Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information,
transportation,
inventory,
warehousing,
material handling, and
packaging, and often
security. Logistics is a channel of the
supply chain which adds the value of time and place utility. Today the complexity of production logistics can be modeled, analyzed, visualized and optimized by plant simulation software, but is constantly changing. This can involve anything from consumer goods such as food, to IT materials, to aerospace and defense equipment.
Origins and definition
The term logistics comes from the Greek logos meaning "speech, reason, ratio, rationality, language, phrase", and more specifically from the Greek word logistiki , meaning accounting and financial organization The word logistics has its origin in the French verb loger to lodge or to quarter. Its original use was to describe the science of movement, supplying & maintenance of military forces in the field. Later on it was used to describe the management of materials flow through an organization, from raw materials through to finished goods
Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient
Greek,
Roman and
Byzantine empires, military officers with the title
Logistikas were responsible for financial and supply distribution matters
[The
Oxford English Dictionary defines logistics as "the branch of
military science relating to procuring, maintaining and transporting
materiel, personnel and facilities." Another dictionary definition is "the time-related positioning of resources." As such, logistics is commonly seen as a branch of
engineering that creates "people systems" rather than "machine systems". When talking in terms of
human resources management, logistics means giving inputs, i.e. "recruiting manpowers", which ultimately work for the final consumer or to delivery.
According to the Council of Logistics Management, logistics contains the integrated planning, control, realization and monitoring of all internal and network-wide material-,part- and product flow including the necessary information flow in industrial and trading companies along the complete value-added chain (and product life cycle) for the purpose of conforming to customer requirements.
Main logistics targets
Logistics is one of the main functions within a company. The main targets of logistics can be divided into performance related and cost related. They are high due date reliability, short delivery times, low inventory level and high capacity utilization. But when decisions need to be made, there is always a trade off between these targets. This is what makes being a logistician challenging and interesting.
Logistics viewpoints
Inbound logistics is one of the primary processes and it concentrates on purchasing and arranging inbound movement of materials, parts and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses or retail stores.
Outbound logistics is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user.
Logistics Fields
Given the services performed by logistics, one can distinguish the main fields of it as it follows:
- Procurement Logistics
- Production Logistics
- Distribution Logistics
- After sales Logistics
- Disposal Logistics
Procurement Logistics consists of activities such as market research, requirements planning, make or buy decisions, supplier management, ordering, and order controlling. The targets in procurement logistics might be contradictory - maximize the efficiency by concentrating on core competences, outsourcing while maintaining the autonomy of the company, and minimization of procurement costs while maximizing the security within the supply process.
Production Logistics connects procurement to distribution logistics. The main function of production logistics is to use the available production capacities to produce the products needed in distribution logistics. Production logistics activities are related to organizational concepts, layout planning, production planning, and control.
Distribution Logistics has, as main tasks, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Distribution logistics is necessary because the time, place, and quantity of production differs with the time, place, and quantity of consumption.
Disposal Logistics' main function is to reduce logistics cost(s), enhance service(s), and save natural resources.
Military logistics
Militaries have a significant need for logistics solutions, and so have developed advanced implementations.
Integrated Logistics Support (ILS) is a discipline used in military industries to ensure an easily supportable system with a robust customer service (logistic) concept at the lowest cost and in line with (often high) reliability, availability, maintainability and other requirements as defined for the project.
Supply chain management in military logistics often deals with a number of variables in predicting cost, deterioration,
consumption, and future demand. The US Military's categorical
supply classification was developed in such a way that categories of supply with similar consumption variables are grouped together for planning purposes. For instance, peacetime consumption of ammunition and fuel will be considerably less than wartime consumption of these items, whereas other classes of supply such as subsistence and clothing have a relatively consistent consumption rate regardless of war or peace. Troops will always require uniform and food. More troops will require more uniforms and food.
Some classes of supply have a linear demand relationship—as more troops are added more supply items are needed—as more equipment is used more fuel and ammunition is consumed. Other classes of supply must consider a third variable besides usage and quantity: time. As equipment ages more and more
repair parts are needed over time, even when usage and quantity stays consistent. By recording and analyzing these trends over time and applying to future scenarios, the US Military can accurately supply troops with the items necessary at the precise moment they are needed.
History has shown that good logistical planning creates a lean and efficient fighting force. Lack thereof can lead to a clunky, slow, and ill-equipped force with too much or too little supply.
Business logistics
A logistics provider's warehouse of goods being stacked on pallets with a forklift.
Logistics as a business concept evolved in the 1950s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for experts called supply chain logisticians. Business logistics can be defined as "having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer", and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of
project life cycles,
supply chains and resultant efficiencies.
In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see
supply chain management). The main functions of a qualified logistician include
inventory management,
purchasing,
transportation,
warehousing, consultation and the organizing and
planning of these activities. Logisticians combine a professional knowledge of each of these functions to coordinate resources in an organization. There are two fundamentally different forms of logistics: one optimizes a steady flow of material through a network of
transport links and storage nodes; the other coordinates a
sequence of resources to carry out some project.
Production logistics
The term production logistics is used to describe logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right time. The concern is not the transportation itself, but to streamline and control the flow through value-adding processes and eliminate non–value-adding ones. Production logistics can be applied to existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.
Production logistics is becoming more important with decreasing batch sizes. In many industries (e.g. mobile phones), a batch size of one is the short-term aim, allowing even a single customer's demand to be fulfilled efficiently. Track and tracing, which is an essential part of production logistics—due to product safety and product reliability issues—is also gaining importance, especially in the automotive and medical industries.
Logistics management
Logistics is that part of the
supply chain which plans, implements and controls 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 and legal requirements. A professional working in the field of logistics management is called a
logistician.
Logistics management is known by many names, the most common are as follows:
- Materials Management
- Channel Management
- Distribution (or Physical Distribution)
- Business or Logistics Management or
- Supply Chain Management
Warehouse management systems and warehouse control systems
Although there is some functionality overlap, the differences between warehouse management systems (WMS) and warehouse control systems (WCS) can be significant. Simply put, a WMS plans a weekly activity forecast based on such factors as statistics and trends, whereas a WCS acts like a floor supervisor, working in real time to get the job done by the most effective means. For instance, a WMS can tell the system it is going to need five of
stock-keeping unit (SKU) A and five of SKU B hours in advance, but by the time it acts, other considerations may have come into play or there could be a logjam on a conveyor. A WCS can prevent that problem by working in real time and adapting to the situation by making a last-minute decision based on current activity and operational status. Working
synergistically, WMS and WCS can resolve these issues and
maximize efficiency for companies that rely on the effective operation of their warehouse or distribution center.
[2]Logistics outsourcing
Logistics outsourcing involves a relationship between a company and an LSP which, compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, is characterized by a long-term orientation, and, thus, has a rather strategic nature.
[3] Third-party logistics
Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself.
[4] According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in-house. If, for example, a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries.
Fourth-party logistics
The concept of Fourth-Party Logistics (4PL) provider was first defined by Andersen Consulting (Now Accenture) as an integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third party logistics (3PL) service provider targets a function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor who manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer.
Emergency logistics
Emergency logistics is a term used by the logistics, supply chain and manufacturing industries to denote specific time critical modes of transport used to move goods or objects rapidly in the event of an emergency.
[ The reason for enlisting emergency logistics services could be a production delay or anticipated production delay, or it could be that specialist equipment is needed urgently to prevent instances such as aircraft being grounded (also known as "aircraft on ground"--AOG), ships being delayed, or telecommunications failure. Emergency logistics services are typically sourced from a specialist provider.
As a profession
A
logistician is a
professional logistics practitioner. Professional logisticians are often certified by professional associations. One can either work in a pure logistics company such as
shipping line,
airport or
freight forwarder or within the logistics department of a company. However, as mentioned previously, logistics is a very broad field encompassing procurement, production, distribution and disposal activities. Hence, the career perspectives are very broad also. A new trend in the industry are the 4PL, or Fourth-party logistics - consulting companies offering logistics services. They hire students with a BA or MA in International Logistics.
Some universities and academic institutions train students as logisticians, offering undergraduate and postgraduate programs.
- Cargo
- Document automation in supply chain management & logistics
- Inventory
- Inventory management software
- Performance-based logistics
- Returns management system
- Reverse logistics
- Sales territory
- Supply chain management
