Logistics is the efficient flow and storage of goods from origin to consumption. It covers transport, warehousing, and import/export operations. Companies have their own logistics departments to ensure products are obtained at a reasonable price and shipped on time.
Logistics, in its most basic definition, is the efficient flow and storage of goods from their point of origin to the point of consumption. It is the part of the supply chain process that plans, implements and controls the flow of goods. It can also be seen as inventory management, at rest or on the go. The word logistics was first used in military service to describe the process of supplying a war zone with troops, supplies, and equipment. The term is now more commonly used in the business field.
A recent US study found that logistics costs account for nearly 10% of gross domestic product. The process itself covers a diverse number of functional areas. Involved in logistics are transport and traffic as well as shipping and receiving. It also covers warehousing and import/export operations.
The logistics concept can be applied to specific business areas. Procurement Logistics, for example, covers everything related to the procurement of equipment and logistics support personnel for a new weapons system for the Army. This includes the identification, design, definition, development, production, delivery and installation of the new weapons system.
Another area is Integrated Logistics Support (ILS). This is a management function that provides funding, planning and controls to ensure that the system meets the expected requirements. ILS is also expected to ensure that the price of the goods is reasonable and that the product is of the required quality.
Many companies involved in the supply of goods or services have their own logistics department. For example, a company that supplies copy paper worldwide will have a logistics team. The manager will supervise or delegate to his staff the process from the point of origin. The team will take care of acquiring the card from the card provider up to the requesting customer. The supplier and the buyer may be in different countries.
It is the logistics team that has to make sure that the products can be obtained at a reasonable price. They must therefore ensure that the product is shipped on time and will arrive when expected. The logistics team also has to deal with import and export contracts, and possibly also with the customs department. The process can sometimes be lengthy, but once in place it should run smoothly.
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