Archives

This is the first in a series of articles that will seek to focus on the logistics and supply chain industry. The articles will cover the definition of logistics, trace the flow of material, money and documents among buyers and sellers, shippers and carriers and customers and suppliers. The objective is to assist all players in logistics and supply chain activities in developing global logistics strategies to support international business objectives.

It is believed that by 2020 International trade will exceed $17 trillion. Global logistics represents nearly 20% of the world's gross national product. A corporation's success in the global marketplace depends to a large extent on its capabilities in global logistics. Unfortunately, the general level of understanding of global logistics is low. International trade professionals and managers do not typically include general logistics principles in their planning and conversely logistics professionals and managers do not generally include trade principles in theirs.

Due to the lack of mutual understanding, corporate global logistics costs including in-transit inventory, international transportation, and financial transactions, payment delays, and duty drawbacks are often 30% to 50% higher than necessary. In addition, without worldwide inventory and order visibility, and intelligent mode selection, customer service suffers.

What is Logistics : Definitions

'Logistics' was originally a military term used to describe the organisation of moving, lodging and supplying troops and equipment. It was clearly somewhat broader in scope than transport, since it covered everything needed to deliver troops and equipment to the right place, at the right time, and in the right condition.

Modern business logistics is based on much the same concept. It sets out to deliver exactly what the customer wants - at the right time, in the right place and at the right price. Very often transport is a major component of the 'supply-chain', which delivers to the customer the goods and services needed. However, supply-chains can vary enormously. They can involve all the steps from coffee bush to coffee cup, or iron ore to motor car with all the complexity of the components required.

Logistics involves: getting the right goods, to the right place, at the right time, at the right cost, in the right condition, and with due care and attention to the environment.

The Institute of Logistics defines logistics as 'the time related positioning of resources' within the supply chain. Academics define it as 'the management of the supply chain from source of procurement to the final user'.

In other words it is concerned with 'getting your baked beans from the field into their tin and then into your food cupboard'.

Logistics commonly includes: transport, warehousing, inventory/stock control, communication/information systems, packaging and manufacturing management.

In business, logistics is fundamental to: retailing, production management and control, forecasting, purchasing and supply, materials management, packaging, installation and servicing, property, quality, order processing, project management, re-use and recycling, information technology and importing and exporting.

Logistics is also fundamental to: governments, the armed forces, welfare agencies. 

News | Business | Features | Editorial | Security
Politics | World | Letters | Sports | Obituaries |

Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
Comments and suggestions to :Web Manager