Basic explanation of business logistics

0
657

Logistics is defined by the Dictionary of the Spanish language, published by the Royal Spanish Academy (RAE), as the «set of means and methods necessary to carry out the organization of a company, or a service, especially distribution.

In the business world there are multiple definitions of the term logistics, which has evolved from military logistics to the contemporary concept of art and technology that deals with the organization of commodity, energy and information flows.

Logistics is essential for trade. Logistics activities make up a system that is the link between production and markets that are separated by time and distance.

Business logistics, through logistics management and the supply chain, covers the management and planning of activities of the purchasing, production, transport, storage, maintenance and distribution departments.
Main objectives

 

The fundamental mission of business logistics is to place the right products (goods and services) in the right place, at the right time and in the desired conditions, contributing as much as possible to profitability.

Logistics aims to satisfy demand in the best conditions of service, cost and quality. It is in charge of the management of the necessary means to reach this objective (surfaces, means of transport, IT …) and mobilizes both the human and financial resources that are adequate.

To guarantee the quality of service, that is to say the conformity with the requirements of the clients, gives a competitive advantage to the company. Doing it at a lower cost allows improving the profit margin of the company. Achieving this by guaranteeing safety allows the company to avoid sanctions but also communicate on current issues such as respect for the environment, ethical products, etc. These three parameters allow us to explain the strategic nature of the logistics function in many companies (environmental pressure creates the function). Currently, the logistics directors are members of the management committees of the companies and report to the shareholders.

The responsibility domains of logistics are varied: operational (execution), tactical (organization of the company) and strategic (strategic plans, prospective, responsibility and knowledge).
Logistic chain

 

 

In business or in any type of company, logistics can have an approach (internal or external) that covers the flow from the origin to the delivery to the end user. All this at the minimum global cost for the company.

There are two advantages

  • One optimizes a constant flow of material through a network of transport links and storage centers.
  • The other coordinates a sequence of resources to carry out a specific project.

Logistic flow systems are generally optimized for one of several goals: to avoid shortages of products (in military systems, especially regarding fuel and ammunition), to minimize the cost of transport, obtain a good in a minimum time or storage Minimum of goods (in time and quantity). The logistic flow is particularly important in just-in-time manufacturing, in which the great emphasis is placed on minimizing the stock. A recent trend in large distribution chains is to assign these goals to individual common items, rather than optimizing the entire system for a particular purpose. This is possible because the plans generally describe the common quantities that will be stored in each location and these vary depending on the strategy. The basic method of optimizing a distribution standard system is to use a tree of minimum distribution coverage to design the transport network, and then to place the storage nodes dimensioned to manage the minimum, average or maximum demand of articles. Very often, the demand is limited by the transport capacity existing outside the location of the storage node. When transporting outside a storage point exceeds its storage or incoming capacity, storage is useful only to equalize the amount of transport per unit hour in order to reduce load peaks in the transportation system.

 

Logistic operator

 

It is a company that is responsible for operating the load of a customer and deliver it at one point; It also develops a management process along the supply chain to satisfactorily meet the logistics requirements of its customers, making use of various tools and knowledge that can only be acquired through their experience in the corresponding sector.

Depending on three fundamental factors, different types of services offered by the operators can be found:

  1. According to the type of process:
  • Dedicated logistics: When the service provided to the client is offered exclusively, previous design tailored to the logistics project

required. It is a monoclonal service.

  • Shared logistics: The services provided are part of a catalog offered by the logistics operator, and therefore can be

Requested by other companies. It is a multi-client service.

  1. According to the location or physical location of the operation:
  • Logistics in the company: It is carried out in the premises of the contracting company of the service, which cedes part of its facilities to

the company subcontracted to develop the function that is the object of the contract.

  • Logistics outside the company: The service is executed in the establishment of the logistics operator, different from the location of the subcontracting company.
  1. In accordance with the human and technical resources:
  • Own resources: When the resources of the company of a fixed or temporary nature are used, and the management of the system is the responsibility of the

subcontracted organization.

  • External resources: When the resources belong to the subcontracted company and not to the subcontracting company