Logistics Definition: Objectives and Nature of Logistics

Meaning and Definition of Logistics

According to Council of Logistics Management (CLM)___” Logistics is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw material in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of confirming customer requirements”.

According to Robert A. Novack___” Logistics is an activity involving the creation of time, place, form and possession of utilities within and among firms and individuals through strategic management with the goal of creating products/ Services that satisfy the customer through attainment of value”.

The process through which the procurement, movement, and storage of raw materials, semi-finished and finished products are tactically managed through organizations and marketing channels in a way that maximizes the current and future profitability by cost-efficient order fulfillment is known as Logistics.

Objectives of Logistics

  1. Improving Customer Services: By attaining customer satisfaction, the highest level of profits can be ensured. Thus, continuous improvement in customer services acts as the core objective of logistics.
  2. Speedy Response: It refers to the organization’s ability to give prompt response to the customer’s queries. In today’s era of IT, it has become completely manageable to give an immediate response to the customers’ queries by acquiring related data and postponing logistical functions to latest time for increasing the response rate.
  3. Decreasing Costs of Total Distribution: The expenses on the distribution of goods include expenditure on shipment, storage, and record keeping, etc. As these processes are interlinked, reducing the cost of one function often increase the cost of the other.
  4. Creating Additional Sales: It is to increase sales by creating additional sales. This can be attained by providing better services in the most economical way.
  5. Stability of Costs: It is to ensure the stability of costs. It can be attained by managing the supply of goods through the thoughtful use of the accessible transportation and suitable storage facilities.
  6. Upgrading Quality: In the long-run, logistics seeks to ensure continuous quality improvements. Total quality management has emerged as a primary obligation in all parts of the industry within this aspect. It’s assurance of mainly responsible for logistical regeneration.

Nature of Logistics

  1. Smooth Flow of goods.
  2. Movement of Goods.
  3. Integrated Action.
  4. Fulfilling Customer Expectations.
  5. Customer Services.
  6. Storage of Goods.
  7. Productivity and Profitability.

Functions of Logistics

  1. Maintain Competitive Edge.
  2. Building Good Customer Relations.
  3. Creating Finished Product.
  4. Ultimate Consummation of the Sales Contract.
  5. Provide Better Customer Service.
  6. Relives the Customers of Holding Excess Inventories.