Logistics is the management of the flow of resources between the point of origin and the point of destination in order

to meet some requirements, for example, of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, equipment, liquids, and staff, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources are common motives.

What is logistics
The planning, execution, and control of the movement / placement of goods and / or people, and the related supporting activities, all within a system designed to achieve specific objectives.

Definition[Save to Favorites][See Examples] The management of business operations, such as the acquisition, storage, transportation and delivery of goods along the supply chain.

Competitive Advantage
A central theme of these series of articles is to show that effective logistics management can provide a major source of competitive advantage. The source of competitive advantage is found firstly in the ability of the organization to differentiate in the eyes of the customer, from its competition and secondly from operating at lower cost and hence at lower cost and greater profit. Put simply, successful companies either have a productivity advantage or they have a value advantage or a combination of the two. The productivity advantage gives a lower cost profile and the value advantage gives the product or offering a differential over competitive offerings. Let us take a brief look at the two methods of competitive advantage. Productivity advantage - In any industry we will find that there is one company that is able to achieve highest sales and thereby also achieve the lowest cost per unit due to economies of scale. There is substantial evidence to prove that in these cases that 'big is beautiful' when it comes to cost advantage.

The experience curve has its root in the earlier concept of the learning curve. The learning curve effect was discovered in the second world war where is was seen that as the number of units produced increased every additional unit produced could be created using less time and resources. Subsequently Bruce Henderson of the Boston Consultancy Group extended this concept to state that all costs - production related or not reduced and the volume of output increased. In fact to be more precise, the relationship exists between real unit costs and cumulative volume. Further it is recognized that cost decline exists only for value added and not for bought in supplies. Hence it has been accepted that one of the principle ways of improving cost advantage is through greater production and sales. However, through logistics we will demonstrate that there are multiple methods and means of improving cost efficiency through better logistics management. Value advantage - it has long been an axiom in marketing that customers don't but products they buy benefits. Put another this means that the product is not purchased for itself but for what it will deliver. The benefits may be intangible such as image or reputation. Unless the product can be differentiated in some way from the competition it will be seen as generic and will get only commodity prices. The values of the market can only be fully realized by segmenting the market and creating distinct value segments. In other words different groups in different markets place different values to benefits. Adding value through differentiation is a powerful way of achieving a defensible advantage in the market.

Gaining Competitive Advantage through logistics

One of the distinguishing features of the value chain is to postpone the final creation of the product as much as possible. The idea behind this is that maximum flexibility can be achieved through postponement by obtaining time place and form utility. This can be achieved by aggregating production systems rather than catering to individual customer requirements. Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering, and supporting its product. Each of these activities can contribute to a firm's relative cost position and create a base for differentiation... the value chain disaggregates a firm into its strategically relevant activities in order to understand the behaviour of costs and the existing and potential sources of differentiation. A firm gains competitive advantage by performing these strategically important activities more cheaply or better than its competitors.

Understanding logistics management

The mission of logistics management is to plan and coordinate all activities necessary to achieve desired levels of delivered service and quality at lowest possible cost. Logistics must therefore be seen as the link between the market and the company. The scope of logistics spans the organization from raw material management to delivery of the final product.

To achieve company wide integration requires quite a different orientation than what is seen in the conventional organizations.

The supply chain and competitive performance

Traditionally most organizations view themselves as entities that exist independently from others and indeed need to compete with them in order to survive. However such a philosophy can be self defeating if it leads to unwillingness to corporate in order to compete. Behind this seemingly paradoxical concept is the idea of supply chain management. The supply chain is the network of organizations that are involved, through upstream and downstream linkages in the different processes that produce value in the form of products and services in the hands of the ultimate consumer. A typical example of the new type of organization that we discuss is Apple Computers where over 90% of the cost of sales of a typical Apple computer is purchased content. Clearly this trend has many implications for logistics management, not the least being the challenge of integrating and co-ordinating the flow of materials from a multitude of suppliers, often offshore, and similarly managing the distribution of the finished product by way of multiple intermediaries. There are still some companies that will reduce cost and improve profit margins at the expense of supply chain partners. These companies do not realize that they are simply transferring costs upstream and downstream and this does not make them any more competitive. All costs incurred by intermediaries will ultimately reflected in the price charged from the end-user. The leading logistics companies recognize the fallacy of this conventional approach and instead seek to recognized Logistics management is simply the management of flows of materials within the organization but supply chain management recognizes that this is simply not enough and linkages with external supply chain partners upstream and downstream is essential. For the purposes of clarity we define supply chain management as: "The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole"

The changing logistics environment

As the new competitive context of business continues to change, brining with it new complexities and concerns for management generally, it also has to be recognized that the impact of these changes on logistics can be considerable. Of the many issues facing organizations today perhaps the most challenging are in the area if logistics. The pressing issues facing organizations today are listed below: The customer service perspective Time compression Industry globalization Organizational integration

The mission of logistics management

abril 12, 2010
It will be apparent form the previous comments that the mission of logistics management is to plan and co-ordinate all those activities necessary to achieve desired levels of delivered service and quality at lowest possible cost. Logistics must therefore be seen as the link between the marketplace and the supply base. The scope of logistics spans the organization, from the management of raw materials through to the delivery of the the final product. Logistics management, from this total systems viewpoint, is the means whereby the needs of costumers are satisfies through the co-ordination of the materials and information flows that extend from the marketplace, through the firm and its operations and beyond that to suppliers. To achieve this company-wide integration clearly requires a quite different orientation than the typically encountered in the conventional organization. For example, for many years markienting and manufacturing have been seen as largely separete activities within the orgranization. At the best they have coexisted, at worst there has been open warfare. MAnufacturing priorities and objectives have typically benn focused on operating efficiency, achivied through long productions runs, minimized set-ups and change-overs and product standaridization. On the other hand, marketing has sought to achieve competitive advantage through variety, high service levels and frequent product changes. In todays more turbulent enviroment there is no longer any possiblility of manufacturing and markenting acti ng independently of each other. The internecine disputes sounter-productive to the achievement of averall corporate goals. Its no coincidence that in the recent years both marketing and manufacturing have become the focus of renewed attention. Marketing as a concept and philosophy of costumer orientation noe enjoys a wider acceptance than ever. It is now generally accepeted that eh need to understand and meet costumer requirements is a prerequisite for survival. At the same time, in the search for improved cost competitivities, manufaturing management has been the subject fo a massive revolution. The last decade has seen the rapid introduction of flexible manufacturing systems (FMS), of new approches to inventory based on materials requirements planning (MRP) and just-in-time (JIT) methods, perhaps most important of all, s sutained emphasis on total quality management (TQM). Equally there has been a growing recognition of the critical role that procurement plays in creating and sustaining comeptitive advantage as apart of an integrated logistics process. Leading-egde organizations now routinely include supplysides issues in the development if their strategic plans. Not only is the cost of purchased materials and supplies a significant aprt of total costs in msot organizations, but there is a major opportunity for leveaging the capabilities and competencies of suppliers through closer integration of the buyers and suppliers logistics processes. In this scheme if things, logistics is therefore essentially and integrative concept that seeks to develop a system-wide view of the firm. It is fundemantally a planning concept that seeks to create a framework through which the needs of the marketplacecan be translated into a manufacturing strategy and plan, which in turn links into a strategy and plan for procurement. Ideally there should be a one-plan mentality within the bussiness which seeks to replace the conventional stand-alone and separate plans of marketing, distribution, production and procurement. This, quite simply, is the mission of logistics management.