Logistics

logistics

Logistics is an important subset of supply chain management. Logistics is the management of the transportation and flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations.

The resources managed in logistics can include physical items such as food, materials, animals, equipment, and people, as well as abstract items, such as time and information. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, and warehousing. Logistics may have either an internal focus (inbound logistics) or an external focus (outbound logistics).

Inbound Logistics

A manager in charge of inbound logistics manages everything related to the incoming flow of resources that the company needs to produce its goods or services. These activities will include managing supplier relationships, accessing raw materials, negotiating materials pricing, and arranging quicker delivery.

Outbound Logistics

A manager working in outbound logistics will be focused on two issues: storage and transportation. They will use warehousing techniques to keep the finished goods safe and accessible. Since the products may need to be moved out to a customer at any moment, proper organization is crucial. Having as little product stored as possible can be advantageous since stored products are not making money, so the outbound logistics manager often has to balance company cost savings with consumer demand. The transportation function is by far the most complex part of outbound logistics. Without transport, there simply is no logistics. For that reason it’s critical to be able to move the product from one location to another in the fastest, most cost-effective, and efficient way possible. Since transportation involves fluctuations, factors such as delays and changes in fuel costs need to be taken into account in order to cover all possible scenarios that might jeopardize the efficient movement of goods.

Logistics and Supply Chain Management

You can see that logistics is closely related to supply chain management. Supply chain management covers all aspects of production and delivery of a product, including figuring out where to source materials and customer satisfaction. In contrast, logistics is narrower and focused on the flow of goods and information within the overall supply chain management function.