Logistics

We explain what logistics is, its history, functions and what types exist. In addition, we tell you what the 7C methodology is.

What is logistics?

The logistics It is the study and application of the different methods of organization of a company, a service or an initiative any, in order to guarantee that the necessary resources are where they are needed at the right time. This is a term of particular interest in the areas of distribution and transportation.

The origin of the word “logistics” dates back to medieval Latin logisticsand this to ancient Greek logisticsa word composed of the verb logiszesthai (“calculate”) and the suffix -tikos (“relating to”), since at that time the word referred to mathematical calculation. The current meaning of the word arose later, in the military field, and comes from French logisticsthrough English logistics. In this context, it referred to the provisioning of troops during a military campaign.

Currently, logistics plays a fundamental role in the business world and in commerce, especially in relation to supply chains (production, storage, transportation, distribution, maintenance). Its fundamental purpose is the location of goods and services produced in the appropriate place, time and conditions to maximize sales and with this the profitability of the organization.

For this, the logistics deals with both human and financial resources, as well as means of transportation and available surfaces taking into account the optimization of the organization's production chain and sales, and compliance with health, environmental and ethical provisions.

Currently, a career in logistics can be studied in numerous university institutions and specialized courses.

See also: Multimodal transport

History of logistics

The history of logistics goes back to the beginning of humanity. For centuries the ability to transport products and materials from one place to another was limited to the weight that people or, in the best of cases, pack animals could carry. This forced individuals to consume whatever was abundant in the vicinity of their home, and often meant being fed monotonous diets and lacking key resources for development.

The invention of the wheel and the first vehicles allowed commercial networks to expand and forced us to devise conservation and storage methods since perishable materials have a time limit during which they can be consumed. For example, a fishing town could produce a lot of fish, but it had a time limit to get it to neighboring towns in good condition.

At that moment logistics was born although its name was initially intended, in ancient Greece, for those who were in charge of accounting for the State's resources. Transmitted to Roman culture, logistics He began to deal with military engineering and looked for the most efficient way to keep troops equipped in the distant corners of the empire.

Good supply and intelligent movement of troops could mean the difference between victory and defeat, especially in war situations. With that meaning he used the term for the first time logistics the Swiss general Henri-Antoine Jomini (1779-1869) in his treatise Précis l'Art de la Guerre of 1838.

The leap from logistics to the business and production world occurred, in formal terms, after the Industrial Revolution, and especially in the mid-20th century, during the Second World War. The basic idea was apply the logic of military organization to productive initiatives, to make them more efficient. Thus, the business world understood that the organization of its processes could provide a company with the decisive factor to succeed against the competition.

Logistics functions

The essential functions of logistics in the business world are the following:

• Transportation and supply. It involves the flow of the necessary materials within the production circuit, and the subsequent distribution of the finished products to their respective marketing destinations.
• Material storage. It involves the storage, classification and distribution of the company's internal assets, such as raw materials, machinery, manufactured goods, among others.
• Management of stocks. It involves accounting for available material and replenishment requests (purchase orders) to third parties or other parts of the company itself.
• Customer service. It involves receiving and processing orders, checking inventory, packaging products, and shipping them to the customer.
• After-sales. Involves the return of merchandise, the feedbackhe e-commerce and customer loyalty.

Types of logistics

Logistics can be classified according to the core role it performs within the organization, as follows:

• Supply logistics or stocks. Focused on the replacement of internal inventories, for example, raw materials or secondary goods. It seeks to prevent a lack of resources that slows down or interrupts production.
• Production logistics. Focused on the flow of resources necessary to keep the productive machinery running, such as financial capital, energy resources, productive machinery, among others.
• Information logistics. Focused on the flow of information and communications, both internal and external.
• Transportation logistics. Focused on the physical transfer of materials and products to and from the organization's production headquarters.
• Customs logistics. Focused on the crossing of goods across a border through regular channels.
• Distribution logistics. Focused on the distribution of finished goods, it goes hand in hand with commercialization and marketing.

Importance of logistics in today's world

In a globalized world, crossed daily by international transport of all types, logistics plays an extremely relevant role. Especially in the face of the complex dynamics of electronic commerce (e-commerce) and the possibility of easily reaching geographically distant markets. Because the origin of the raw material and the destination of the product can be radically different, new forms of logistical thinking are currently required.

In addition, numerous factors that, at the moment, have an emerging role in the industrial chain, such as the use of robotic labor or the management of “Big Data”, will be important elements in the immediate future when designing supply chains. Which suggests that a new industrial organization is in the making, which will force us to rethink current logistics dynamics.

The 7C methodology in logistics

It is known as 7C methodology to an evaluation criterion that includes seven key instances for an effective logistics system. The letter C comes from the adjective “correct.” These seven C's are the following:

• The right product. The starting point in this methodology is quality control over the product, so that it fulfills what was promised and returns and complaints that hinder the logistics chain are minimized.
• The correct quantities. Inventory and management stocks must be adequate to prevent stock outthat is, the lack of products that are in demand.
• The right conditions. In-depth knowledge of the merchandise and the destinations to which it is directed is essential to design a transportation dynamic. You must know if the merchandise requires refrigeration, if it is flammable, if it is perishable, etc., and take the necessary measures.
• The right storage. The warehouse conditions must be ideal so that the flow of merchandise and raw materials is continuous and uninterrupted. The design and layout of the warehouse must be thought according to the type of materials that will be stored and the type of processes that demand them.
• The right time. One of the key factors for the success of any logistics pattern is respect for established times: it is not enough for a material to be in the place where it is needed, but it must be there at the time it is needed. Neither before (generating the need for secondary storage), nor after (slowing down the production chain).
• The right client. Knowing the customer and their needs ensures that demand for the product remains more or less constant, and is key to ensuring that they receive the product in a way that guarantees their loyalty and commitment.
• The right cost. Finally, the economic criterion must be present in the design of any logistics plan: superfluous expenses must be eliminated, waste margins minimized and available resources used to the maximum.

Continue with: Infrastructure

References

• “Logistics” on Wikipedia.
• “Military logistics” on Wikipedia.
• “Etymology of Logistics” in the Online Spanish Etymological Dictionary.
• “What is logistics and why it is confused with supply chain management” at OBS Business School.
• “Logistics (business)” in The Encyclopaedia Britannica.