How is this industry, which initially played a vital role in transporting logistics, military personnel, equipment and goods? Let's examine what is Logistics.
Logistics is the process of planning and executing the efficient transport and storage of goods from the point of origin to the point of consumption. The aim of logistics is to meet customer requirements in a timely and cost-effective manner.
Many companies specialize in logistics, serving manufacturers, retailers, and other industries that have a large need to move goods. Some have the entire spectrum of infrastructure, from jet planes to trucks to warehouses and software, while others specialize in one or two divisions. FedEx, UPS and DHL are well-known logistics providers.
Logistics functions
Transport and storage are the two main functions of logistics.
Transportation management focuses on planning, optimizing and executing the use of vehicles to move goods between warehouses, retail locations and customers. Transport is multimodal and may include land, sea, air and rail.
Logistics companies often use transportation management system (TMS) software to help meet their transportation logistics demands.
It includes functions such as warehousing or warehouse management, inventory management, and order fulfillment. It also includes managing warehouse infrastructure and processes – for example, in an order fulfillment center where orders for goods are received, processed and fulfilled (shipped to the customer). Most companies use warehouse management system (WMS) software to manage the flow and storage of goods and keep track of inventory. Most vendors of enterprise resource planning (ERP) software offer TMS and WMS modules, as well as more specialized components for inventory management and other logistics functions.
Customs management or global trade management is often considered part of logistics because paperwork showing compliance with government regulations often has to be processed where goods cross national borders or enter shipping ports.
Why is logistics important?
While timely delivery of intact packages has always been important throughout the supply chain, same-day home or retail delivery of customized products ordered from smartphones has become even more critical and commonplace in recent years.
Suppliers, manufacturers, distributors and retailers had to improve their logistics processes to meet the demand for faster and more convenient delivery of a wider range of products.
Difference between logistics and supply chain management
Logistics management is an important component of supply chain management. Although the terms are sometimes used interchangeably, logistics focuses on moving products and materials as efficiently as possible. In contrast, SCM encompasses a much broader range of supply chain planning activities such as demand planning, sales and operations planning, and supply chain execution, including strategic sourcing and transportation management. Sometimes the terms inbound and outbound logistics are used to denote logistics for goods arriving at or leaving a facility, respectively. An important category is reverse logistics.