WHAT ARE LOGISTICS

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    Logistics can be defined as planning, implementing and controlling the flow of raw materials, inventory and finished goods to point of consumption.

    A bit of history

    Many people believe that logistics is a word, but from a semantics point of view its origin was from ancient Greek and means the science of computation. In fact, it is originally from combat environments and not from business or academia. It seems the ancient Greek referred the word logistics to military officers, who were expert in calculating the military needs for expeditions in war. As a science, it seems the first book written on logistics was by Antoine-Henru Jomini (1779-1869), a general in the French and later in the Russian service, titled Summary of the Art of War (1838).

    Definition of Logistics

    Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers, Logistics involve the integration of information, transportation, inventory, warehousing, material-handling and packaging.

    Logistics is defined as those activities that relate receiving the right product or service in the right quantity, in the right quality, in the right place, at the right time, delivering to the right customer, and doing this at the right cost.

    Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods service and related information between the point of origin and the point of consumption in order to meet customers requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply demand planning and management of third party logistics services provider. It is involved in all levels of planning and execution-strategic, operational and tactical. Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions including marketing, sales, manufacturing, and finance and information technology.

    Supply Chain

    A supply chain is the collection of processes and resources required to make and deliver a product to the final customer

    Six Key supply chain links

    1. Improve customer service. Customer service levels are measured by on-time shipments of the right quality product in the appropriate quantity.
    2. Decrease inventory. Demand-driven companies are able to optimize their inventory and reduce inventory buffers, which are typically kept at higher levels than necessary in order to maintain good customer service levels
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    3. Optimize production. Production lines need to perform smoothly to ensure batch product quality is maintained within specifications. Having an effective supply chain management system that can optimize batch sequencing means production is more likely to run efficiently, less time is spent in setups and clean-outs, and delays or disruptions can be addressed proactively, before they can impact customer orders or incur unnecessary expedited transportation costs.
    4. Be agile. The ability to respond quickly to planned and unplanned supply chain shocks is essential to remaining profitable. By being equipped to analyse different responses to the unexpected, companies can choose the most appropriate response to issues and take corrective action that secures plant profits and meets customer contracts.
    5. Reduce costs. Procurement. Working capital, inventory storage, distribution and labour are key areas to potentially reduce supply chain cost.
    6. Manage materials. Managing fluctuating raw material costs is important in order to set the right price expectations to customer. Robust planning and effective communications will protect customer relationships, which can have a significant impact on margins.

    Logistics vs Supply Chain Management

    Logistics and Supply Chain Management are terms that are often used interchangeably, but they actually refer to two aspects of the process.

    Logistics refers to what happens within one company, including the purchase and delivery or raw materials, packaging, shipment, and transportation of goods to distributors, for example. While supply chain management refers to a large network of outside organizations that work together to deliver products to customers, including vendors, transportation providers, call centers, werehouse providers, and others.

    CONCLUSION

    Most logistics professionals and academics agree that logistics is an essential function within business. Furthermore, there has been a trend over last few years to consider logistics as a process that creates value. While the terms value and value-added have experienced popular usage, they are neither clearly defined nor accurately measured. In the context of how value is created by logistics. Based on empirical research, definitions of value and value-added are suggested that are founded upon and related to the perspective of practicing managers. Following a brief literature review, details are provided about the objectives and methodology of the research that was conducted. Last, managerial implications and the key messages for both logistics managers and researchers are presented.