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s01e02: what is logistics

where does it start?

· s01-logistics101,theLMNpodcast

So what is logistics and where does it start? It all starts with a someone wanting something (demanding it). In this sense everyone can be demanding and wanting of stuff (goods) because without people wanting stuff (goods), there wouldn’t really be a need for commercial supply chain. Businesses exist, because you want stuff goods.

But before going any further, it's important to know the difference between logistics and supply chain. Logistics is the individual entity (known as a node) for example a wholesaler, a warehouse, a distributor or a transport company (there’s more but we’ll keep it simple). Logistics as an entity looks at how individuals function in the process of; making goods, storing them or transporting from place to place. Supply chain is the whole thing, end-to-end, all of the nodes combined - this forms a chain which supplies you stuff (I mean goods).

For example if you have a warehouse, they take care of the logistics of getting stock in and out the door. Whereas a supply chain will look at where the stock which was sent out there door came from, how it gets to the warehouse, the warehouse itself AND how it gets transported to the customer. All nodes combined.

So why is this important, you don’t work in a warehouse or for a transport company, you work in an office or on a building site or in a hair salon. Well… It’s important you know how much work has gone into getting you stuff that you’ve asked for, to have some sympathy, or better still to be impressed by what's going on.

Take for example something as simple as going to get groceries at Woollies or Coles (or Aldi), all three will supply you goods - they are the distributor of goods, that's their primary function in the supply chain.

As a customer you demand there be milk in the fridge, so they in turn provide. But now, think about the amount of work which went into getting you that milk. Someone had to work out that you want milk, find a supplier, figure out a way to transport it, find a place to store it, then make it available for you in however many thousands of locations there are across the country. That’s a lot of work. Now times it by any product you’ve ever bought. See what I mean...

If done well, the milk is always there for you to buy - no matter which store you go to. If things don’t go so well and somewhere along the chain there was err... issues... You end up in the apocalyptic situation where goods, let's say the kind which gets deep fried, have run out. There is mass panic, public abuse, you start wondering the meaning of life and regret ever taking KFC for granted. Stores lose money, people get yelled at, jobs are on the line and overall everyone gets another reason to drink (not milk) on Friday… maybe even sooner.

Okay, a little bit dramatic. But the point is solid, and this did actually happen (KFC ran out of chicken and everyone went crazy… Google it, happened like last week). The point of course being that people are demanding and supply chains need to respond.

So there you have it, logistics starts with the customer (you) demanding something, that’s when the supply chain as a whole gets nudged into action. From that point, A Lot of work goes into getting you whatever you ordered; to you, to the right place, for the price you paid for, not broken, as soon as possible. Sure there is a whole routine and rhythm to supplying things before the trigger is pulled - that's the premise of forecasting and the reason milk pretty much never runs out, but as a start. I think it's a wrap… or a twister?

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