06/07/2020
Logistics: The Modern Perspective
At its heart, logistics deals with satisfying the customer. This implies that management must first understand what those requirements are before a logistics strategy can be developed and implemented to meet them. As will be discussed in more detail later, customer service is the most important output of
an organization's logistics system.
In a more practical sense, logistics refers to the systematic management of the various activities required to move benefits from their point of production to the customer. Often these benefits are in the form of a tangible product that
must be manufactured and moved to the user. Sometimes these benefits are intangible and are known as services; they too must be produced and made available to the final consumer. But logistics encompasses much more than just
the transport of goods. The concept of benefits is a multifaceted one that goes beyond the product or service itself to include issues regarding timing, quantity, supporting services, location, and cost. So, a basic definition of logistics is the continuous process of meeting customer needs by ensuring the availability of the right benefits for the right customer, in the quantity and condition desired by that
customer, at the time and place the customer wants them, all for a price the buyer is willing to pay.' These concepts apply equally well to for-profit industries and non-profit organizations, as the earlier discussion on military requirements illustrated.
However, logistics can mean different things to different organizations. Some firms are more concerned with producing the benefits; that is, their management focus is on the flow of raw materials into the production process rather than on delivering the final goods to the user. The sourcing and managing of raw materials and component parts is often referred to as materials management. For firms with very heavy flows into the production process, materials management and logistics may be synonymous. For example, Airbus Industrie assembles an A-380 airliner in France for Singapore Airlines (SIA). Once the aircraft is finished, SIA sends a crew to Toulouse and flies the plane away. The
logistics effort is not complete at this point, however. Rather, for firms like Airbus, post-production emphasis is on after-sales service and support as opposed to
product delivery. Alternatively, some companies experience greater management challenges once the product is finished. In other words, they are much more concerned with the flow of finished goods from the end of the production line to
the customer. Depicted logistics in this situation is sometimes referred to as physical distribution and is a perspective in many consumer goods manufacturing firms.
Finally, some firms view logistics as embracing both materials
management and physical distribution. These organizations look at logistics as a4 way to manage the entire process of customer satisfaction, from sourcing the
necessary parts and material through production of the benefit to its delivery to the final user. Indeed, it is this approach that enables management to exploit the full potential of the logistics process. This broader view of logistics integrates
materials management and physical distribution tasks into a single supply chain that links the customer with all aspects of the firm. Viewing internal operations this
way keeps seemingly disparate and historically separated activities focused on the common objective: to produce and deliver some benefit or benefits to the customer in a way that offers greater value than can be obtained from a
competitor. In other words, this comprehensive view of logistics, sometimes referred to as supply chain management, can lead to lower costs and/or better service that enhance the value received by the buyer.
