Logistics Supply Agreement

CS Shirish Bhootra
Mar 10, 2023
3 min read

Written by CS Shirish Bhootra

Introduction

The term "logistics" originates in the military and is used for materials concerning training. U.S. Army defines it as "the processes, resources, and systems involved in generating, transporting, sustaining, and redeploying or reallocating material and personnel."

In trade, manufacturing businesses use this term to describe their procedures concerning acquiring, storing, and transporting resources covering the production cycle from raw materials to complete or finished goods.

Corporations have separate logistics departments, subject to the control and supervision of logistics managers. There is also the option of hiring specialized contract firms to manage the logistics of the firm.

Logistics is a step-by-step procedure wherein there is the acquisition of raw materials by manufacturing units as per their requirements, which then undergo a manufacturing process involving packing and shipping of products and, after that, dispatch of the same to the required consumer.

Logistics Supply Agreement (LSA)

Logistics Supply Agreement is an execution of an agreement involving two nations with a motive to execute various activities among nations involved as well as to have assistance between nations concerning various other activities. It is a bilateral agreement with characteristics of reciprocal access concerning facilities that are parties to the agreement.

These agreements possess administrative arrangements wherein access to various military facilities among nations involved results in simplifying logistical support and increment in operational turnaround when military force has operations away from India.

Our nation has executed various logistics agreements with all Quad Counties like France, Singapore, and South Korea, initiating with Logistics Exchange Memorandum of Agreement [LEMOA] with the U.S. in 2016.

Key Factors Concerning the National Level

It helps in the facilitation of interoperability among the nations.
It facilitates conducting training in each other's areas.
Facilitation is reciprocal when forces have engaged in activities concerning disaster relief and operations related to maintaining peace.
It facilitates the recovery of members [crew] and an easy supply of essential items, like food, water, etc.
It helps in long-duration complex and joint military exercises with no burden of logistic sustainment of forces in the foreign land by the guest country.

Logistics Exchange Memorandum of Agreement (LEMOA)

It is a tweaked India-specific version of the Logistics Support Agreement (LSA), which the U.S. has executed with countries with military cooperation. It is also said to be one out of three fundamental agreements as referred to by the U.S.

LSA (Industrial Context)

LSA is an agreement executed between parties to clarify every related aspect. It involves a complete operating cycle wherein it includes the acquisition of raw materials, their manufacturing, and final dispatch to the consumer. It is a customized agreement that varies from business to business. It facilities ease of doing business as it helps in the reduction of inventory, minimization losses, less operating cash, less duration of the operating cycle, and at last timely and appropriate schedule for dispatch of goods, which in turn helps in retention of customers and ultimately affects business as a whole.

Conclusion

LSA plays an important role in business. It is an effective tool to survive in the competitive business world. To have its maximum benefits and effective usage, it must be drafted carefully, covering all relevant points to have fewer chances of disputes, and disputes, if any arise, may be resolved quickly and easily.

References

UPSC Preparation Strategy, Logistics Supply Agreement (LSA) (byjus)
InsightsIAS, Logistics agreements and their benefits (InsightsOnIndia)
Mitchell Grant, Contract Logistics: Definition, Purpose, Examples, and Benefits (Investopedia)