Basics of Logistics

Study Notes

Logistics has evolved since the late 1940s. Initially, military use was primary, but recognized as a critical tool for enhancing competitiveness in the 1950s & 60s, it expanded beyond the army.
Competitive advantage for companies is linked to delivering a product or service where customers perceive value at a lower cost, leading to greater profits.
Logistics is crucial for getting products to customers when needed, enabling economic activity and trade.

The Council of Logistics Management defines logistics as the part of supply chain management that handles the efficient flow of goods, services, and information from the point of origin to the point of consumption, adapting to customer needs.
Logistics facilitates the efficient delivery of products and services to customers. It supports economic transactions, driving trade and commerce.

Logistics management is a vital component that maintains and coordinates the supply chain.

Factors contributing to the increased importance of logistics include a reduction in economic regulation, changing consumer behavior, technological advancements, increased retailer power, and globalization of trade.

Key objectives include cost reduction, economies of scale, ensuring delivery reliability and consistency, minimizing product damage, and providing quicker and faster responses.

Right product, right customer, right quantity, right condition, right place, right time, and right cost—all crucial for effective logistics.

Logistics activities encompass all processes from procuring raw materials to delivering products. Key activities include customer service, facility location decisions, inventory management, order management, procurement, transportation, demand forecasting, international logistics, materials handling, packaging, reverse logistics, and warehousing management.

A supply chain encompasses the network of companies involved in delivering a product/service to the market.
Logistics within a supply chain focuses on the physical movement and storage of items.

A supply chain is the network of companies, while logistics is the set of activities focused on the physical aspects of movement and storage within the supply chain.

Inbound logistics (upstream) involves operations before manufacturing, encompassing raw material & component movement from suppliers.
Process logistics deals with the operations directly related to transforming raw materials into finished goods (includes storage and movement within manufacturing facilities).
Outbound logistics (downstream) involves operations after the production process, encompassing warehousing, transportation, and finished goods inventory management. This step directly services the end customer.

Logisticians need to be both generalists, understanding the wider business context, and specialists, with in-depth knowledge of specific logistics activities.
Typical logistics-related jobs include: logistics analyst, consultant, logistics specialist/manager, supply chain coordinator/manager, customer service manager, procurement manager, transportation manager, warehouse operations manager, and production planning manager.

Professional logistics organizations include APICS, AST&L, CSCMP, Delta Nu Alpha, SOLE, SCL, and CILT (UK). There is also a Warehousing Education and Research Council (WERC).