Logistics is defined as the complete process involved in managing the transportation of material from its first source to the final source. Logistics include three important aspects i.e., supply, management of materials, and their marketing. It involves the movement of things between the point of source and the point of utilization for meeting the demands of consumers and organizations.

The means which are managed in logistics may include physical goods like equipment, materials, supplies of food, and other consumable articles. It involves the processes like planning, implementing, monitoring, controlling, directing the supply of materials from the origin to the ultimate consumer. New Oxford American Dictionary defines logistics as “the detailed coordination of a complex operation involving many people, supplies or facilities”.

It is very difficult for marketing and management activities to successfully function without the help of logistics. Logistics constitute both physical supply and physical distribution. Supply chain management is another term used for physical distribution. Some examples of logistics are Inbound conveyance, outbound conveyance, fleet control, warehousing, materials handling, order fulfillment, inventory management, demand planning, etc. There are 7 R’s of logistics, they are- getting the right product, in the right condition, at the right place, at the right time, to the right customer, and at the right price.

Some organizations choose to hire services of freight carriers and third-party service providers logistics are trending today due to plenty of its benefits. The largest third-party service provider in the world is DHL Supply chain and global forwarding headquarters in Germany.

Types of logistics

Inbound logistics- it comprises all the activities related to managing and arranging raw materials from supplier to the manufacture or producer of goods.

Outbound logistics- it includes all the processes followed in safe keeping and transferring the final product from the manufacture to the final user.

Domestic logistics- when the management, control of raw materials, finished products etc. and storage take place within the country. it is known as domestic logistics.

International logistics- when the management, control and storage of resources takes place outside the border of the country.

Objectives of Logistics

Well-equipped and properly managed logistics aims in accomplishing many key objectives. They are- stock reduction, timely delivery, minimizing costs, reduce the damage of goods, economical shipment, avoiding wastage, augmentation of sales, etc.

The topmost priority of logistics management should be to increase the efficiency for all types of logistics. Increasing efficiency may provide for optimum utilization of resources and even reduces the cost of operations. For logistics management, customer satisfaction is very crucial. If good quality services are provided at required time. It will increase the confidence of customers. The business of logistics will improve. So, the rapid response policy must be adopted, to satisfy the needs of customers.

Mishaps can take place. Right strategy must be followed to tackle them wisely. Damages of products, machinery breakdown etc. must not stop the process midway. To prevent such risks, safety stock must be kept in the inventory to deal with such unexpected happenings.

Logistic management aims for many other significant aspects like the foremost is the improvement of quality. They aim for the reduction of expenses but not at the cost of quality. As they will lose their customers to the rivals. They also work in the direction to reduce transportation costs. These costs depend upon the size and kind of shipment, the distance involved, and the mode of transfer. The bigger the order and farthest the distance, the lesser will be the per-unit costs.

Supply chain is a wider term than logistics

Logistics comprises all the planning involved in the movement of products from one source to another. On the other hand, Supply chain management is the coordination between various processes. it helps in forming linkages for achievements of objectives at low cost and at the same time provides satisfaction to the consumers. The Centre of attraction to supply chain management is efficiently governing the relationships involved in processes.

The focus of supply chain management is a competitive advantage. Logistics is a part of supply chain management. It is an activity taking place within the supply chain. Supply chain management is an alliance between firms to connect with suppliers, customers, etc. for the combined benefit of all. It involves all the strategic decisions. It comprises of the collective efforts of everyone involved in the supply chain including supplier, manufacture, retailer, whole seller etc.

Stages in Logistics Management

• Information/network design- All the information that is required for building a network design comes in this stage. Facilities to be used, amount and number of sales. Such information must be known to go ahead in further stages.
• Transport- It is an important stage in logistics management. In this stage, things to be considered include the type of transport to be used for different value and weighted products. The goods can be transported by air, water, and land means of transport. Air means can be used for transferring light-weighted and valuable goods within no time. Railway means can be used for the movement of heavy, bulky goods for long-distance. Land means can be used to transport medium bulky goods at short distance etc.
• Warehouse- It is a place for the safekeeping of raw materials or finished goods. Various things to be kept in mind before setting a warehouse are the place of the warehouse, its location, its size i.e., how big, or small according to requirements. Various other amenities required for the safekeeping of products i.e., lightning, the temperature of the room is suitable for the products or not, etc.
• Procurement- the most important stage in logistics is to gather raw materials, semi-produced goods or work in progress materials or final products. Various steps are involved in procurement of goods.
• Package/label- for a product most important stage is its packaging. It should be easy to carry, it should be properly labelled. The label includes the brand name, symbol which helps the customers to connect with the manufacture. The label provides many kinds of information like price of the product, material used for production, name, place of manufacture etc.
• Stock Management- other important stages in logistics is the management of stock. Safety stock must be available to deal with unforeseen events. Stock should be purchased according to the demands of the customers. Wastage should be avoided, that can happen by building limited inventory.
• Order Processing- the last and final stage is the processing of orders. The orders must be timely processed, to fulfill the goals of customers. It will help in building customers loyalty.

Adding value to organizations

Logistics can help add value to the organization in many ways. Every business wants to grow and expand its operations in their home country and going global. This can happen by fulfilling demands of the customers constantly to be in a better position than rivals. Logistics help in reduction of overall costs. They even provide a warehouse to store goods according to the requirements of the organization. They help in providing good quality products at low costs to the customers. It helps in avoiding wastage and reducing the costs and time in expanding the organization. It provides easy availability of materials to manufactures and producers. It manages movement of information and materials for the combined benefit of organization and consumers. It even provides various utilities to organization like form utility, place utility, time utility and possession utility.

Frequently Asked Questions

How can logistics be described?

Logistics can be described as the process of managing transfer of materials and information. it includes acquisition, storage, transportation of goods whether finished or not. It was earlier used to describe the military movement of goods i.e., military logistics but now it is globally used in many fields other than military.

How logistics affect supply chain management?

A supply chain management cannot function without transport facility. Due to this reason, logistics is an important factor in supply chain management. It has a positive effect on supply chain management. Logistics help in fulfilling the flow of materials in a quick span of time, at low costs and at the same time aids in avoiding wastages.

How it adds value to the organization?

It helps in adding value to the organization with help of various utilities. It provides a wider market and helps in making available products of good quality and helps in reduction of operations cost. It tends to take better advantage of various locations.

Reference

[i] The Institute of Company Secretaries of India, International Business-Laws and Practices, (2014)

[ii] Ibid

[iii] Ibid

[iv] Ibid

[v] Scmwizard.com

[vi] Txemainlogisticsworld.wordpress.com

[vii] Michiganuniversityonline.com

[viii] The Institute of Company Secretaries of India, International Business-Laws and Practices, (2014)

[ix] Jayeshlogistics.com