What is logistics?

The term logistics refers to the planning, management and control of tangible as well as intangible flows of goods. In logistics, the flows of goods, information and people are planned, managed and controlled. Logistics can be divided into various subareas and is made up of numerous individual processes that interlock to ensure that the overall process runs smoothly. As the digitalization of logistics progresses, the degree of automation is also increasing. The use of cutting-edge technologies in logistics is leading to a steady reduction in process costs and times as well as susceptibility to errors.

Logistics Definition of the term

The word logistics means “to house, quarter, accommodate” and is derived from the French “loger” = “to lodge.” Around 1830, it was first used by the military to refer to the theory and practice of supply, transportation, and delivery systems. French military theorist Antoine-Henri Jomini defined it in his writing The Art of War (French “Précis de l’Art de la Guerre”), deriving “(l’art) logistique” (Engl. “the art of quartering troops”) from the French word ‘logis’ (“lodging”). The historical derivation of the word shows its relation to military supply, from which logistics springs. Logistics is derived from ancient Greek word λογιστική (“logistikē”, in English: “practical arithmetic”).

Tasks of logistics

The Seven Rights definition according to Grosvenor E. Plowman (1964) has prevailed as a definition of goals. He singles out seven essential aspects that have to be carried out “correctly” in transportation logistics.

Image for article what is Logistics in which all modes of transport are shown.He describes logistics as ensuring the availability

– of the right goods

– in the right quantity,

– in the right condition

– at the right place

– at the right time,

– for the right customer and

– at the right cost.

To put it more simply: in logistics, service providers ensure that goods are delivered in the best possible condition to the specified location at the agreed time.

The core task of logistics is to ensure that the transport, storage, provisioning, procurement and distribution of goods function properly. Management and control ensure that everything runs smoothly.

History of logistics

As described earlier, the concept of logistics has its origins in the military. But logistics plays a fundamental role not only in the military, but in global development as a whole – and has for nearly 5,000 years. Since the construction of the pyramids in ancient Egypt, logistics has made remarkable progress. Time and again, ingenious logistical solutions have laid the groundwork for the transition to a new historical and economic era. Examples of this fundamental progress include the invention of the ocean freight container and the creation of novel service systems in the 20th century. Both are integral parts of globalization today.

 


This might also be of interest for you: The history of global supply chains


 

Milestones in the history of logistics

Around 2700 BC: Technique of transporting materials in pyramid construction. Blocks of stone weighing several tons were transported and assembled at the construction site. To build the Great Pyramid of Giza, 146 meters high and weighing 6 million tons, the Egyptians needed sophisticated material handling equipment to move the massive building blocks and put them in place. Even today, we still can’t quite explain how this level of precision was achieved using lifting equipment and transportation.

Around 300 BC: Revolutionary Greek rowing ships. The new basis of intercontinental trade. The revolutionary invention of rowing ships created the basis for rapid travel on the high seas. This invention formed the basis for the creation of enormous logistical supply systems, which were important for mobile army camps. Alexander the Great used this logistical capacity to take his troops, their families and all the weapons of war on campaigns that stretched as far as India.

Around 700 AD: The procurement logistics for the construction of the Mezquita Mosque. The columns for the mosque came to Spain from all parts of the Islamic empire. Construction of the famous Mezquita Mosque in Cordoba began in 756 under the Caliph of Cordoba of the Umayyad dynasty. It is considered the largest mosque in Europe. Extraordinary procurement logistics were required to bring the building materials for the columns to Spain.

Ca. 1200 AD: The international “Hanseatic” network. Cooperation in transportation and international maritime traffic. In 1188, the Hanseatic League’s base on the North Sea was founded in Hamburg to make maritime traffic safer and to represent trade interests abroad. Hanseatic trade extended from the Black Sea to Reval, today’s Tallinn/Estonia. From today’s perspective, the League’s cross-border trade already bore strong similarities to the European Union.

Ca. 1500: Advanced postal service in Europe. The first chronologically accurate postal service. Based on an agreement with Philip of Burgundy, Francis of Taxis organized the first postal service with strictly defined transit times. Letters were sent to Paris, Ghent, Spain and the imperial court in Vienna. Given the infrastructure of the time and the political fragmentation caused by a multitude of small principalities, the mail reached its destination with very little delay.

Around 1800: Discovery of new means of road transport and the railroad. The practical use of the steam engine, the invention of vehicles, railroads and (steam) ships, and the discovery of petroleum ushered in a new economic era, bringing new tasks, tools and opportunities for logistics.

WW1 and WW2: Military logistics during the world wars. Transfer of military logistical concepts to the business world. During World War I, military logistics was the critical link in the network of supplying troops with rations, weapons, and equipment. With the outbreak of World War II, logistics became further refined in the area of resupply. As a result, logistics gained an important place in the business world as well.

1956: Invention of the sea container. The invention of the sea container by the American Malcolm P. McLean changed the production conditions for almost all industries in the world and subsequently also changed consumer habits. Even today, the sea container ensures that ports receive large orders, new countries and regions experience an economic boom, markets are created and products from all parts of the world are bought and sold at reasonable prices. In this way, the container has made an important contribution to the structural development of world trade, the boom in international flows of goods and globalization as a whole.

1970 / 1980: Kanban and Just-in-Time. The Kanban and Just-in-Time (JIT) concepts were developed and introduced at the Japanese Toyota Motor Co. by Taiichi Ohno with the aim of effectively linking logistics with other operational functions. Particular emphasis was placed on the procurement area.

Around 1990: QR and ECR technologies. Logistics concepts with a particular focus on distribution. Quick response and efficient consumer response (ECR) technologies were developed in the 1990s and used by many retailers and wholesalers. These technologies had a major impact on logistics. The result of this technology, distribution centers tasked with moving goods instead of storing them. This allows companies to speed up their response times to market developments and build efficient goods supply systems.

From 2000: Supply chain management and globalization. Supply chain management is a term that has grown enormously in importance since the late 1980s. Today, supply chain management is seen as a holistic view of key business processes that extend from the supplier’s vendor to the end consumer. Accordingly, supply chain management is a highly interactive, complex system that requires the simultaneous monitoring of many conflicting objectives – all within a global context. Today, globalization continues to advance. In this context, efficient logistics and smooth supply chain management create a decisive competitive advantage for companies expanding in global markets.

Today: Logistics 4.0 – the digitalization of logistics. The digital transformation, in particular the networking of logistical processes, ensures greater transparency in supply and shipping chains and thus better supply chain management. In this way, digitization and automation lead to the optimization of material flows and the use of resources in logistics. At the same time, as a prerequisite and consequence of digitization, an interacting flexibilization of business models, processes and partner networks is emerging. Logistics processes become faster, more efficient, less prone to errors, and more sustainable.

Daniel Mahnken
Daniel Mahnken is a Head of Corporate Communications at Saloodo!. As a qualified journalist, writing is practically in his blood. After studying sports journalism, he wanted to become Germany’s Next Sports Commentator, but then he discovered logistics and has been stuck with it ever since.

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