30/09/2015
Origins Of Logistics
Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services, and related information from point of origin to point of consumption (including inbound, outbound, internal, and external movements) for the purpose of conforming to customer requirements.
Business logistics is a relatively new term and concept in modern business vocabulary; its origins can be traced back to World War II when the ability to mobilize personnel and material was critical to the outcome of the war. The first university level courses and textbooks dealing with business logistics appeared in the United States first in the 1960s.
The relatively recent development of business logistics has led, as it has evolved, to the use of a variety of terms to refer to it. In the 1960s and 1970s the terms physical distribution, distribution, materials management, and physical supply were common. Physical distribution and distribution refer to the outbound flow of goods from the end of the production process to the consumer; physical supply and materials management refer to the inbound flow of material to the production process. As the importance of coordinating the entire flow of material from the raw materials to the end consumer became recognized, the term business logistics became widely used to reflect the broadening of the concept. Today, the term supply chain management is coming into use to reflect the importance of forming alliances and partnerships to streamline the flow of materials. Business logistics remains the dominant, all-encompassing term for this important concept at this time.
The initial development of business logistics began in the 1950s with an understanding of the potential for cost savings if the management of the logistical activities was coordinated. There were a number of factors present in the 1950s that encouraged attempts to coordinate the management of logistical functions. In general, these attempts focused on cost savings and on the physical distribution or outbound part of the system. An important factor present in many organizations involved managers with military logistics experience from World War II. Not only did they have an understanding of the interrelationships found in logistics systems, but some of them had also used management science techniques developed during the war—such as linear programming and simulation, which are well suited to analyzing logistics problems.
Another factor that proved to be important in focusing management attention on logistics was the economic recession of 1958. Cost cutting was brought on by the recession, and many firms targeted logistics because it was believed to have more potential than manufacturing and marketing. Manufacturing had been studied by industrial engineers for many years, and it was believed that most of the excess costs had already been squeezed out. Marketing, although costly, was not understood well enough to intelligently cut costs. For example, most firms were probably spending more than was optimal on advertising, but the relationship between sales and advertising was not known well enough to tell which advertising costs to cut. In addition, marketing costs are often difficult to quantify, whereas logistics costs can be quantified. Tangible things that are moved and stored can be tracked.
