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What Logistics Really Means

        posted by , May 03, 2013

There's a thin line between business efficiency and business chaos. That line is called logistics.

Logistics is the management of resource flows from source to use.

Logistics has been around for thousands of years. Ancient armies that operated far from home for months at a time needed to move resources efficiently to feed and equip their troops. Logistics strategies and techniques evolved out of this need.

Today, logistics continues to evolve driven by intense competition, global supply chains and sustainability goals.

Definition: Logistics

Logistics is the discipline of managing the flow of resources from source to use. Logistics may include the planning and control of procurement, material handling, production, packaging, transportation, sustainability, inventory, warehousing and security.

How To Get Ahead in Logistics Management

Logistics has its own physics. Get these factors right and you'll achieve competitive advantages.

  • Time
    Get it there at the right time. The goal is not too early, not too late.

  • Place
    Get it to the right place.

  • Amount
    Get it there in just the right amount. The goal is to keep inventories as low as possible.

  • Cost
    Minimize costs.

  • Sustainability
    Prioritize people and communities and minimize environmental harm.

Types of Logistics

Logistics has several flavors:

  • Inbound Logistics & Procurement Logistics
    Supplying your needs. This may include processes such as developing purchasing requirements, market research, supplier selection, supplier management, purchasing and purchase controlling.

  • Outbound Logistics & Distribution Logistics
    Order processing and delivery of your products and services to customers.

  • Production Logistics
    Logistics related to the production of goods and services such as manufacturing logistics.

  • Reverse Logistics
    Returning items from customer to producer.

  • Green Logistics
    Logistics that aim to reduce energy consumption and waste to achieve sustainability targets.

  • Emergency Logistics
    Emergency logistics are special processes for time sensitive needs. For example, if critical equipment breaks down on a production line the parts required to fix it must be secured quickly.

Examples of Logistics

The following examples illustrate logistical business needs.

  • Local Supply
    A grocery chain needs a supply of local corn for the annual corn season.

  • Production Planning
    An electronics manufacturer in San Fransisco is designing a new device. As part of planning the manufacturer needs to work with 47 suppliers in 6 countries to plan logistics.

  • Emergency Logistics
    A $291 million dollar Boeing 777 is grounded in Kuala Lumpur due to a maintenance issue leading to canceled flights. Every hour the aircraft is idle costs the airline money and damages customer relationships. Maintenance needs a part that's not available locally.

  • Green Logistics
    A retailer has committed to dramatically reducing its carbon footprint. It looks to its logistics teams for solutions.

  • Reverse Logistics
    A customer orders earphones online. When they arrive they're broken. She calls the company and asks to return them.

  • Outbound Logistics
    A shoe manufacturer needs to get 1900 orders to 490 customers in 22 countries this week.

  • Mass Customization
    A car manufacturer offers custom packages that must be manufactured and delivered to the 48 contiguous states of the United States within 2 weeks.

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