International-Business-Dr-R-Chandran-E-book

210
International Business- Dr. R. Chandran
13. INTERNATIONAL LOGISTICS
Logistics is defined as a “system of handling the physical movement of
goods and services from the place of origin to the destination as fast as
possible at a low cost and with safety and security.” Logistics provides the
means for the actual transfer of goods or services from the seller to the
buyer. Once a product or service has been marketed and ordered, it is
necessary to employ logistics to pack, deliver and manage the items for
delivery. In order to be effective, logistics must address the following issues.
Distribution has always been an important and inevitable function, but it is
only relatively recently that it has been recognized as a major function in its
own right. The main reason for this lapse was probably been the natur4e of
distribution itself. It is a function made up of many sub-function and subsystems,
each of which has been, and may still be, treated as a distinct
management operation.
Both the academic and the business world now accept that there is a need to
understand all the operations in a global perspective in order to see how they
are interrelated.
Logistics primarily involves three broad areas of functions.
Logistics = Supply + Materials Management + Distribution
(L = S + M + D)
Logistics is an art and science of determining business success. Acquiring
goods, distributing and finally maintaining them to win the goodwill of the
customer is the major responsibility of logistic management.
Importance of Logistics Management
In advanced countries a large part of the final price of a product often goes
towards logistics. In the case of bulk cargoes like sulphur, Bitumen, grains,
iron ore and crude, the cost of logistics is the main factor in fixing the price.
Major turnkey projects, can be completed provide the right materials are
supplied in the right time. During an emergency, thousands of lives may be
lost if medicines do not reach in time. Therefore, logistics is the
management of cost and time. Hence, the UK Institute of Logistics and
Transport has defined logistics as “the positioning of resources at the right
time, in the right place, at the right cost and in the right quality”. Logistics is
an important activity making extensive use of human and material resources
that affect the national economy.
Only for Private Circulation