Logistics the road to competitiveness
Ports can be built and developed. At the same time one has to be very
clear in the thought process of the service advantages and be educated
in what logistics and supply chain management is all about.
This article is written to give insight to this most important
services sector in today's globalization of the markets.
The word 'Logistics' originally, evolved from the Greek word - 'Logisticos'
meaning planned movement of materials.
It was used mainly in military parlance referring to the massive
exercise for planning and mobilizing of resources'. Men, weapons,
materials from food to medicines etc from various parts of the world to
the battle fields.
The Colombo harbour
But Logistics today has emerged as the road-map to commercial
True to Peter Drucker's word, the internationally acclaimed pundit in
management theory says the last great frontier for managements to
conquer is logistics and the practice of efficiently managed Supply
It has become the sharpest strategic weapon in any companies armour
to win the commercial war in the modern world.
The management of logistics has been in existence for a very long
time and practiced within one's organization or outsourced to
professional companies mostly in the developed economies as a focused
and specialized area.
In the modern day situation it has also been identified as one of the
strongest-links that needs to be super efficient in the total supply
chain delivery process from sourcing, manufacturing and delivery to the
end user (Customer).
It involves transport, warehousing, inventory control, packaging in
all forms of value addition to the consumer and on-time deliver within a
well secured and guaranteed service.
In the future we will also be able to know how logistics will come to
be evolved for delivering people and goods for space stations,
conducting space programs.
Traditionally, in most of countries, in the period from 70's to 90's
managed their aspects of procurement and distribution on their own,
mostly as independent functions.
Establishing and managing an efficient distribution networks which is
not their core business becomes increasingly complex as the number of
products to be procured and distributed and the geographical spread of
the network increases with the advent of new markets.
From being a military tool, it has today imbibed by the business
empires to effectively manage their production and distribution
A contemporary definition of logistics explains it as the process of
planning, implementing and controlling efficient and cost effective flow
of materials and information from point of origin to point of
consumption for the purpose of conforming to your customers delivery
Today, 10 to 15 percent of a company turnover is spent on logistics,
depending on the nature of product and distribution pattern adopted.
Realization of the difference it can make to profitability has led to
a paradigm shift from traditional business approach, having exhausted
all options in the areas of product differentiation, pricing, quality,
promotional strategies and advertising warfare, large corporations,
medium and small enterprises are now increasingly turning to 'Integrated
Logistics Systems' to counter their competition in the market place.
The integrated logistics systems carries the entire spectrum from
procurement to storage and distribution to optimize all aspects of
supply chain management and reap the benefits of:-
- Faster reach to market ensuring product availability on shop
- Lesser order cycle time
- Reduction on inventory levels
- Reduction in operating costs
- Improved asset productivity
Most of the largest multinational and regional companies, today has
seriously viewed and implemented in outsourcing logistics as an very
important strategic measure in their companies, not only a means to
reduce costs in the short-term but has to be seen in its proper
prospective as a long-term strategic management tool.
Today to quote as a example to the aforesaid, the most important
factor that has contributed to the success of the US retailing giant the
WalMart Stores' would be a noteworthy factor where the companies total
supply chain operations has been outsourced in partnership with global
logistics players, which has enabled to focus 100 percent on their core
business of retailing products.
There are three very important factors that today has benefited
companies by contracting /outsourcing their non-core functions, which
are elaborated below as overall impetus to managements.