Back to the Basics: What is Logistics?
The process of moving goods from one location to another falls under the definition of logistics. Great, but at its core, what is logistics?
Well, in a nutshell, it’s a global industry that involves the operation of equipment to move commodities and people via air, land, and sea.
Each year, more than $1.5 trillion is spent on scheduling logistics services by companies all across the globe. In short, the logistics industry is responsible for moving goods and products from place to place. Without some sort of logistics operation, you would not be able to order products or even go grocery shopping. And without specialists managing and organizing these movements, our economies would not survive, much less thrive.
While many of us that live and work in this industry understand the complexity of logistics, sometimes it’s important to get back to the basics. Sometimes it just flat out helps to get a little refresher on some of the more core concepts of the shipping industry at large.
In this blog post, we will be answering the all-too commonly asked question; what is logistics?
How Did the Term Originate?
The first use of the word logistics is a bit debated. Some believe it finds its roots in the ancient Greek word “logo” which equates roughly to the word “reason”.
However, the more commonly accepted belief is that it comes from the French word “logistique”. This belief is the more logical of the two as the French term means to lodge something. Originally coined by a military officer and writer named Antoine-Henri Jomini, logistics originally described the movement of military troops. More specifically, the word finds its origins in his book Summary of the Art of War.
It essentially described the process of distributing people, supplies, and equipment to the place of deployment. Moving equipment, supplies, and people is a complex task, that involves multiple moving parts. In fact, each branch of the military has dedicated personnel whose primary task is to supplement and operate the logistics process.
The management of logistics is typically referred to as supply chain management, which is a term that was introduced in a 1982 magazine interview by Keith Oliver, a consultant at Booz Allen Hamilton.
However, they serve two different aspects.
Logistics is the bigger picture. It involves purchasing, shipping, delivering from a point of origin to a destination.
On the other hand, we have supply chain management. This involves the collaborative efforts of individual networks that move freight. This generally includes manufacturers, distributors, vendors, transportation companies, and warehousers.
What are the Components of A Logistics Operation?
Logistics is the industry – the supply chain is the process. Within the supply chain, the logistics industry relies on collaboration between multiple parties or sub-sectors of the logistics world. Some of the common tasks involved include the following.
Whether it’s the manufacturing of goods or sales to consumers – everything moved within the supply chain has a starting point. This begins with inbound logistics or the process of receiving the materials or commodities needed to assemble a finished product.
While the inbound process is crucial for the creation of new products, outbound transportation is just as critical. The outbound process involves the movement of materials or goods further down the chain or directly to customers.
All those inbound and outbound shipments are typically moved via fleets of trucks, boats, aircraft, railways, or other methods. Keeping these large groups of transportation equipment organized, maintained, scheduled, and moving is the job of the fleet managers.
Goods typically require some length of time in storage before being allocated to their last-mile delivery phase. This is the task of warehousing and it is responsible for the storing of dry goods as well as cold or perishable products.
When a customer orders a product, the process of pulling, packaging, and shipping that product to the consumer is the order fulfillment phase. This can occur in warehousing operations, distribution centers, retail, or even dedicated fulfillment locations.
The logistics network also depends on accurate accounting procedures to ensure that all parties involved from raw materials to the finished product have ample quantities to serve their customers. This is the task of inventory management.
Everything we consume or use on a daily basis is made available to us via the logistics world.
This global industry is vital for survival. And the real beauty of it is that logistics powers more than just the shipment of products. It brings us the food we eat, supplies farmers with the seeds and equipment to grow crops, and allows us to travel to visit family, enjoy a vacation, and so much more!