What is logistics? What is the function and role of Logistics?

What is Logistics? In the current global development context, Logistics has become a keyword searched by many business owners. Because Logistics is one of the most effective tools to help managers implement business strategies and bring economic efficiency to the world.

Let's follow KT Global Logistics to the end of the article below to find out what is Logistics? What is its role and characteristics? But it's so important!

Logistics is growing and separating into an industry that holds an extremely important position for businesses. However, up to now, no Vietnamese words can fully describe the meaning of the term Logistics. Therefore, in Vietnam, the industry name remains the same as Logistics. In recent years, it also has other names such as Marketing, containers, ... but Logistics is still accepted as the most standard Vietnameseized word for this industry.

What is the academic definition of Logistics?

According to the Association of Professionals in Supply Chain Management, Logistics is defined quite fully and in detail as follows:

“Logistics management is that part of supply chain management that involves planning, implementing, and controlling the efficient movement and storage of goods, services, and related information from the point of origin. delivered to the point of consumption to meet customer requirements.

The basic logistics management activities include import and export freight management, fleet management, warehousing, raw materials, order fulfillment, logistics network design, inventory management , supply/demand planning, third-party service provider management. To some extent, logistics functions also include inbound sourcing, production planning, packaging, and customer service.

Logistics management is an integrated function that combines and optimizes all logistics activities as well as coordinates logistics activities with other functions such as marketing, sales, production, finance, information technology believe.”

What is the definition of Logistics in the Vietnamese Code?

In the commercial code of Vietnam, this term is transliterated in Vietnamese as “Logi-stic”. According to Article 233 of the Commercial Law: “Logistics service is a commercial activity whereby a trader organizes to perform one or more jobs including receiving goods, transporting, storing, storing, carrying out customs procedures, other paperwork, customer consultation, packaging, marking, delivery or other services related to goods as agreed with the customer for remuneration.”

What is Logistics Overview?

When you learn about Logistics, make sure you have a good grasp of the following basic knowledge about Logistics!

What are the basic characteristics of Logistics services?

Logistics is considered as an aggregate of business activities based on 3 main aspects which are:

– Survival logistics: ie meeting basic human needs like what? how much do you need? Need when? And where is it needed?

– Operational logistics: based on survival logistics to develop and participate in the production of enterprise products. Then involves the process of movement, storage and penetration into distribution channels before reaching the final consumer.

– System logistics: help maintain the operating system of the business through equipment and machinery; Human Resources; technology or infrastructure..

Each aspect of logistics, although taking on different functions and roles, has an intimate relationship that forms the basis of a complete logistics system.

Logistics not only supports the activities of enterprises in the entire process of production and warehousing, but even after leaving the production line and reaching consumers, a business still needs support. Logistics support through activities such as: management and circulation of materials or semi-finished products moving in the enterprise;…

Logistics is freight forwarder?

Many people still confuse logistics with freight forwarding and vice versa. However, logistics is much broader than that. Logistics is a complete and higher development of freight forwarding services. Or rather, freight forwarding is included in and associated with logistics.

The freight forwarder today is considered a logistics service provider because they have to manage a synchronous system from forwarding to transportation; even supplying materials to serve production activities or warehouse management; receive and distribute the goods to the right place, at the right time, etc. by using electronic information to track and check.

So it can be seen that logistics has developed a lot more diversified traditional transportation and forwarding activities. From discrete activities in freight forwarding or preparation of packaging and recycling of goods; ... becoming an entity responsible for regulatory sources of law when delivering and receiving with customers. Carry out chain activities with a reasonable arrangement to save costs of packaging, customs clearance, delivery,...

Logistics is the complete evolution of multimodal transport

From the 60-70s of the twentieth century; The container revolution has paved the way for the birth and development of multimodal transport. Instead of transporting goods in the form of retail goods; must go through many different means of transport with many risks of loss; difficult to control and many complicated contracts; Shippers only need to sign a single contract with the trader to ensure safety and reliability during the transportation of goods. This method is called MTO (Multimodal Transport Operator). An MTO is a logistics service provider.

What is the function and role of Logistics?

With the current importance and strong development; Logistics is gradually showing its role and position in the economy in general and in each enterprise in particular.

Logistics is a tool to link activities in the global value chain
With today's global development; especially scientific and technological advances; The opening of the economic market for integration is becoming more and more open. Especially for developing or underdeveloped countries; Logistics is considered as an effective tool of strategic managers to link different fields in an enterprise or the economy of a certain country. Therefore, today's world is seen as interconnected economies.

Logistics optimize the flow of goods
During the entire process of moving goods to the final consumer; Shipping costs are always a difficult problem that businesses have to face. Not to mention in many stages; Interest rates can fluctuate abnormally, causing businesses to have capital inflow because the inventory is too large without a solution.

That's why how to optimize the process from production to storage; and then shipping to the customer is always the top priority. The support of logistics today has solved this problem; especially with the continuous development of information technology.

Logistics helps managers make more accurate decisions
Logistics for helping managers control the supply of materials; vehicles or storage facilities more efficiently and easily. Thereby minimizing the costs incurred and ensuring efficiency in the production and business process.

Logistics plays the role of ensuring the right time and place
The process of economic globalization is both an opportunity; It is also a challenge for businesses. Although the movement of goods is more diverse and richer, it is complicated and requires many strict requirements as well as strict management for forwarding services.

To do that, logistics activities must ensure quantitative factors; time and place. Especially with the strong development of today's informatics; supply, production, storage and consumption processes become more efficient; more promptly and quickly.

The above are the most general concepts and knowledge about Logistics services. Make sure to master them and learn more about Logistics if you are really interested. Don't forget to visit the website ktglobal.vn more often to update the latest articles! Good luck!