What are 'Logistics'

Logistics is the general management of how resources are acquired, stored and transported to their final destination. Logistics management involves identifying prospective distributors and suppliers, and determining their effectiveness and accessibility. Ultimately, management establishes a relationship with the appropriate companies or handles its own logistics if it is more cost-effective to do so.

BREAKING DOWN 'Logistics'

"Logistics" was initially a military-based term used in reference to how military personnel obtained, stored and moved equipment and supplies. Since its initial use, "logistics" is used widely in the business sector to refer to how resources are handled and moved along the supply chain.

Understanding Logistics

In simple terms, "logistics" means having the right amount of a good at the right time, getting it to the appropriate location in proper condition and delivering it to the correct customer. Logistics is a web that links to businesses in every industry sector. The goal is to manage the fulfillment of each customer, moving quickly and efficiently from one section of the supply chain to the next.

Example

In the natural gas industry, logistics involves all of the systems used to gather and transport oil. This includes pipelines, trucks, storage facilities and distribution centers. An efficient supply chain and effective logistical procedures are essential to reduce costs and to maintain and increase efficiency. Poor logistics leads to failure in meeting the needs of the clientele and ultimately causes the business to suffer.

The Transformation of Logistics

The concept of business logistics has been transformed since the 1960s. The increasing intricacy of supplying companies with the materials and resources they need and the global expansion of supply chains has led to a need for specialists known to as supply chain logisticians. (Logistics managers are referred to as logisticians.) The technology boom and the complexity of logistics processes have spawned logistics management software that expedites the movement of resources along the supply chain. This software helps logisticians navigate the transformation logistics has undergone.

Primary Functions of a Logistician

The tasks for which a logistician is responsible vary depending on the business. Primary responsibilities include overseeing and managing inventory, arranging for appropriate transportation, and establishing adequate storage for the inventory. A qualified logistician plans out all of these and other aspects, coordinating the steps as inventory moves along the supply chain. The logistician is also responsible for consultations with potential and existing clients as well as the companies that are transporting and storing resources.

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