Logistic Management

1.4.4 Logistic Management

The concept “logistics” first appears in America, when American troops, revolving around wartime supply, set up the logistics theory, and applied it during the World War Ċ. The logistics refers to the unified arrangement of the goods production, procurement, transport, delivery during the war to seek better service,

1 Fundamentals of E-commerce

faster speed and lower cost in terms of the supplies for war. Therefore, the logistics warranty system in the wartime was used in modern economic activities before today’s logistics evolved. Probably because any behavior can be changed in the market economy, there is still no convincing definition of logistics, and related concept have been changing. Roger Oakden, project director of logistics team in Melbourne Royal University of Technology, surveyed the changes of the concept logistics from 1992 to 1997. During these years, logistics had changed from a movement of materials to an activity of providing low-cost services by using information technology.

So-called logistics management refers to the fact that according to the law of material entity movement, people plan, organize, direct, coordinate, control and supervise the logistic activities in social reproductions by the basic principle and scientific methods of management, in order to realize the perfect coordination of all logistic activities, lower logistic costs and gradually increase the efficiency and economic benefits. Logistic management comprises management of such aspects as elements of logistic activities; links like transport, stock, etc.; elements of logistic system, i.e., human, capital, material, equipment, methods and information; concrete roles in activities, mainly including plan, quality, technology, economy, etc. as shown in Fig. 1.13.

Figure 1.13 Logistic system

Introduction to E-commerce

Logistics is the essential warranty for e-commerce development

Seen from the basic procedures of e-commerce in Fig. 1.14, the whole deal in e-commerce contains several fundamental “flows”, i.e., information flow, capital flow, material flow. The information flow refers to supply of product’s information, transfer of commercial documents, technical support, etc. the capital flow refers to the process of payment, money transferring between banks. The material flow (logistics) refers to the movement of material entity (products or services), such as delivery, transport, loading or unloading, information management, etc. The flow of materials is only a part of several links, but it is the essential embodiment of the value of products or services; if it’s not solved well, the value of front link cannot be shown. In e-commerce, the former two “flows” can be realized through computers and network communications. However, as the most special logistics, only these products and services like e-publications, information inquiry, etc., can be carried on directly through

network communication. Most products and Figure 1.14 Basic services need to be transported by physical flow of e-commerce

means. So the application of a series of mechanical and automatic device, accurate and prompt logistic information can quicken the speed of material movement, improve the accuracy, effectively decrease stock, and shorten the period of production.

No matter in traditional trade or in e-commerce, production is the basis of logistics, while smooth production needs the support of all kinds of logistic activities. The whole process of production, starting with the procurement of raw materials, demands the corresponding activities of supplied materials in order to put the purchased materials at the assigned places, otherwise production cannot

be carried on; in all procedures of production, the flow of raw materials and semi-finished products, i.e., the production logistics, realizes the mobility of production. It can be seen that the whole process of production is actually a series of logistic activities. The reasonable logistics guarantees the effective modern production by lowering cost, improving stock structure, reducing fund accumulated or used for other purposes and shortening the production time. On the contrary, without modern logistics, production will by no means carry forward; no matter how convenient the e-commerce is, there is nothing coming from nothing. Only when products and services are really provided to consumers will the business

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activities come to an end; without modern logistics, whatever relaxing business activity will turn out to be a white paper.

The presence of e-commerce, to a great extent, facilitates the final consumers. They need not go to the crowded streets, selecting the products they want from one shop to another. Only by searching, checking and choosing on Internet at home can they complete their shopping. However, just imagine whether consumers will continue to shop on Internet if it has been a long time before the products they bought come or if the delivery is not what they bought. The logistics is the final warranty for realizing the customer-centered notion. Without modern logistics, e-commerce will bring consumers no convenience, and accordingly the consumers will inevitably turn to the traditional method of shopping that they think is more secure. Then is there any necessity that online shopping exists?

It has been proven that logistics is the final warranty for realizing e-commerce. As the applications of e-commerce develop, the logistics will have more obvious effect on e-commerce activities.