Category Archives: Allgemein

What is Logistics Management?

Despite what many people think, logistics management is the world’s oldest profession. Have you ever wondered how the food you eat, the gas you use in your car, or the news that is in the paper you read in the morning gets to you? We get the things we need delivered to us by a system called logistics.

Logistics is the “how” things like energy, information, goods, services, and people get from their origin to their destination so people like you and me can consume them. Without this system and people who can manage the system there wouldn’t be the pyramids in Egypt, the Great Wall of China, no wars would have been fought, and schools wouldn’t have textbooks. Everything you can touch right now was brought to you by logistics. The system works because there are people who can manage the system.

Logistics is as old as the human race. Some of the first examples of the system of logistics and logistics management were the Great Pyramids of Egypt. These massive constructions were (and still are) amazing examples of the science of logistics in action. There were people, called logisticians then and now, who managed every aspect of project. The Pharaoh said build me a huge burial palace in the desert and the project managers of the day called in the logisticians.

The ancient logisticians on the “Pyramid Project” were the people responsible for making sure there were enough building materials on the site; they made sure there were enough workers on the site to use the building materials; the logisticians also ensured workers were fed, clothed, and entertained. In sum, these early logistic managers made sure that the people who needed resources got them in the correct amount when they needed them.

Logistics strode boldly forward during the Greek and Roman empires. Military leaders of the time realized soldiers were able to move from a base to a new advanced position more efficiently if there was a supply line of services in place. The military began to assign officers, titled “Logistikas”, the duties of providing services related to the supply and distribution of resources. The military found that better supplied and supported troops were a determining factor in the outcome of wars. This revelation led to the development and study of logistics as a science and laid the foundation for today’s system of logistics management.

Applying the concepts of Logistics to modern business began to gain popularity in the years following WWII. The increasing complexity of supplying a business with materials and shipping out products in the new global marketplace demanded complex logistics systems to be erected and expert logisticians to manage the flow of goods and services. In business, logistics has either external focus (outbound logistics), or internal focus (inbound logistics) covering the flow and storage of materials from “where it’s at”’ to “where it needs to be”. Logistics has come to be a kind of relief for many businesses that formerly looked upon it as a burden.

The ancient system of Logistics has blossomed into a science—though cannot be termed as an exact science as Logistics does not follow a defined set of rules—and an art. Companies nowadays are hiring people with the essential knowledge to deliver long lasting improvements in the field of logistics management; people who will help to evolve the system of logistics are much in demand. As has been the case throughout most of logistics history, the assignment of a logistics manager involves a lucid vision, action, and a drive within to deliver results under strict deadlines.

Logistics management is that part of the system of logistics that plans, executes, and controls the quick, successful forward and reverse flow and storage of goods, services and related information between “the where it is at” and “the where it needs to be” in order to meet people’s needs. It is a dynamic and necessary part of our daily lives.

What is Reverse Logistics?

Reverse logistics refers to all activity which is associated with a product or service following the point of sale, with the ultimate goal of optimizing or rendering the aftermarket activity more efficient. This in the long run saves money and environmental resources. In short, reverse logistics implies the process of implementation, planning and control of cost effective and efficient raw materials, process inventory, finished products and related information from the point of origin for proper disposal or recapturing value. In reverse logistics, the goods are moved from their ultimate destination for capturing value or for ensuring appropriate disposal. The process can also implement refurbishing and re-manufacturing activities.

Why Reverse Logistics is Important

Reverse logistics includes the materials or goods being sent backward, as well as processing returned merchandise as a result of damage, restock, salvage, seasonal inventory, recalls as well as excess inventory. The process additionally incorporates hazardous material and recycling programs, disposition of obsolete equipment and asset recovery.


Distributors in the software industry aim to reduce their retailer returns by implementing timely delivery. However, retailers usually overestimate demands since appropriate forecasting for them entails no incentive. For software manufacturers, the product should be present on the retailers’ shelves. They frequently agree to block the channels. With the costs of a box of software being less than its price, some software manufacturers often contract with third parties for destroying millions of copies of a product. Due to such practices, the return rates in the industry are about 20%.

Releasing more of software titles compels returns as the product life span for those titles contract. As a result of reduced risk, a few retailers purchase the software which is purchased elsewhere. Some retailers also try to reduce returns and enhance inventory turnover through a reexamination of channel relationships. They have even started creating return policies of 30 days.


Succumbing to competitive pressure, the retail industry has made competitive weapons out of the return policies. If the pressure is greater, the solutions are innovative. The focus on the problem of returns was first assuaged by the grocery retailers who concentrated on developing reverse logistics innovations. For them, having a good return management is critical as profit margins are slim. Hence, for them, innovations became reclamation centers.

Centralization of returns created additional benefits. Today, large retailers exercise increased power over the supply chain, and are more powerful than the manufacturers. Not many manufacturers dictate policies to retailers like Wal-Mart. Few retailers accept returns that have been rejected by the manufacturers. In exceptional instances, retailers make allowances for a manufacturer’s products which according to them are not replaceable with identical products.


Retailers have made larger investments in technology for improvement of their reverse logistics dynamics. It is said that manufacturers lose out to retailers in almost all categories of technology. It is seen that almost twice the number of retailers than manufacturers have implemented automated material handling equipment. Retailers use barcodes, computerized returns entry, computerized return tracking, EDI or electronic data interchange and RF or radio frequency for enhancing their reverse logistics management.

The practices of reverse logistics vary on the basis of channel position and industry. If an industry has greater operational costs, they have better systems and procedures of reverse logistics. For successful retailers, it is important to understand that handling reverse logistics successfully will positively affect their bottom line.

Why Organizations Use Third Party Warehousing

Third party warehousing or third party logistics, often abbreviated as 3PL is the service, especially logistic services provided from a firm to its outsourced customer or the third party, for managing all or part of its supply chain management functions. Specialty of firms offering one stop third party management services apart from warehousing are cross docking, integrating operations or applications for customer in order to manage various levels within the department, management of inventory, packaging, freight forwarding and conducting management of products or service as well as monitoring transportation services. Based on the market demand the 3PL can customize their service and scale it down or up to different levels.

here are three basic forms of 3PL, the freight forwarders, the companies integrating logistics transportations developments and the courier companies. Together they are called 3PL providers. Third Party warehousing are part of the most basic type of 3PL provider too, where pick and pack as well as distribution also forms a part of the logistics functions of the enterprise. Advanced value added services such as specific packaging, cross docking, tracing and tracking as well as providing security systems through a string IT foundation forms a part as well. Besides the developers and providers, there are adapters as well who do not introduce any new model but upgrades the processes and activities to its highest level.

Customers prefer third party warehousing because it facilitates the functions of the supply chain management. There can be group or an individual behind. However, in the long run the ultimate focus is to conduct the services in an organized way and in more economical fashion. When any client avail the service, they are able to have complete control over different warehousing functions, where shippers and carriers are quite vital too. Shipping services are necessary for transportation of goods from one place to other and carriers provide transportation. Through a 3PL, shippers can have access to not one but hundreds of carriers at the same time. So clients need not search carrier providers themselves. This saves effort, time and a lot of cost.

Since the 3PL firms have experience of price negotiation and usually they have more skills in managing shippers as well as carriers, it is possible for them to settle the deal at reduced price. Administration of various aspects of the management of warehouse can also be conveyed through 3PL quicker because they know both the parties very well and they are aware of the requirements of both.

The administrative aspects of warehousing include data storage and management of arrival and departure of goods. This is a very important part of supply chain management. Monitoring the containers forms a huge part of this facet too. Affordable price of such services is necessary and it is obligatory that the firm managing these aspects would be responsible. Most clients like to have a party who would have the specific administrative skills. 3PL firms arrange such duties to the most skillful enterprise.