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What is logistics?
Have you ever wonder about the correct explanation for Logistics? The word “Logistics” first appeared in the Summary of the Art of War” book by Mr. Antoine-Henri Jomini, a military officer and a writer. It was attested to the English language in early 1846 from the French word ‘logistique’.
The Oxford dictionary defines Logistics as ”the practical organization that is needed to make a complicated plan successful when a lot of people and equipment are involved” or “the business of transporting and delivering goods”.
In the military, Logistics was defined as “The discipline of planning and carrying out the movement, supply, and maintenance of military forces”, which was crucial during world war II. The word was added to the commercial world due to its importance from a point of production to the consumer.
In the commercial world, Logistics has given many definitions. Yet the bottom line is to improve the efficiency of the resources. Logistics of a value chain contain material handling including packing and labeling, transportation, warehousing, inventory management, demand projection, and procurement.
Looks like a simple process, but there is a lot to dig in within one element. Logistics play a crucial role to keep the world running. Most of the time, the Logistician does the hard work being backstage.
i.e. Consider a situation where person A in country B order a product from supplier C in country D. To deliver the product from country D to country B there is a lot of work involved.
First, this product should be produced. Supplier C has to purchase raw materials to produce the product. Then the product should pack and store until it is delivered. Then a booking has to make from a shipping line or from an airline.
Then the product should deliver to the airport or the seaport for transporting. Once the product is at the destination port, from the port it should deliver to the customer’s doorstep. So, there are a lot of logistics activities involved.
The undiscussed documentation process also has a lot more to do along with the risk mitigation throughout the flow.
There are arguments on giving a clear definition and setting a dedicated work to the word “Logistics”. Industry experts were confused on whether to place logistics as a sub-category of the supply chain or whether supply chain and Logistics are two different categories having common terms.
Yet there is no agreed work limit on whether Logistics is a sub-category of Supply Chain or two different terms with a common series of activities. Logistics is a very old term where the supply chain is a new concept.
Both terms target the smooth and efficient flow of products and services from the point of origin to the destination. I am keeping a question mark for you to decide what is best suited for Logistics.
Michael Kirby of National Distribution Centers defined Logistics and Supply Chain as “Supply chain management incorporates the field of logistics and logistics is a number of sub-processes within SCM,” confirming Logistics as a subcategory of Supply Chain.
Yet, Wayne Johnson of American Gypsum stated “There isn’t a difference today” saying Logistics and Supply Chain are the same.
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7 Rights of Logistics
Logistics could be defined as a combination of 7 rights, where 7 rights include the right product, the right price, the right quantity, the right quality, the right place, the right customer, and the right time.
The product should be the same as what the customer has ordered which is a basic requirement of placing orders by a customer. Placed orders should not substitute with other products.
Product quality is another key component in Logistics. There are different standards for different goods. Or there is a quality which customer demand for the payment they make in return. The quality of a product should not dissatisfy customers, It may make the customer satisfied or happy.
The right quantity is the volume a customer has ordered. Receiving less than or more than the ordered quantity could become a burden to the customer. Receiving less will fail customers to cater to the market he/she is having a presence.
The right price is the payment done for the valued customer receives with procuring a product or a service. The right price depends on the other 6 rights of Logistics.
The ordered products or services should reach the right customer who requires the products or the services. Receiving a product or a service to the wrong customer leads the right customer to be dissatisfied and fail the logistics of the product chain.
The right product should be produced at the right time to cater to the demand. If jerseys are manufactured, the right time for them to be on the market is in the winter. If the product doesn’t reach the market prior to winter there won’t be a demand for the jerseys. Hence right time is very critical in Logistics
The right place is the 7th right factor in logistics. Even the right product reaches the wrong place/market it won’t be easy to see the expected demand for the product. For example, ladies in some Asian countries wear sarees. The demand sarees have in Europe is not the same as in Asia. Hence the right place for sarees is the Asian market and not the European market.
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