Logistics

Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently, and originally, military organizations). Logistics involve the integration of information, transportation, inventory, warehousing, material-handling, and packaging.

Origins and definition

The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word, calculation, reason, speech, oration").

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, Roman and Byzantine empires, there were military officers with the title ‘"Logistikas"’ who were responsible for financial and supply distribution matters.

The Oxford English dictionary defines "logistics" as: "“The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.”"Another dictionary definition is: "The time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems"....

Logistician

Logistician is the profession in the logistics & transport sectors, including sea, air, land and rail modes. Professional qualifications for the logisticians can carry post-nominal letters. Common examples include FCILT/CMILT/MILT (by The Chartered Institute of Logistics & Transport) (CILT), EJLog/ESLog/EMLog (by European Logistics Association) (ELA), PLog (by Canadian Professional Logistics Institute, CITT (by Canadian Institute of Traffic and Transportation), CML/CPL (by International Society of Logistics) (SOLE), JrLog/Log/SrLog (by China Federation of Logistics & Purchasing) (CFLP), FHKLA/MHKLA (by Hong Kong Logistics Association) (HKLA), PLS/CTL/DLP (by American Society of Transportation & Logistics) (AST&L). However, some universities (i.e. Istanbul University, Turkey) and academic institutions do help in producing logisticians, by offering academic degree programmes at both undergraduate and postgraduate levels, too.

Military logistics

In military logistics, logistics officers manage how and when to move resources to the places they are needed. 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, 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 Erwin Rommel in World War II, have been largely attributed to logistical failure. Fact|date=March 2008 The historical leaders Hannibal Barca, Alexander the Great and the Duke of Wellington are considered to have been logistical geniuses.

Another field within logistics is called Medical logistics.

Logistics management

Logistics management is that part of the supply chain 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 customers' requirements. A professional working in the field of logistics management is called a "logistician".

The Chartered Institute of Logistics & Transport (CILT) was established in the United Kingdom in 1919 and was granted the Royal Charter in 1926. The Chartered Institute is one of professional bodies or institutions for the logistics & transport sectors, that offers such professional qualification or degree in logistics management.

Definitions of logistics outsourcing (3PL)

According to Baziotopoulos (2008) (PhD thesis- "an investigation of logistics outsourcing practices in the greek manufacturing sector"), logistics outsourcing or third-party logistics (3PL) “involves the utilization of 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 transport facilities decides to employ external warehouse specialist, this would be an example of third party logistics.

Another definition comes by Rabinovich et al. (1999) who defined logistics outsourcing as “long and short-term contracts of alliances between manufacturing and service firms and third-party logistics providers” (Rabinovich et al., pg. 353). This definition has been largely used on the needs that firm characteristics influence the decision to contract multiple third-party logistics services, and therefore, firms have to obtain cost savings and to concentrate on their core competencies. The agreement also becomes more formalized with mutual commitments from both parties. In such partnerships the partners attempt to keep their autonomy, while at the same time collaboration is vital to develop more efficient results. Sometimes, the agreement specifies that the external service provider fully or partly takes responsibility over personnel, equipment and plant of the client firm.

Similar to the above definition, Hertz and Alfredsson (2003, pg. 139) simply stated that logistics outsourcing involves “an external provider who manages, controls, and delivers logistics activities on behalf of a shipper”. The purpose is that both parties develop a mutually beneficial and continuous strategic relationship and all or a part of the logistics activities are performed in a satisfactory way for the partners, with the guarantee of the quality of performance and benefits involved.

Nevertheless, to understand the concept of logistics outsourcing, there are five levels of logistics outsourcing. According to Kujawa (2003) these are as follows:1) In-house logistics or in sourcing logistics, or reverse outsourcing: means that the firm operates its logistics activities in-house. 2) Logistics service provider (LSP), or asset-based logistics (2PL): means the management of traditional logistics functions, such as transport and warehouse.3) Third-party logistics (3PL/TPL), or forwarding logistics, or contract logistics: This can be also a close relationship between a firm and a logistics provider not only to operate the logistics tasks but also the sharing of information, risks and benefits under long-term contract.4) Fourth-party logistics (4PL/FPL), or supply chain logistics, or lead logistics provider (LLP): 4PL has been viewed as a single contact that manages and integrates all kinds of resources and directs 3PL function along the supply chain with the sense of strategic advantages, and long-term relationship.5) Fifth-party logistics (5PL): means serving the electronic business (e-business) market. Those 3PL and 4PL providers manage all the parties in the supply chain on electronic commerce (e-commerce). They key to success in this area is the information technology and information systems.

Clarification of definitions of third-party logistics

In addition to the definitions of logistics outsourcing as given above, the term third party, as well as that of fourth party, can be quite confusing, thus Lynch (2000) refers to the outsourcing of logistics activities to firms that are capable of providing the services, rather than to third-party or fourth-party logistics providers (3PLs and 4PLs respectively).

Nevertheless, the use of the term third-party logistics (3PL) is rising considerably and therefore further discussion is needed. However third-party logistics are better defined and exemplified as follows: “A 3PL is a relationship between a shipper and third party which, compared with basic services, has more customised offerings, encompasses a broader number of service functions and is characterised by a longer-term, more mutually beneficial relationship” (Murphy and Poist, 2000, pg. 122). “A 3PL is a logistics service provider, usually asset-based, which focuses on specific elements of the supply chain in order to optimise the physical movement of goods from the point-of-origin to the end-user” (Stock and Lambert, 2001, pg. 5).

According to the definitions above, the 3PL provider specialises in a range of logistics services with the purpose to sell or perform these services to firms that are involved in manufacturing and distribution activities (Baziotopoulos, 2008). For example, small trucking companies are not 3PLs; however, some 3PLs own transportation and other assets to perform logistics needs while others do not. While many definitions suggest that 3PL involves the provision of multiple distribution activities, they often do not include the concept of longer term, mutually beneficial relationships between the parties. Therefore, while logistics activities, in particular, transportation and warehousing, have been outsourced to third parties, generally on a transaction-by-transaction basis, the characteristic of the 3PL is that it, by contrast, is focused on a “formal, contractual, long-term relationship between the provider and the user” (Murphy and Poist, 2000, pg. 122).

Logistics Management Software

Software is used for logistics automation which helps the supply chain industry in automating the work flow as well as management of the system. There are very few generalized software available in the new market in the said topology. This is because there is no rule to generalize the system as well as work flow even though the practice is more or less the same. Most of the commercial companies do use one or the other of the custom solutions.

But there are various software solutions that are being used within the departments of logistics. There are a few departments in Logistics, namely: Conventional Department, Container Department, Warehouse, Marine Engineering, Heavy Haulage, etc.

The software used in these departments are,

Conventional department : CVT software / CTMS software /

Container Trucking: CTMS software /

Warehouse : WMS /

Business logistics

Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as "having the right item in the right quantity at the right time at the right place for the right price" 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 chains 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). The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project.

Production logistics

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The term is used for describing 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 point in time.

The issue is not the transportation itself, but to streamline and control the flow through the value adding processes and eliminate non-value adding ones. Production logistics can be applied in 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 getting more and more important with the decreasing batch sizes. In many industries (e.g. mobile phone) batch size one is the short term aim. This way even a single customer demand can be fulfilled in an efficient way. 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 the medical industry.

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