What Are Logistics?
Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination. Logistics management involves identifying prospective distributors and suppliers and determining their effectiveness and accessibility. Logistics managers are referred to as logisticians.
"Logistics" was initially a military-based term used in reference to how military personnel obtained, stored, and moved equipment and supplies. The term is now used widely in the business sector, particularly by companies in the manufacturing sectors, to refer to how resources are handled and moved along the supply chain.
Key Takeaways
- Logistics is the overall process of managing how resources are acquired, stored, and transported to their final destination.
- Poor logistics in a business can impact its bottom line.
- Logistics is now used widely in the business sector, particularly by companies in the manufacturing sectors, to refer to how resources are handled and moved along the supply chain.
Understanding Logistics in Management and Business
In simple terms, the goal of logistics management is to have the right amount of a resource or input at the right time, getting it to the appropriate location in proper condition, and delivering it to the correct internal or external customer.
For example, in the natural gas industry, logistics involves managing the pipelines, trucks, storage facilities, and distribution centers that handle oil as it is transformed along the supply chain. An efficient supply chain and effective logistical procedures are essential to reduce costs and to maintain and increase efficiency. Poor logistics lead to untimely deliveries, failure to meet the needs of clientele, and ultimately cause the business to suffer.
The concept of business logistics has been transformed since the 1960s. The increasing intricacy of supplying companies with the materials and resources they need, along with the global expansion of supply chains, has led to a need for specialists known as supply chain logisticians.
In the modern era, the technology boom and the complexity of logistics processes have spawned logistics management software and specialized logistics-focused firms that expedite the movement of resources along the supply chain.
One reason large online retailers like Amazon have come to dominate the retail landscape is the overall innovation and efficiency of their logistics along every link of the supply chain.
Manufacturing companies may choose to outsource the management of their logistics to specialists or manage logistics internally if it is cost-effective to do so.
Special Considerations
The tasks for which a logistician is responsible vary depending on the business. Primary responsibilities include overseeing and managing inventory by arranging for appropriate transportation and adequate storage for the inventory.
A qualified logistician plans out the logistics process and coordinates the steps as inventory and resources move along the supply chain.
Specialized training in supply chain management and logistics often includes core or elective courses, or even discrete programs of study, in business education. A business degree that emphasizes these skills—or in some cases, a technical degree in systems analysis or database management—is usually necessary to begin what is often a well-paid career as a logistician.
What Is Logistics in Business?
In business, logistics is the process of transporting and storing raw materials, finished goods, inventory, and other resources. Logistics in a business is typically made up of many components, including customer service, demand forecasting, warehousing, material handling, inventory control, order processing, and transportation.
Why Is Logistics Important?
Logistics is critical to a company's bottom line. It enables the movement of materials or goods, the satisfaction of contracts, and the fulfillment of services. Effective logistics management ensures smooth movement along the supply chain and can provide a competitive advantage.
What Jobs Are Available in the Logistics Industry?
Careers in logistics can include truck driver, customer service representative, dispatcher, freight agent, supply chain manager, transportation analyst, procurement manager, logistician, and operations manager, among others. A degree in logistics or business administration will be helpful for many roles in logistics, including logistician, a career that is expected to grow much faster than average.
The Bottom Line
When a company optimizes its logistics, it improves efficiency along all points of the supply chain. Understanding how to get the right resource to the right place at the right time can be a differentiator for a business, adding value to the customer while at the same time cutting costs and boosting the bottom line.
