Business logistics

Business Logistics corresponds to the science that studies the management of all materials and the corresponding flow of information, starting from suppliers and arriving at the end consumer. Hence, all materials entering the warehouse, as input, to leaving, as output .

This discipline, which is the basis of any business process, was developed and started to be studied late, because its importance was not immediately understood. Therefore, although it is not easy to give a definition to this discipline, there is always some confusion when it comes to business logistics.

Nowadays, Business Logistics is gaining more and more importance, thanks to the introduction of many concepts related to the introduction of value creation, or even real global value chains.

As already mentioned, in an international context such as the modern, contemporary one, business logistics is becoming increasingly important, but above all, in such a context, the flow of information and resources in and out, thus exchanged between the various companies or countries, is considerably greater. This is why, at this time, we have come to speak of Global Value Chains, real chains on a global scale. The management of such a process, i.e. the management of information and resources, is essential and vital for any business entity, because it guarantees organisation and solid structure.

However, the term was coined around the mid-1900s and was mainly used for military procurement, but even in this context it referred to the flow of information and resources, in a certain sense. It was only later, however, that it also began to have significance in a climate of 'peace' .

Inbound and Outbound activities

There are two main macro-groups of activities that make up this major subject, namely Inbound Activities and Outbound Activities .

• Inbound

This macro group refers to all those activities that in some way converge within the company and thus allow materials, resources, goods, to enter the company. According to the article, therefore, this macro group includes the following phases: order, order receipt, transport and management of resources, goods, which are entering the company. Inbound activities are a challenge for the company in terms of cost and time. Indeed, the company aims to keep its warehouse in line with the company's needs, thus more efficient, but this is not always obvious due to high costs or long waiting times for receipt, thus delays.

• Outbound

This macro group, on the other hand, focuses on the exit of goods, resources, final output, from the warehouse and to the final customer. This macro group includes all the stages of product dispatch from the in-house warehouse, so it is mainly concerned with packaging, delivery to the customer and with assistance during delivery, for any problems, for example. All these activities, in a way, reflect on the final profit because the satisfaction of the end customer, the one who generates profit, also depends on it.

Evolution over the years

As already mentioned, logistics was initially used and thought of solely in military terms, despite the fact that its purpose was actually more or less the same, but then it underwent an evolution, especially in terms of context.

This is probably because the economic and competitive advantage of organising the management of inbound and outbound logistics was realised. In any case, in the first phase of its application, logistics was fragmented within the company into several strategic areas (marketing, finance, production), this because understanding of the subject was low and initially this was considered the best way to reduce costs. Subsequently, however, logistics was thought of as a real strategic area, useful for reducing total costs, and therefore with strategic significance. This took shape around 1960/1970 when the physical distribution of materials was officially born, under the strategic attention of top management .

Actually, the first to be invented were the outbound logistics activities, i.e. the activities that get the output to the consumer. However, shortly thereafter, inbound activities also took shape and grew in importance. Now, in the present, Business Logistics, has considerable importance within the company, for several reasons. First of all, we can consider it as a real internal strategic area that takes care of the supply chain in its entirety, thus up to the delivery to the customer. Furthermore, it is a good tool that even today promotes internal coordination, thus a considerable organisation of resources, the continuous integration of the structure and the continuous building of new relationships in the market of interest. Thanks to these relationships, in a market, not only will there be a flow of matter, but also a non-tangible flow, namely that of information, which is vital for businesses .

From now on, business logistics will continue to grow and gain in importance, mainly because we look at this matter in a much broader context: the international context. And furthermore, with constant technological advancement, and, as already mentioned, internationalisation, business logistics will acquire an even more important role in relationship management .

Future of Business Logistics

Now, the challenge of the future is to automize all processes, according to Matthias Klumpp, and create the right combination of human and machine skills. In some regions of the world, education still remains a problem, so the world continues to be poor in providing qualified personnel. However, it is important to check first whether this relationship in a similar context, in business logistics, can exist. Otherwise there is a risk of further failure .

As previously mentioned, in such a complex context, such as the international context in which the logistics business is placed, the skills required also become increasingly complex. Even the 'international Journal of Physical Distribution' is documenting the constant interest of an increasing number of companies interested in more efficient distribution channels. The problem probably arises more in European states than in the US. This is because we are more accustomed to the concept of import and export. Although historical facts prove otherwise, such as the case in 1970 when, according to the book 'Business Logistics', US invested some $12 billion in foreign operations .

In any case, business logistics is becoming more and more challenging due to the increasingly international environment. Tasks and activities that were not important in the past will become very important. In fact, distribution will have to be planned in various aspects: taxation, resistant packaging, reciprocal agreements. Thus, company logistics will probably become a crucial aspect of international logistics.

Author: Samuele Cannistrà

Footnotes

Business logistics — recommended articles

Internationalization — International division of labor — Global interdependence — Outsourcing — Logistics — Open innovation — Barriers to entry — Just in time manufacturing — Alfred Sloan

References

• Ballou H. R., (2007), The evolution and future of logistics and supply chain management, European Business Review, Vol. 19, No. 4.
• Jenkins A., (2020), Guide to Inbound and Outbound Logistics: Processes, Differences and How to Optimize.
• Klumpp M., (2017), Automation and artificial intelligence in business logistics systems: human reactions and collaboration requirements, International Journal of Logistics, Vol.21, Issue 3.
• Kukovič D., Topolšek D., Rosi B., Jereb B., (2014), A comparative literature analysis of definition for logistics: Between general definition and definition of subcategories, Business Logistics in Modern Management, 14th International Scientific Conference.
• van Buijtenen P., Christopher M., Wills G., (2012), Business Logistics, Springer Science & Business Media.