What is Logistics? Author: tylerg
January 25, 2013

No matter what industry you are in, you already know that implementing the right logistic solutions is critical to your business. You also know that effective and efficient logistics management is one of the best ways to control your costs as your business grows. However, we can get so caught up in the details of freight management logistics that we apply a definition to the field that is too broad or too narrow. When we mistakenly prejudice our view of logistics in either direction, it can cause us to fail to see opportunities that are right there in front of us.

For that reason, it is a good idea to occasionally ask ourselves: What is logistics? Logistics is one of the oldest business concerns of all time, but it is also one of the most complex. The latest wave of globalization has ensured that logistics is now one of the largest and most sophisticated functions in many Fortune 500 enterprises. From an outside perspective, it is easy to make the mistake of thinking that logistics is exclusively about cost savings -- that it is a “service” function that does not provide its own energy to a global brand – but this viewpoint is mistaken.

Although logistic solutions are usually sought out because of a business challenge in cost control, logistics management adds significant value to every transaction that a business engages in. How is this the case? Whether you focus on freight management logistics or some other area of the field, you are doing something that builds up trust in your brand.

Logistics and the Example of Amazon

Look at Amazon to give one obvious example. In 2005, Amazon’s supply chain and logistics performance was so excellent that the brand was able to expand its services substantially with the new Amazon Prime service. Amazon Prime provided the ability for online customers to indulge their impulse shopping needs more quickly than ever before, realizing the chance to make purchases that would arrive at a customer’s home literally the next day at an attractive price point. This service line has been rolled out in the United States, Japan, the United Kingdom, Germany, and France, and now represents tens of millions of dollars in revenue and sales value on an annual basis.

Even if you are not Amazon, logistics performance should matter to you. Logistics is one of the first factors by which your customers, particularly your new customers, judge the quality of your services. Before customers even have an opportunity to engage with your products, they have already made a judgment about you on the basis of whether those products arrived quickly, whether they were packaged and shipped correctly, and whether the process was affordably priced, transparent, and highly visible. Again, all of these judgments are made before your product ever arrives, setting the stage for how its performance will be viewed.

So, yes: In the short view, logistics is simply “managing the flow of resources from a source to a destination” and controlling for issues like speed, routing, and cost. However, in reality, it is so much more than that. It is the cornerstone of a successful brand: That is to say, no brand can be successful for long without the respect and trust garnered by effective logistics. Likewise, investing in optimized logistics early on in a company’s history has a geometric effect on cost savings now and in the future.

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