Logistics is the management of product transportation routes from point of origin to point of consumption at the least possible cost. Nearly every product in existence has been logistically evaluated to determine and arrange the most effective and safest route from the manufacturer to the consumer. Logistics operations mainly consist of transportation, warehouse and distribution, inventory management, and regulatory and compliance.
Here are seven important things you need to know about logistics:
1) Logistics experts can save your business a lot of money by improving efficiency. According to the Annual 3PL Study, in 2012, shippers who partnered with outsourced logistics providers reported a 13 percent average cost reduction.
2) Internet security is one of the largest vulnerabilities of the logistics industry. Because logistics providers rely so heavily on the internet to exchange confidential and valuable information with suppliers, warehouses and retailers, the security of that information is often at stake and in danger of being compromised. Information can pass through hundreds, if not thousands of suppliers in just one supply chain and the necessary security measures are sometimes neglected, making it nearly impossible for logistics experts to assess the risk of doing business with each external partner. According to Michael de Crespigny, CEO of the Information Security Forum, 40 percent of security breaches relating to data occur because of attacks on suppliers.
2) Air, sea, ground and rail transportation interconnect and are heavily relied upon in the world of logistics. Freight gateways like airports, sea ports and goods stations are essential aspects of the efficient movement of goods. The port of Los Angeles is the biggest freight gateway in the United States, with JFK airport in New York the second.
3) Logistics is an essential aspect of any industry. Without logisticians calculating and managing the most efficient distribution methods, products would not reach consumers in a timely manner. Without logistics, grocery stores could go through periods where they don’t have essential items in stock, and those car parts you are looking for may never reach your local auto store.
4) Because there are 3.5 million truck drivers in America, at least 1 in 15 people in the United States works as part of a logistics operation. The United States economy largely depends on these truck drivers to deliver goods in a timely manner. Nearly 70 percent of all goods transported annually—$671 billion worth of freight—is transferred by trucks.
5) Logistics is thought to have originated because of wartime demands. The greatest logistician of all time is often said to be Alexander the Great. Because of his expertise in terrain, enemy location and tactics used to move ammunition and other military weapons and supplies, Alexander was able to successfully expand his empire to East Asia.
6) Logistics still plays an extremely important role in military efforts today. The lack of efficient and guaranteed shipment of weapons and troops could spell disaster for a country during wartime operations. The general principles of military logistics can be summarized in five main points: concentration, austerity, visibility, mobility and flexibility.
7) Communication technology is at the heart of logistics. Without functioning methods of communication such as real-time two-way data exchange, efficient logistics would dramatically slow down, taking a toll on consumer prices, product availability and business profits. The invention of cheap and immediate communication methods such as the internet has allowed businesses to cut costs and shipping times drastically, revolutionizing the field of logistics.
This article was written together with Richard Craft, an MBA student who looks forward to helping you and your business succeed. He writes this on behalf of Hawthorne Global, one of the best international shipping companies in the market. Check out their website today and see how they can help you!