Difference Between Logistics And Logistics

1061 Words5 Pages
1.1 Logistics Management Definition Logistics Management concept changes from organization to another. However, the most widespread definition is published by the Council of Supply Chain Management (CSCMP, n.d) which have considered logistics as "the part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information from the point-of-origin to the point-of-consumption in order to meet customer 's requirements". Additionally, USAID (2011) defined logistics management according to the consumer hopes as a process which guarantees that the right merchandise, in the right amounts and right condition, are carried to the perfect location, at…show more content…
Logistics cost is considered as a major expense for the firms. In the big industrialized countries, logistics contribute a high percentage of the gross domestic product (GDP) (Cupido, 2012). Thus, this will cause some impacts on the inflation, interest rates, productivity and different sides of the economy (Hertz & Alfredsson, 2003). According to Cupido (2012), “In the United States back in the 90’s logistics contributed 10.5% 0f the GDP that is almost $800 billion divided on transportation of freights, warehousing, storage, carrying inventory, and other expenses in logistics”. Additionally, if the logistics activities cost is continuously increasing, this will lead to a higher logistics percentage of the GDP. Therefore, this will turn into an increase in the product prices, in which the demand will decrease and affect the company 's profits. As a result, working under an efficient logistics system, will help improving the economy (Cupido,…show more content…
Customers believe that the desired products should be available on the stores shelves at any time they require. As a result, lack in fulfilling customers demand will cause a serious issue for the business. On the other hand, regarding the production side, holding inventory is an essential logistical process to provide continuous supplies to the business. Whereas carrying inventory requires huge capital investments in the form of warehouse and insurance; therefore this will be costly. In the term of solving this problem, logistics companies tend to decrease the amount of inventory by applying continuous replenishment (Consulting & Decision-Economics, 2002). In addition, there is a trade off between small but frequent deliveries and large but fewer deliveries. In first case transportation cost will be high whereas in second case inventory holding cost will be high. Efficient logistics can help overcome this issue by minimising transportation
Open Document