You are on page 1of 3


is the management of the flow of goods, information and other resources, including
energy and people, between the point of origin and the point of consumption in
order to meet the requirements of consumers (frequently, and originally, military
organizations). Logistics involve the integration of information, transportation,
inventory, warehousing, material-handling, and packaging. Logistics is a channel
of the supply chain which adds the value of time and place utility.
Origins and definition
The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio,
word, calculation, reason, speech, oration").
Logistics is considered to have originated in the military's need to supply
themselves with arms, ammunition and rations as they moved from their base to a
forward position. In ancient Greek, Roman and Byzantine empires, there were
military officers with the title ‘Logistikas’ who were responsible for financial
and supply distribution matters.
The Oxford English dictionary defines logistics as: “The branch of military
science having to do with procuring, maintaining and transporting material,
personnel and facilities.”Another dictionary definition is: "The time related
positioning of resources." As such, logistics is commonly seen as a branch of
engineering which creates "people systems" rather than "machine systems"....
Military logistics
In military logistics, logistics officers manage how and when to move resources to
the places they are needed. In military science, maintaining one's supply lines
while disrupting those of the enemy is a crucial—some would say the most crucial—
element of military strategy, since an armed force without resources and
transportation is defenseless.
The defeat of the British in the American War of Independence, and the defeat of
Erwin Rommel in World War II, have been largely attributed to logistical failure.
The historical leaders Hannibal Barca Alexander the Great and the Duke of
Wellington are considered to have been logistical geniuses.
Another field within logistics is called Medical logistics.

Logistics management
Main article: Logistics Management
Logistics management is that part of the supply chain which plans, implements and
controls the efficient, effective forward and reverse flow and storage of goods,
services and related information between the point of origin and the point of
consumption in order to meet customers' requirements. A professional working in
the field of logistics management is called a logistician.
The Chartered Institute of Logistics & Transport (CILT) was established in the
United Kingdom in 1919 and was granted the Royal Charter in 1926. The Chartered
Institute is one of professional bodies or institutions for the logistics &
transport sectors, that offers such professional qualification or degree in
logistics management.
Definitions of logistics outsourcing (3PL)
Logistics outsourcing, or third-party logistics (3PL), involves the utilization of
external organizations to execute logistics activities that have traditionally
been performed within an organization itself. According to this definition, third
party logistics includes any form of outsourcing of logistics activities
previously performed in-house. If, for example, a company with its own transport
facilities decides to employ external warehouse specialist, this would be an
example of third party logistics.
Another definition has it as “long and short-term contracts of alliances between
manufacturing and service firms and third-party logistics providers.” This
definition has been largely used on the needs that firm characteristics influence
the decision to contract multiple third-party logistics services, and therefore,
firms have to obtain cost savings and to concentrate on their core competencies.
The agreement also becomes more formalized with mutual commitments from both
parties. In such partnerships the partners attempt to keep their autonomy, while
at the same time collaboration is vital to develop more efficient results.
Sometimes, the agreement specifies that the external service provider fully or
partly takes responsibility over personnel, equipment and plant of the client
Similar to the above definition, Hertz and Alfredsson simply stated that logistics
outsourcing involves “an external provider who manages, controls, and delivers
logistics activities on behalf of a shipper”. The purpose is that both parties
develop a mutually beneficial and continuous strategic relationship and all or a
part of the logistics activities are performed in a satisfactory way for the
partners, with the guarantee of the quality of performance and benefits involved.
Nevertheless, to understand the concept of logistics outsourcing, there are five
levels of logistics outsourcing, as follows: 1) In-house logistics or in sourcing
logistics, or reverse outsourcing: means that the firm operates its logistics
activities in-house. 2) Logistics service provider (LSP), or asset-based logistics
(2PL): means the management of traditional logistics functions, such as transport
and warehouse. 3) Third-party logistics (3PL/TPL), or forwarding logistics, or
contract logistics: This can be also a close relationship between a firm and a
logistics provider not only to operate the logistics tasks but also the sharing of
information, risks and benefits under long-term contract. 4) Fourth-party
logistics (4PL/FPL), or supply chain logistics, or lead logistics provider (LLP):
4PL has been viewed as a single contact that manages and integrates all kinds of
resources and directs 3PL function along the supply chain with the sense of
strategic advantages, and long-term relationship. 5) Fifth-party logistics (5PL):
means serving the electronic business (e-business) market. Those 3PL and 4PL
providers manage all the parties in the supply chain on electronic commerce (e-
commerce). They key to success in this area is the information technology and
information systems.
Clarification of definitions of third-party logistics
In addition to the definitions of logistics outsourcing as given above, the term
third party, as well as that of fourth party, can be quite confusing, thus
Lynch[5] (2000), refers to the outsourcing of logistics activities to firms that
are capable of providing the services, rather than to third-party or fourth-party
logistics providers (3PLs and 4PLs respectively).
Nevertheless, the use of the term third-party logistics (3PL) is rising
considerably and therefore further discussion is needed. However third-party
logistics are better defined and exemplified as follows: “A 3PL is a relationship
between a shipper and third party which, compared with basic services, has more
customised offerings, encompasses a broader number of service functions and is
characterised by a longer-term, more mutually beneficial relationship” (Murphy and
“A 3PL is a logistics service provider, Poist, 2000, pg. 122). usually asset-
based, which focuses on specific elements of the supply chain in order to optimise
the physical movement of goods from the point-of-origin to the end-user” (Stock
and Lambert, 2001, pg. 5).
According to the definitions above, the 3PL provider specialises in a range of
logistics services with the purpose to sell or perform these services to firms
that are involved in manufacturing and distribution activities (Baziotopoulos,
2008). For example, small trucking companies are not 3PLs; however, some 3PLs own
transportation and other assets to perform logistics needs while others do not.
While many definitions suggest that 3PL involves the provision of multiple
distribution activities, they often do not include the concept of longer term,
mutually beneficial relationships between the parties. Therefore, while logistics
activities, in particular, transportation and warehousing, have been outsourced to
third parties, generally on a transaction-by-transaction basis, the characteristic
of the 3PL is that it, by contrast, is focused on a “formal, contractual, long-
term relationship between the provider and the user” (Murphy and Poist, 2000, pg.
Logistics Management Software
Software is used for logistics automation which helps the supply chain industry in
automating the work flow as well as management of the system. There are very few
generalized software available in the new market in the said topology. This is
because there is no rule to generalize the system as well as work flow even though
the practice is more or less the same. Most of the commercial companies do use one
or the other of the custom solutions.
But there are various software solutions that are being used within the
departments of logistics. There are a few departments in Logistics, namely:
Conventional Department, Container Department, Warehouse, Marine Engineering,
Heavy Haulage, etc.
The software used in these departments are,
Conventional department : CVT software / CTMS software /
Container Trucking: CTMS software /
Warehouse : WMS /
Business logistics
Logistics as a business concept evolved only in the 1950s. This was mainly due to
the increasing complexity of supplying one's business with materials and shipping
out products in an increasingly globalized supply chain, calling for experts in
the field who are called Supply Chain Logisticians. This can be defined as having
the right item in the right quantity at the right time at the right place for the
right price and is the science of process and incorporates all industry sectors.
The goal of logistics work is to manage the fruition of project life cycles,
supply chains and resultant efficiencies.
In business, logistics may have either internal focus (inbound logistics), or
external focus (outbound logistics) covering the flow and storage of materials
from point of origin to point of consumption (see supply chain management). The
main functions of a qualified logistician include inventory management,
purchasing, transportation, warehousing, consultation and the organizing and
planning of these activities. Logisticians combine a professional knowledge of
each of these functions so that there is a coordination of resources in an
organization. There are two fundamentally different forms of logistics. One
optimizes a steady flow of material through a network of transport links and
storage nodes. The other coordinates a sequence of resources to carry out some
Production logistics
The term is used for describing logistic processes within an industry. The purpose
of production logistics is to ensure that each machine and workstation is being
fed with the right product in the right quantity and quality at the right point in
The issue is not the transportation itself, but to streamline and control the flow
through the value adding processes and eliminate non-value adding ones. Production
logistics can be applied in existing as well as new plants. Manufacturing in an
existing plant is a constantly changing process. Machines are exchanged and new
ones added, which gives the opportunity to improve the production logistics system
accordingly. Production logistics provides the means to achieve customer response
and capital efficiency.
Production logistics is getting more and more important with the decreasing batch
sizes. In many industries (e.g. mobile phone) batch size one is the short term
aim. This way even a single customer demand can be fulfilled in an efficient way.
Track and tracing, which is an essential part of production logistics - due to
product safety and product reliability issues - is also gaining importance
especially in the automotive and the medical industry.