What is logistics exactly? – Supply Chain Game Changer™

Logistics has been in the news a lot lately and will be for some time to come.

In March 2021, we heard about logistics when a ship blocked passage through the Suez Canal. In the second half of 2021, we heard about the huge log jam for overseas shipping in ports around the world.

By now everyone should understand the incredible importance of logistics to our economies and our lives. But aside from those glitches, does anyone really understand what it is?

let’s explore What is logistics exactly?

Definition of logistics

The first distinction is that logistics management is different from freight management. Simply put, logistics management is a much broader and overarching term with an enormous scope that encompasses freight management.

Investopedia defines it as “the entire process of managing how resources are acquired, stored and transported to their final destination”. Shopify says it’s “the process of coordinating and moving resources — people, materials, inventory, and equipment — from one location to storage at the desired destination.”

Merriam-Webster defines logistics as “the things that need to be done to plan and organize a complicated activity or event involving many people.” The Cambridge Dictionary states that it “is the process of planning and organizing to ensure resources are where they are needed for an activity or process to run effectively.”

And finally, Wikipedia calls logistics “the detailed organization and implementation of a complex operation (and) is that part of supply chain management and supply chain engineering that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between point of origin and point of consumption to meet customer requirements.”

From these definitions, it becomes clear that logistics not only includes freight management, but much more than just the concept of goods transport. Logistics is the coordinated planning, organization, administration and use of any resources (not just materials).

Examples of logistics management

Historically, the term logistics was created and used in relation to the military. The organized movement, deployment, and replenishment of goods, equipment, food, soldiers, supplies, and ammunition for military operations were considered logistics. Wikipedia defines military logistics as “the planning and execution of the movement, supply and maintenance of armed forces.

In the broadest sense, they are those aspects of military operations that deal with: design, development, acquisition, storage, distribution, maintenance, evacuation and disposition of materiel; transportation of personnel; acquisition or construction, maintenance, operation and sale of facilities; purchase or provision of services; and medical and health support.”

Manufacturing logistics includes the planning and execution of all processes related to: procurement, setup, installation and maintenance of equipment; personnel recruitment, training and scheduling; inventory storage, distribution, movement; process tracking, management and optimization; quality management; product flow and planning; testing; and shipping.

Retail logistics encompasses the merchandising of goods for sale, as well as the planning, scheduling and movement of these goods from the manufacturer to the retailer or distribution center to the retail channel (e.g. brick-and-mortar stores) and includes the last mile delivery solution .

Further setting up stores, be it physical merchandising or creating online stores, customer experience management (from marketing to order management to returns management) is also part of the retail supply chain.

In healthcare, logistics have been on display for all to see during the pandemic. The planning, sourcing, ordering, manufacturing, delivery and distribution of masks, PPE (personal protective equipment), equipment (e.g. ventilators) and finally vaccines are all part of the healthcare supply chain network. The refrigeration requirements for some of the vaccines further complicate the systemic requirements.

And service companies even manage the logistics to support their customers, even though they’re not moving physical goods or products. Service companies still have to coordinate and move resources such as people or information for their customers. The movement, deployment and flow of these resources require logistics management.

The importance and impact of logistics

If you didn’t understand the importance of this feature before, our examples should certainly underscore that importance now.

Without trucks, rail transport and shipping, the economy and with it our private and professional lives would come to a standstill in practically all companies.

Throughout 2021, we have seen the scale of disruption caused by logistics and transportation delays. The ship blockade of the Suez Canal led to massive delays in the delivery of goods early on.

During the year, restrictions on unloading container ships at ports around the world are having a devastating impact on the supply of goods across all industries. And even as the ships unloaded, the lack of truck drivers and trucking equipment affected the movement of goods to their final destinations.

Without logistics, our standard of living would be irreversibly atrophied and hampered.

Ensuring the adequacy of logistics management and risk mitigation

Given its importance, it should be clear that every company must have a comprehensive and exhaustive logistics strategy and risk mitigation plan. Without these plans, companies have to think anew every day about how to transport their goods and services.

With infrastructure limitations and capacity constraints restricting supply and the flow of goods, we are seeing many organizations rethink their fundamental strategy and tactics.

For example, companies have used more air freight transport. In addition, larger companies have chartered their own container ships and diverted these ships to ports that allow goods to be unloaded in a timely manner. And some companies, like Amazon, have attempted to vertically integrate all logistics infrastructure within their own operations.

Experienced executives, who are also in short supply, are in great demand to make all of this work. You can have the best products, the best marketing, and the best brand, but if you can’t get your wares to market, the rest doesn’t matter. Experienced leadership is the backbone to make any logistic strategy and out-of-the-box daily tactical management work.

Because everything stops when logistics operations aren’t working, companies need to make the necessary investments in strategy, resources, processes, systems, infrastructure and supplier partnerships.

Any company that fails to make these investments will continue to perpetuate the problems it experiences until it eventually goes out of business.

That’s what we call logistics!

Originally published February 1, 2022.

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