Logistics

Logistics

Overview
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory
Inventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...

, warehousing, material handling
Materials management
Materials management can deal with campus planning and building design for the movement of materials, or with logistics that deal with the tangible components of a supply chain...

, and packaging, and often security
Security
Security is the degree of protection against danger, damage, loss, and crime. Security as a form of protection are structures and processes that provide or improve security as a condition. The Institute for Security and Open Methodologies in the OSSTMM 3 defines security as "a form of protection...

. Logistics is a channel of the supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...

 which adds the value of time and place utility. Today the complexity of production logistics can be modeled, analyzed, visualized and optimized by plant simulation software, but is constantly changing.
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Encyclopedia
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory
Inventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...

, warehousing, material handling
Materials management
Materials management can deal with campus planning and building design for the movement of materials, or with logistics that deal with the tangible components of a supply chain...

, and packaging, and often security
Security
Security is the degree of protection against danger, damage, loss, and crime. Security as a form of protection are structures and processes that provide or improve security as a condition. The Institute for Security and Open Methodologies in the OSSTMM 3 defines security as "a form of protection...

. Logistics is a channel of the supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...

 which adds the value of time and place utility. Today the complexity of production logistics can be modeled, analyzed, visualized and optimized by plant simulation software, but is constantly changing. This can involve anything from consumer goods such as food, to IT materials, to aerospace and defense equipment.

Origins and definition


The term logistics comes from the Greek logos (λόγος), meaning "speech, reason, ratio, rationality, language, phrase", and more specifically from the Greek word logistiki (λογιστική), meaning accounting and financial organization.

Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek
Greek Empire
-Classical Greece:* Athenian Empire* Macedonian Empire-Hellenistic civilization:In the Hellenistic period, Greek Empire can refer to any individual successor state of the Diadochi:* Seleucid dynasty* Antigonid dynasty* Ptolemaic dynasty-Middle Ages:...

, Roman
Roman Empire
The Roman Empire was the post-Republican period of the ancient Roman civilization, characterised by an autocratic form of government and large territorial holdings in Europe and around the Mediterranean....

 and Byzantine empires
Byzantine Empire
The Byzantine Empire was the Eastern Roman Empire during the periods of Late Antiquity and the Middle Ages, centred on the capital of Constantinople. Known simply as the Roman Empire or Romania to its inhabitants and neighbours, the Empire was the direct continuation of the Ancient Roman State...

, military officers with the title Logistikas were responsible for financial and supply distribution matters.

The Oxford English Dictionary
Oxford English Dictionary
The Oxford English Dictionary , published by the Oxford University Press, is the self-styled premier dictionary of the English language. Two fully bound print editions of the OED have been published under its current name, in 1928 and 1989. The first edition was published in twelve volumes , and...

defines logistics as "the branch of military science
Military science
Military science is the process of translating national defence policy to produce military capability by employing military scientists, including theorists, researchers, experimental scientists, applied scientists, designers, engineers, test technicians, and military personnel responsible for...

 relating to procuring, maintaining and transporting materiel
Materiel
Materiel is a term used in English to refer to the equipment and supplies in military and commercial supply chain management....

, personnel and facilities." Another dictionary definition is "the time-related positioning of resources." As such, logistics is commonly seen as a branch of engineering
Engineering
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...

 that creates "people systems" rather than "machine systems".
When talking in terms of human resources management, logistics means giving inputs, i.e. "recruiting manpowers", which ultimately work for the final consumer or to delivery.

According to the Council of Logistics Management, logistics contains the integrated planning, control, realization and monitoring of all internal and network-wide material-,part- and product flow including the necessary information flow in industrial and trading companies along the complete value-added chain (and product life cycle) for the purpose of conforming to customer requirements.

Main logistics targets


Logistics is one of the main functions within a company. The main targets of logistics can be divided into performance related and cost related. They are high due date reliability, short delivery times, low inventory level and high capacity utilization. But when decisions need to be made, there is always a trade off between these targets. This is what makes being a logistician challenging and interesting.

Logistics viewpoints


Inbound logistics is one of the primary processes and it concentrates on purchasing and arranging inbound movement of materials, parts and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses or retail stores.

Outbound logistics is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user.

Logistics Fields


Given the services performed by logistics, one can distinguish the main fields of it as it follows:
  • Procurement Logistics
  • Production Logistics
  • Distribution Logistics
  • After sales Logistics
  • Disposal Logistics

Procurement Logistics consists of activities such as market research, requirements planning, make or buy decisions, supplier management, ordering, and order controlling. The targets in procurement logistics might be contradictory - maximize the efficiency by concentrating on core competences, outsourcing while maintaining the autonomy of the company, and minimization of procurement costs while maximizing the security within the supply process.

Production Logistics connects procurement to distribution logistics. The main function of production logistics is to use the available production capacities to produce the products needed in distribution logistics. Production logistics activities are related to organizational concepts, layout planning, production planning, and control.

Distribution Logistics has, as main tasks, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Distribution logistics is necessary because the time, place, and quantity of production differs with the time, place, and quantity of consumption.

Disposal Logistics' main function is to reduce logistics cost(s), enhance service(s), and save natural resources.

Military logistics


In military science, maintaining one's supply lines while disrupting those of the enemy is a crucial—some would say the most crucial—element of military strategy
Military strategy
Military strategy is a set of ideas implemented by military organizations to pursue desired strategic goals. Derived from the Greek strategos, strategy when it appeared in use during the 18th century, was seen in its narrow sense as the "art of the general", 'the art of arrangement' of troops...

, since an armed force without resources and transportation is defenseless. The defeat of the British in the American War of Independence and the defeat of the Axis in the African theatre of World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

 are attributed to logistical failure. The historical leaders Hannibal Barca
Hannibal Barca
Hannibal, son of Hamilcar Barca Hannibal's date of death is most commonly given as 183 BC, but there is a possibility it could have taken place in 182 BC. was a Carthaginian military commander and tactician. He is generally considered one of the greatest military commanders in history...

, Alexander the Great, and the Duke of Wellington
Arthur Wellesley, 1st Duke of Wellington
Field Marshal Arthur Wellesley, 1st Duke of Wellington, KG, GCB, GCH, PC, FRS , was an Irish-born British soldier and statesman, and one of the leading military and political figures of the 19th century...

 are considered to have been logistical geniuses.

Militaries have a significant need for logistics solutions, and so have developed advanced implementations. Integrated Logistics Support
Integrated Logistics Support
Integrated logistics support is an integrated approach to the management of logistic disciplines in the military, similar to commercial product support or customer service organisations...

 (ILS) is a discipline used in military industries to ensure an easily supportable system with a robust customer service (logistic) concept at the lowest cost and in line with (often high) reliability, availability, maintainability and other requirements as defined for the project.

In military logistics
Military logistics
Military logistics is the discipline of planning and carrying out the movement and maintenance of military forces. In its most comprehensive sense, it is those aspects or military operations that deal with:...

, logistics officers
Logistics Officer
A Logistics Officer is a member of an armed force responsible for overseeing the support of an army, air force, or navy both at home and abroad. Logistics Officers can be stationary on military bases or deployed as an active part of a field army, air wing, or naval force. The responsibilities of...

 manage
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...

 how and when to move resources to the places they are needed.

Supply chain management in military logistics often deals with a number of variables in predicting cost, deterioration, consumption, and future demand. The US Military's categorical supply classification
Classes of supply
The U.S. Armed Forces divides supplies into ten Classes of Supply. The North Atlantic Treaty Organisation uses only the first five.-U.S...

 was developed in such a way that categories of supply with similar consumption variables are grouped together for planning purposes. For instance, peacetime consumption of ammunition and fuel will be considerably less than wartime consumption of these items, whereas other classes of supply such as subsistence and clothing have a relatively consistent consumption rate regardless of war or peace. Troops will always require uniform and food. More troops will require more uniforms and food.

Some classes of supply have a linear demand relationship—as more troops are added more supply items are needed—as more equipment is used more fuel and ammunition is consumed. Other classes of supply must consider a third variable besides usage and quantity: time. As equipment ages more and more repair part
Spare part
Spare Parts may also refer to:* Spare Parts , by Status Quo* Spare Parts is a Doctor Who audio drama.* Spare Parts , by Servotron* "Spare Parts" , by Bruce Springsteen* "Spare Parts"...

s are needed over time, even when usage and quantity stays consistent. By recording and analyzing these trends over time and applying to future scenarios, the US Military can accurately supply troops with the items necessary at the precise moment they are needed. History has shown that good logistical planning creates a lean and efficient fighting force. Lack thereof can lead to a clunky, slow, and ill-equipped force with too much or too little supply.

Business logistics



Logistics as a business concept evolved in the 1950s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for experts called supply chain logisticians. Business logistics can be defined as "having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer", and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...

s and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see supply chain management
Supply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...

). The main functions of a qualified logistician include inventory management, purchasing
Purchasing
Purchasing refers to a business or organization attempting for acquiring goods or services to accomplish the goals of the enterprise. Though there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations...

, transportation, warehousing, consultation and the organizing and planning
Planning
Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired goal on some scale. As such, it is a fundamental property of intelligent behavior...

 of these activities. Logisticians combine a professional knowledge of each of these functions to coordinate resources in an organization. There are two fundamentally different forms of logistics: one optimizes a steady flow of material through a network of transport
Transport
Transport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations...

 links and storage nodes; the other coordinates a sequence
Sequence
In mathematics, a sequence is an ordered list of objects . Like a set, it contains members , and the number of terms is called the length of the sequence. Unlike a set, order matters, and exactly the same elements can appear multiple times at different positions in the sequence...

 of resources to carry out some project.

Production logistics


The term production logistics is used to describe logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right time. The concern is not the transportation itself, but to streamline and control the flow through value-adding processes and eliminate non–value-adding ones. Production logistics can be applied to existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.

Production logistics is becoming more important with decreasing batch sizes. In many industries (e.g. mobile phones), a batch size of one is the short-term aim, allowing even a single customer's demand to be fulfilled efficiently. Track and tracing, which is an essential part of production logistics—due to product safety and product reliability issues—is also gaining importance, especially in the automotive and medical industries.

Logistics management



Logistics is that part of the supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...

 which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer and legal requirements. A professional working in the field of logistics management is called a logistician.

Logistics management is known by many names, the most common are as follows:
  • Materials Management
  • Channel Management
  • Distribution (or Physical Distribution)
  • Business or Logistics Management or
  • Supply Chain Management


The Chartered Institute of Logistics & Transport
Chartered Institute of Logistics and Transport
The Chartered Institute of Logistics and Transport is a professional body representing the transport and logistics industries worldwide...

 (CILT) was established in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 in 1919 and was granted a Royal Charter
Royal Charter
A royal charter is a formal document issued by a monarch as letters patent, granting a right or power to an individual or a body corporate. They were, and are still, used to establish significant organizations such as cities or universities. Charters should be distinguished from warrants and...

 in 1926. The Chartered Institute is one of the professional bodies or institutions, for the logistics and transport sectors, that offers professional qualifications or degrees in logistics management.

Warehouse management systems and warehouse control systems


Although there is some functionality overlap, the differences between warehouse management systems (WMS) and warehouse control systems (WCS) can be significant. Simply put, a WMS plans a weekly activity forecast based on such factors as statistics and trends, whereas a WCS acts like a floor supervisor, working in real time to get the job done by the most effective means. For instance, a WMS can tell the system it is going to need five of stock-keeping unit (SKU) A and five of SKU B hours in advance, but by the time it acts, other considerations may have come into play or there could be a logjam on a conveyor. A WCS can prevent that problem by working in real time and adapting to the situation by making a last-minute decision based on current activity and operational status. Working synergistically, WMS and WCS can resolve these issues and maximize efficiency for companies that rely on the effective operation of their warehouse or distribution center.

Logistics outsourcing


Logistics outsourcing involves a relationship between a company and an LSP which, compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, is characterized by a long-term orientation, and, thus, has a rather strategic nature.

Third-party logistics


Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself. According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in-house. If, for example, a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries.

Fourth-party logistics



The concept of Fourth-Party Logistics (4PL) provider was first defined by Andersen Consulting (Now Accenture) as an integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third party logistics (3PL) service provider targets a function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor who manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer.

Emergency logistics


Emergency logistics is a term used by the logistics, supply chain and manufacturing industries to denote specific time critical modes of transport used to move goods or objects rapidly in the event of an emergency. The reason for enlisting emergency logistics services could be a production delay or anticipated production delay, or it could be that specialist equipment is needed urgently to prevent instances such as aircraft being grounded (also known as "aircraft on ground"--AOG), ships being delayed, or telecommunications failure. Emergency logistics services are typically sourced from a specialist provider.

As a profession


A logistician is a professional
Professional
A professional is a person who is paid to undertake a specialised set of tasks and to complete them for a fee. The traditional professions were doctors, lawyers, clergymen, and commissioned military officers. Today, the term is applied to estate agents, surveyors , environmental scientists,...

 logistics practitioner. Professional logisticians are often certified by professional associations. One can either work in a pure logistics company such as shipping
Shipping
Shipping has multiple meanings. It can be a physical process of transporting commodities and merchandise goods and cargo, by land, air, and sea. It also can describe the movement of objects by ship.Land or "ground" shipping can be by train or by truck...

 line, airport
Airport
An airport is a location where aircraft such as fixed-wing aircraft, helicopters, and blimps take off and land. Aircraft may be stored or maintained at an airport...

 or freight forwarder
Freight forwarder
A freight forwarder, forwarder, or forwarding agent is a person or company that organizes shipments for individuals or other companies and may also act as a carrier...

 or within the logistics department of a company. However, as mentioned previously, logistics is a very broad field encompassing procurement, production, distribution and disposal activities. Hence, the career perspectives are very broad also.
A new trend in the industry are the 4PL, or Fourth-party logistics
Fourth-party logistics
A Fourth-party logistics provider , lead logistics provider , or 4th Party Logistics provider, is a consulting firm specialized in logistics, transportation, and supply chain management...

 - consulting companies offering logistics services. They hire students with a BA or MA in International Logistics.

Some universities and academic institutions train students as logisticians, offering undergraduate and postgraduate programs.

See also


  • Cargo
    Cargo
    Cargo is goods or produce transported, generally for commercial gain, by ship, aircraft, train, van or truck. In modern times, containers are used in most intermodal long-haul cargo transport.-Marine:...

  • Document automation
    Document automation
    Document automation is the design of systems and workflow that assist in the creation of electronic documents. These include logic based systems that use segments of pre-existing text and/or data to assemble a new document. This process is increasingly used within certain industries to assemble...

     in supply chain management & logistics
  • Inventory
    Inventory
    Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...

  • Inventory management software
    Inventory management software
    Inventory management software is a computer-based system for tracking product levels, orders, sales and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other production-related documents. Companies use inventory management software to...

  • Performance-based logistics
  • Returns management system
    Returns Management System
    A returns management system is a system which manages returns of faulty products for businesses. There are various ways in which a returns management system can be implemented in an organization. It can be custom software developed in-house or third-party software.The system allows definition of...

  • Reverse logistics
    Reverse logistics
    Reverse logistics stands for all operations related to the reuse of products and materials. It is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption...

  • Sales territory
    Sales territory
    Sales territories are the customer groups or geographic districts for which individual salespeople or sales teams hold responsibility. Territories can be defined on the basis of geography, sales potential, history, or a combination of factors...

  • Supply chain management
    Supply chain management
    Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...