An Overview of Logistics

If anybody has seen a UPS commercial in the last few years, they have heard the word logistics a lot. However, the meaning of this term is not as simple as it seems in the advertisements. The broad definition of this word is–the procurement, maintenance, distribution, and replacement of personnel and materials.
Although, this definition can be broken down even further into different categories, based on what type of business it is. All businesses use logistics in some capacity, however to goods or services being provided affect how logistics are used from company to company.
This broad term can be broken down into three smaller terms that can help explain what logistics actually is. Those three terms are subsistence logistics, operations logistics, and systems logistics. Here is an overview of what they mean, and examples of those specific types of logistics.
Subsistence Logistics
This branch of logistics is concerned mainly with fundamental necessities that all humans need. Food, water, shelter, and clothing are all taken into account here; it is also stable and very predictable. Companies that produce these things find it relatively easy to pinpoint what is needed, how much is needed, and where it is needed.
It can be argued that subsistence logistics, is logistics in its most basic form; answering the questions of who needs what, and how much of it do they need? The fundamental nature of this category of logistics ties it closely to how primitive societies act. Although a primitive society wouldn’t necessarily have business or enterprise, they would experience the need to allocate basic resources, which is what subsistence logistics is all about. In addition to early societies, this principle is paramount to an industrial economy. Finally, this provides the basis for a more complicated form of logistics.
Operations Logistics
This category of logistics takes things one step further. Instead of just being concerned with raw materials, and the supply of or demand of those materials, operations logistics has to do with implementing the systems that take these raw materials to produce the luxuries and necessities that Americans are able to enjoy.
Operations logistics is mostly concerned with the movement and storage of materials in and out of different enterprises. For example, bio banks which provide fundamental services for the progress of medical research. A biobank for secure storage can offer a multitude of operations logistics services including: lab transplant and relocation, chemical transport, lab relocation management, lab animal transport, bio repository management, and cold chain management.
Operations logistics is chiefly important to biological research as well as many other industries including fast food restaurants and automobile manufacturers. However, this form of logistics is relatively easy to predict as well, because of the focus on movement and storage. There are some drawbacks to this category of logistics though, because it cannot predict where an enterprise will experience a setback, the duration of the setback, or what it will take to get back on track. This type of logistics leads into yet another slightly more complicated form.
System Logistics
Subsistence logistics deals with the supply and demand of basic necessities and raw materials. Operations logistics implements the systems of movement and storage that make the inventory of a given business efficiently managed.
System Logistics builds on the idea of implementing systems for the control and distribution of resources and materials, and incorporates the aspects needed in order to keep those systems working properly. This category includes everything that supports the raw materials, storage, and distribution including: spare parts, personnel and training, technical publication, test and support equipment, and facilities.
An example of a company that helps other business accomplish this, as well as does so themselves is UPS. UPS, the national shipping service, aims to provide business with an efficient and effective way to move resources throughout a business. In addition to this, they have added services at their UPS store locations which offer printing and 3D printing, and other services to help small businesses integrate their flow of materials with their flow of information both within and outside of the company.
These services make it possible for smaller businesses to easily control all aspects of the business they conduct, and make it possible for them to focus on the systems that help deliver their products more closely.

About Mildred Bean
Mildred Bean is an experienced consumer debt expert. She is lived through bankruptcy and founded a national credit counseling group. She is also experienced in all aspects of getting out of debt and a recognized authority on the subject. These days she spends her days writing about the debt relief industry, warning consumers about scams, and providing free debt help and answers through the my article. You can also find Mildred on Google+ .

Surety Bond Basics: What to Know Before You Buy


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By Derrick Lin
Whether you’re a veteran business owner or looking to start your first business, you’re going to need a surety bond. Oftentimes, first-time owners don’t hear about surety bonds until they find out they need them; an added learning curve (and unexpected expense) in the middle of setting up your new business is probably the last thing you need during such a stressful time.
Understanding surety bonds before you encounter them in your licensing process will shorten your application time and give you an accurate idea of the price you’ll pay when you’re ready to purchase a policy.
Bond Basics
First things first, what exactly is a surety bond? Put simply, it’s an agreement that guarantees certain tasks will be completed in an appropriate fashion. A surety bond, regardless of type, will always involve the following three parties:
Obligee. The party that requires the purchase of a surety bond. This is usually a government agency that is protecting itself and consumers against financial loss.
Principal. The party that purchases the surety bond. This is usually the business owner that is guaranteeing quality work in the future.
Surety. The party that enforces the terms of the surety bond and guarantees the business owner meets his obligations.
Determining the Price (or Premium) of Your Bond
No surety bond will be priced the same, but there are four main factors that will determine your bond premium:
1. Bond Amount. The premium you pay is a percentage of the total bond amount. Bond amounts, or amount of coverage required by the obligee, for business owners can range anywhere from $10,000 to over $100,000 depending on your state and the industry you are in.
Note that “bond amount” (coverage amount required by the governing agency) is different than “bond cost” (amount you will actually pay for your bond).
For example, if you want to begin a career as a mortgage broker and you have a 700 credit score, you can expect to pay a 1-2 percent rate of the $50,000 bond amount requirement–or $500-1000 based on standard market pricing.
There is such a wide spectrum of bond amounts because each state and industry has proven to have a different likelihood of consumer claims, known as “claim ratio,” and unethical owner behavior. The number of incidents or specific conditions per area have been factored into each state and industry designating its own bond amount for business owners. The greater the evidence of risk involved equates to a higher bond amount required.
2. Underwriting Risk. The underwriting process for surety policies, just like consumer or business insurance policies, serves the purpose of thoroughly and accurately assessing risk. Underwriting for bonds varies depending on the bond type and industry, but in general, it is when the surety provider evaluates the principal’s proposed agreement or business from a number of angles. They perform an analysis of risk of the business and the industry as a whole. The principal’s individual risk is based on personal and background information (usually reviewing the applicant’s credit report is sufficient) in order to determine qualifications and costs for the bond.
If you are in a higher-risk industry or profession, you can expect your bond premium to be higher, respectively. Risk is pushed higher or lower on the scale depending on claim activity from previous policies. Underwriters are more hesitant to sign off on bonds when the likelihood of a claim is high. Surety bonds are unlike other types of insurance (i.e., home, auto, or life) because accidents and claims are expected on those types of policies.
Bonds, on other other hand, do not transfer any liability away from the policyholder to the surety company and claims are not expected to occur. They are designed as financial guarantees for meeting industry standards, promoting ethical practices, and allowing only qualified persons to conduct business or provide certain services.
3. Bond Type. Some bond types cost more than others because the likelihood for claims is greater in some industries than others. For example, notary bonds are very low risk and usually have a $10,000 bond amount. Notary bond holders only pay $50 total over four years for their bond and don’t even need a credit check to be issued for a bond. This is because so few claims are made on notary bonds, no matter where the business operates in the country.
Auto dealer bonds are in the middle of the pack when it comes to bond cost. But keep in mind that amounts for the same bond type vary by state, due to different risk factors associated with each state.
Some of the most expensive bonds are in the construction industry. They are called performance bonds, and the bond amount is often over $100,000. The hefty price comes from the many variables that must be considered in the construction industry, such as bid amounts, bid dates, and possible weather conditions, which will vary by state. A qualified contractor with a good financial record will be able to pay a premium of about 2.5 to 3 percent of the bond amount.
4. Credit Score. Generally speaking, the higher your credit score is, the lower your bond premium will be. A credit score of 700 or more will usually only require a business owner to pay 1 to 3 percent of the total bond amount, depending on what industry they are in. When the credit score drops below 680, the premium rate can increase to 4 to 10 percent depending on other financial credentials.
That being said, notary bonds are so low-risk that they don’t even need a credit check to be issued. And, unlike riskier professions, an auto dealer only needs to provide the information that would be on a credit report to qualify for an auto bond. In comparison, construction professionals must go through a more extensive credit check and evaluation of their financial history.
Prospective business owners with low credit scores aren’t necessarily out of the running for a surety bond, though. For example, auto dealers with premiums over $2,100 can be financed, so they can get the bond on loan to start their businesses. This enables dealers to open and operate in compliance with the law, begin generating revenues from sales, and have a foundation to begin making payments on their financed policies.
Financing options can be extremely helpful for some applicants, but keep in mind that you must qualify for such programs as determined by the surety. Also, you will incur financing fees in addition to the premium by choosing this route for purchasing your bond.
Bonds: More Than Just Another Business Expense
While surety bonds are an initial cost to your business, they will help you attract consumers. If a business can say that it is legally licensed and bonded, then consumers will know that they are buying from an honest and reputable company.
Additionally, the surety bond contractual guarantee of upholding professional and ethical standards will push owners who cannot meet these standards out of the industry. Bonds can actually eliminate excess competitors in a given area who are unqualified to do business, leading to a healthier and more sustainable marketplace, which benefits consumers and business owners alike.

About the Author
Post by: Derrick Lin
Derrick Lin is a member of the Educational Outreach Team at, a major online surety provider. He is a senior journalism major emphasizing in strategic communication at the University of Missouri. Derrick has been writing blog posts with in an effort to educate business owners on the importance and benefits of surety bonds.
Company: SuretyBonds.comWebsite: www.suretybonds.comConnect with me on Facebook, Twitter, LinkedIn, and Google+.

Top 10 Reasons to Invest Your Money

In order to construct your wealth, you will certainly wish to invest your cash. Investing enables you to put your cash in automobiles that have the potential to make strong rates of return.

If you don’t invest, you are losing out on chances to increase your financial worth. Obviously, you have the potential to lose your cash in investments, but if you invest sensibly, the potential to gain money is greater than if you never ever invest. Continue reading