What Exactly are Corporate Logistics?
“Logistics must be simple—everyone thinks they’re an expert.”— Anonymous.
Can corporate logistics be simple?
What do the pyramids of Egypt, Alexander the Great and supermarkets have in common? Logistics. (Don’t worry, it’ll all become clear in a moment.) “Logistics” is a word that often gets thrown around, but few people have a firm understanding of it. It’s one of those words—like “ironic”—that people use without fully grasping. Maybe they just think they look cool when they run their hands through hair in an agitated way and say things like, “This is a logistical nightmare!” to no one in particular.
As a concept, logistics has been around since the building of the pyramids, according to Discover Logistics. After all, the stone blocks used to build pyramids didn’t just appear fully formed at the pyramid site—they needed to be transported to their final resting place. By 300 BC, logistics was important enough in war that Alexander the Great even had a quote about them:
“My logisticians are a humorless lot…they know if my campaign fails, they are the first ones I will slay.” (Found at Universal Cargo.)
While most procurement managers needn’t worry about being slain because of a logistics issue, logistics still plays an important role in the success of any business. So, what are these logistics that are so vital to an organization’s success?
We scoured the Internet and came across a variety of definitions, from the somewhat simple to the almost unreadable. After hours of searching, we’ve reached a definition that makes sense to us.
LogisticsDegree defines logistics as “The efficient flow and storage of goods from point of origin to the point of consumption.” This includes the planning, coordinating, packing, storing, and moving of items related to the functions of a business, according to The Chronicle. Logistics can be inbound or outbound, so even if your business doesn’t sell products to customers, you still deal with logistics in purchasing items that help you run your business.
Image Credit: jennie-o
Small and large businesses alike have logistical needs, just on a different scale. A person selling muffins at the local farmers’ market must find a kitchen to bake muffins in, purchase ingredients and tools to make the muffins, package the muffins, store the muffins if they’re made ahead of time, transport the muffins to the farmers’ market, purchase a table on which to sell the muffins, and purchase a sign to attract customers. Those logistics might only take a few minutes to figure out, but they still count as logistics.
A large company’s logistics might involve bringing in components from overseas for a product, finding a factory to build the final product, finding a facility to store the product until it’s shipped to customers, packaging the product, and shipping the product to customers nationally and internationally. They may also have to deal with reverse logistics, which happens when customers return merchandise.
Whether a company is large or small, dealing with inbound and/or outbound logistics is part of the organization’s success and profitability. Successful companies take their logistical issues seriously and figure out ways to increase profitability and productivity through improved logistics. For example, supermarkets. “Supermarket companies are big logistics companies, and one of the ways we’ve increased profitability in the past is by re-evaluating how they do logistics,” Ronald Burkle, founder The Yucaipa Companies, LLC.
Image Credit: Dean Hochman
Now when you use the word “logistics” you know exactly what you’re talking about.
