Logistics Concepts and Structure The Term Logistics

1. Logistics Concepts and StructureThe Term Logistics Te-Cheng Yu Dept. of Logistics Management, National Kaohsiung Marine University

2. Outline • The Chinese word • The English word • Era of business logistics • Beginning in the 1970s • Time to emergency logistics • From logistics to supply chain management

3. The Chinese word • “logistics”（運籌） appears in the days of Chu-Han empire, China. （司馬遷，西元前0091）＜史記高祖本記＞. • The story of “The Three Heroes in the Early Han” is the idiosyncratic and valuable resources to define the term logistics（運籌帷幄）. • The logistics of Chang Liang is a sort of military strategy which requires the mastery in classical texts and tactics, and the combination of personal wisdom and environmental resources for providing the commander in chief with successful tactics for making decision and issuing orders to the field commander and soldier so as to attack cities and capture territories in a blow.

4. The Chinese word (cont’d) • In the struggle of Chu-Han, while “Hsiao Ho’s protectively and completely transporting foods and supplies by land and by water for avoiding the shortage of civilian and military goods as well as materials in Guanzhong (around Xian area)” is no doubt the most valuable logistics practice in creating sustained competitive advantage.

5. The English word • The English word logistics appears to have been derived from both the Greek word logistikos and the French word logistique. • Logistikos is rooted in the concept of logic and means skilled in calculation. In addition to logistique, it is probably influenced by the French loger meaning to quarter (or lodge) soldiers. Hence, the combination of logic, calculation, and quartering soldiers appears to have yielded the word.

6. The English word (cont’d) • The term logistics entered military terminology in 18"' century Europe（marechal des logis; Alger, 1985）. There were three principal types of logistics utility in the military context, include Encamping and quartering troops, and stocking of supply depots. • The term logistics was first employed in a formal sense in the American lexicon in the late 19th century. Rear Admiral Alfred T. Mahan, American naval strategist, introduced the word logistics into the US Navy (Ostirowski, 1996).

7. The English word (cont’d) • The term received a written definition in 1905: logistics is a branch of the art of war pertaining to the movement and supply of armies (Baker, 1905). • Until World War II : the term logistics began to be used pervasively to describe the support of military forces and their equipment.

8. The English word (cont’d) • Beginning in the 1960s, logistical support of weapon systems became an integral part of the planning and design stages of these systems. Logistics was focused on engineering issues, calculating initial support requirements, and programming resources to keep a system operational after introduction. • The Persian Gulf War (Jan. 16, 1991–April 6, 1991) probably contributed to increased recognition because of the frequent mention by news commentators of the logistical challenges associated with the so-called 7,000-mile “supply pipeline”to support the war effort in the Persian Gulf countries.

9. Era of business logistics • The term logistics migrated to the business sector under the label of physical distribution, which had a focus on the outbound side of the logistics system

10. Market Customers Market Customers Market Customers Raw materials supply point Manufacturing plant Raw materials supply point Flow Era of business logistics (cont’d) A simple logistics channel

11. Era of business logistics (cont’d) • The logistics concept began to appear in the business-related literature in the 1960s as academicians in marketing saw potential in applying the principles of military logistics to physical distribution of consumer goods (Langley, 1986). Business logistics evolved into a dichotomy of • Inbound logistics (materials management or physical supply) to support production, where the plant is the customer • Outbound logistics (physical distribution of product) to support external customers.

12. Beginning in the 1970s • The term logistics crept into the lexicon of the common culture. • Event logistics has been defined as "the activities between the event and chaos”. • Logistics is now being used with regard to the supply support of activities from church picnics to the Olympics. • The popular press has written of the logistics of waging a Presidential campaign.

13. Time to emergency logistics • During the US famine relief efforts in Bangladesh in 1974 and in Somalia in 1992 and 1993, logistics was applied to deal with emergency cases. • Logistics was applied to the distribution of food (Logistics Handbook for Relief and Development, 1987) • Logistics was applied to provide relief to victims of the floods in Honduras in 1998 and of recent hurricanes.

14. From logistics to supply chain management • Most recently, the business community began viewing logistics as a component of a larger evolving concept, supply chain management (SCM). • SCM is a linking of all Firms up and down the supply chain (from ultimate material sources to ultimate customers) in a collaborative and seamless network (Blaser and Westbrook, 1995). • SCM is the collaborative integration of all logistics processes by all players in a chain, from original suppliers through end users.

15. From logistics to supply chain management (cont’d) • The process is a customer-driven system involving the sharing of information, risks, and assets among partners to achieve an integrated, seamless, responsive distribution system. • SCM literature views business logistics as a component of supply chain management. It is differentiated from logistics in that it involves all partners (suppliers, carriers, other distribution channel participants, and customers) up and down the supply chain and, hence, is more than the internal integration of logistics activities within a firm. (Cooper, Lambert, and Pagh, 1997). • The key concepts of SCM are pull system, customer-driven, strategic alliances, shared data, and system (as opposed to firm) optimization.

16. Next…. • Definitions of Logistics