Logistics is usually misinterpreted as only transportation of goods, which is far from truth as transportation is just a subject of logistics. Logistics is a knowledge-based industry that requires procurement, transport, inventory control and distribution of goods. The cost of logistics of a company is estimated to be around 2 % of its total sales. With effective and efficient logistics 20 % of this cost can be saved. Logistics and Supply Chain Management (SCM) have always been an integral part of any business for timely and cost-effective decision making. Logistics can safely be said to be the management of the flow of goods, information and other resources from the point of origin to the point of final consumption by the customer. Just imagine there is a supplier situated at Kolkata, which manufactures shampoos for The Hyatt hotel, Delhi. The raw materials need to be picked up from nearby supplier by tempo or if some raw material need to be imported from a manufacturer situated outside the country, say China, then it would involve another set of logistics- Collection from the overseas factory to nearby port, customs clearing, Import, again customs clearing in India and Transportation to factory at Kolkata. The raw materials after the manufacturing process needs to be packaged and stored, then it will be transported either by road or train or air or a combination of these to reach Delhi and then before reaching the hotel, needs to be cleared by Octroi authorities at entry point of Delhi. Now the goods are ready to be delivered to the hotel which would ultimately reach the customers of the hotel who are staying there.
Business logistics is important in several ways. First, business logistics provides an opportunity for the firm to create a sustainable competitive advantage for itself by designing a system which fulfills customers' needs better than the competition.
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