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What is Logistics - Logistics definition and its importance in business?

Phaata Phaata

What is Logistics? Logistics is part of the Supply Chain which includes the following stages: Planning, Implementing and Controlling the flow of goods and services as well as the information related to abovementioned flow.

Logistics services always appear from the first production point to the final consumption point to satisfy customer requirements.

The stages from start to finish of a logistics chain are basically summarized as below chart:

what-is-logistics

"What is Logistics?" according to the Government of Vietnam.

Vietnamese law also has the answer for "What is Logistics?" in Article 233 of the 2005 Commercial Code, stating logistics services as a commercial activity.

In this Commercial Code, the traders who organize the implementation of one or more stages including: Receiving, Transportation, Storage, Customs clearance, or other paperwork, directly or indirectly Consulting customers, participating in Packing, Packaging, Marking, Delivery, or other services related to goods as agreed with customers for remuneration ...

So far, there is no Vietnamese word that has enough meaning to replace "Logistics", so logistics services are transcribed in Vietnamese as “lô-gi-stíc” service.

 

"What is Logistics?" according to International organizations.

As defined by CSCMP - Council of Supply Chain Management Professionals: Logistics Management is part of Supply Chain Management. In particular, logistics management will aim at the efficiency of the chain of goods, services, and information in both directions, from producer to consumer and vice versa.

To do this, Logistics management professionals must Plan, Execute and Manage all operations from first place to last, with the highest goal of ensuring customer satisfaction.

 

The origin of "Logistics"

According to the original Oxford dictionary, logistics is “the branch of military science relating to procuring, maintaining and transporting material, personnel and facilities”.

The reason for this definition is because Logistics is considered by many to be derived from the word "Logistique" in French, which first appeared in the book "The Art of War" by Baron Henri, a general under Napoleon.

 

what-is-logistics

 

Some other opinions say that "Logistics" comes from Greek, with two words "Logosh" - Reason and "Loyistikosh" - Accounting specialist.

Later, the manufacturing and service industries began to borrow Logistics and use the term "Business Logistics", which was heavily applied by the French army during the World War.

Therefore, we have a new definition of Logistics in the book "New Oxford American" as follows: “the detailed coordination of a complex operation involving many people, facilities, or supplies” and “the detailed organization and implementation of a complex operation”.

 

The Meaning of Logistics in Business

No matter how well the business focuses and invests in the design and manufacture of products / services to meet the needs of customers, if those products / services do not reach customers at the right place, at the right time business will still fail.

That is the meaning and importance of logistics in the economy.

 

what-is-logistics

 

But that is just the tip of the iceberg, as defined from the outset, Logistics emerges from start to finish of a supply chain, so the materials are bought, transported, and stored until they are shipped. The more efficient it is to use, the more profitable the business will be.

In addition, the coordination of resources for the timely provision and use of the available materials is also a factor to "survive" in this economy.

On the customer side, if the product / service is produced on time but not delivered in time, the customer satisfaction will decrease, negatively impact the profitability and the possibility of long-term survival for any business.
 

Phaata

 

Ref:

1/ Ancient Logistics – Historical Timeline And Etymology 

2/ Oxford Dictionaries 

3/ Council of Supply Chain Management Professionals

 


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