Logistics for Dummies: Key Concepts Defining Supply Chain Management

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February 19, 2014

Logistics as a concept can be said to be amorphous and far reaching: different functions work together to support complex systems that make up the broad variety of activities that can be put under the “supply chain management” umbrella.

In properly defining logistics, however, the efforts of our industry can be distilled down to a few basic fundamental issues that form the foundation for supply chain management.

At the core of logistics and supply chain management operations is the movement of information.

Before any part of the logistics process can commence, it is necessary for communication to be initiated.

Information such as client orders for goods, or notification that new cargo is headed to a warehouse must be sent and received to facilitate carrying out the required procedures.

Information regarding the whereabouts of cargo in transit is also shared between delivery crews, warehouse managers and customers.

Similarly, information regarding inventory is moved between those in charge of warehouses and the suppliers of goods housed therein to keep inventory levels where they need to be.

Such movement of information therefore fosters integration of a supply chain management company or department with key stakeholders.

This works in favor of all involved by establishing a well oiled system of communication that encourages fast responses and ease in reaching the other parties in case of an emergency.

Logistics therefore relies upon integration between supply chain management players and their customers to allow for delivery of services.

Likewise, integration is required with vendors and other suppliers of cargo or support functions such as security solutions where contracted from outside the company to ensure smooth running of operations, enabling carrying out of functions that define logistics.

The most apparent pillar of logistics can be said to be movement of goods. The underlying purpose of logistics, all things considered, is to get cargo from one point to its final destination.

Cargo can range from consumer products, highly perishable goods, raw materials headed for factories, medical waste or supplies and many others.

Logistics therefore entails identifying the optimal mode of transportation to get goods to where they need to go.

Taking into consideration issues of time, cost, availability and even distance in the case of exports or imports, deciding on the logistics of moving cargo means choosing between road, air, sea, rail travel or a combination of them for multi modal transport.

Photo Credit: www.telephonetraininguk.co.uk

Photo Credit: www.telephonetraininguk.co.uk

The final core facet of logistics is the provision of services. This term here encapsulates all operations carried out in the course of rendering services as purchased and paid for.

Activities such as delivery of cargo for individual or corporate purposes, provision of storage facilities, consultation on streamlining delivery processes in a given company and so forth all form the basis for logistics as an industry and practice.

As with integration, this function works both as applied to supply chain management companies providing services and companies receiving services as paying customers.

Logistics both as industry and a study can be challenging to define in the traditional sense, most of all in lay terms to those outside related professions and scholarly discourses.

The fundamental concepts of supply chain management, however, make it simple to compartmentalize this field, making it possible to have a concise answer the next time you have someone ask, “What exactly is logistics?”. You’re welcome.


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