Author: Alexandra Lagorio
Albachiara, last week made me think that if we really want to understand how the Covid-19 has impacted reshoring and logistics, we have to start again from asking ourselves what reshoring and logistics actually are. She then suggested doing two articles in which we try to define our two main research topics. Last week Albachiara described what reshoring is. To me today, the ungrateful task of trying to explain what logistics is. There are two central moments in life when I have to try to answer this question: the first day of a course, and when someone asks me “what do you do in life?” After five years of university, a degree in transport and logistics and seven years of working in a university, I still find it challenging to give a clear and precise answer. This is because logistics is a complex subject, which takes into consideration activities of different nature and involves a large number of very different actors as I have already mentioned in my first article.
But let’s try to go in order. Logistics, like almost all engineering disciplines, is also born in the military field. The need to store, transport and ration weapons and munitions, as well as water, food and primary goods reserves for the troops, was not a secondary problem. Over time, some military departments have devoted themselves entirely to these management activities. Although for some, military logistics even date back to the times of Alexander the Great and Julius Caesar, it was with Napoleon Bonaparte that it began to take on a key role and be studied (also because of the strong military imprint Napoleon gave to the Ecole Polytechnique). With the first World War and, above all, with the Second one, logistics had a new boost thanks to the birth and diffusion of operational research (we will have the occasion to dig deeper into this topic in the future).
The most complete definition, in my opinion, is that of the 1985 Council of Logistics Management: “Logistics is the process of planning, implementation and management concerning the efficient and profitable handling and storage of raw materials, semi-products and related information from the place of production to the place of consumption to meet customers’ needs”.
According to this definition, there are, therefore, two main activities (handling and storage) and two main flows (of materials/products and information). However, a further distinction must be made between internal logistics or in-bound logistics (e.g. picking, handling, packaging and storage inside the factory) and external logistics or out-bound logistics (e.g. supply chain management – outside the factory).
At this point, it is easy to see how those two main activities, handling and storage, actually hide many other sub-activities related to the transport and movement of material and warehouse management. These sub-activities include, for example, the choice of the location of factories and warehouses, stock management, acceptance and management of orders, suppliers’ selection, purchase of raw materials, loading and unloading of finished and semi-finished products, the return of goods, return flow management and so on.
What complicates things obviously is the fact that companies (being they logistics, manufacturing or service companies) are not separate universes, but are part of a supply chain, a network that includes suppliers and customers and that, with the spread of globalisation, the internet and new technologies, is becoming increasingly global. This is why in 1998 the Council of Logistics Management revised the definition of Logistics as follows: “Logistics is that part of the supply chain process that plans, implements and controls the flow and efficient storage of goods, services and related information from the point of origin to the point of consumption to meet the needs of customers”. In this sense, therefore, logistics becomes a part of the supply chain, which must also be defined: “A supply chain is made up of all parties involved, directly or indirectly, in fulfilling a customer’s request. The supply chain includes not only the manufacturer and suppliers but also transporters, warehouses, retailers and even the customers themselves. Within each organisation, the supply chain includes all the functions involved in receiving and fulfilling a customer request. These functions include new product development, marketing, operations, distribution, finance and customer service” (Chopra and Meindl, 2016).
Perhaps now it is a little clearer for you as well why the definition of “logistics” requires more than three lines!
In the next articles here on Young SCholar, I will try to go into more detail in the description of the various internal and external logistics activities, the supply chain and how these activities are rapidly evolving under the pressure of technological innovation.