SUPPLY CHAIN MANAGEMENT UNIT 1 MODULE 1

Introduction and Historical Perspective to Logistics

What is logistics?

Logistics is a subset of supply chain management. Before we understand logistics, we must understand
what entails supply chain management . A supply chain is a network of firms who collectively convert a
basic commodity into a finished product that is valued by end-customers and manage returns at each
stage.

Logistics is defined as the management of material flow and information flow throughout a supply chain
to meet the customer’s needs. Logistics is basically the process of getting the right product, to the right
customer, in the right quantity, right condition, at the right place, right time, and the right cost.

Material flow

Material flow is defined as the movement of the physical product from the 2 nd tier supplier all the way
down to the customer. This flow is usually uni-directional, that is, it only flows one direction from
supplier to customer; however, in certain instances, when the customer returns the product, the flow
occasionally goes in the other direction. A typical flow of materials usually begins with the raw materials
suppliers to manufacturers to warehouses and distribution to the final customer.

Information flow

Information flow is the flow of information from supplier to customer and from customer back to
supplier. This flow is bi-directional, that is, it goes both direction in the supply chain. The type of
information that flows between customers and suppliers include quotations, purchase orders, delivery
status, invoices, customer complaints and so on. For supply chain to be successful there must be
constant interaction between supplier and customer. In many cases, other partners like distributors,
dealers, retailers, logistic service providers are involved in the information network.
SUPPLY CHAIN MANAGEMENT UNIT 1 MODULE 1

Each partner of the chain transforms inputs in the form of materials and information into outputs in
the form of goods and services. Each firm in the supply chain is directly responsible for a process that
adds value to the product. The supply chain, which is also referred to as the logistics network, consists
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of suppliers, manufacturing centers, ware-houses, distribution centers, and retail outlets, as well as
raw materials, work-in-process inventory, and finished products that flow between the facilities.

TYPES OF LOGISTICS

Definition and types:

(a) business;

(b) military;

(c) events; and

(d) service.

 Business logistics: The process of the supply chain that plans, implements, and controls the
efficient flow and storage of goods, service, and related information from point of origin to
use in order to meet customer requirements.

 Military logistics: The design and integration of all aspects of support for the operational
capability of the military forces (deployed or in garrison) and their equipment, to ensure
readiness, reliability, and efficiency.

 Event logistics: The network of activities, facilities, and personnel required to organize,
schedule, and deploy the resources for an event to take place and to efficiently withdraw after
the event.

 Service logistics: The acquisition, scheduling, and management of the facilities/assets,

personnel, and materials to support and sustain a service operation or business.