Logistics: Definition, System, Purpose, Benefits, and Role for the Company

You may hear the term "logistics" often. Both due to the increasingly widespread use of online shop platforms, as well as in committees and the business world.

In general, the notion of logistics is a science or art in carrying out the process of storing, distributing, maintaining and removing various goods or certain tools.

But for complete information, DailySocial.id will explain it to you below!

Understanding Logistics

The general understanding of logistics is the science or art of carrying out storage operations, maintenance and distribution and disposal of certain goods or equipment.

In addition, some experts say that the concept of logistics is a set of efforts that include planning, implementing, and controlling the efficiency of the process of transporting goods or services, energy, or other resources from the place of origin to the place of use.

From the explanation of the notion of logistics above, it can be concluded that the notion of logistics is part of the art of management. Where the process of a series of activities are interconnected and carried out in stages and whose purpose is the management and maintenance of certain goods or equipment.

Logistics Objectives and Benefits

All logistics activities are carried out to achieve a certain goal, namely the timely availability of products at the right place. Therefore, a company performs several different logistics activities, namely procurement of goods, production and distribution activities.

The logistics function has certain performance standards that must be achieved. The level of performance that can be achieved in logistics operations is a balance between the quality of service desired by customers and the costs incurred to achieve the company's ultimate goal.

Bowersox said there are at least two main factors that determine the level of logistics activity. The first is the service factor, the level of service provided by the company to its customers.

The second is the cost factor, namely the nominal costs incurred by the company to provide good service to its customers.

Logistics Activities

There are various logistical activities that turn out to be related to one another. These logistics activities are:

• Customer service
• Demand Prediction
• Inventory Management
• Logistics Communication
• Material Handling
• Order Process
• Packaging
• Components and Support Services
• Selection of Factory Locations and Storage Areas
• Procurement/ Purchasing
• Reverse Logistics
• Transportation
• Warehousing and storage

Logistics System

There are at least five important components that must exist in the logistics system to support the flow of goods and logistics distribution. The five components are as follows:

Location of Logistics Facilities

Facility location network is a must and must have component in business. The goal is nothing more than planning where and where materials and goods will be transported.

So as a form of good service to customers who are directly related to the product, the company needs to provide other facilities such as factories, warehouses and retail stores.

If several location structures can be managed properly and strategically, the company has many good advantages. Of course, companies also expect good performance from the logistics management system. In this case, efficiency is closely related and also constrained by the structure of the plant location.

Transportation

Transportation is another important thing that must be considered in the logistics system. Usually, a company has three alternatives to support its various means of transportation, namely:

• Fleet of private equipment that can be purchased or rented
• Perform a specific contract that can be arranged with a transport specialist in order to obtain a contract for transportation services.
• Obtain various services from transport companies that have pocketed permits that offer transportation services from one place to another at an agreed fee.

To design a logistics system, it is advisable to pay attention to several factors that can affect the quality of transport services, namely cost, speed, and delivery consistency.

Inventory Procurement Management

Inventory acquisition management in the logistics system is part of the company structure that plays a role in managing inventory levels. Companies must be able to control and manage inventory, the storage process, so that the inventory can later be given or used.

The main goal is to be able to keep the number of goods according to the purpose of the service.

Communication

Communication is the activity of sharing information in all logistics activities. Poor communication in the logistics system can cause serious problems.

• First, the trend assessment of the logistics rate will be erroneous. If this happens, then the flow of logistics will result in a shortage of goods, or cause excessive commitment between the company and the suppliers, intermediate customers, to the final stage customers.
• Second, poor communication can lead to disruption of system performance which results in instability due to insufficient or excessive evaluation processes.

Storage

In this case, storage covers all operational aspects of logistics, such as packing, movement and packaging. All of these aspects are related to the flow of supplies that are useful for meeting the need for a particular product or material.

The Role of Logistics in the Company

A logistics team department that can work effectively will be able to improve marketing quality by providing a more efficient movement process for a product to its customers. The following are some of the roles of logistics in a company.

Marketing Oriented

Logistics plays an important role in customer satisfaction, so the logistics team plays an important role in marketing. In addition, logistics is also an important key for companies to gain profits.

Providing Added Value

Companies must continue to improve the quality of their products to attract consumers who are very loyal to their products. Well, a good logistics system is able to provide value to consumers according to place and time.

Utility in this case means added value or created by making the product always available to buyers or customers. Time utility is the value obtained by making a product that can be obtained at the right time.

Efficient Product Movement

A good logistics system is proven to be able to create a process for supplying the right product, at the right place, at the right time, under the right conditions and at a more friendly cost so that customers can benefit from the product.

More Economical

An efficient and economical logistics system is an asset that must be maintained and maintained by the company. If the company is able to deliver products to customers quickly and cheaply, then the company can increase its market share more than competitors who do not have a poor logistics system.

In addition, thanks to logistical efficiency, companies can also sell products at lower prices or provide better after-sales satisfaction, which also has a good effect.

That is an explanation of the meaning of logistics, complete with objectives, benefits and the role of logistics in the company. You must understand this understanding of logistics well in order to be able to create a good logistics system for your company or business.