-Laia Domínguez García-

Hi dear classmates!!

Most of us have chosen this subject because we find it interesting and we want to learn more about it but, do we really know the origins of Business Logistics? How it all began? I would like, to conclude this semester, we all make a little review.

Logistics (as historians say, this word comes from the greek Logis, which means calculation and from the latin Logística, term that was identified in the Ancient Rome with the boss of the armies) was born at the same time, more or less than the human being. Its concept wasn’t considered at that time, but people used logistics in its daily life for simple things like storing food in the caves (due to the fact that some food could only be found in a certain period of the year). They didn’t know but they were using concepts which are very popular nowadays like provisioning or inventory management.

The beginnings of the business administration were in the military institutions and logistics is not an exception. It was developed with the aim of attending the needs of the military forces, achieving its maximum efficiency.

It was in 1870 when logistics started to work in companies the way we know it today, in EEUU and Western Europe. The basic infrastructure of transport and communications were railways and telegraph. Although that advances, companies used to stock a lot of products which would be transported in a future with the objective to reduce costs. This needed to be fixed because that made that every region had to produce every type of product, but if distribution and transportation costs were reduced, regions could start specializing and work only in the products they could be competitive.

When this problem was solved, large-scale production began, but a new logistics problem emerged because of the lack of knowledge in coordination and logistics management. In response to this, improvements in the administrative area were made. This allowed the fact that the tasks could be done in a more organized and efficient way. Furthermore, those companies who invested in technology and also in raw materials and capacity to face provisioning, production and distribution positioned as leaders during this time, benefiting from a cost reduction and competitive advantages.

At that time, logistics weren’t so recognized as an important part of the product as marketing or finance could be.

From 1950 on, and after the wars, companies started to look for mechanisms to control distribution costs, because of the increase of products in the market and its disordered commercialization. Then, we can confirm that physical distribution emerged as a way of reacting to the market problems.

Finally, and to summarize what happened with logistics and how it has get as it is today, I leave you a summary table:

 

1950 Discovery of the logistics potential and awareness of total costs

Cost-cost equilibrium

1955 Optimization of the customer service as a strategy to obtain revenue and get competitive advantage

Cost-service equilibrium

1965 Logistics focused on outsourcing
1970 Integration of logistic operations in the company

Decrease of technology information cost allowed managers focus on the improvement of the operations quality

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