Logistics and distribution involve the transportation, warehousing and packaging of products. Logistic analysts examine transportation costs and delivery methods to determine what changes need to be made. Logistics managers oversee employees and daily operations.
Material sourcing:
Material sourcing involves more than finding the lowest-cost supplier for a raw material used in manufacturing. Logistics includes calculating and managing contributing factors and costs, such as backorder delays, competitor priority rankings and lockouts, add-on services costs, extraneous fees, increased shipment costs due to distance or regulatory environments, and warehousing costs. Finding the right source for any given material requires a good understanding and management of all contributing factors. This process is called strategic sourcing, and logistics plays an important role in that planning.
Transportation:
At the core of logistics is the act of physically transporting goods from Point A to Point B. First, a company needs to select the best mode of shipment—air or land, for example—and the best carrier based on cost, speed and distance, including optimizing routes that require multiple carriers. In the case of global shipments, the shipper needs to be up to speed on customs, tariffs, compliance and any relevant regulations. Transport managers need to document and track shipments, manage billing and report on performance using dashboards and analytics.
Order fulfilment:
To complete a transaction, items must be “picked” from the warehouse per the customer order, properly packaged and labeled and then shipped to the customer. Collectively, these processes comprise order fulfillment and are the heart of the logistics sequence in customer distribution
Warehousing:
Both short- and long-term storage are common parts of logistic planning. But warehouse management systems also enable logistical planning. For example, logistics planners must consider warehouse space availability and special requirements such as cold storage, docking facilities and proximity to modes of transportation such as rail lines or shipyards.
Further, organization within the warehouses is part of logistic planning. Typically, goods that move frequently or are scheduled for transport soon are placed at the front of the warehouse. Lower-demand items are stored toward the rear. Perishable goods are often rotated so the oldest items are shipped out first. Items that are often bundled are usually stored beside one another, and so on.
Demand forecasting:
Logistics relies heavily on inventory demand forecasting to ensure that a business never runs short on core or high-demand products or materials—and never ties up capital unnecessarily in warehoused goods with sluggish sales, either.
Inventory management:
By using inventory management techniques to plan ahead for increased demand in seasonal or trending products, companies can keep profits higher and make inventory turns faster, meaning the ratio of how many times you sell and replace inventory in a set period. Conversely, by noting slowing inventory turns on other products, a company can better determine when to offer discount pricing or other incentives to free capital to reinvest in goods that are in higher demand.
Further, retail sales often differ store to store, region to region and country to country. Good inventory management enables the business to decide to ship products that are performing poorly in one store or region to another rather than take a loss via discount pricing to be rid of the stock. Logistics is key to moving inventory where it is likely to get the best price.
Supply chain management:
Logistics is an important link in the supply chain as it facilitates the movement of goods from suppliers to manufacturers and then to sellers or distributors and eventually to buyers.
A supply chain is essentially a series of transactions. If logistics fails, the supply chain fails and transactions grind to a halt. A prime example: bare shelves in grocery store dairy aisles even as farmers dumped milk as supply chains broke during the pandemic.
Logistics vs Supply Chain Management
Logistics deals with the movement of goods from a single company’s perspective, meaning the movement of materials and goods one company receives and manages internally as well as when it moves those goods to a customer. A supply chain is a network of businesses involved sequentially in the production or distribution of goods or services. In short, logistics is generally a one company issue while the supply chain is a multi-company issue.
While logistics may be coordinated throughout part of or even the entirety of the supply chain, each segment is the responsibility of one entity until it hands off the material or product to another entity in the supply chain.
Logistics Components
In its most basic form, logistic components are:
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 Intake from suppliers and material handling.
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 Labelling, packaging into smaller units, organization, and warehousing.
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 Inventory management for production or distribution.
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 Demand planning.
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 Order fulfilment; and
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 Transport.
Typically, a logistics management system includes inbound and outbound transportation management, warehouse management, fleet management, order processing, inventory control, supply and demand forecasting, and management of third-party logistics service providers.
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