➤

Logistics

Logistics Overview: Prevailing Trends & Practices

logistics photo Photo courtesy of Caroline UniversityOpens in new window

Logistics is concerned with movement and storage — getting the raw materials to the factory, moving them through the production process, breaking the flow to store them when necessary, running information system to keep management up to date, and finally transporting the product to the consumer.

Militarists know all about logistics but now is the time for business people to do the same. It was only in the seventies that the term logistics was first used in business. Read further on the origin of logistics hereOpens in new window.

What is Logistics?

Logistics is basically the process that a commodity (or service) moves through from the initial customer order to final consumption of the commodity (or service) by the customer.

Several other relevant definitions include the following:

  • Logistics is the management of all activities which facilitate movement and the co-ordination of supply and demand in the creation of time and place utility.
  • Logistics is the planning, implementation and control of the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer requirements.
  • Logistics is the positioning of resources at the right time, in the right place, at the right cost, at the right quality.
  • Logistics is the entire process of planning, implementing, and controlling the efficient flow and storage of materials and products, services, information, energy, people, and other resources that move into, through, and out of a firm (in both the public and private sectors) from the point of origin to the point of consumption and with the purpose of meeting customer requirements.

We see then that logistics is:

  • a process
  • started by the customer and
  • ended by the customer,
  • involving a number of steps.

Logistics is a science, a technology, and a practical planning and implementation process relevant to any business or industry.

Logistics is changing the face of international trade by providing workable systems geared to fulfilling global needs by supplying goods at the right destination, in the right quantity, at the right time.

Based on its definition and nature, a logistics system involves the following:

  1. Storage, warehousing, and material handling
  2. Packaging and unitization
  3. Inventory
  4. Transport
  5. Information and control

Each of these logistical processes is briefly explored hereOpens in new window.

Every Activity is Affected by Logistics

  • The text book that you are using must first be put in a computerized format, then printed, bound, packaged, sent to the retailer, and finally sold to the customer.
  • The beer you drink at a restaurant has to be manufactured, packaged, labeled and transported, and the right ingredients need to be sourced (hops, barley, yeast, water and other ingredients).
  • The medicine that you buy at the pharmacy must be correctly sourced, labeled, packaged and invoiced, and the right information must accompany it.

Basically any and every product or service goes through a logistical process. Registering and studying at a university, buying petrol at a station, running a well-supplied shop, running a restaurant, conducting a military maneuver (such as the Gulf War Invasion), and even running a successful election, are all examples of logistical processes.

We need sound logistics in each and every activity in life, not just for the supply and delivery of products, but also in dealing with service industries (such as insurance brokers, banks and other financial institutions, and government and educational institutions).

The Six Rights of Logistics

Logistics involves getting:

  • the right product or service
  • to the right customer
  • at the right time
  • in the right condition
  • at the right place
  • at the right price.

I order a pizza from a Pizza Hut. They deliver the right pizza (not the seafood pizza which I am allergic to), to the right customer (me and not my next-door neighbor, who hates pizzas!), at the right time (just before the football game starts and not after it), in the right condition (a nice box which protects the pizza from breaking up and keeps it hot), at the right place (my doorstep), at the right price (a price I can afford).

Logistics Is About Adding Value

Logistics is customer-focused. The customer is the key to all logistics activities—the very reason why things happen. The customer starts the whole process off, and also ends it off.

Logistics adds value to the supply chainOpens in new window, by getting the goods to the customer faster, in a better condition (packaging), at a time that suits the customer (who may perhaps go to a 24-hour shop), at a place that suits the customer (you can buy a Coca-Cola virtually anywhere nowadays, through vending machines, etc.)

Ultimately, the mission of effective logistics is supplying the right product, to the right customer, in the right condition, at the right time and place. Effective logistics is marketing-oriented — it enhances the company’s marketing effort by enabling the marketer to meet realistic promises s/he has made to the customer.

Effective logistics also adds value to the goods from the customer’s points of view. The customers can buy the product they want, at a place and time that suits them (for example, buying a Coca-Cola from a hospital vending machine at 03hr30 in the morning).

Logistics is thus an intangible and yet very real asset to a company. The focus of logistics if getting the goods to the place where the customer will buy the product.

See also:
  1. J.C. Johnson, D.F. Wood, D.L. Wardlow, P.R. Murphy, Contemporary Logistics, seventh ed., Prentice Hall, Upper Saddle River, NJ, 1999, pp. 1 – 21.
  2. A. Rushton, P. Crouche, P. Baker, The Handbook of Logistics and Distribution Management, third ed., Kogan Page, London, 2006.
  3. S.C. Ailawadi, R. Singh, Logistics Management, Prentice Hall of India, New Delhi, 2005.
  4. R.H. Ballou, Business Logistics/Supply Chain Management: Planning, Organizing, and Controlling the Supply Chain, fifth ed., Pearson-Prentice Hall, Upper Saddle River, NJ, 2004.
  5. J.R. Stock, D.M. Lambert, Strategic Logistics Management, fourth ed., Irwin McGraw-Hill, New York, 2001.
  6. G. Ghiani, G. Laporte, R. Musmanno, Introduction to Logistics Systems Planning and Control, John Wiley & Sons, NJ, 2004, pp. 6 – 20.
  7. M. Hugos, Essentials of Supply Chain Management, John Wiley & Sons, Hoboken NJ, 2003, pp. 1 – 15.
  8. H.T. Lewis, J.W. Culliton, J.D. Steel, The Role of Air Freight in Physical Distribution, Division of Research, Graduate School of Business Administration, Harvard University, Boston, MA, 1956, p. 82.
  9. D. Riopel, A. Langevin, J.F. Campbell, The network of logistics decisions, in: A. Langevin, D. Riopel (Eds.), Logistics Systems: Design and Optimization, Springer, New York, 2005, pp. 12–17.
  10. M. Browne, J. Allen, Logistics of food transport, in: R. Heap, M. Kierstan, G. Ford (Eds.) Food Transportation, Blackie Academic & Professional, London, 1998, pp. 22–25.
  11. J. Drury, Towards More Efficient Order Picking, IMM Monograph No. 1, The Institute of Materials Management, Cranfield, 1988.
Image