Logistics - what is it?

Mysterious word “Logistics” can be heard everywhere today. A loader, who brings a refrigerator to somebody’s home, has a perfect right to say that he works in the sphere of logistics. The deputy director of a large company dealing with supply chain of good can say the same. Today logistics – is a sphere of human activity (not afraid to use such a big word), which provides us with fresh products in the stores, new TVs and cameras, and many other thing in life that makes us happy.

Logistics

In Russian language before americanisms had been introduced in our lives the only meaning of the word “Logistics” concerned a branch of mathematical logic and everything which deals with that. However, current demands brought some corrections. Today “Logistics” is a branch of business, providing its own needs. Before 1991 this branch of activity was called physical distribution or public distribution in the USA. Later it was adopted from the US Army with term “Logistics”. According to Webster’s Dictionary “Logistics” is a branch of military science (no more no less) and operations, that provided supplying and supporting equipment by means of conveyance, evacuation and hospitalization of personnel with the help of facilities and services provision, as well as all related. Thus, the US business lives the military way. So ours is following it.

Actually we knew this branch of business always. Not so generally as it is comprehended today, but in parts, which are called now as functional branches. For example, we always knew what the supply, transportation and warehouse services meant.

The main goal of logistics

The main goal is to ensure the needs of consumers, in particular, providing indirectly manufacture, marketing and other branches of work for everything needed. The main logistics goal as a branch is providing us with recently published newspaper, just cooked bread in the stores and fresh strawberry in the markets. The auxiliary goal is to provide manufacture with needed raw materials, for example to provide bread-baking plant with powder, or to supply farmers, who cultivate strawberry, by fertilizers and seedlings. The main characteristics are: availability of products, speed and regularity of deliveries and flexibility of processes.

Meanwhile, an integrated logistics takes into account total costs that allow creation of so-called supply chains, which ensure the goods delivery in time and with minimum charges. The total charges hadn’t been taking into account in the chains earlier, because they hadn’t been existed.

Functional branches

Before the term “Supply chain” had appeared logistics operated by separated functional branches and the charges minimized exceptionally in each branch. For example: the head of transport department reduced only his charges for transport. At the same time it could be found that business in general sustained losses because of fresh products deliveries’ lack in stores on time. The local economy brought the whole business into losses.

Logistics is divided into following functional branches:

Logistics infrastructure is a set of objects which have a specific geographical location and different characteristics. For example: the plant could be located close to its raw material sources and have a definite productivity of manufacturing power. The warehouse could be located in another place. It is also possible that several warehouses are in the country or even in the world (for transnational corporations). This infrastructure is connected in all sections.

The transportation provides connections between infrastructural objects by delivering necessary goods. We know different means of transport from our childhood. The most mass conveyance is made by automobile and railway transport. As far as it can be made by water or air transport. There is also pipeline transport for traveling gas or oil.

Storage and handling of goods are essential functional elements of logistics system. All necessary products and materials are stored at warehouses. Warehouses could be either independent or connected with the  factory. They could be located at wholesale depots or at retail stores, where we get used to buy fresh bread, milk and other products. Handling means unloading, loading and moving of goods inside warehouse.

Inventory management is intended to calculate necessary quantity of stocks at all points of infrastructure based on the whole chain needs. At the same time the general delivery goal of needed products to consumer is realized in stipulated term.

Informational support is the most important part of all logistics system. Appearance of informational technologies has affected transformation of separate functional branches set into one integrated system which allows minimizing total costs of all supply chain. Exactly informational systems supplying necessary information in time, make possible delivery planning on right time at right place.

There is such a definition as functional logistics cycle. It involves many different operations. It is usually started from the order placing. Sometimes in some companies the beginning stage of this cycle could be fulfilled by separate functional structure maybe even connected with marketing.

Business organizing

Today business in general is organized differently. Some fully performs all functions related to logistics by its own sources. The other one uses transport companies for conveyance organization. Somebody is looking for warehouses in region, where it is necessary to stock sales or manufacture. Therefore the most perspective method of logistics’ organization is using specialized logistics companies services. These companies carry out the most functions of logistics. (Thus, such name could have also companies, which carry out only several functions). They could help in organizing of logistics chain for all their clients. However, setting goals and formulating tasks depends only on those for whom this logistics is organized. If the management of the company doesn’t understand how logistics could improve business in general, no other company could help it.

Good luck to you in replenishment and usage of your reserves!

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