10 BASICS OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT YOU SHOULD KNOW.

What is Logistics and Supply Chain Management?

"Logistics typically refers to activities that occur within the boundaries of a single organization and Supply Chain refers to networks of companies that work together and coordinate their actions to deliver a product to market. Also, traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply Chain Management (SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service".

What is Logistics?

"Logistics is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost (the seven Rs of Logistics)" 

In the past, various logistics tasks were under different departments, but now they are under "logistics department" and report to the same logistics head as below:

 

We would like to point out that the word "logistics" ends with the "s". Without the "s" (logistic), it means a kind of mathematical function showing exponential growth.

What is Logistics Management?

Logistics Management deals with the efficient and effective management of day-to-day activity in producing the company's finished goods and services.

 

 What is the Difference between Inbound and Outbound Logistics?

Inbound Logistics refers to movement of goods and raw materials from suppliers to your company. In contrast.

Outbound Logistics refers to movement of finished goods from your company to customers.


To illustrate this term, we make a small graphic as below:

As you can see above, purchasing and warehouse function communicates with suppliers and sometimes called "supplier facing function". Production planning and inventory control function is the center point of this chart. Customer service and transport function communicates with customers and sometimes called "customer facing functions".

What is Transport and Logistics?

Transport and Logistics refers to 2 types of activities, namely, transportation (traditional services such as air/sea/land transportation, warehousing, customs clearance) and logistics (value-added services which including information technology and consulting)

What is International Logistics and Global Logistics?

International logistics, global logistics and global supply chain are one of the most ambiguous group of terms out there. They are used interchangeably and often referred to international production and transportation activities. However, most concise definition of international logistics or global logistics is as below.

"International Logistics (also known as Global Logistics) focuses on how to manage and control overseas activities effectively as a single business unit. Therefore, companies should try to harness the value of overseas product, services, marketing, R&D and turn them into competitive advantage"

What is 3PL or Third Party Logistics?

The concept of Third Party Logistics or 3PL appeared on the scene in the 1980s as the way to reduce costs and improve services which can be defined as below:

"3PL or Third Party Logistics refers to the outsourcing of logistics activities, ranging from a specific task, such as trucking or marine cargo transport to broader activities serving the whole supply chain such as inventory management, order processing and consulting."

In the past, many 3PL providers didn't have adequate expertise to operate in complex supply chain structure and process. The result was the inception of another concept.

What is 4PL or Fourth Party Logistics?
Fourth Party Logistics or 4PL is the concept proposed by Accenture Ltd in 1996 and it was defined as below,

"4PL or Fourth Party Logistics refers to a party who works on behalf of the client to do contract negotiations and management of performance of 3PL providers, including the design of the whole supply chain network and control of day-to-day operations"

 Top 3 reasons why customers would like to use 4PL providers according to the research by Nezar Al-Mugren, are as below:

- Lack of technology to integrate supply chain processes

- The increase in operating complexities

- The sharp increase in global business operations.

What is Supply Chain?

"Supply Chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer" - from Logistics and Supply Chain Management by Martin Christopher

10. What is Supply Chain Management?
Each researcher defines supply chain management differently. However, we would like to provide the simple supply chain management definition as below,

"Supply Chain Management (SCM) refers to the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served" - from Essential of Supply Chain Management by Michael Hugos

LOGISTICS REFERENCES:

http://www.supplychainopz.com,

Essential of Supply Chain Management by Michael Hugos, 

Supply Chain Management: A Logistics Perspective By John J. Coyle et al