Why Is Logistics Important?
Saturday night finds you as the host for a special birthday celebration for a friend at a local restaurant. You carefully planned everything ahead of time—the number of guests, the expected cost of the dinner, and the menu. Unfortunately, by the end of the evening, everyone agrees that the restaurant experience was a disaster. Your food arrived late, the specials were sold out, the wrong meal was served, the food was cold, and the wait staff were unresponsive. You will never return to this restaurant. How did this happen? A dining logistician would say that the cooks, servers, and managers in the restaurant used poor logistics practices. The cooks did not determine the volume and lead times from ordering to delivering the goods, the servers did not communicate the order to the cooks, the staff did not follow quality assurance procedures, and the management did not communicate clearly with the customer.
Logistics is similar to dining at a restaurant. Simply put, “logistics is the flow of material, information and money between consumers and suppliers (Frazelle 2002)1. It incorporates the planning and execution of activities to move products from origin to destination. Logistics is often called supply chain management because a chain of partners, products, money, and information ultimately delivers the food (supply) to the patron (customer).
Figure 1, a distribution plan or pipeline for a typical supply chain, shows the many partners, facilities, and shipments that can make up a supply chain. Products arrive at a destination port by an ocean vessel, plane, or truck carrier; then a customs broker clears them through customs. Depending on the terms and service of the transportation, which defines who is responsible for what, another carrier transports the goods to a central warehouse, also called a distribution center. From there, products move through the distribution system until they reach the client.
Even before the shipment reaches the port, many transactions; negotiations; and steps that include product selection, forecasting, financing, and procuring the products; must be completed efficiently. All the steps involve a number of stakeholders.
If the people who attended the disappointing dinner party were asked why logistics is important, they might answer that the correct logistics in the restaurant would probably have resulted in better customer service. In fact, logistics and customer service are mutually dependent. Customer service drives logistics practices, and logistics practices impact customer service. In the field of public health, without product availability, a program or campaign will not be successful. Although customer service may be defined differently between corporate logistics and public health or disaster relief logistics, all logisticians operate according to the same six rights.