Introduction to Logistics

 

Origin of Logistics

          Logistics refers the movement of products or services to a designated location at an agreed upon time, cost and condition. Ancient Roman and Greek wars are the basis for today’s logistics systems. Rome developed a highly efficient logistic system to supply its legions. Military officers called “logistikas” were responsible for ensuring the supply and allocation of resources, so that soldiers could move forward efficiently.

During the Middle Ages elaborate supply systems, roads and warehouses were used. Forts and castles became storage depots supported by the economy of the surrounding countryside. During the Industrial Revolution, logistics advanced greatly with the addition of railways and ships.

After World War II, logistics moved from warfare to business. Physical distribution of products began with a focus on outbound activity. Filling orders, distribution of products, storage and warehousing, production planning and customer service are presently important aspects of the logistics process.

An entire industry was born from what started as a way to get products from point A to point B. Many companies now rely on outsourcing for some or all of their supply chain management activities, resulting in the development of third party logistics companies for efficient transport and tracking of goods.

Definition of Logistics

"Logistics is the process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements and includes inbound, outbound, internal and external movements."

Functions of Logistics

Logistics is a process of movement of goods across the supply chain of a company. However, this process consists of various functions that have to be properly managed to bring effectiveness and efficiency to the supply chain of the organization.

Logistics activities or Functions of Logistics

1) Order processing.

2) Materials handling.

3) Warehousing.

4) Inventory control.

5) Transportation.

6) Packaging. 

Scope of Logistics

      Network Design: Network Design is one of the prime function performed by process of logistic management. Logistic manager properly designs a network that denotes the number and location of production plants, storage houses, equipment for handling of materials.

•       Procurement: Logistics management monitor the procurement of required materials and equipment for supporting manufacturing process of organization. It identifies supply sources, places order, manages inbound transportation, collect, inspect and store materials. All required raw materials of right quality are provided at right time at a minimum cost.

•       Material Handling: Logistics management involves proper handling of all materials within organization like raw-materials, equipment’s, semi-finished and final goods. They need to be properly handled within and outside the manufacturing plant, storage house and transportation terminal. Managers need to ensure that there are no losses arising out of breakage, spoilage etc.

•       Order Processing: Processing of consumer order is an important aspect of logistics management. It ensures that all order are timely processes and performs various operations like receiving, handling and recoding of consumer orders. Logistics management process focuses on reducing the time gap in between the order receipt and dispatch of consignment.

•       Inventory Management: Logistics managers manages all the inventories of materials in right way. Proper amount of inventory is maintained at every point of time to facilitation uninterrupted production and regular supply of goods to consumers. Efforts are made to avoid any blockage of working capital in inventory. Overstocking and understocking of inventory is prevented and an optimum amount is always maintained.

•       Packaging: Packaging and labelling are very important in logistics management. Packaging involves encasing products in proper packets for its safety and convenient handling. It makes product attractive and facilitate its sales. Labelling is a process of giving identification marks to product and defines its packaging and expiry date, ingredients, price, weight or size of product and instruction for proper handling.

•       Warehousing: It is a logistical operation which aims at creating time utility by safe storage of products from the time in-between production point to consumption point. Logistic managers properly decide number and location of all warehouses to be established by company for proper storage of its products.

•       Transportation: Transportation is a logistical activity which refers to movement of goods within and outside the organization. It creates time utility by delivering goods at right time and in right order. Railways, roadways, waterways, airways and pipeline are major sources of transportation used. Logisticians choose a right source of transportation by analyzing them in terms of their cost, speed, reliability, safety and no of its locations. 

Objectives of  Logistics

•       Increased efficiency: Logistics management aims at increasing the overall efficiency of organization. It fastens all inbound and outbound logistics activities to accomplish the project within the stipulated time. Best quality materials are acquired at lowest possible cost and utilize efficiently with minimum wastage. Logistic managers monitor all operations and avoids any overheads which enhance the overall efficiency.

•       Reliable and consistent delivery performance: Process of logistics management focuses on providing on-time delivery to customers for building their confidence level. Transport mode is selected through proper planning and required materials are transported rapidly to production plant for timely completion of project. Faster Delivery of goods at right place to consumer will enhance their satisfaction.

•       Minimum product damage: Products damage adds cost to logistical expenses and have adverse effect on overall profitability. Logistic managers ensure that products are properly encased in suitable packages which impart them safety, properly handled and use of load unitization. Proper monitoring of all product movements by managers will minimize product damages.

•       Reduce transportation cost: Logistic management process focuses on reducing the freight charges which bring down the logistical cost. Managers tries to lower the transportation expenses by choosing efficient transportation source, planning of shortest route, freight consolidation and load unitizing.

•       Quick response: It reflects the capability of firms to serve its customers in proper manner timely. There should be a strong communication process which enables customers to easily give their orders and report their issues. Companies by implementing latest technology in information processing system will improve their decision making capability. It would make them flexible enough to fulfill their consumer needs in great volumes in proper time.

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