What is Logistics

 

In simple words Logistics means having the right thing, at the right place, at the right time. It is a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today’s business environment. The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.” Note that this definition includes inbound, outbound, internal, and external movements, and return of materials for environmental purposes.

In the terms  of business , it can be summarized as a competitive strategy adapted by the enterprise to meet and exceed the expectations of its existing and prospective customers. It refers to a complete process of total supply chain management that is established to achieve a state of perfection through efficiency and integration. Logistics does not mean a single work activity but refers to a group of activities performed to attain the goal of a business enterprise that is maximizing the Profits. This may involve steps like purchasing, planning, coordination, transportation, warehousing, distribution and customer service. A business can run without profits, but it needs money to fund its services, pay its employees and grow its customer base. Logistics play an important part in the present business world; it cannot be neglected by an enterprise focused on growth and profitability.

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.

There are different fields of Logistics which can be categorized as follows:

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.

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