DHL Logbook - in cooperation with

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Definition of logistics
Logistics is complex and simply everywhere
Modern logistics involves planning, creating and monitoring flows of goods and
information. To carry out these jobs, logisticians need to understand and
conceive business processes. Although these complex structures may often
remain hidden from consumers, logistics has long been an indispensable part
of daily life. Across industries, it ensures that goods and merchandise are
always where they are needed. Logistics fuels innovation and creates jobs
around the world.

Significance and origins of logistics

Every day, we come in contact with logistics, either directly, e.g., when the
parcel carrier rings the doorbell and delivers merchandise we ordered the day
before, or indirectly, e.g., when we see the word logistics, supply chain
management or contract logistics on a truck traveling down the highway.
However, logistics is much more than parcel delivery or freight forwarding.
A product also contains numerous logistics services by the time it reaches the
consumer. For example, a company requires logistics support in production
planning, material procurement, product assembly and delivery of the finished
item.
Logistics must ensure that a recipient is supplied from a point of origin in
accordance with his requirements with the correct product (in quantity and
variety), in the right condition, at the right time and in the right place at
minimum cost. (Pfohl, H.-Chr., 2004)
In these terms, logistics amounts to more than the mere transport of a good
from Point A to Point B. Rather, it is also closely connected to organizing and
monitoring the entire value chain - so-called supply chains .
Logistics is that part of supply chain management that plans, creates and
monitors the efficient, cost-effective flow and storage of goods, semi-finished
items and manufactured products as well as related information between the
point of origin and the point of consumption in order to meet customers'
requirements. (Council of Supply Chain Management Professionals | CSCMP,
2007)
The etymology of the word logistics is often thought to be related to armed
forces, which uses the term to describe all tasks related to troop support.
However, the origins of logistics run back much deeper into the past. In ancient
times, for instance, cross-border procurement logistics and building
techniques led to the erection of the Great Pyramid of Giza.

Logistics trends and challenges

Today, logistics plays a key role in the economy, and the market volume of
logistics has already reached a substantial level in many economies as a
result. Companies that are successful worldwide have long recognized the
critical role logistics plays in creating added value. In addition, a close focus on
the customer is a critical factor for companies working together in a supply
chain.
In the years ahead, the significance of global logistics markets will continue to

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increase in response to economic and social conditions. The topic of

megatrends has now gained a prominent place on the business agenda, and
this development will have a further impact on logistics. These megatrends
include increasing globalization, a development that is related to the
internationalization of procurement, production and sales as well as the
evolution from a manufacturing-based society to a service society. Other
aspects include shortened product life cycles and growing environmental
concerns.

Functional areas of logistics service providers

Every production and retail company depends on logistics for production and
distribution. Today, these tasks are usually assumed by specialized
companies, or logistics service providers.
One look at the functional areas of logistics service providers shows the
diverse range of logistics services and opportunities. These extend from
transport, handling and storage of products through standardized courier,
express and parcel services to customer-specific logistics solutions (contract
logistics). As a result of such activities, car doors can be delivered directly to
an automakers production line in precisely the required order and at exactly
the right time. Globally networked logistics service providers also offer firstclass specialized solutions for the logistics of large events or for the
temperature-controlled shipments of exotic fruits from the Caribbean to
Europe. Another example for the importance of temperature-controlled
shipments would be pharmaceutical products.

Logistics tasks and processes

To gain a better view of different perspectives, the entire spectrum of logistics
services can be broken down into individual areas. The first focus of this
examination is an overview of fundamental logistics tasks. These can be
subdivided into
Order processing
Warehouse or Warehousing
Packaging
Transport
By tracing the flow of a product from the procurement of raw materials through
manufacture of the end product to the delivery to the customer, one can gain a
broad view of logistics processes. In this context, a distinction can be drawn
among the phases of
Procurement logistics
Production logistics
Distribution logistics
Spare-parts logistics
Reverse logistics
The task- and phase-specific perspectives are closely linked. This is because
all types of tasks can be performed in every step of the logistics process. As a
result, there are warehouses both in procurement as well as in production and

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distribution.

Logistics management
The tasks and processes carried out by logistics systems require an efficient
organizational structure and the management of all logistics activities. Just like
other areas of a company, numerous planning and monitoring techniques are
available to support logistics management.
Suitable methods and instruments exist for strategic logistics planning, supply
chain management, management of international logistics chains as well as
logistics controlling. Particularly for logistics service providers, the strategic
planning of logistics networks is a decisive factor for success.

Innovative technologies in logistics

New technologies are often the cornerstone for logistics innovations. In
intralogistics, for instance, a shift from central management of material flows to
decentralization and modularization in conveyor technology is taking place. As
part of this change, standardized mechanical elements that can be freely
combined with one another draw on their own individual power supplies.

A mutual relationship exists between developments in identification and

communications technology (I/C Technology) and logistics. On one hand,
logistics is one of the most important commercial areas of application. With its
growing needs, it acts as a catalyst for advances in IT. On the other hand, new
technological opportunities form the basis for new concepts in logistics. In this
context, logistics advances include barcodes and RFID technology (Radio
frequency identification). Thanks to this technology, real-time information can
be stored and transmitted using the RFID tags on pallets , containers and
parcels to efficiently manage flows of goods. In addition, logisticians envision
scenarios in which intelligent logistics objects find their own way through the
material flow, managing and organizing the flow of goods by themselves in the
process.
The integration of various applications into software systems offers logistics
further opportunities to optimize the processes of global trade. For instance,
internal warehouse management systems and IT systems such as track &
trace systems often are components of modern logistics. Electronic platforms
are also becoming increasingly important. More and more shipping agents,
freight forwarders and service providers are turning to the Internet in order to
gain an additional way to offer their services. Moreover, innovative measures
for the protection of the environment, e.g. delivery trucks featuring hybrid
technology or special parcels for CO2-neutral shipments, play an increasingly
important role.

Recommended reading
Contemporary Logistics | Murphy Jr. / Wood 2007
Logistiksysteme | Pfohl 2004
Fundamentals of Logistics Management | Grant / Lambert / Stock / Ellam 2006

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Logistikmanagement | Pfohl 2004

References
URL
http://www.dhl-discoverlogistics.com/cms/en/course/origin/defintion.jsp

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