Fundamental Basis and Connection of Modern Entrepreneurial Logistics and SCM

Author’s approach to identification and systematization of separate theoretical-methodological issues of modern entrepreneurial logistics and concept of SCM has been provided in the article. Features of fundamental basis of business-logistics and SCM system in interconnection with initial adjoining sciences in different fields of knowledge (mathematics, military science and so on) have been grounded. The principle of rationalism has been identified as a common classical basis for all historical kinds of logistics. Dualistic character of modern economical logistics has been defined and it has been offered to use it as a basis of logistics classification. Term “specialized logistics” has been separated and revealed. Rhochrematics has been identified as a direct evolutional basis of a modern concept of managing logistical provision. Classification of levels of Party Logistics has been improved by indication of measure and character of outsourcing logistical functions by the company. Methodology has been systemized and hierarchical basis of logistical approach in economics has been determined.


Setting a Task
In modern conditions of dynamic development of markets and technologies adequate logistics and the system of Supply Chain Management (SCM) has become one of the most significant factors of providing competitiveness of a business and effective satisfaction of consumer needs.At that logistics as a notion gradually widens borders of its traditional use and application in the professional environment.
Its spread in economics promoted formation and development of theoretical, methodological and practical basis of entrepreneurial logistics.However up to today there is a very active discussion concerning many issues and high level of motley is evident in its relation to scientific cognition.At that interpretation and use of term "logistics" and its separate categories often differ in academic and entrepreneurial environment.

Analysis of the Latest Studies and Publications
Analysis of the latest scientific works affirms the fact that motley of positions of researchers remains in defining the essence and principles of entrepreneurial logistics and logistical approach in economics.Connection of logistics and SCM concept is described ambiguously.
At the same time the object of study of logistics in concentrated only within material flow according to many scientific studies.In particular it is: Represented in works by M. Chakkol (2014), J. L. Heskett, (1977), P. D. Larson (2004) and other scientists.D. J. Bowersox (1996), S. E. Fawcett and G. M. Magnan (2002), A. Harrison (2011), M. A. Souza (2013) mainly associate economical logistic with integrated logistics or with the theory of managing flows.
Entrepreneurial logistics and physical distribution as an evolving basis for SCM concept are considered by D. M. Lambert (2004), P. R. Murphy (2010), E. Sweeney (2009).
In works of F. Abey (2010), R. H. Ballou (2007), J. Stock (1993) attention is focused on background of notions of modern business logistics in the sphere of military logistics.K. Bichou (2004), M. Christopher (2011), C. M. Wallenburg (2009) consider the main fundamental principle of entrepreneurial logistics and SCM concept to be the principle of systemic integration.Despite numerous studies there is no final solution and coordinated systematization of the theoretical problems which concern: outcome principles of entrepreneurial logistics and SCM concept; environment of their application and manifestation in modern economy; features of connection with alternative concepts of management over flow processes; development of the system of their scientific methodology and so on.

Purpose, Materials and Methodology of the Research
The purpose of the research is to study the diversity of modern manifestation of entrepreneurial logistics as well as identification of fundamental basis and versatility of methodology of logistical approach in economics and its connection to SCM concept.
Materials for the research were scientific works on issues of theory and methodology of entrepreneurial logistics and the system of Supply Chain Management as well as empiric data concerning features of activity of separate participants at the market of logistical services.
Methodological basis for the research were: praxeological, structural-functional, systemic-differentiated, systemic-integrated, activity-based and other approaches.

Results and Discussions
During the history of formation and development of entrepreneurial logistics different alternative terms have been used (physical distribution, material management, rhochrematics, integrated distribution, management over supply chain and so on).At the same time some of them are viewed in the context of a certain interrelation: in the form of components, additions, synonymic substitutes, evolutional stages of formation, basis outcomes of development and so on.
Along with that a separate attention should be paid to the study of etymological connection between such terms as entrepreneurial logistics and management over supply chain.
Most researchers agree upon the fact that semantics of the word "logistics" comes from ancient Greece.There this word meant the art of thinking (thinking, expediency of actions, performing of calculations).From ancient Greeks the term "logistics" came to ancient Romans but they interpreted it differently-"activity for providing troops with food and lodging".
Further interpretation of this word in fact took place in parallels and at some stages of historical development it was integrated.
In particular in contemporary encyclopedic dictionaries there are two main directions in development of logistics: first is connected with management over deployment and material-technical supply of troops, as it was widespread in fundamental works of a military theoretician of the XIX century A. A. Jomini; the other-as the interpretation of mathematical logic, which was firstly used in works of a famous German mathematician G. Leibniz and attached to this meaning in 1904 during the philosophical congress in Geneva.
The idea of transferring certain concepts of the military logistics into economy was formulated in 1951 by an American researcher O. Morgenstern.In fact since that moment development of logistics has started which in most sources is known as "entrepreneurial" (economical).
In the process of its development such logistics has passed through four stages: fragmentation, formation, development and integration (Wasylko, 1999).
In consequence of structuring and integration the modern entrepreneurial logistics at the same time has become a certain development of mathematical logistics (science about features and methods of thinking) as well as military logistics.It enables scientists to define two main types of business logistics: rationalistic and providing.At that in separate cases their approaches or manifestations are used or take place in the integrated way (for example-logistical mix 7 "R-s"-production, amount, quality, place, time, consumer, expenses).Rationalistic logistics is a logistics which studies models and methods of formalization and rationalization of certain economical phenomena with the purpose of optimal building of flow processes and systems.Rationalistic logistics is oriented on processing scientific principles, methodology of optimization of economic activity in business and support of decisions in the system of management.It is a certain development of logic, as a science about features and methods of thinking and a part of military logistics (rational organization of deployment and supply of troops).
Providing logistics is a logistics which studies the processes of providing businesses and different logistical formations which are connected with them (logistical objects, organizations, canals, chains, networks and so on).It is a certain development of a part of the military logistics (rear organizations for provision of front) and in that sense is more often used in entrepreneurial environment.
In general logistical provision of business operation through carrying out special subsidiary operations (operational processes)-is one of the main tasks of entrepreneurial logistics.
One of the main purposes of logistics of an enterprise is provided due to integration of functional chains (physical distribution, maintenance of production and supply) and its components (transportation, stocks, warehouses and so on) on the basis of general consumption.
It is essential to note that the process of manufacturing (technological operations) and maintenance of production (logistical operations) are principally different business processes.
Technological operations are operations owing to which qualitative transformation of the subject of labor takes place.
Logistical operations are operations which provide the presence of a necessary subject or labor product in a necessary quantity, in the necessary place and at the appointed time.Thus logistical operations are any operations, which are carried out by material subjects and products of labor in the fields of manufacturing and circulation except for technological operations for producing material values.Some logistical operations are essentially the continuation of a technological manufacturing process.
To a certain extent rationalistic and providing character of logistics is defined in many explanations of this term.In particular in "Standards of logistics and management over chain supply" by European Logistics Association logistics is interpreted as planning, carrying out and control over the flow and placement of people and (or) goods as well as maintenance actions which are connected with this flow and placement within an economic system created for achieving its specific purposes (European Logistics Association [ELA], 2004).
In this definition the object of study is not limited exclusively by a material flow hence the speech goes not only about movement but also about placement of people and (or) goods.The function of planning implies rationalistic approach and maintenance actions-providing nature of such a phenomenon as entrepreneurial logistics.
In the system of management of an enterprise logistics has dual character for it is simultaneously used as the approach and the object of management.As the approach to management logistics is most often manifested in the system of logistical management and as the object of management-in the system of management of logistics.The process of logistical management is mainly based on means of the rationalistic logistics, and management of logistics first of all is connected with processes of providing the main type of business activity of an enterprise.
At that the change of material objects is more often a consequence of management over development of providing logistics and ideal objects-rationalistic logistics.
Besides the derived adjective from "logistics" is "logistical" for different categories is used in two separate meanings: mainly as rationalistic (logistical approach, logistical organization, logistical management, logistical selection, logistical modeling and so on) and mainly as providing (logistical object, logistical process, logistical provider, logistical channel, logistical chain, logistical network and so on).Such double connotation of the derived adjective is not observed for example in manufacturing, finances and other spheres.
We consider that rationalistic and providing logistics as its two main manifestations are at the highest level of classification of entrepreneurial logistics.They form its two most universal types.It means that any type of logistics at a lower level of the classification is connected with both rationalistic and providing types.
Thus, for example, macro-and micro-logistics can be both rationalistic and providing.On the other hand rationalistic and providing types of logistics include providing, manufacturing, sale and other types of logistics of an enterprise by functional and other features.
In most researches business logistics as a fundamental basis of business logistics there are the following principles: rationalistic, systemic, hierarchical, integrated, formalizing, unique and so on.
According to the author while studying directions of manifestations and basis of entrepreneurial logistics it is necessary to consider its connection with historical origin (mathematical and military logistics) as well as features of evolving.
Thus studying logistics with its other types I. D. Afanasenko and V. V. Borisova ( 2013) has arrived at the conclusion that despite significant differences which are typical for mathematical, military and economic logistics, there is something in common -it is a necessity to consider features of the flow form of organization and principles of sequencing, rationality and preciseness in the process of managing flows (Afanasenko & Borisova, 2013).
Agreeing with the connection of the mentioned principles attention should be paid to discussion features of uniting the mentioned types of logistics around the flow form of organization, especially if it concerns mathematical logistics.
Such evolution allowed us to form and develop fundamental basis of modern entrepreneurial logistics, separate elements of which continue to remain common in adjacent spheres of scientific and practical activity (Figure 1).Differentiation is a way of development process connected with division and separating of the whole which develops into parts, stages, levels.Structural differentiation is a differentiation during which subsystems are created in the system which realize some or other functions.Functional differentiation is a differentiation during which the number of functions is widened which are carried out by elements of a developing system.
Realization of the principle of structural-functional differentiation creates conditions for development of specialized activity in spheres of military and entrepreneurial logistics.
Separate attention is necessary to consider the principle of systemic integration, which is common for entrepreneurial logistics and supply chain management concept.
Systemic integration is a combination of components of subsystems into one system and provision of work for separate subsystems as one system.
The principle of systemic integration is places in the basis of integrated logistics which is equalized in many publications of scientists with entrepreneurial logistics in general.
Sometimes efficacy of a certain division of integration logistics is considered doubtful at all since logistics while carrying out the system-forming, integrated, regulating, resulting functions is always integrated.
First profound studies of nature principles of integration logistics were made by D. J. Bowersox and D. J. Closs (1996).The main contribution of scientists is that integrated logistical system is able to provide better results than the system in which coordination between functions is absent (Bowersox Closs, 1996).
Integrated logistics implies general systemic management over entire logistical chain as one subject, not as a separate management over separate logistical functions (Integrated logistics [IL], 2014).
At that integration in business is typical not only for logistical activity.Besides it is used in the system of production and in the system of marketing and other spheres.
Thus systemic integration in manufacturing is carried out with the purpose of uniting it into one functional item with existing automated systems and informational technologies.
In the system of integrated marketing principles of marketing have such an organizational formation that enables scientists to completely calculate the possibility of distribution and based on it to coordinate efforts of all other subdivisions to achieve commercial and other purposes of an enterprise.Here marketing is viewed not as one of elements of management but as a global function which defines the content of all manufacturing-distributing activity of an enterprise.Marketing service undertakes responsibilities to carry out many functions or acts as a consulting organ concerning other subdivisions.
But in business most complex and global principle of systemic integration is realized in the process of supply chain management (SCM concept).SCM concept is most often considered as a certain development of integrated logistics which has evolved in countries with developed market economy, as a type of entrepreneurial logistics in the 80s of the XX century.At the same time supply chain management is represented as a concept of integrated business planning, which was formed in the 50s of the ХХ century by experts and practical specialists in the field of not only logistics but also in strategic planning, study of operations and so on.
At the same time the principle of rationalism is more naturally represented in the essence and fundamental basis of entrepreneurial logistics than in the concept of supply chain management which key feature is a principle of systemic integration.
Owing to that the following integrated combinations occur such as supply chain management based on logistics, logistical supply chain management and others.
According to P. R. Murphy and D. F. Wood (2010), supply chain management is designed to provide gradual and continuous distribution of goods from suppliers of a supplier to clients of a client.Supply chain is more than a marketing channel.In marketing channel distribution of goods is carried out only from a manufacturer to a customer.Within marketing channel there are a few interconnected channels which have relation to property, financing, negotiations, promotion and logistics.In the supply chain relations with companies which provide logistical services are considered separately (Murphy & Wood, 2010).
At the same time А.А. Bochkarev (2009) considers that supply chain management is an integration of key business processes (mainly logistical), which start with end user and include all middlemen and suppliers of goods, services and information, adding value to the customer and other interested parties (Bochkarev, 2009).
At that the researcher pays attention to the fact that a number of key business processes is debatable.So, J. Stock (1993) and D. Lambert (2001) define eight business processes: interaction with a consumer, service for a customer, management of demand, carrying out of orders, management over manufacturing flow, supply, product development and its processing to commercial use, management of flows which return.
A. Harrison and R. Van Hoek (2011) also include marketing and retailing into the group of key business processes.
At that supply chain management and entrepreneurial logistics are connected with material flows to a different extent.
J. L. Heskett, R. M. Ivie and N. A. Glaskowsky (1964) were among the first to define logistics as a complex of types of activity in management of produce flows, coordination of manufacturing and markets of distribution at the determined level of services with minimal expenses.
Nowadays most definitions determine logistics as a theory and practice of management over material flows.However it is essential to note that such activity has been done by people for a long time.
Modern logistics is only a part of science about flows.Thus for example there are mathematical disciplines for studying flows-theory of mass servicing, study of operations, theory of gradoids and so on.
In our opinion entrepreneurial logistics unlike SCM concept is connected only with a part of material flow (logistical processes, logistical chain) and, besides in modern conditions goes beyond it.
Taking into account that a chain of supply includes a group of non-logistical business processes (manufacturing, marketing and so on), the issue of equalizing it with a logistical system is debatable.
In the same way in the chain of added value M. E. Porter (1985) among five main business processes (Inbound Logistics, Operations, Outbound Logistics, Marketing and sales, Customer service) defines logistical as supply and distribution.
In fact it means that entrepreneurial logistics and SCM concept only partly have common basis and their subjects of research and sphere of application significantly differ.
Nowadays in economical literature one can find a wider definition of the term "entrepreneurial logistics" in which the object of management is not limited by a material flow.
Besides management over labor, energy, financial and other flows in economic systems are considered to be a part of logistics.Such terms as bank, informational logistics and others have appeared.Term "logistics" has started to be used in situations which are connected with exact planning of coordination in sequence of actions.For example, a visitor to symposium who has arrived at the hotel might be advised to refer to the manager of logistics to clarify further program of actions or a TV announcer might note within criminal chronicle that a gang of criminals had a very well developed system of logistics.
Classical mathematical logistics has not lost the connection with economical processes: it has become adjacent to economical logistics first of all through economical-mathematical modeling (Afanasenko & Borisova, 2013).
At that solutions in logistical management are connected not only with optimization of material and other flows but also with formalization of reasoning the choice of a supplier, type of transport, technologies or optimal planning of manufacturing or use of resources and so on.
That is why multiple aspects of the general entrepreneurial logistics are shown in a wide rationalization and provision: from flow processes to separate economical phenomena beyond logistical business processes (Table 1).So, specialized logistics to a major extent can be typical for party providers (operators), which provide separate logistical services, carrying out certain narrow functions (transportation, storing and so on).
Integrated logistics is a logistics which implies combination of several logistical functions (processes) in the process of entrepreneurial activity.
It can be typical for a separate enterprise which integrates its own performance of such processes as supply, maintenance of manufacturing and distribution and at that it provides their optimization within the logistical system.Also integrated logistics is observed in the activity of separate party providers (operators), which provide complex logistical services aimed at general management of the supply chain.
At that integrated logistics despite its common fundamental basis is connected exactly with the logistical chain while SCM concept is oriented on the whole supply chain (material flow).
Logistical chain is a set of interconnected consequent and parallel operations (business processes) of the logistical provision of creating and distributing to the consumer of ready goods, work or service.Supply chain is a gradual promotion of goods within one material flow.
Evolutionary basis of entrepreneurial logistics is often considered rhochrematics, and in some studies these notions are even considered equal.
On the other hand rhochrematics is a science which I directly oriented on the study of the material flow from the initial source to the end-user.Hence it studies the process of managing material flows.The purpose of rhochrematics is to shorten the general time of the material flow (cycle) and general expenses for transportation, storing, packing and distribution of raw materials, semi-finished goods and finished goods.
Besides in direct translation (Greek.Rhoe-flow and chrema-objects) rhochrematics is oriented on flows of objects of management at all.There could be material, financial resources, information and so on among them.
In our opinion rhochrematics is not a stage of forming general entrepreneurial logistics.At the same time rhochrematics (not logistics), is a direct evolutional basis for modern concept of supply chain management (SCM) as well as partly of integrated entrepreneurial logistics.
Terms "logistics" and "logistical approach" are separated in works of many contemporary scientists and some of the authors principally divide or even contrast these terms.
According to the author the logistical approach itself as well as modern entrepreneurial logistics by its nature is manifested in three key aspects: general, differentiated and integrated.At that initial basis of all logistical approaches is not a systemic integration but rationalization (1а) (in certain cases in combination with providing main activity (1b)).Additionally (2) in the basis of the differentiated logistical approach there is a principle of structural-functional differentiation and of integrated -systematic integration which are secondary (Figure 2).Source: author's development Besides in the system of party logistics the differentiated logistical approach is more often evident at lower levels of PL, while integrated approach-at highest levels of PL.
In our opinion party logistics is a type of external logistics.Therefore the inclusion of "party logistics" to type variety level into the level of internal logistics (1PL) is not quite correct.
Along with that at the level of 2PL the easiest logistical outsourcing might take place based on strategic partnership with a bigger extent of integration with customer of services on separate logistical operational processes.
More exact classification of levels of party logistics should be done by means and character of outsourcing logistical functions by an enterprise to another party (Figure 3).At levels of logistical outsourcing a high degree of integration of logistical processes takes place with the customer of the service and at the level of subcontracted relations logistical providing exists with a low degree of integrating such functions in the system of party logistics.
Multiple aspects in logistical approaches form multiple aspects in the system of methodology of entrepreneurial logistics.
The essence of the functional approach implies the fact that the need is considered as a group of functions which must to carried out to satisfy the need.Upon setting functions several alternative objects are created for implementation and the one which requires minimal expenses per life cycle of the object for one unit of its beneficial effect.
Principle of distribution and specialization of labor is the basis of a functional-oriented approach developed by A. Smith (1976).
The sense of the structural-functional approach is in separation of structural elements (components, subsystem) in systemic objects and definition of their roles (functions) in the system.Elements and interconnections between them create the structure of the system.Each element performs its own specific functions which "work" for general system functions.The structure characterizes the system in a static way, the function-in a dynamic way.
In our opinion structural-functional approach is one of the key methodologies of the differentiated logistical approach as well as specialized entrepreneurial logistics.
Systemic approach is a methodological basis of the through management of the material flows.The systemic approach means that each system is an integrated part of the whole which enables scientists to represent the studied object as a complex of interconnected systems united by a general purpose, reveal its integrated qualities, internal and external connections.D. J. Bowersox (1996) in his research has arrived at the conclusion that the principles of systemic analysis are widely used by most scientists who describe potential possibilities of the integrated logistics.Systemic analysis is the checked methodology for creating the whole entity from separate functions, which outnumbers the sum of its components and functions.
However, at that it is essential to note that systemic approach in its development has passed through two stages, first of which -systemic differentiated and the other one-systemic-integrated.In its basis these stages do not contradict each other: they are different types of systemic approach, representing corresponding strategies of development and improvement of organizational systems.The essence of the systemic-integrated approach is the integration of different types of activity necessary for achieving specific purposes and concentration of the necessary resources for it.
Based on that the systemic-differentiated approach is one of the key methodologies of the differentiated logistical approach and systemic-integrated is one of the key methodologies of the directly integrated logistical approach.
One of the most important methodologies of the integrated logistics as well as SCM concept is an activity-based management.
Many contemporary scientists pay attention to similarity of the process management with the integrated logistics.
For now the activity-based approach is a main basis for modern approaches to management including the following: WFMS (Work Flow Management System)-system of managing work flows.
Activity-based management is methodology which enables an enterprise to increase value of goods for customers and the level of profitability by focusing attention not on local functions but on business processes (integrated functions).Logistics is a business process which consists of three local business functions: supply, maintenance of manufacturing, physical distribution.
Taking into account that logistical approach is mainly based on methodology of rationalistic logistics, the key methodology of a general approach and the common methodology for all logistical approaches should be the classical theory of praxeology.
The most deeply praxeological approach is observed in the logistical mix (7 "R-s").
The term was firstly used in 1882 by L. Bourdieu and further developed by a Polish scientist T. Kotarbinskyy.The appearance of praxeology took place in the context of scientific expectations and searches at the beginning of the ХХ century, which found its place in the theory of the general organizational science by A.A. Bogdanov.
By its content praxeological approach is meant to analyze technique and analytically describe elements and forms of the rational activity.Praxeology is considered as general methodology in logic.Mathematicians, who developed the theory of probability and heuristics, manifested praxeological point of view, adding improved mathematical models to the set of existing methods.Praxeology has especially close contact with social economics.Therefore separate scientists consider praxeology as a science about rational actions within economy (Praxeology, 2014).
Hence mathematical, military and entrepreneurial (economical) logistics develop based on these ideas.
In particular logistical chain supply management is directed at increasing rationality of application of the latter (optimization of spending of time and resources).Correspondingly such systems of management over operational processes in the supply chain such as MRP, ЕRP, KANBAN, FZ are logistically (rationally) organized.Also the supply chain itself might be logistically organized (built on logistical principles).

Conclusions
In modern conditions the widening of the environment for the term "entrepreneurial logistics" use is connected with its development in directions of rationalization and provision of business processes of an organization.It enables us to separate two main types of entrepreneurial logistics: rationalistic and providing.Each of them is based on ideas of separate directions of the military logistics and rationalistic is additionally based on certain achievements in logic as a science about features and methods of thinking.
Entrepreneurial logistics is a field of knowledge in the sphere of economics and it is not a component in business management or marketing.In the system of management of an enterprise logistic possesses a dual character since it is at the same time both the approach and the object of management.At that in the first case such functional type of management as logistical management is formed and in the second case-management of logistics.Each of them is connected with both logistics of rationalization and with logistics of provision of business processes.Along with that logistics as the approach to management is more often based on methodology of rationalistic logistics, and logistics as the object is more spread in the meaning of providing qualitative transformation of labor subject and processing of the finished goods to the customer.
Each new paradigm in logistical evolution does not contradict the previous one but widens the multi aspect manifestation of logistics in economy.Owing to that modern entrepreneurial logistics is manifested both as a part of the material flow and beyond it.It enables scientists to separate such main kinds of entrepreneurial logistics as general, specialized, and integrated.
Despite the broad evolutionary differentiation, fundamental basis of entrepreneurial logistics cannot be considered outside the organic interconnection with initial adjacent sciences in different fields of knowledge (mathematics, military science and so on) and economical logistics itself is not reasonable to define as one of its own kinds or with modern concepts and theories which have partly common ground with the business logistics (SCM, chain of value and others).
At that rationalism is a common classical basis for all historical types of logistics.
Rhochrematics is the direct evolutionary basis for modern concept of the supply chain management (SCM) as well as partly for the integrated entrepreneurial logistics.
Party logistics is a kind of outside logistics.Therefore it is not reasonable to include type variety "Party Logistics" into the level of internal logistics.Correspondingly the classification of levels of party logistics should be done exclusively by the degree and character of outsourcing logistical functions of an enterprise to the party.
Multi aspect manifestation of logistics in economy influences multi aspect manifestation in the logistical approach and its methodology.At that it is reasonable to consider praxeological approach as the mutual classical methodology for all logistical approaches.
It is reasonable to consider all that in the process of scientific cognition of feature of entrepreneurial logistics and SCM concept.

Figure 1 .
Figure 1.Fundamental basis of logistics and SCM concept Source: author's development

Figure 2 .
Figure 2. Methodology and hierarchical basis of the logistical approach in economy

Figure 3 .
Figure 3. Levels of party logistics (by degree and type of outsourcing logistical functions of an enterprise to another party) Source: author's development

Table 1 .
Separate features of entrepreneurial logistics and system of supply chain management Specialized and integrated entrepreneurial logistics unlike general logistics are directly concentrated on parts of the material flow.Such a classification should be carried out by means of joining separate functions.Specialized logistics-is a logistics which implies mainly concentration of organization on carrying out separate logistical function (process).