Logistics is complex and simply everywhere

Modern logistics involves planning, creating and monitoring flows of goods and information. To carry out these jobs, logisticians need to understand and conceive business processes. Although these complex structures may often remain hidden from consumers, logistics has long been an indispensable part of daily life. Across industries, it ensures that goods and merchandise are always where they are needed. Logistics fuels innovation and creates jobs around the world.

Significance and origins of logistics

Every day, we come in contact with logistics, either directly, e.g., when the parcel carrier rings the doorbell and delivers merchandise we ordered the day before, or indirectly, e.g., when we see the word “logistics,” “supply chain management Supply chain management ” or “contract logistics Contract logistics ” on a truck traveling down the highway. However, logistics is much more than parcel delivery or freight forwarding.
A product also contains numerous logistics services by the time it reaches the consumer. For example, a company requires logistics support in production planning, material procurement, product assembly and delivery of the finished item.
“Logistics must ensure that a recipient is supplied from a point of origin in accordance with his requirements with the correct product (in quantity and variety), in the right condition, at the right time and in the right place at minimum cost.” (Pfohl, H.-Chr., 2004)
In these terms, logistics amounts to more than the mere transport of a good from Point A to Point B. Rather, it is also closely connected to organizing and monitoring the entire value chain - so-called supply chains Supply chain .
“Logistics is that part of supply chain management that plans, creates and monitors the efficient, cost-effective flow and storage of goods, semi-finished items and manufactured products as well as related information between the point of origin and the point of consumption in order to meet customers' requirements.” (Council of Supply Chain Management Professionals | CSCMP, 2007)
The etymology of the word “logistics” is often thought to be related to armed forces, which uses the term to describe all tasks related to troop support. However, the origins of logistics run back much deeper into the past. In ancient times, for instance, cross-border procurement logistics Procurement logistics and building techniques led to the erection of the Great Pyramid of Giza.

Logistics trends and challenges

Today, logistics plays a key role in the economy, and the market volume of logistics has already reached a substantial level in many economies as a result. Companies that are successful worldwide have long recognized the critical role logistics plays in creating added value. In addition, a close focus on the customer is a critical factor for companies working together in a supply chain.
In the years ahead, the significance of global logistics markets will continue to increase in response to economic and social conditions. The topic of megatrends has now gained a prominent place on the business agenda, and this development will have a further impact on logistics. These megatrends include increasing globalization, a development that is related to the internationalization of procurement, production and sales as well as the evolution from a manufacturing-based society to a service society. Other aspects include shortened product life cycles and growing environmental concerns.

Functional areas of logistics service providers

Every production and retail company depends on logistics for production and distribution. Today, these tasks are usually assumed by specialized companies, or logistics service providers.
One look at the functional areas of logistics service providers shows the diverse range of logistics services and opportunities. These extend from transport, handling and storage of products through standardized courier, express and parcel services to customer-specific logistics solutions (contract logistics). As a result of such activities, car doors can be delivered directly to an automaker’s production line in precisely the required order and at exactly the right time. Globally networked logistics service providers also offer first-class specialized solutions for the logistics of large events or for the temperature-controlled shipments of exotic fruits from the Caribbean to Europe. Another example for the importance of temperature-controlled shipments would be pharmaceutical products.

Logistics tasks and processes

To gain a better view of different perspectives, the entire spectrum of logistics services can be broken down into individual areas. The first focus of this examination is an overview of fundamental logistics tasks. These can be subdivided into

 

By tracing the flow of a product from the procurement of raw materials through manufacture of the end product to the delivery to the customer, one can gain a broad view of logistics processes. In this context, a distinction can be drawn among the phases of

 

The task- and phase-specific perspectives are closely linked. This is because all types of tasks can be performed in every step of the logistics process. As a result, there are warehouses both in procurement as well as in production and distribution.

Logistics management

The tasks and processes carried out by logistics systems require an efficient organizational structure and the management of all logistics activities. Just like other areas of a company, numerous planning and monitoring techniques are available to support logistics management.
Suitable methods and instruments exist for strategic logistics planning, supply chain management, management of international logistics chains as well as logistics controlling. Particularly for logistics service providers, the strategic planning of logistics networks is a decisive factor for success.

Innovative technologies in logistics

New technologies are often the cornerstone for logistics innovations. In intralogistics, for instance, a shift from central management of material flows to decentralization and modularization in conveyor technology is taking place. As part of this change, standardized mechanical elements that can be freely combined with one another draw on their own individual power supplies.

 

A mutual relationship exists between developments in identification and communications technology (I/C Technology) and logistics. On one hand, logistics is one of the most important commercial areas of application. With its growing needs, it acts as a catalyst for advances in IT. On the other hand, new technological opportunities form the basis for new concepts in logistics. In this context, logistics advances include barcodes and RFID technology (Radio frequency identification). Thanks to this technology, real-time Real time information can be stored and transmitted using the RFID tags on pallets Pallet , containers and parcels to efficiently manage flows of goods. In addition, logisticians envision scenarios in which intelligent logistics objects find their own way through the material flow, managing and organizing the flow of goods by themselves in the process.
The integration of various applications into software systems offers logistics further opportunities to optimize the processes of global trade. For instance, internal warehouse management systems and IT systems such as track & trace systems Tracking & tracing often are components of modern logistics. Electronic platforms are also becoming increasingly important. More and more shipping agents, freight forwarders and service providers are turning to the Internet in order to gain an additional way to offer their services. Moreover, innovative measures for the protection of the environment, e.g. delivery trucks featuring hybrid technology or special parcels for CO2-neutral shipments, play an increasingly important role.

Recommended reading

Contemporary Logistics | Murphy Jr. / Wood 2007

Logistiksysteme | Pfohl 2004

Fundamentals of Logistics Management | Grant / Lambert / Stock / Ellam 2006

Logistikmanagement | Pfohl 2004

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