The five elements of logistics
The role of each element of logistics often defines the logistics activities within a supply chain.
The problem with definitions and discussions of supply chains is that it is not easy to recognise the role of logistics within them, which is why the supply chain river is a simple way to relate the role of logistics within a supply chain.
The elements of logistics further help to explain what logistics activities and processes are being undertaken in a supply chain.
There are five elements of logistics:
- Storage, warehousing and materials handling
- Packaging and unitisation
- Information and control
Let’s break this down:
What is the role of storage, material handling and warehouses in logistics?
It is to enable a steady stream of products to be supplied by manufacturers. Why is this important? Manufacturers need to operate at peak efficiency, but consumers tend not to demand goods at the same rate as a manufacturer supplies them.
There tends to be an imbalance between supply, which is steady, and demand, which can be unpredictable. The answer is to store the surplus goods produced by a manufacturer until they are demanded by consumers. To achieve this, warehouse buildings are required. These need specialist storage equipment such as shelving or racks and material handling equipment to move them around the warehouse and to load and unload delivery vehicles.
What is the role of packaging and unitisation?
A key definition and one of the Rs of logistics is the care and condition of a product. Packaging is an essential part of that. Unitisation is also important as this assists storage and transportation. The easiest product to move and store is a cube, so packaging and unitisation attempts to take all different sizes and shapes of product and pack them as near as possible into a cuboid shape.
What is the role of inventory?
Inventory is a logistics element that is closely related to storage and warehousing. It is concerned with what stock to hold, where the stock is located and how much stock to hold. In effect, inventory is controlling the flows of goods going into and out of a warehouse. How is this achieved? By looking at sales data of past orders and using various mathematical and statistical tools to attempt to predict how much goods will be demanded by consumers. Inventory management is not an exact science, but depending on how variable demand can be, it is a useful tool to help manage the flows of goods through the supply chain.
What is the role of transport?
A major element of logistics that most will recognise is transport. This includes all modes of transport including road vehicles, freight trains, cargo shipping and air transport. Without transport, goods would be unable to move from one stage to another within a supply chain. Some goods with short supply chains, such as foods, do not travel far. Other more complex products consist of many components that can be transported from all over the world.
What is the role of information and control?
The element of information and control is needed by all the elements to act as triggers to various operational procedures. We have mentioned the information needed for inventory. Order levels help decide what orders need to be picked and packed in warehouses and enable the planning and organisation of transport. Information and control’s role is to help design information systems that can control operational procedures. They are also key in the forecasting of demand and inventory as already mentioned.
If you are attempting to identify what parts of a supply chain are logistics, the elements of logistics is an essential tool.
Chapter One of: Rushton, A., Croucher, P. & Baker, P. (2017) The Handbook of Logistics & Distribution Management. 6th Ed. London: KoganPage
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