Why Logistics Matters
It is only relatively recently that logistics and supply chain management (SCM) have emerged as key business concerns, and it is now generally accepted that supply chains, and not individual firms or products, are the basis of much marketplace competition.
Both logistics and SCM are fascinating and exciting areas that touch all of our lives. Just think of the many different products that are purchased and consumed each day – how do they reach the customer and at what cost?
Not only are logistics and SCM key aspects of today’s business world, but they are also of importance in the not-for-profit and public sectors. In addition, while the origins of much logistics thinking and practice are in a manufacturing context, we also are witnessing increased and highly successful application of logistics and SCM principles in a services context (just think of the efficiencies which have been driven into many service-based activities such as banking and hospitals where the emphasis has shifted to serving more customers, better, faster, cheaper).
Logistics has come of age as a core operational competence and an area of management that requires close attention. But its origins lie elsewhere.
According to Wilfred Funk writing in Word Origins and Their Romantic Stories, the word ‘logistics’ originally comes from the emphasis that was placed on ensuring the efficient supply of material by the French military during the time of Napoleon. He relates that, the French invented a third military science to go along with tactics and strategy. They called it Logistique to describe the business of moving, supplying and quartering soldiers. The name originates in the French word Loger, which means to quarter or to find lodgings.
The development and implementation of efficient and effective logistics systems has continued to be at the forefront of military planning. History gives good reason for this as these views from some important writers clearly illustrate. Now modern business has, somewhat belatedly, also recognised the importance of logistics.
Transport, Logistics and Supply Chains
Terminology is important! When discussing this important and fast-changing area it is important that a shared understanding of key terms exists.
Logistics involves getting
… the right product
… in the right way
… in the right quantity and right quality
… in the right place at the right time
… for the right customer at the right cost
Logistics isn’t just transport, although transport is of course important. Along with the technical and physical aspects of transport, logistics includes inventory management and related information systems and is, in essence, the engine of the supply chain. Transport services (links in supply chains) and transport infrastructure (nodes in supply chains) are key elements in efficient logistics systems. In turn logistics is a key component of the supply chain.
The supply chain is a much wider, intercompany, boundary-spanning concept, than is the case with logistics.
The supply chain is the network of organisations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.
Supply chain management is the management across and within a network of upstream and downstream organisations of both relationships and flows of material, information and resources. The purposes of SCM are to create value, enhance efficiency, and satisfy customers.
Getting It Right
According to Tom Peters, you win in business as in war through superior logistics. But what does this mean? How do you know your logistics qualify as ‘superior’?
What can you do about it when problems are uncovered? Just as important, what should you be doing when things are going well to ensure you stay ahead of the competition?
The study of logistics aims to answer these questions. But this is an area of study that must, if it is to be relevant, clearly identify how its conclusions can be applied in real world situations.
This means that logistics must keep things as simple as possible. But, even if simple, designing logistics systems is not simple. Particularly, when there are deadlines to be met today, and tomorrow.
Logistics.ie aims to provide a space where issues can be discussed and new information is readily available. It also provides access to recognised professionals who can step back from the deadlines.