What is logistics?

Some people define it very generally and briefly saying e.g. Logistics is support; others give extensively long and precise definitions, which run for pages. There are almost as many definitions of logistics as the number of books written on the subject. This, to some extent, is also reflecting the very characteristics of logistics, which is undergoing a constant evolution of itself during the recent decades.

A widely adopted textbook defines logistics management as follows: "the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements" (D. Lambert 1998).

Starting from the late 1980's, logistics has been extended to cover a wider range of interest and activities. Such an enlarged concept and practice is called Supply Chain Management.

A typical definition of supply chain management is the following: “A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers” (Ganeshan & Harrison 1995).

Supply chains exist in both service and manufacturing organizations. Taking into account the most recent development of logistics and supply chain management, we describe logistics with the following definition:

Logistics is an optimization process of the location, movement and storage of resources from the point of origin, through various economic activities, to the final consumer.

This definition provides logistics with a comprehensive dimension and allow organizations to take full advantage of the philosophy, the way of thinking and the practice of logistics during the entire process of all logistics related activities to enhance the system efficiency in different areas. To better understand the exact meaning and scope of logistics we need to explain this definition by looking at some of its key words.

First we should look at the word process. This means that logistics is not an isolated action, it is rather a series of continuous and interrelated activities in which principles of logistics thinking, planning, organization, management and operation apply. Therefore logistics is a process concerned with various activities within an organization from the overall thinking to each individual operational task. Logistics is also a process that covers every element that associates with the product from the origin of resources to the final stage of consumption.

Logistics does not only concern materials. It interests in all resources needed for having the right product or service at the consumer's disposal. The resources here mean materials, capital, people, but they also include information, technology know how etc.

Logistics should include two levels of planning and organizing activities. The first is about where and when to get resources and products and where to send them, therefore a problem of location. This is the major difference between the traditional logistics concept and supply chain management, as the former is concentrating on "flows", whilst the latter concerns the problems of location as well. The second level concerns how to get the resource and products from the origin to the final destination, thus a problem of movement and storage. So far much attention has been paid to the second level of logistics or to the movement and storage of resources, but not enough to the fundamental question of location or in other words where the resources should be secured and transformed.

Logistics itself is not a new activity in the organization. It is rather a new way of thinking and organizing the existing activities under the an integrated concept of logistics. It is a process of optimizing systematically the system which includes each activity so that the total benefit can be maximized and the best overall result can be achieved. Optimization means to organize all relevant activities for the purpose of minimizing the total cost of providing the consumer with the value (product and/or service) required. This implies the elimination or minimization of all unproductive activities and activities that do not provide or provide less value added. The optimization is to be assured on the entire process of providing the product or service instead of on only a part of it.

Where should logistics start and where should it end? Again different views exist on this question. Some say that logistics commences with finished product from the end of production line to the consumer, or to get the right goods to the right place, at the right time, in the right form and at the right cost.