logistics | Meaning, Types and Importance

The process of planning or coordinating, relocating goods, materials or equipment from specific area to storage at the desired destination is known as logistics.
by Admin | Oct 15 2022 , 14:37:55





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What is logistics?

The process of planning or coordinating, relocating goods, materials, equipment, and people from specific area to storage at the desired destination is known as logistics. The aim of logistics is meeting the needs of the customer as quickly and cost-effectively.

The origin of the term is from the military, it was used to refer to the transport of equipment and supplies to troops in the field. Although logistics is as crucial as it ever was for the army, the word nowadays is used more for moving commercial products in the supply chain.



logistics vs. supply chain management

Supply chain management and logistics are two terms commonly used interchangeably; however, they are actually referring to two different aspects to the same process.

Logistics refers to the activities that take place within a single company, such as the purchasing and distribution of raw material, packaging, delivery and transportation of products to retailers for instance. Supply chain management is a reference to a larger group of external organizations working together to supply goods to customers, such as suppliers, transportation companies warehouse suppliers, call centers and other.



Logistics types


Inbound Logistics

Inbound logistics is basically transportation, storage and receipt of incoming resources (such raw material, other goods, etc.) required to make a product.

It can also be the delivery of goods you have in your inventory.

If your business deals in footwear, for example, inbound logistics will include the rubber for the shoes and the yarn to make the shoes.

Inbound logistics is dominated by procurement. It involves sourcing and transporting raw material from the supplier to the buyer's facility. It may involves managing suppliers, costs and inventory to ensure that the correct components are delivered to your factory in schedule because hundreds of parts are being brought in to make one final product.


Outbound Logistics

Outbound logistics is the delivery of the right product to the right customer at the best price. It is focused on customer satisfaction.

If your business deals in footwear, the outbound logistics for your company will include the shipment of the final product, which could be sandals, shoes, or slippers to your customers.

The main goal here is customer satisfaction. The logisticians ensure that the product reaches the customer as safely and cost-effectively as possible.

Outbound logistics is a complex process that requires a strong distribution system. Distribution channels and the transportation system must support the company's value proposition to customers (e.g., Quick response to customers, high quality customer service, etc. E-commerce is a growing trend in retail. This makes it more important to optimize outbound logistics flows. Outbound logistics is a key focus for the retail e-commerce industry. This sector is more important than any other. Amazon, Walmart, Lazada are examples of companies that take bold steps to innovate technologies and build facilities to improve their logistics performance.


Reverse Logistics

Reverse logistics refers to the movement of products from the end-user back towards the origin in order to recover value or dispose properly. This includes collection, inspection, sorting and refurbishing of product.

It is likely that you have experienced it at least once: You order a product online, and it does not meet your needs. You can then request a refund of the product. This is demonstrated by a refurbished a mobile phone, the customer can return the phone that is defective during the warranty period to the carrier network, and then to manufacturing company for refurbishment. The company inspects the Phone and then replaces it with the correct parts or software. The new phone is labeled with a serial number or model number to allow for reselling. The customer then resells the refurbished phone, creating additional value for the company.


what is logistic management?

Transport and warehouses are two of the main logistical functions.

Transportation management is about organizing, optimizing and managing the transportation of products between retail stores and customers. Transportation is multimodal and could comprise air, ocean railways, roads and rails.

Unsurprisingly, transport management can be described as a nitty-gritty procedure that requires the planning and optimization of routes, load management for shipment along with freight auditing and payments. It may also include yard management, which supervises the flow of vehicles in the yards that are outside of manufacturing plant warehouses, distribution centers and warehouses. Carrier management is an essential aspect as the cost as well as the capacity and availability of transporters can differ significantly.

Companies that deal in logistics typically employ transportation management systems (TMS) applications to meet the needs of transportation-related logistics. There are other niche applications like Yard management solutions.

Warehousing, also known as management of warehouses is a term used to describe the functions of inventory management and fulfillment. It also involves the management of warehouse processes and infrastructure for instance, in fulfillment centers where orders for products are received, processed, and processed and fulfilled (shipped to the client). The majority of companies utilize warehouse management systems (WMS) applications to control the movement and storage of goods, and keep track of the inventory. The majority of suppliers of Enterprise Resource Planning (ERP) software have WMS and TMS modules and additional components that are specialized for inventory management, as well as other logistics tasks.

Customs management, also known as the global management of trade, is typically thought of as a part of logistics because the documentation required to prove compliance with the regulations of government agencies will often be processed when products cross national borderers or cross into ports for shipping.

Artificial Intelligence (AI) and autonomous vehicles will have a major role in how logistics functions in the coming years. Some logistics firms already utilize AI to track packages better and identify issues related to transportation within the supply chain.

While autonomous vehicles, including delivery trucks, driverless forklifts and drones, are expected to be more prevalent in warehouses, warehouse yards and along highways.


Logistics components.

The management of logistics can involve some or all of the following business functions, including:

Inbound transportation 

Outbound transportation

Fleet management


Materials handling

Order fulfillment

Inventory management

Demand planning



Why logistics is Important?

The timely delivery of packages that are intact has always been crucial across the supply chain and while many small-scale businesses concentrate on the development and production of their services and products to meet the needs of their customers but if the products aren't able to be marketed to customers, then the business is likely to be in danger of failing. This is the primary role logistics is playing.

However, logistics can also impact other aspects of business, too.

The more quickly raw materials can be bought or transported and then stored until needed the more profitable a business will be. The coordination of resources that allows for the timely delivery and use of raw materials can be the difference between a successful or unsuccessful business.

On the other hand, on the side of the customer when products can't be manufactured and delivered on time and customers are not satisfied, it can affect their satisfaction and negatively impact the profitability of a business and its the long-term viability.

Distributors, suppliers, manufacturers and retailers have had to enhance their logistics processes in order to accommodate the growing demand for speedier and more convenient delivery of a wider range of products. They have also had to improve the integration of their processes and systems in order to enhance visibility into the supply chain.


The difference between supply chain and logistics management

Logistics management is an essential aspect of the supply chain management (SCM). While the two terms are frequently used interchangeably, logistics is focused on moving materials and goods as efficiently as is possible. However, (SCM) encompasses a much larger variety of planning for supply chains (SCP) actions including demand planning, the planning of sales and operations (S&OP) and the execution of supply chains (SCE) that includes strategic logistics and sourcing.

Sometimes the terms inbound or outbound logistics are used to describe the logistics involved in bringing goods into or departing from a facility and vice versa. Another important class can be reverse logistics. which refers to the process of logistics required to deliver a product back for servicing or refurbishing, as well as decommissioning or recycling.