Logistics
Logistics is the planning and execution of how goods move and where they sit: transportation, warehousing, inventory positioning, and order fulfillment. It covers flows into a company (inbound), out to customers (outbound), and back again (returns). Logistics is one function within supply chain management, which also spans sourcing, planning, and manufacturing; logistics is the part that physically moves and stores material.
Examples
Network design: A consumer electronics company shipping 40,000 orders a month from one Ohio warehouse models a second site in Nevada. Average parcel cost drops $0.85 per order ($34,000 a month) against $26,000 a month in added warehouse cost, and West Coast delivery improves from 4 days to 2. The second node pays for itself.
Mode trade-off: Facing a 3-week connector shortage, a planner flies two pallets in for $4,800 instead of $950 by ocean. Against a production stoppage costing roughly $30,000 a day, the $3,850 premium is an easy call.
Definition
The job splits into a few repeating decisions: which transport mode to use (ocean, air, truck, rail, parcel), how many warehouses to operate and where, how much inventory to hold at each node, and which operations to run in-house versus hand to a third-party logistics provider. Execution sits underneath: booking shipments, tendering loads through a transportation management system, tracking, receiving, picking, and packing.
Logistics gets used interchangeably with supply chain management, but they are not the same thing. SCM spans sourcing, planning, manufacturing, and logistics; logistics is the function within it that physically moves and stores goods. A company can have excellent logistics (on-time trucks, accurate picks) and a weak supply chain (bad forecasts, wrong suppliers).
Practitioners split the work into inbound flows from suppliers and outbound flows to customers because the levers differ: inbound is shaped by purchase terms and routing guides, outbound by service promises and carrier contracts. Good logistics teams measure themselves on a short list of numbers (freight cost per unit, on-time-in-full, dock-to-stock time) rather than on activity volume.
Related Terms
Inbound logistics
Outbound logistics
Third-party logistics (3PL)
Transportation management system (TMS)
Supply chain management (SCM)
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