Logistics chain

From CEOpedia | Management online

Logistics chain provides technological connection of storage and shipment points, during transport of goods. The logistics chain can be defined as a logistics network extending between the markets of supply and sales of finished goods. More specifically, between: manufacturers, suppliers, trade links, logistics services providers and final customers. It involves close cooperation of companies, suppliers, customers and other chain units, enables smooth movement of not only goods, but also the information and financial resources.

Basic processes in logistics chain

The various actions within the framework of the functioning of the logistics chain is one stage of the whole process of movement of goods and services from the producer to the consumer. All operations and processes involving procurement and inventory between individual links of this chain are organizationally and financially consistent. In the logistics chain, we can distinguish several basic processes:

Types of links in logistics chain

Logistics chains, differ in the level of complexity and structure (e.g. parallel, serial, and branching), however, we can distinguish four main types of links in any supply chain:

  • link (source) for procurement of raw materials,
  • links for transportation and supply of raw materials - brokers, sales agents for raw materials and semi-finished products,
  • link of manufacture of finished products,
  • distribution link - for delivery of finished products to the client.

See also:

Examples of Logistics chain

  • The most common example of a logistics chain is the supply chain of a company. This includes all the steps involved in taking a product from raw materials to the finished product, and then delivering it to the customer. Each step in the chain requires careful management of resources, transportation, and communication.
  • Another example of a logistics chain is the global supply chain of a manufacturing company. This involves the coordination of multiple activities around the world, including sourcing, production, distribution, and customer service. This requires a high level of coordination and communication between the different parts of the chain to ensure the delivery of the products on time.
  • A third example of a logistics chain is the food supply chain. This includes the whole process of sourcing and delivering food from farmers, processors, distributors and retailers, to customers. This chain involves a complex network of businesses, from food production to distribution and retailing. It also involves a number of different strategies such as cold chain logistics, which is the process of keeping food at a specific temperature to ensure its freshness.

Advantages of Logistics chain

Logistics chain provides many advantages for businesses and customers, such as:

  • Improved customer service - Logistics chain allows for streamlined and efficient delivery of goods and services to customers, resulting in higher satisfaction and fewer delays.
  • Reduced costs - Logistics chain improves visibility and communication between all of the players in the supply chain, allowing for more efficient processes, resulting in cost savings.
  • Increased efficiency - Logistics chain allows organizations to better manage their inventory and stock levels, resulting in fewer delays and improved customer service.
  • Improved visibility - Logistics chain provides visibility into the entire supply chain, allowing organizations to have better control over the flow of goods and services.
  • Increased flexibility - Logistics chain enables organizations to respond quickly to customer needs and changing customer preferences, resulting in better customer satisfaction.

Limitations of Logistics chain

The limitations of Logistics chain can be divided into three categories: cost, complexity and control.

  • Cost: Logistics chain requires significant investments in order to be effective. This means that there is a risk of increased costs, due to the complexity of the system and the need to integrate different actors in the chain.
  • Complexity: Logistics chain is often very complex and can be difficult to manage. This complexity can cause delays and inefficiencies in the chain, as well as making it difficult to monitor.
  • Control: Logistics chain can also be difficult to control, as each actor in the chain has their own interests and agendas. This can lead to a lack of coordination and communication between the different actors in the chain, which can cause problems.

Other approaches related to Logistics chain

  • An integrated approach - This approach involves the integration of the chain activities and processes to ensure the most efficient and cost-effective manner in which resources are used. This approach requires an understanding of the business processes, customer requirements, and the complexity of the supply chain.
  • Lean logistics - This approach is focused on streamlining processes to improve speed and reduce costs while ensuring quality. This includes processes such as inventory management, order fulfillment, delivery, and returns.
  • Green logistics - This approach takes into account the environmental impact of the supply chain and seeks to reduce or eliminate negative environmental impacts. This includes the use of alternative fuels, reducing packaging waste, and incorporating sustainable practices.
  • Reverse logistics - This approach focuses on the management of returns and other activities related to the disposal of products. This includes the management of returns, repairs, and recycling of products.

In summary, logistics chain involves close cooperation of companies, suppliers, customers and other chain units, enables smooth movement of not only goods, but also the information and financial resources. The other approaches related to logistics chain include an integrated approach, lean logistics, green logistics, and reverse logistics. These approaches focus on different aspects of the supply chain such as streamlining processes, reducing environmental impacts, and managing returns.


Logistics chain — recommended articles
Material stream — Supply logistics subsystem — Added value (logistics) — Global supply chains — Coordinative function of logistics — Contract logistics — Production logistics subsystem — Principles of Supply Chain Management — Integrative function of logistics

References

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