Logistics(Business)

Introduction

in business, the organized movement of materials and, sometimes, people. The term was first associated with the military but gradually spread to cover business activities.

Logistics implies that a number of separate activities are coordinated. In 1991 the Council of Logistics Management, a trade organization based in the United States, defined logistics as: “the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.” The last few words limit the definition to business enterprises. Logistics also can be thought of as transportation after taking into account all the related activities that are considered in making decisions about moving materials.
In some firms, all these activities are placed within a single logistics department; in others, they are shared among departments. The firm's logistics department also is responsible for logistics management, control, and planning. The firm may contract with an outside party to perform specific logistics services; this practice is referred to as third-party logistics.
The phrase business logistics is often associated with firms that have large volumes of products to move, such as appliance manufacturers or retail chain stores. Service industries also have logistic concerns, however. Banks with automatic teller machines must keep them supplied with currency and paper forms and must collect deposits. Television networks operate many vehicles to help collect the news; and, at a major sports event, broadcasters may have several dozen vehicles present. Governments and nonprofit organizations also have logistics programs. Some of the most challenging logistics assignments have been associated with the military buildup in the dispute between the United Nations and Iraq in 1990–91 and in the famine relief efforts in Ethiopia and other African nations in the 1980s.

Business logistics

Separate activities or functions, all of which fall under a business firm's logistics “umbrella,” include customer service, demand forecasting, documentation flow, interplant movements, inventory management, order processing, packaging, parts and service support, plant and warehouse site selection, production scheduling, purchasing, returned products, salvage scrap disposal, traffic management, and warehouse and distribution centre management. These activities must be planned and executed in coordination with each other. The logistics manager may pay more for one element of service in order to save an even larger amount on a different element. For example, air freight, an expensive form of transportation, saves money on packaging because airlines are more careful with cargo than are some of their competitors. Also, because the goods will be delivered more quickly, payment for them is received more quickly.