Logistics

Logistics -(from The Greek "logos", means: word, reason, bill) - is the process of planning and controlling activities aimed at cost-effective flow and storage of raw materials, inventory, finished goods and related information from point of origin to the place of consumption in order to meet customer needs.

The purpose of logistics is to provide appropriate goods for the right customer in the right quantity that should be delivered at the right time and the right place. Customers expect goods in excellent condition at the lowest possible price.

History

The beginning of logistics is closely linked with the history of the army because the military needs constant supplies. The first inventor of the logistic system was Alexander The Great whose army consisted largely of cavalry. A slave on a horse was being assigned to the cavalry who led a horse with supplies. Infantry that was also a big part of his army had a slave with a horse with supplies.

The first information about the use of logistics in warfare was found in the annals of the Byzantine Empire. Emperor Leo VI in his work: " The aggregate liner art of war " distinguished next to strategy and tactics, the third study war - logistics. According to him the task of logistics was taking care of regular payments of soldiers, adequate equipment, facilities and preparing soldiers for battle.

In feudal Europe, sign of logistic activities was the use of standardized uniforms and weapons. As a result, it lowered the costs of equipping the army and reduced the problem of supply.

Modern understanding of the logistics refers to issued in 1837 by AH Jominiego's work: "Outline of the art of war ". He described the logistics as a practical art movement the army, which also includes the continuous supply, and engineering. Milestone in the history of logistics was the Second World War. At that time, the U.S. Defense Department established a special teams whose task was to develop mathematical models of planning and their application in solving the supply problems of the U.S. Army that established the foundations of mathematical science of planning, known today as operational research, as well as the economic discipline - logistics (FJ Beier, 2004, p 15).

The use of logistics for civilian purposes was in 1956 after the publication of results of research on the interdependence of air transport costs and maintenance costs of inventories in the distribution of goods. It turned out that the high cost of air transport should not be the sole determinant of its use. Much more important for the company are the total costs of transportation and inventory management. Thanks to this research, many companies began to see a way of reducing logistic costs.

Today logistics is a very broad concept. It consists of network management vendors, storage of products or chain customers. The advent of cheap digital technology, logistics system management has become easier. Within a few seconds, you can now find the right merchandise, from hundreds or even thousands of others, and read its features such as quantity, price or place of origin.

Definition of Logistics

According to the Council of Logistics Management - "Logistics is a term that describes the process of planning, implementing and controlling the efficient and cost-effective flow of raw materials, materials for the production, finished products and relevant information from point of origin to point of consumption in order to meet customer requirements." (F. J. Beier, 2004, p 16)

According to S. Krawczyk - "Logistics covers the planning, coordination and control of the course in terms of both time and space, in real processes in which the implementation, the organization is a member in order to effectively achieve the objectives of the organization. " (S. Krawczyk, 2000, p 33)

According to S. Kummer and J. Weber - "Logistics is the concept of process management and the potential for coordinating the implementation of commodity flows across the enterprise and the relationships between its market partners. " (F. J. Beier, 2004, p 21)

Distribution of functional logistics

The most common logistics division is the division of functions due to the logistics of supply, logistics, manufacturing, logistics, distribution.

• Supply logistics subsystem - refers to providers whose main purpose is to provide goods at the right time, quantity and quality in accordance with the needs of the recipient.
• Production logistics subsystem connects procurement logistics and distribution logistics covers all activities related to the supply of raw materials and semi-finished materials and their passage through all stages of production, up to the warehouse.
• Distribution logistics subsystem - is the flow of products from the manufacturer to the final purchaser.

See also:

• Functions of logistics

Examples of Logistics

• Transportation: This is the movement of goods from one location to another. This includes air, land, and sea transportation, with various methods ranging from track, rail, road, pipeline, and air freight.
• Warehousing: This is the storage of goods at a designated facility. This can include both short-term storage and long-term warehousing. Warehousing can include organizing and storing materials, maintaining inventory, and facilitating order fulfillment.
• Inventory Management: This involves tracking and controlling the flow of goods, from the point of origin to the point of consumption. This includes monitoring stock levels, managing stock turns, and ensuring the right inventory is available at the right time.
• Order Fulfillment: This is the process of packaging, labeling, and delivering goods to customers. This includes managing customer orders, preparing items for delivery, and overseeing deliveries.
• Supply Chain Management: This is the process of planning and controlling the movement of materials from the supplier to the customer. This includes managing the flow of materials, overseeing the production process, and ensuring the delivery of goods on time and within budget.

Advantages of Logistics

Logistics plays a key role in business operations, as it has the potential to provide companies with a great deal of advantages. Below is a list of the most common advantages of logistics:

• Increased Efficiency: Logistics helps to ensure that all activities related to the production and delivery of goods and services are coordinated efficiently, resulting in a reduction of wasteful activities and an increase in productivity.
• Improved Customer Service: Logistics can help to reduce lead times, increase accuracy and reliability, and improve customer service. By providing customers with the right product, at the right time and the right place, businesses are able to increase customer satisfaction and loyalty.
• Reduced Costs: Logistics allows businesses to optimize the process of shipping and receiving goods, resulting in lower costs associated with transportation and warehousing. Additionally, by streamlining processes, companies can realize further cost savings.
• Improved Visibility: Logistics helps businesses to monitor their supply chain more effectively, allowing them to gain a better understanding of their inventory levels, delivery times, and customer demands. This can help businesses to make more informed decisions regarding their operations.
• Increased Security: Logistics helps to ensure that goods are delivered safely and securely, reducing the risk of theft or damage. This is especially important when dealing with sensitive or perishable goods.

Limitations of Logistics

Logistics is a powerful tool that can help organizations streamline their supply chain operations, but it is not without its limitations. The following are some of the major limitations of logistics:

• High Cost: Logistics can be expensive, as it involves significant investment in storage facilities, transportation, and personnel. Companies may need to use outsourcing to reduce costs, but this can be a risk if the outsourced company does not provide the same level of quality.
• Complexity: Logistics can be complicated, as it involves managing multiple suppliers, inventory, and transportation routes. This complexity requires significant resources and time to manage.
• Time Constraints: Logistics is time-sensitive, and delays can have a major impact on the supply chain. Companies must manage inventory levels, transportation routes, and customer needs to ensure timely delivery.
• Environmental Impact: Logistics can have a significant environmental impact. Companies must consider their impact on the environment when choosing transportation routes and modes of transport.

Other approaches related to Logistics

In addition to planning and controlling activities, Logistics also involves other approaches such as:

• Transportation - this involves the movement of goods from one point to another, and can be done by air, water, road, or rail.
• Warehousing - this involves the storage of goods in a designated area, and can include the use of pallets, racks, and other storage systems.
• Inventory Management - this involves the tracking of goods and their associated information, such as quantity, size, weight, and other characteristics.
• Order Fulfillment - this involves the processing of customer orders and the delivery of goods to the customer.

These approaches are all important for a successful logistics operation, as they enable the efficient and cost-effective flow of materials and information from point of origin to the place of consumption.

Logistics — recommended articles

Procurement logistics — Distribution logistics subsystem — Added value (logistics) — Contract logistics — Logistic center — Principles of Supply Chain Management — Optimization of transport — Logistic process — Material stream

References

• Christopher, M. (1998). Logistics and supply chain management: Strategies for reducing cost and improving service.
• Lambert, D. M., Stock, J. R., & Ellram, L. M. (1998). Fundamentals of logistics management. McGraw-Hill/Irwin.
• Stock, J. R., & Lambert, D. M. (2001). Strategic logistics management (Vol. 4). Boston, MA: McGraw-Hill/Irwin.

Author: Bartłomiej Maruszak, Marek Dziuba