Paper Example on Logistics and Its Importance

Introduction

The word logistics and its activities have their origin from the military where during the war it was defined as the procedure of delivering supplies and equipment to soldiers. It evolved as a business model in 1950s due to the rising complexity of supplying different enterprises. Currently, in business sector, the Council of Supply Chain Management Professionals abbreviated as CSCMP describes logistics as a component of supply chain management (SCM) which plans, executes, and manages the effective and efficient forwarding and reversal movement and inventory of commodities and associated data between place of manufacture or production to place of consumption to meet needs of clients (Waller & Stanley, 78). Logistics plays a significant role in private firms by preventing loss and increase revenue. It gives business owners an understanding to comprehend why losses, spoilage, and theft increase with high stock as well as reduce expenses to attained high income. In public organisations, logistics is important since it helps improve customer experience. This is through the presence of automation of all actors involved in the logistics process. This, for instance, helps client track their orders to know the time consumed to receive their commodities hence ensuring they are satisfied and engaged.

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Importance of Logistics on a Macro Level and Economy Contributions

The absolute importance of logistics on a Macro level is that it causes growth and development in the economy. This means that as more goods and services are being manufactured, the cost of logistics expenditure will often rise. The decrease in relative expenditure ensures that firms are more competitive because such cost reduction affects the manufacturing costs of goods and services (Liu et al., 849). Logistics also offers essential contributions to the economy such as technological advances (Coyle, 398). This because logistics firms incorporate every function of supply chain into a form of digital plan. This strategy tracks orders, pallets, and vehicles to achieve higher visibility as well as grow logistics organisations' methods. Logistics also contributes to the creation of employment opportunities in an economy. This is through employing various individuals in different occupations in logistics companies such as in transportation and warehousing among other services.

Adding Value to the Economy and Firms Through Logistics

Logistics in any economy adds value by increasing the economic utility of goods and services through four forms. These include one, form utility which denotes to adding value to commodities via assembling, production, and manufacturing procedures. Second, through place utility which involves moving commodities from the point of manufacturing surplus to where their demand is high (Coyle, 34). Third, through time utility which involves ensuring goods are available where the demand is high when they are needed. Fourth, through possession utility which is effort via indirect and direct contact with clients to raise the customer desire to own a product or enjoy a service (Coyle, 35). Conversely, logistics adds value to different firms by incorporating various functions such as accounting, finance, manufacturing, and marketing among other in its process. For instance, manufacturers require to ship at least once a week or thrice in fortnight any raw components or semi-finished commodities required for manufacturing or transport final goods various distributors. The manufacturer cannot deliver products to producers in the absence of its delivery system hence value is created by the price changed for transportation of such commodities.

The Relationship Between Logistics and Supply Chain Management

The link between supply chain management and logistics can be explained through four different perspectives. One, a traditional perspective which contends that supply chain management is a component of logistics. Second, relabeling perspective which retitles logistics to what is currently known as supply chain management which decreases the field of SCM because it is equivalent to logistics. The third perspective is unionist which views logistics as a component of supply chain management that is SCM entirely incorporates logistics. Waller and Stanley (81) argued that SCM is the control of some business procedures such as returns, product commercialisation and development, procurement, production flow management, order fulfilment, demand management, customer service management, and customer relationship management. Additionally, these procedure incorporates much of operations management, marketing, purchasing, and logistics (Coyle, 399). The fourth perspective is inter-section which argues that supply chain management is not a union of operation management purchasing, marketing, and logistics among other functional fields. This is because SCM supervisors are engaged in dialogues and not on the transmission of the purchase order.

Major Subdivisions of Logistics

Logistics is seen as that component of organisational management which has some subdivisions which encompass service, event, military, and business logistics. However, these subdivisions are different in their role. For example, business logistics is an element of supply chain procedure which strategises, executes, and manages information about goods and services from their origin to their consumption destination to match the requirements of different customers (Mangan, Lalwani & Lalwani, 26). Military logistics is the integration and design of every supported feature purposely for the operational ability of the army as well as their equipment to enhance their efficiency, reliability, and readiness. Service logistics is the management, scheduling, and acquisition of materials, personnel, assets, facilities to sustain and support business and service functioning. On the other hand, event logistics is the network of personnel, facilities, and activities required to deploy, schedule, and organise various resources for an incident to occur and to effectively to withdraw after an occurrence (Mangan, Lalwani & Lalwani, 27). Despite having some differences, the four sub-categories of logistics share some similarities regarding requirements and aspects. For instance, all the subdivisions require transportation, scheduling, and forecasting.

The Relationship Between Manufacturing and Logistics

Logistics involves both movement and storage of goods from the place of production to the point of consumption. These goods are important raw materials in manufacturing which also require storage since in most instances they are not consumed at once in the production process. On the other hand, manufacturing ensures that goods are available for transportation and storage hence both processes must work jointly since they have an inter-dependent relationship. The tradeoff between logistics and manufacturing is that they must work at equilibrium to avoid a loss because when one process is reduced, it causes a decrease in the other procedure hence optimal effectiveness or return may not be achieved.

Works Cited

Coyle, John J., Et Al. Supply Chain Management: A Logistics Perspective. Nelson Education, 2016.

Liu, Xiaohong, Et Al. "An Empirical Examination of the Contribution of Capabilities to the Competitiveness of Logistics Service Providers: A Perspective from China." International Journal of Physical Distribution & Logistics Management 40.10 (2010): 847-866.

Mangan, John, Chandra Lalwani, and Chandra L. Lalwani. Global Logistics and Supply Chain Management. John Wiley & Sons, 2016.

Waller, Matthew A., and Stanley E. Fawcett. "Data Science, Predictive Analytics, and Big Data: A Revolution that will Transform Supply Chain Design and Management." Journal of Business Logistics 34.2 (2013): 77-84.