Harshish Arora - 17BSP1018 (LOGISTICS INDUSTRY).docx - LOGISTICS INDUSTRY WHAT IS LOGISTICS It is generally the detailed organization and implementation

LOGISTICS INDUSTRY WHAT IS LOGISTICS? It is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations. The resources managed in logistics can include physical items such as food, materials, animals, equipment, and liquids; as well as intangible items, such as time and information. The logistics of physical items usually involves the integration of information flow, materials handling , production , packaging , inventory , transportation , warehousi ng , and often security . Why the product has evolved?  First , physical distribution and logistics were envisioned to have broad responsibilities for managing activities associated with product flow from the points of raw material acquisition to the end consumer.  Second , the total cost concept served as the basis for managing certain activities collectively. Activities such as transportation and inventory control were collectively managed because they were in cost conflict.  Third , physical distribution and logistics were embraced by both marketing and production areas, but they gave little attention to issues of product flow. As a result, physical distribution and logistics began to develop as an independent function within business. This action was spurred by the recognition that logistics costs were high and that there was an unrealized opportunity to reduce them.

 Fourth , among the areas of purchasing, production, and physical distribution, there was little coordination, even though they had a direct effect on product flow management. This coordination was to become a major theme in later years. LOGISTICS PAST SCENARIO (1950-2000) How the product has evolved? Before the 1950s, logistics was thought of in military terms. It had to do with procurement, maintenance, and transportation of military facilities, materiel, and personnel. Although a few authors before this time began talking about trading one cost for another, such as transportation costs with inventory costs, and discussed the benefits to the firm of getting the right goods to the right place at the right time, the organization within the typical firm around the activities currently associated with logistics was fragmented. The below picture show how the organisations must have organized key activities at that time in terms of the responsibilities and objectives for marketing, finance, and production. This fragmentation led to conflicts among those responsible for logistics activities with the result that, from the firm’s perspective, costs and customer service were sub-optimized. The reasons for this fragmentation were said to be:  A lack of understanding of key cost trade offs  The inertia of traditions and conventions  Areas other than logistics were thought to be more important  The organization may have been in an evolutionary state