If we were to check which term is the most frequently mentioned when discussing fast-growing industries – logistics would certainly take the podium. This is not just because of the growth of large companies or the warehouses being built almost everywhere, but because logistics is so present in everyone’s everyday life. It is therefore worth taking a closer look at this field and discussing all its important aspects.
In our guide, you will find a definition of logistics, see how it has evolved and find out when the biggest changes occurred, as well as learn about the types of logistics today – read on.
Logistics – definition
Logistics was first described by many as early as the ninth century, when Byzantine Emperor Leontos VI described well-planned operations and wise management as the art of war to guarantee success.
There are many publications on the subject, but to understand exactly what this process is, it is worth quoting the words of the Council of Logistics Management, which is the best definition:
- “Logistics is a term describing the planning, executing and controlling the efficient and cost-effective flow of raw materials, inputs, finished goods and relevant information from the point of origin to the point of consumption to satisfy customer requirements.”
- So, in short, logistics is the efficient planning and management of the complex process by which a product begins its journey from the moment it is sourced, to the moment it reaches the hands of the consumer. It is not without reason that the complexity of the whole endeavour is emphasised, as the number of activities carried out at different stages is the work of many people.
Logistics – the genesis of development
As mentioned above, the birth of logistics is considered by most researchers to be in the 9th century, but almost all, including later definitions, have their roots in wartime periods.
The development of logistics as a process related to the planning, storage or distribution of products dates back to the 1960s. In 1950, physical distribution was added to the production issue for the first time. This is what is known as the awakening of logistics. It was the beginning when the attention of entrepreneurs was not, as it had been before, focused solely on producing a given commodity. The era of looking more broadly at the process involved in planning, distribution or storage began.
The 1960s saw the publication of the first book on logistics in the USA by E. Smykay, D. Bowersox, F. Mossman. It was then that the attempts to define what exactly all these activities are started. The research that was carried out was to bring about a definition of the process. In Europe, this period was in the 1970s, when a monograph was written by L. Poth, W Kiersch, R. Wentworth. The period of the 1980s saw an increasing awareness of the consumer and the integration of the different departments of the company: production, planning, transport, and finally the 1990s when computerisation quite strongly influenced all logistics-related processes. This allowed for fast and efficient order processing, control and planning. The speed with which logistics is developing makes it impossible not to notice that the process is over. The emergence of new devices, programmes or applications that assist in executing a given process requires ongoing and active education of the participants.
Types of logistics
Logistics is a highly complex process. To fully understand its specificities, it is useful to know that several basic types are distinguished:
- Supply logistics;
- Production logistics;
- Distribution logistics;
- E-logistics;
- Transport logistics;
- City logistics.
Procurement logistics
Procurement logistics is the supply of raw materials necessary for the manufacturing process. Here, it is all about guaranteeing continuity of supply, excellent cooperation with suppliers and optimising purchasing costs. What has the strongest impact on procurement logistics? The nature of the product to be supplied, the activities of the suppliers and the availability of the raw material. Procurement logistics is very much linked to another type: production logistics.
Production logistics
Production logistics is the planning of where and when the goods already produced should go. This type of logistics is the process that links procurement logistics with distribution logistics. It is also at this stage that the very important activity of disposing of ‘frozen’ raw materials for further processing and subsequent sale takes place. Production logistics distinguishes between 3 basic operating systems: just in time – i.e. just in time, pull – i.e. pulling the necessary materials and push, i.e. producing products from all the necessary materials and then placing them in the customer’s warehouse.
Distribution logistics
Distribution logistics – strongly linked to the group of supply and production logistics described above, is most often associated with the final product and its release directly into the hands of the consumer. Distribution can occur through wholesalers, sales intermediaries or institutions providing other services such as banks. Distribution logistics is very much linked to the marketing activity of a given company, which, through market research, effectively determines the consumer’s needs and how to sell a particular product.
E-logistics
E-logistics, in an age where time is a priority, its development should not surprise anyone.
All processes that could not take place online were quite expensive and time-consuming. E-logistics has not only shortened these activities or reduced the price, but has also contributed to a reduction in errors. Newer and newer programmes such as ERP, CRM or WMS are now almost a daily reality for many companies.
Transport logistics
Transport logistics is one of the most extensive departments that not only optimises costs, but also significantly reduces the lead time for a specific order. It starts as early as the generation of the consignment note and is the backbone of almost every company. It is very strongly linked to the types discussed above.
City logistics
Urban logistics is nothing more than a series of activities related to the planning of both transport and space in an urban area. It has 3 objectives: economic (reducing the cost of operating an urban space), environmental (planning transport so that the environment is not exposed to pollution, emissions, etc.) and social, which aims to improve quality of life.
Do we know everything about logistics? Summary
Can it be concluded that we know everything about logistics – not. Such a dynamic industry cannot be defined once. That is why every further action to optimise time, costs and space will be the beginning of new logistical challenges.