1.1.1 A question of definition
A review of the business literature reveals that the term logistics started to gain prominence at the beginning of what has been called the 'age of information'. This is not to say that functions which fall under the umbrella of modern business logistics did not previously exist. Rather, logistics required the 'visibility' provided by rapid developments in information and communications technologies (ICTs) to realise its potential as a 'value adding', strategic business activity.
In the early 1970s, Australian enterprises had not even heard of 'logistics'. The recently formed industry body, the Australian Physical Distribution Management Association (APDMA), was concerned with physical distribution management , which it defined as:
Generally considered to be the flow of products from the production plant to the user. It describes the wide range of activities needed for the efficient movement of materials, components and finished articles from producer to consumer. The key elements of a physical distribution system are transportation, warehousing, inventory control, materials handling, packaging and order processing. Economies generated by a unified, integrated P.D. system increase corporate profits.
Source: (Gilmour 1991, p.3)
As this definition shows, the emphasis was very much on coordinating the movement of finished goods to their ultimate destination, be that another business enterprise or the individual consumer.
Even in the United States of America , it was October 1985 before the American National Council of Physical Distribution Management (NCPDM) changed its name to the Council of Logistics Management (CLM) and adopted the following definition:
Logistics management is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.
Source: (Gilmour 1991, p.3)
In September 1986 the APDMA changed its name to the Logistics Management Association of Australia (LMA) and adopted the CLM's definition of logistics. By the late 1980s, many Australian enterprises were starting to talk about logistics and the term logistics was appearing in management titles. Yet few senior managers really appreciated the potential of logistics activities to positively impact upon their enterprise's productivity and profitability.
In 1990, Dr John Gattorna (an internationally recognised Australian academic and consultant in this field) offered a new definition of logistics, which he defined as the:
. process of strategically managing the acquisition, movement and storage of materials, parts and finished inventory (and related information flows) through an organization and its marketing channels to fulfil orders most cost-effectively.
Source: (Gattorna 1990, p.5)
This definition was the first to emphasise the strategic nature of logistics and draw attention to the role of two-way information flows within and between enterprises, which was being made possible by rapid developments in ICTs.
Previous Page