In the last step, we explored the concept of a supply chain – but how does this differ from ‘logistics’? These are terms that are often used interchangeably, so let’s consider what we mean by logistics.
Logistics is a term that was originally used in the first world war by the American military, and it has been argued that it was the key to not only breaking trench warfare but to the success of the D-Day landings almost 30 years later (Gropman 1997).
Perhaps the best place to start when trying to define what logistics really means is the New Oxford Dictionary of English, where it is defined as, ‘the detailed coordination of a complex operation involving many people, facilities, or supplies’.
So, now we know what it is, what exactly does it do? Logistics is primarily concerned with the flow of goods through a supply chain. This is known as a ‘logistics flow’. The types of logistics flows include:
- Product flow – the movement of materials and goods
- Information flow – this facilitates the movement of materials and goods, and informs decision making
- Cash flow – the flow of funds between the different organisations and/or functions in a supply chain
- Demand flow – managing the demand vs. supply dynamic
(Rushton et al 2014)
It was Forrester (1961) who first recognised the effects of logistics flows in his examination of industrial dynamics. Product flows are initiated by information, such as an order for a product. The order is information and sets into action a chain of events and decisions. Simultaneously, another flow is imitated by the order, that of a cash payment for the order. The movement of goods is based on information in return for cash.
Additionally, an examination of the order and cash flow information gathered through these logistics flows can be used to estimate future demand. This means that, by managing logistics flows, managers can plan, organise, direct and control a product’s many suppliers.
Research different definitions of logistics (there are many) and discuss in the comments area whether you feel they are all saying the same thing, or if there are distinct differences between them?
Forrester, J. (1961) Industrial Dynamics. M.I.T Press
Gropman, A. (1997) The Big L – American Logistics in World War II. Washington: National Defense University Press
Rushton A, Baker P, Croucher P. (2014) The Handbook of Logistics and Distribution Management : Understanding the Supply Chain. London: Kogan Page
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