Question

How has logistics management changed over the past years? Why has the importance of logistics management been growing over the past few decades?

Answer 1

Few decades back, logistics was considered as a mere transportation of goods from one place to another place as and when the requirement originates from the destined party. Over the years, logistics has expanded the activities and is called logistics management which involves storage and movement of goods to ensure minimum costs and optimal network pat

Logistics involves a set of activities that deal with the movement of goods from one location to another location. Every organization that transports goods require an effective logistics management to ensure timely and complete delivery of the goods to the business partners. Logistics can be - Inbound, where the goods/materials from external party viz. supplier are received in the manufacturing unit or Outbound, where the goods that are manufactured are shipped out for delivery to the warehouses, third-party logistics providers etc.

Below is why logistics is a critical function for every enterprise and has gained importance -

1. It involves movement of goods across locations by aggregating the goods in bulk.

2. It is a major cost center in the supply chain and if effectively managed, it would save huge amount of costs.

3. The integrated logistics function which is being implemented by Third-party and Fourth-party logistics involves storage, handling and movement of goods to optimize the customer service levels and minimize the costs.

4. It also include reverse logistics which handles the return movement of damaged or defective products back to the manufacturer.

5. Logistics involves various modes of transport which include Road, Rail, Waterways and Airways; the decision regarding the right mode of transport depends on lead time of delivery, costs, handling efficiency etc. of each mode.