prerequisite to becoming and staying competitive. Key words: supply chain management, logistics, education, contractors, support, public-private partnership, efficiency Introduction In its abstract sense, the word “logistics”, like the other abstraction “strategy”, “tactics”, “economics”, and “politics” is not susceptible to a single, simple and permanent definition. Since World War II the term logistics has frequently been used to apply to civilian activities. However, we can find great number of different definitions and realized evolution that lead towards military dimensions of logistics. Logistics is defined as process of planning for and providing goods and services. Under the term international logistics we understand the process of planning for and providing goods, facilities and services for the support of the military forces and civilian economies at the international level. National logistics is the process of planning for and providing goods and services for the support of a nation’s military forces and its operations, a nation’s civilian economy and its international obligations and requirements. Civilian logistics is the process of planning for and providing goods and services for the support of the civilian economy. Military logistics has to perform the same as civilian, but for the support of the military forces. The Republic of Macedonia has developed and adopted Logistic Concept1 that recognized public – private partnership as an essential component of security and defence
The National Concept for Logistics Support of the Defense and the Army of the Republic of Macedonia
and distribution. nearly 20% of the world’s GDP. it will enable implementation and use of best bussines practices in MoD and ARM. trade. Both sectors. which can be. In the global economy customer-oriented business environment. Moreover. 3 ARM – Army of the Republic of Macedonia 2 . In the US. and provides opportunity part of the logistics functions to be executed by specialized private companies. That document defines the directions of the transformation of the logistic system. total logistics activities make up 15-20 percent of finished product costs.2 It enables significant share of operational and investment costs of government expenditures for security and defence could be provided by implementation of public-private partnership. for defining and devastation of functions which are not core logistics functions in MoD and ARM. making logistics one of the last frontiers for major corporations to significantly increase shareholder and customer value. logisticians are well educated and skilled workers.5 trillion USD. at the heart of every effort to improve organizational logistics performance is supply chain efficiency. On the other side. that Logistics and its role as an enabler. There is no doubt that it also gives opportunity for faster development of the economy in the country especially by using best practices from the business sector in the sphere of security and defense and vice-versa. which could perform many different but compatible tasks as logistics support of the Army. This is the main idea in the effort of developing Macedonian Logistics Service Firm. consultancy. guarantee for their influence on business circles and processes. plays a key and critical role in commerce and government. regulation. where logistic system as well as aquistion can functione properly.policy. education and training of logistics personnel for the business community etc. support of business sector. Strategic Defence Review and the measures that has to be executed for reduction and transformation of the civilan and military personnel in MoD and ARM. superior supply chain performance is a prerequisite to becoming and staying competitive.Army and bussines sector have benefits of implementation of contracting logistics. In fact. as well as directions and activities determined in Annual National Program of the Republic of Macedonia for NATO membersheep. as well as an inhibiter. This decision is wholly compatible with the decision of the government and its activities for implementation of the reforms of the public administration. at the macro-level annual global logistics expenditures exceed $3. to name a few areas. implementation of the system of contracting logistics will generate also great benefits for the business sectors. There should be no doubt that implementation of contracting logistics means reductions of the fixed and variable expenditures in the ARM3 and can help in decreasing the number of personnel and creation of wholy operational system. revenue generator. To put logistics into perspective. It is yet to be fully realized. Logistics system of the Army is well developed. Its insertion into the enabling environment mix will provide critical connectivity between several major components of government and industry that are associated with manufacturing. within these communities. which will be able to perform their immanent characteristics and efficiently realize principles of contemporary management and financing.
in this case Logistics. regulatory and policy frameworks. and stakeholder factors. and warehousing) connect and activate the objects in the supply chain. often inter-related. systematic way that addresses its multiple components. and logistics information systems (LIS) that are connected by an enterprise’s supplier’s suppliers and its customer’s customers. in any effort to diagnose and improve the performance of an organization. program or project level. Charles Lusthaus. Its objective is to generate new knowledge 4 5 Supply Chain Strategy. Logistics is what happens within the supply chain. Chapter 2. They include legal. World Bank Group. it requires an understanding of the forces outside the organization that can facilitate or inhibit that performance. Each one of the things listed in this explanation make up Logistics and by their size provides some insight as to the impact of Logistics on the economy of Macedonia and the region. More specific. supply. socio-cultural. economic. 2003 . and creating such environments is becoming an increasingly important aspect of development assistance. put into the context necessary for Logistics to be acknowledged and inserted into an enabling environment initiative. including government ministries and executing agencies as well as nongovernmental organizations. and homes). transportation. it can be explained that the supply chain is the network of facilities (warehouses. socio-cultural and economic factors. Strengthening that kind of institutions will also help the country to receive also grants and loans. political.6 The enabling environment is made up of the administrative. as well as the previously mentioned political. inventory management. whether at the policy.5 That is why it is critical at this point in Macedonia’s reform process to ensure that Logistics is.At times there is confusion surrounding the terms logistics and supply chain management (SCM)4. the enabling environment is a set of conditions. However. is to develop capacities (companies and government agencies) in order to improve the performance of the organizations they support which can lead in final term of impede progress in the whole country. Enabling environments support effective and efficient organizations and individuals. 2002. Logistics. stores. Chapter 1. All of these conditions and factors are to be addressed and. It is a key to improving the efficiency and effectiveness of development assistance. planes. A Framework for Improving Performance. that impact on the capacity of citizens and civil society organizations to engage in development processes in a sustained and effective manner. vehicles (trucks. and secondly it is brought into the mix in a pragmatic. 2002. first included in the enabling environment mix. and ocean vessels). Edward Frazelle. terminals. technological. Consequently. 6 Enabling Environment for Civic Action”. The challenge for Macedonia. Organizational Assessment. ports. trains. Logistics activities (customer response. factories. Business concept Macedonian Logistics Service Firm stated goal has to be to contribute to wealth creation and sound and sustainable development of society. MarieHélène Adrien.
There are also other reasons that can jeopardize realization of that idea and make that company profitable (government/laws. It has to be capable to offer support to the Army as well as to the business sector. Final goal for the company is to become a reputable service provider that can make interpret the requirements. consultancy. It means necessity of developing training and education on SCM.and solutions for their customers. They are. It will have a direct connection to the Macedonian Transport Association. automated logistics systems that provide asset visibility and accountability. the health sector’s need for medical logistics. Transportation Logistics as well as importance of bringing commercial logistics through the various facets of SCM into the bilateral enabling environment mix. and implementation. Macedonian Logistics Services (MLS) provider is to be a private company working in collaboration and in association with an established regional logistics services provider. based on research and development in technology. in the area of Logistics. the need for improved production logistics. development. government. the need for the development of a national distribution hub. In the area of Logistics Consultancy services will includes strategic planning. and the need for SCM curriculum development and instruction within the functional areas. and IT insertion. the need for automated inventory control for asset visibility and accountability. However. and automated warehouse and distribution system. . the basic task of each company is profit maximization but it must be realized through its effort to optimize its support efforts in Macedonia. there are several key areas that can be exploited immediately in Macedonia reference Logistics. engage and understand the enabling environment conditions and factors. and educational sectors. and know how to develop and implement Logistics for profitability and sustainment. individual process design and modeling. At this time. The MLS will provide a range of Logistics services. medicine and the social sciences. as well as support economic development of the country. However. Regional Transport and Logistics Associations. and management. as well as Macedonian and Regional Manufacturers. the natural sciences. the government’s need to integrate the national procurement system. The crucial problem in development of that business idea will be challenges with the change of mentality of the people who cannot get rid of communist legacy. change mindset. and will seek to install standards and certification. project assessment. business environment). In the area of National and Regional Integration the MLS Company will seek to bring together all those associated with Logistics at the national and regional levels to raise the awareness and gain the support needed to make Logistics effective and efficient. that offers a full range of business logistics services. The area of Technology Insertion includes the Radio Frequency Identification. The area of Education and Training will include collaboration with the Macedonian and Regional education foundation that provides Supply Chain Management curriculum and instruction and professional development. in order to be efficient it is necessary to connect the education base with the commercial and government sectors that can provide education and training. the banking sector’s needs for cash management. Macedonian University System. The basic idea is that Macedonian logistics services firm offers a range of services to the commercial.
forms a bridge between the economic system of the nation and the operations of the combat forces. gas station. Government investments can be in fixed assets (buildings like warehouses. Good programming and financial management should be the bases of logistics support. and practical application of the theory. planning. These leaders must effectively and efficiently manage the activities of warehousing & logistics. maintenance capacities. Organizational development. training. restaurants. The educational program has to provide orientation. laundry services. The Logistics and Supply Chain Management.How to make this idea operational? Government has to entertain working with a "developing" logistics services consultancy providing its "credibility and financial backing" through working arrangements. control and governance of their products and services to their customers. . processes. In order to make significant progress in human resources management. computers etc). The Syllabus of that educational program has to provide a framework that allows participants to integrate and apply proven supply chain management strategies within their scope of responsibility. procurement. sales and marketing. integrate all the activities involved in the procurement. storage. transportation. and outsourcing. this MSC has to find partner (universities in the country) to work SCM and educate efficient personnel for the business sector. operational execution and other management topics. but also in vehicles. information technology and supplier relationships. execution and supervision). staffing and supervision. It means that whole business cycle depends on efficient functioning of SCM. and payment from the initial suppler to the final customer. supervisors and managers trained in supply chain management are essential. together. Conclusion Using the fundamental elements of logistics (requirements. and project management. and distribution) and the basic aspects of command (organization. Logistics is an art. systems. a science. The training courses have to provide the student with the knowledge and skills associated with current practices in Logistics and Supply Chain Management areas that include: Purchasing. warehousing. and inventory management. the best way is to make Government shareholder in that company with maximum 49% of equity capital. Operations. However. with a focus on their integration and management. a process. concepts. organizational strategies. The logistics process is at one and at the same time the economic element of military operations and the military element of economy. by examining managerial behavior. incentive alignment. They lead the teams responsible for the flow of goods and services throughout our global economy. legal considerations. and technologies used in the functions of logistics and its supply chain. movement of goods. the logistic support of the Army. There is no doubt that to successfully compete in today's fast-paced business world. quality control.
. the Logistics and Supply Chain Management. 2002 2. 2003. Edward Frazelle. strategy. . First. place and with necessary quality. National economy can be analysed through several aspects in context of defence. together. integrate all the activities involved in the procurement. economic conditions determined conducting of military operations and waging of war. which are also logistical focuses. and payment from the initial suppler to the final customer. their structure. Organizational Assessment. 2002 3. Fourth. at the same time. A Framework for Improving Performance.On the other side. defence in turn has influence on economy and determined production of material-technical means for the defence. which dues to the level of economic development. Logistics play key role to ensure that combat forces and combat support forces are supplied with what they need to accomplish the mission on the real time. which means that in final instance they determined development of art of war. Supply Chain Strategy. economy can be factor of limitations for the level of equipping of the armed forces. movement of goods. arms. References 1. Marie-Hélène Adrien.. World Bank Group. Charles Lusthaus. economy represents material-technical base for military capabilities of the state. Enabling Environment for Civic Action. storage. efficient use of logistics experiences in business sector can create possibility of better engagement of economic and industrial resources of the country. etc. military production etc. Third. art of operatic and tactics. in the process of achieving this. We can conclude that national economy develops under influence of defense strategic needs as sustaining of armed forces. Second. It means that whole business cycle can be improved through efficient SCM. However.
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