INTRODUCTION

What is LOGISTICS?
Logistics is about moving materials, information and funds from one business
to another or from a business to the consumer. It is a vital part of the
business economic system and is a major global economic activity.
Inf a c t 1 0 -
15 per cent of product costs are logistics related. Worldw
i d e , logistics constitutes about $2 trillion a year. For any country, the
logisticscost is estimated between 9 and 20 per cent of its GDP.Logistics is
the management of the flow of goods,informationandother resources,
includingenergyand people, between the point of
origina n d t h e p o i n t o f c o n s u m p t i o n i n o r d e r t o m e e t t
h e r e q u i r e m e n t s o f consumers (frequently, and originally). Logistics
involve the integrationof information,transportation,inventory,warehousing,
material-handling, and packagingEvery company dreams of achieving the
seven R's - delivering theright product in the right quantity and the right
condition, at the right place,at the right time, for the right customer at the
right cost. Effective logisticsmanagement alone can make
this possible.Lo g i s t i c s i s o n e o f t h e o l d e s t a n d a l s o t h e n e we s t
a c t i v i t i e s o f b u s in e s s management. It involves combining diverse functions
and service providerswho may be culturally and objectively different.
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In the past, quality of products and services

w a s t h e k e y differentiating factor for companies operating in
the same market. In duecourse, quality and low cost became the winning
combination.To d a y, r e s p o n s i v e n e s s t o t h e c u s t o me r s ' n e e d s i s t h e
d e t e r mi n i n g factor. An enterprise that caters instantly to the needs of the
customer is thewinner. Integrated logistics can serve as a potent tool for success
in today'scompetitive business
environment.L o g i s t i c s i s a n o r g a n i z e d p r o c e s s o f m a
n a g i n g t h e f l o w o f merchandise from the source of
s u p p l y - t h e v e n d o r , w h o l e s a l e r o r distributor - through i
nternal processing functions
like warehousing andt r a n s p o r t a t i o n , u n t i l t h e m e r c h a n d i s e i s
s o l d a n d d e l i v e r e d t o t h e e n d customer.Logistics management
aims to reduce inventory-holding costs andimprove profits, while
enhancing customer satisfaction.Anything can be ordered online,
but receiving a tangible product isimpossible. The difference between
e-business success and failure lies in acompany's ability to manage
the logistics.
A recent US study found that logistics costs account for almost 10% of the
gross domestic product. The process itself covers a diverse number
of functional areas. Involved in logistics are transportation and traffic, as
wella s s h i p p i n g a n d r e c e i v i n g . I t a l s o c o v e r s s t o r a g e
a n d i m p o r t / e x p o r t operations.
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The concept of logistics can be applied to specific areas of

business.Acquisition logistics, for example, covers everything involved in
acquiringlogistics support equipment and personnel for a new weapons system
for
them i l i t a r y . T h i s i n c l u d e s i d e n t i f y i n g , d e s i g n i n g , d e f i n i n g
, d e v e l o p i n g , producing, delivering and installing the new weapons
system.A n o t h e r a r e a i s I n t e g r a t e d L o g i s t i c s S u p p o r t ( I L S ) .
T h i s i s a management function that provides funding, planning and controls
to assurethat the system meets the expected requirements. ILS is also
expected toma k e su r e t h e p r i c e o f t h e g o o d s i s r e a s o n a b l e a n d
t h e p r o d u c t i s o f t h e required quality.Many businesses that deal with
supply of goods or services have their own logistics department. For example, a
company supplying photocopying paper around the world will have a logistics
team. Themanager will overseeor delegate to his staff the process from the
point of origin. The team willdeal with the acquisition of paper from the
paper supplier all the way to thecustomer who requests the paper. The supplier
and buyer may be located indifferent countries.It is the logistics team who must
make sure that products can be obtainedat a reasonable price. They then have to
make sure the product is shipped ontime and will arrive when expected. The
logistics team also has to deal
withi mp o r t i n g a n d e x p o r t i n g c o n t r a c t s , a n d p o s s i b l y a l s o wi t h t h
e c u s t o ms department. The process at times can be a lengthy one, but
once in placeshould run smoothly.
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