Logistics is the part of
supply chain management
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...
that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the
point of consumption according to the needs of customers.
Logistics management is a component that holds the
supply chain
A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...
together.
The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other edible items.
In
military logistics
Military logistics is the discipline of planning and carrying out the movement, supply, and maintenance of military forces. In its most comprehensive sense, it is those aspects or military operations that deal with:
* Design, development, Milita ...
, it is concerned with maintaining army supply lines with food, armaments, ammunition, and spare parts apart from the transportation of troops themselves. Meanwhile, civil logistics deals with acquiring, moving, and storing raw materials, semi-finished goods, and finished goods. For organisations that provide
garbage collection, mail deliveries,
public utilities, and after-sales services, logistical problems must be addressed.
Logistics deals with the movements of materials or products from one facility to another; it does not include material flow within the production or assembly plants, such as
production planning or
single-machine scheduling.
Logistics occupies a significant amount of the operational cost of an organisation or country. Logistical costs of organizations in the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
incurred about 11% of the United States national
gross domestic product
Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...
(GDP) as of 1997. In the
European Union
The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
, logistics costs were 8.8% to 11.5% of GDP as of 1993.
Dedicated
simulation software can model, analyze, visualize, and optimize logistics' complexity. Minimizing resource use is a common motivation in all logistics fields. A professional working in logistics management is called a logistician.
Nomenclature

The term ' is attested in English from 1846. It is from , where it was either coined or popularized by
Swiss military officer and writer
Antoine-Henri Jomini, who defined it in his ''Summary of the Art of War'' (). The term appears in the 1830 edition, then titled ''Analytic Table'' (''Tableau Analytique''),
and Jomini explains that it is derived from (cognate to English ), in the terms and :
The term is credited to Jomini, and the term and its etymology criticized by in 1832, writing:
Chambray also notes that the term was present in the ''
Dictionnaire de l'Académie française'' as a synonym for
algebra
Algebra is a branch of mathematics that deals with abstract systems, known as algebraic structures, and the manipulation of expressions within those systems. It is a generalization of arithmetic that introduces variables and algebraic ope ...
.
The is a
homonym
In linguistics, homonyms are words which are either; '' homographs''—words that mean different things, but have the same spelling (regardless of pronunciation), or '' homophones''—words that mean different things, but have the same pronunciat ...
of the existing mathematical term, from , a traditional division of
Greek mathematics
Ancient Greek mathematics refers to the history of mathematical ideas and texts in Ancient Greece during Classical antiquity, classical and late antiquity, mostly from the 5th century BC to the 6th century AD. Greek mathematicians lived in cities ...
; the mathematical term is presumably the origin of the term ''logistic'' in
logistic growth and related terms. Some sources give this instead as the source of ''logistics'', either ignorant of Jomini's statement that it was derived from , or dubious and instead believing it was in fact of Greek origin, or influenced by the existing term of Greek origin.
Definition
Jomini originally defined logistics as:
The ''
Oxford English Dictionary
The ''Oxford English Dictionary'' (''OED'') is the principal historical dictionary of the English language, published by Oxford University Press (OUP), a University of Oxford publishing house. The dictionary, which published its first editio ...
'' defines logistics as "the branch of
military science
Military science is the study of military processes, institutions, and behavior, along with the study of warfare, and the theory and application of organized coercive force. It is mainly focused on theory, method, and practice of producing mi ...
relating to procuring, maintaining and transporting material, personnel and facilities". However, the ''
New Oxford American Dictionary'' defines logistics as "the detailed coordination of a complex operation involving many people, facilities, or supplies", and the Oxford Dictionary on-line defines it as "the detailed organization and implementation of a complex operation". As such, logistics is commonly seen as a branch of engineering that creates "people systems" rather than "machine systems".
According to the Council of Supply Chain Management Professionals (previously the Council of Logistics Management), logistics is the process of planning, implementing and controlling procedures for the efficient and effective
transportation and storage of goods including services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements and includes inbound, outbound, internal and external movements.
Academics and practitioners traditionally refer to the terms
operations or
production management when referring to physical transformations taking place in a single business location (factory, restaurant or even bank clerking) and reserve the term logistics for activities related to distribution, that is, moving products on the territory. Managing a distribution center is seen, therefore, as pertaining to the realm of logistics since, while in theory, the products made by a factory are ready for consumption they still need to be moved along the distribution network according to some logic, and the distribution center aggregates and processes orders coming from different areas of the territory. That being said, from a modeling perspective, there are similarities between
operations management
Operations management is concerned with designing and controlling the production (economics), production of good (economics), goods and service (economics), services, ensuring that businesses are efficiency, efficient in using resources to meet ...
and logistics, and companies sometimes use hybrid professionals, with for example a "Director of Operations" or a "Logistics Officer" working on similar problems. Furthermore, the term "
supply chain management
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...
" originally referred to, among other issues, having an integrated vision of both production and logistics from point of origin to point of production. All these terms may suffer from
semantic change as a side effect of advertising.
Logistics activities

Logistical activities can be divided into three main areas: order processing, inventory management, and freight transportation. Traditionally, order processing was a time-consuming activity that could take up to 70% of the order-cycle time. However, with new technologies such as bar code scanning, computers, and network connection, customer orders can quickly reach the seller in no time, and the availability of stocks can be checked in real time. The purpose of having an inventory is to reduce the overall logistical cost while improving service to customers. Having a stockpile of finished goods beforehand can reduce the frequency of transportation to and from the customers and cope with the randomness of customer demands. However, maintaining an inventory requires capital investment in finished goods and maintaining a warehouse. Storage and order picking occupy most of the warehouse maintenance cost. Freight transportation forms a vital part of logistics and allows access to broad markets as goods can be transported to hundreds or thousands of kilometers away. Freight transportation accounts for two-thirds of logistical costs and significantly impacts customer service. Transportation policies and warehouse management are closely intertwined.
The rise of commercial transactions through the internet gives rise to the need for "e-logistics". Compared to traditional logistics, e-logistics handles parcels valued at less than a hundred US dollars to customers scattered at various destinations worldwide. In e-logistics, customers' demands come in waves when compared to traditional logistics, where the demand is consistent.
Inbound logistics is one of the primary logistics processes concentrating on purchasing and arranging the inbound movement of materials, parts, or unfinished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores.
Outbound logistics is the process related to the storage and movement of the final product. The related information flows from the end of the production line to the end user.
Given the services performed by logisticians, the main fields of logistics can be broken down as follows:
* Procurement logistics
* Distribution logistics
* After-sales logistics
* Disposal logistics
*
Reverse logistics
*
Green logistics
* Global logistics
* Domestics logistics
* Concierge service
*
Reliability, availability, and maintainability
* Asset control logistics
* Point-of-sale material logistics
* Emergency logistics
* Production logistics
* Construction logistics
* Capital project logistics
* Digital logistics
* Humanitarian logistics
Procurement logistics consists of
market research
Market research is an organized effort to gather information about target markets and customers. It involves understanding who they are and what they need. It is an important component of business strategy and a major factor in maintaining com ...
, requirements planning, make-or-buy decisions, supplier management, ordering, and order control. The targets in procurement logistics might be contradictory: maximizing efficiency by concentrating on core competencies, outsourcing while maintaining the company's autonomy, or minimizing procurement costs while maximizing security within the supply process.
Advance logistics consists of the activities required to set up or establish a plan for logistics activities to occur.
Global logistics is technically the process of managing the "flow" of goods through a supply chain from its place of production to other parts of the world. This often requires an intermodal transport system via ocean, air, rail, and truck. The effectiveness of global logistics is measured in the
Logistics Performance Index.
Distribution logistics has, as its main task, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Distribution logistics is necessary because production time, place, and quantity differ with the time, place, and quantity of consumption.
Disposal logistics has the main function of reducing logistics cost(s) and enhancing service(s) related to the disposal of waste produced during a business's operation.
Reverse logistics denotes all those reusing products and materials operations. The reverse logistics process includes the management and the sale of surpluses, as well as products being returned to vendors from buyers. It is "the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin to recapture value or proper disposal." More precisely, reverse logistics moves goods from their typical final destination to capture value or proper disposal. The opposite of reverse logistics is forward logistics.
Green logistics'' describes all attempts to measure and minimize the ecological impact of logistics activities, including all activities of the forward and reverse flows. This can be achieved through
intermodal freight transport
Intermodal freight transport involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation (e.g., rail, ship, aircraft, and truck), without any handling of the freight itself when changing ...
, path optimization, vehicle saturation, and
city logistics.
RAM logistics (see also
Logistic engineering) combines both ''business logistics'' and ''military logistics'' since it concerns highly complicated technological systems for which
reliability,
availability and
maintainability
Maintainability is the ease of maintaining or providing maintenance for a functioning product or service. Depending on the field, it can have slightly different meanings.
Usage in different fields Engineering
In engineering, maintainability ...
are essential, e.g.,
weapon system and military supercomputers.
Asset control logistics: companies in the retail channels, both organized retailers and suppliers, often deploy assets required for the display, preservation, and promotion of their products. Some examples are refrigerators, stands, display monitors, seasonal equipment, poster stands & frames.
Emergency logistics (or
humanitarian logistics) is a term used by the logistics, supply chain, and manufacturing industries to denote specific time-critical modes of transport used to move goods rapidly in the event of an emergency.
[Cozzolino Alessandra, Humanitarian Logistics and Supply Chain Management, In Humanitarian Logistics, Springer Berlin Heidelberg 2012] The reason for enlisting emergency logistics services could be a production delay or anticipated production delay, or an urgent need for specialized equipment to prevent events such as aircraft being grounded (also known as "
aircraft on ground"—AOG), ships being delayed, or telecommunications failure. Humanitarian logistics involves governments, the military,
aid agencies, donors, non-governmental organizations, and emergency logistics services are typically sourced from a specialist provider.
The term ''production logistics'' describes logistic processes within a value-adding system (ex, a factory or a mine). Production logistics aims to ensure that each machine and workstation receives the right product in the correct quantity and quality at the right time. The concern is with production, testing, transportation, storage, and supply. Production logistics can operate in existing as well as new plants. Since manufacturing in an existing plant is a constantly changing process, machines are exchanged and new ones added, which allows for improving the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency. Production logistics becomes more important with decreasing batch sizes. In many industries (e.g.
mobile phones), the short-term goal is a batch size of one, allowing even a single customer's demand to be fulfilled efficiently.
Track and tracing, which is an essential part of production logistics due to product safety and reliability issues, is also gaining importance, especially in the
automotive and
medical
Medicine is the science and Praxis (process), practice of caring for patients, managing the Medical diagnosis, diagnosis, prognosis, Preventive medicine, prevention, therapy, treatment, Palliative care, palliation of their injury or disease, ...
industries.
Construction logistics has been employed by civilizations for thousands of years as the various human civilizations tried to build the best possible works of construction for living and protection. Now, construction logistics has emerged as a vital part of construction. In the past few years, construction logistics has emerged as a different field of knowledge and study within supply chain management and logistics.
Seven R's
The Seven R's is a popular concept used to enforce best practices in logistics management which consists of the following:
* Right product (including the right information about it)
* (At) right quantity
* Right time
* Right condition
* Right place
* (to) the right customer
* (with the) right (financial) resources
Military logistics
In military science, maintaining one's supply lines while disrupting those of the enemy is a crucial—some would say the most crucial—element of
military strategy
Military strategy is a set of ideas implemented by military organizations to pursue desired Strategic goal (military), strategic goals. Derived from the Greek language, Greek word ''strategos'', the term strategy, when first used during the 18th ...
, since an armed force without resources and transportation is defenseless. The historical leaders
Hannibal
Hannibal (; ; 247 – between 183 and 181 BC) was a Punic people, Carthaginian general and statesman who commanded the forces of Ancient Carthage, Carthage in their battle against the Roman Republic during the Second Punic War.
Hannibal's fat ...
,
Alexander the Great
Alexander III of Macedon (; 20/21 July 356 BC – 10/11 June 323 BC), most commonly known as Alexander the Great, was a king of the Ancient Greece, ancient Greek kingdom of Macedonia (ancient kingdom), Macedon. He succeeded his father Philip ...
, and the
Duke of Wellington are considered to have been logistical geniuses: Alexander's expedition benefited considerably from his meticulous attention to the provisioning of his army, Hannibal is credited to have "taught logistics" to the
Romans during the
Punic Wars
The Punic Wars were a series of wars fought between the Roman Republic and the Ancient Carthage, Carthaginian Empire during the period 264 to 146BC. Three such wars took place, involving a total of forty-three years of warfare on both land and ...
and the success of the Anglo-Portuguese army in the
Peninsula War
The Peninsular War (1808–1814) was fought in the Iberian Peninsula by Kingdom of Portugal, Portugal, Spain and the United Kingdom of Great Britain and Ireland, United Kingdom against the invading and occupying forces of the First French ...
was due to the effectiveness of Wellington's supply system, despite the numerical disadvantage. The defeat of the British in the
American War of Independence and the defeat of the
Axis
An axis (: axes) may refer to:
Mathematics
*A specific line (often a directed line) that plays an important role in some contexts. In particular:
** Coordinate axis of a coordinate system
*** ''x''-axis, ''y''-axis, ''z''-axis, common names ...
in the
African theater of
World War II
World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
are attributed by some scholars to logistical failures.
Militaries have a significant need for logistics solutions and so have developed advanced implementations.
Integrated logistics support
Integrated logistics support (ILS) is a technology in the system engineering to lower a product life cycle cost and decrease demand for logistics by the maintenance (technical), maintenance system optimization to ease the product support. Althoug ...
(ILS) is a discipline used in military industries to ensure an easily supportable system with a robust customer service (logistic) concept at the lowest cost and in line with (often high) reliability, availability, maintainability, and other requirements, as defined for the project.
In
military logistics
Military logistics is the discipline of planning and carrying out the movement, supply, and maintenance of military forces. In its most comprehensive sense, it is those aspects or military operations that deal with:
* Design, development, Milita ...
,
Logistics Officers manage how and when to move resources to the places they are needed.
Supply chain management
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...
in military logistics often deals with a number of variables in predicting cost, deterioration,
consumption, and future demand. The
United States Armed Forces
The United States Armed Forces are the Military, military forces of the United States. U.S. United States Code, federal law names six armed forces: the United States Army, Army, United States Marine Corps, Marine Corps, United States Navy, Na ...
' categorical
supply classification was developed in such a way that categories of supply with similar consumption variables are grouped together for planning purposes. For instance, peacetime consumption of ammunition and fuel will be considerably lower than wartime consumption of these items, whereas other classes of supply such as subsistence and clothing have a relatively consistent consumption rate regardless of war or peace.
Some classes of supply have a linear demand relationship: as more troops are added, more supply items are needed; or as more equipment is used, more fuel and ammunition are consumed. Other classes of supply must consider a third variable besides usage and quantity: time. As equipment ages, more and more
repair parts are needed over time, even when usage and quantity stay consistent. By recording and analyzing these trends over time and applying them to future scenarios, the
US Armed Forces can accurately supply troops with the items necessary at the precise moment they are needed. History has shown that good logistical planning creates a lean and efficient fighting force. The lack thereof can lead to a clunky, slow, and ill-equipped force with too much or too little supply.
Business logistics

One definition of business logistics speaks of "having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer". Business logistics incorporates all
industry sectors and aims to manage the fruition of
project life cycle
Project management is the process of supervising the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process ...
s,
supply chain
A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...
s, and resultant efficiencies.
The term ''business logistics'' has evolved since the 1960s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for professionals called supply chain logisticians.
In business, logistics may have either an internal focus (inbound logistics) or an external focus (outbound logistics), covering the flow and storage of materials from point of origin to point of consumption, a key factor in
supply-chain management. The main functions of a qualified logistician include
inventory management,
purchasing
Purchasing is the procurement process a business or organization uses to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary gr ...
, transportation,
warehousing
A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the rural–urban fringe, out ...
, consultation, and the organizing and
planning
Planning is the process of thinking regarding the activities required to achieve a desired goal. Planning is based on foresight, the fundamental capacity for mental time travel. Some researchers regard the evolution of forethought - the cap ...
of these activities. Logisticians combine professional knowledge of each of these functions to coordinate resources in an organization.
There are two fundamentally different forms of logistics: one optimizes a steady flow of material through a network of transport links and storage nodes, while the other coordinates a
sequence
In mathematics, a sequence is an enumerated collection of objects in which repetitions are allowed and order matters. Like a set, it contains members (also called ''elements'', or ''terms''). The number of elements (possibly infinite) is cal ...
of resources to carry out some
project
A project is a type of assignment, typically involving research or design, that is carefully planned to achieve a specific objective.
An alternative view sees a project managerially as a sequence of events: a "set of interrelated tasks to be ...
, such as restructuring a warehouse.
Nodes of a distribution network
A distribution network would require several intermediaries to bring consumer or industrial goods from manufacturers to a user. Intermediaries would markup the costs of the products during distribution, but benefit users by providing lower transportation costs than the manufacturers. The number of intermediaries required for the distribution network depends upon the types of goods being distributed. For example, consumer goods such as cosmetics and handicrafts may not require any intermediaries as they can be sold door-to-door or can be obtained from local flea markets. For industrial goods such as raw materials and equipment, intermediaries are not needed because manufacturers can sell a large number of goods to a user. Generally, there are three types of intermediaries, namely: agent/broker, wholesaler, and retailer.
The nodes of a distribution network include:
* Factories where products are manufactured or assembled
* A
depot or deposit, a standard type of warehouse for storing merchandise (high level of inventory)
*
Distribution centers for
order processing and
order fulfillment
Order fulfilment (in American English: order fulfillment) is in the most general sense the complete process from point of sales enquiry to delivery of a product to the customer. Sometimes, it describes the more narrow act of distribution or th ...
(lower level of inventory) and also for receiving returning items from clients. Typically, distribution centers are way stations for products to be disbursed further down the supply chain. They usually do not ship inventory directly to customers, whereas fulfillment centers do.
* Transit points for
cross-docking
Cross-docking is a logistics, logistical practice of Lean manufacturing, Just-In-Time Scheduling where materials are delivered directly from a manufacturer or a mode of transportation to a customer or another mode of transportation. Cross-dockin ...
activities, which consist of reassembling cargo units based on deliveries scheduled (only moving merchandise)
* Traditional "
mom-and-pop" retail stores, modern supermarkets,
hypermarkets
A hypermarket or superstore is a big-box store combining a supermarket and a department store. The result is an expansive retail facility carrying a wide range of products under one roof, including full grocery store, grocery lines and product (bu ...
,
discount stores or also voluntary chains,
consumers' co-operatives, groups of consumers with
collective buying power. Note that
subsidiaries
A subsidiary, subsidiary company, or daughter company is a company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidiary company. Unl ...
will be mostly owned by another company and
franchisers, although using other company brands, actually own the point of sale.
Logistic families and metrics
A logistic family is a set of products that share a common characteristic: weight and volumetric characteristics, physical storing needs (temperature, radiation, etc.), handling needs, order frequency, package size, etc. The following metrics may be used by the company to organize its products in different families:
* Physical metrics used to evaluate inventory systems include stocking capacity, selectivity, superficial use, volumetric use, transport capacity, transport capacity use.
* Monetary metrics used include space holding costs, such as building, shelving, and services, and handling costs, such as people, handling machinery, energy, and maintenance.
Other metrics may present themselves in both physical or monetary form, such as the standard
inventory turnover.
Handling and order processing
Unit loads are combinations of individual items which are moved by handling systems, usually employing a
pallet
A pallet (also called a skid) is a flat transport structure, which supports goods in a stable fashion while being lifted by a forklift, a pallet jack, a Loader (equipment), front loader, a Jack (mechanical), jacking device, or an erect cra ...
of normed dimensions.
Handling systems include: trans-pallet handlers, counterweight handler, retractable mast handler, bilateral handlers, trilateral handlers,
AGV and other handlers.
Storage systems include: pile stocking, cell
racks (either static or movable), cantilever racks and gravity racks.
[Lambert D., Stock J., Ellram L., Fundamentals of Logistics, McGraw-Hill 1998]
Order processing is a sequential process involving: processing withdrawal list, picking (selective removal of items from loading units), sorting (assembling items based on the destination), package formation (weighting, labeling, and packing), order consolidation (gathering packages into loading units for transportation, control and
bill of lading
A bill of lading () (sometimes abbreviated as B/L or BOL) is a document issued by a common carrier, carrier (or their Law of agency, agent) to acknowledge receipt of cargo for shipment. Although the term is historically related only to Contract of ...
).
[D.F. Bozutti, M.A. Bueno-Da-Costa, R. Ruggeri, Logística: Visão Global e Picking, EdUFSCar 2010]
Picking can be both manual or automated. Manual picking can be both man-to-goods, i.e. operator using a cart or conveyor belt, or goods-to-man, i.e. the operator benefiting from the presence of a mini-load
ASRS, vertical or
horizontal carousel or from an Automatic Vertical Storage System (AVSS). Automatic picking is done either with
dispensers or depalletizing robots.
Sorting
Sorting refers to ordering data in an increasing or decreasing manner according to some linear relationship among the data items.
# ordering: arranging items in a sequence ordered by some criterion;
# categorizing: grouping items with similar p ...
can be done manually through carts or conveyor belts, or automatically through
sorters.
Transportation
Consolidating small shipments into large shipments can help to save transportation costs. There are three methods to do this: facility consolidation, multi-stop consolidation, and temporal consolidation. Facility consolidation uses the
economics of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of cost (production cost). A decrease in cost per un ...
by transporting small shipments over short distances and large shipments over long distances. Multi-stop consolidation makes multiple stops to consolidate small shipments in the case of
less-than-truckload shipping. Temporal consolidation adjusts the shipping schedules forwards or backward so as to make a single large shipment rather than several small shipments over time.
Cargo can be consolidated into pallets or containers. There are five basic modes of transport, namely, ship, rail, truck, air, and pipeline operated by different
carrier. These shipping methods can be combined in various ways such as
intermodal transport (no handling),
multimodal transport, and
combined transport
Combined transport is a form of intermodal transport, which is the movement of goods in one and the same loading unit or road vehicle, using successively two or more modes of transport without handling the goods themselves in changing modes. Com ...
(minimal road transport). A shipper chooses a carrier by taking into account the total cost of shipment and transit time. Air is the most expensive type of transport, followed by truck, rail, pipeline, and ship.
Cargo can be organized in different
shipment categories.
Unit loads are usually assembled into higher standardized units such as:
ISO containers,
swap bodies or
semi-trailers. Especially for very long distances, product transportation will likely benefit from using different transportation means: When moving cargo, typical constraints are maximum weight and
volume
Volume is a measure of regions in three-dimensional space. It is often quantified numerically using SI derived units (such as the cubic metre and litre) or by various imperial or US customary units (such as the gallon, quart, cubic inch) ...
.
Operators involved in transportation include: all train, road vehicles, boats, airplanes companies,
couriers,
freight forwarders and
multi-modal transport operators.
Merchandise being transported internationally is usually subject to the
Incoterms
The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. Incoterms define the responsibilities of exporters and ...
standards issued by the
International Chamber of Commerce
The International Chamber of Commerce (ICC; French: ''Chambre de commerce internationale'') is the largest, most representative business organization in the world. ICC represents over 45 million businesses in over 170 countries who have interest ...
.
Configuration and management

In the logistics business, a logistical system is designed at a minimum cost based on the expected customer service level. As the service improves, the number of sales also increased. As service is further improved, more sales are captured from competing providers. Further increase in customer service levels after these only increases sales marginally.
Similarly to production systems, logistic systems need to be properly configured and managed. Actually a number of methodologies have been directly borrowed from
operations management
Operations management is concerned with designing and controlling the production (economics), production of good (economics), goods and service (economics), services, ensuring that businesses are efficiency, efficient in using resources to meet ...
such as using
Economic Order Quantity models for managing inventory in the nodes of the network.
Distribution resource planning
{{Business logistics
Distribution resource planning (DRP) is a method used in business administration for planning orders within a supply chain. DRP enables the user to set certain inventory control parameters (like a safety stock) and calculate t ...
(DRP) is similar to
MRP, except that it does not concern activities inside the nodes of the network but planning distribution when moving goods through the links of the network.
Traditionally in logistics, configuration may be at the level of the warehouse (
node
In general, a node is a localized swelling (a "knot") or a point of intersection (a vertex).
Node may refer to:
In mathematics
* Vertex (graph theory), a vertex in a mathematical graph
*Vertex (geometry), a point where two or more curves, lines ...
) or at level of the distribution system (
network).
Regarding a single warehouse, besides the issue of designing and building the warehouse, configuration means solving a number of interrelated technical-economic problems: dimensioning
rack cells, choosing a
palletizing method (manual or through
robots), rack dimensioning and design, number of racks, number and typology of retrieval systems (e.g.
stacker cranes). Some important constraints have to be satisfied: fork and load beams resistance to
bending
In applied mechanics, bending (also known as flexure) characterizes the behavior of a slender structural element subjected to an external Structural load, load applied perpendicularly to a longitudinal axis of the element.
The structural eleme ...
and proper placement of
sprinklers. Although
picking is more of a tactical planning decision than a configuration problem, it is important to take it into account when deciding the layout of the racks inside the warehouse and buying tools such as handlers and motorized carts since once those decisions are taken they will work as constraints when managing the warehouse, the same reasoning for
sorting
Sorting refers to ordering data in an increasing or decreasing manner according to some linear relationship among the data items.
# ordering: arranging items in a sequence ordered by some criterion;
# categorizing: grouping items with similar p ...
when designing the conveyor system or installing automatic
dispensers.
Configuration at the level of the distribution system concerns primarily the problem of
location of the nodes in geographic space and distribution of
capacity among the nodes. The first may be referred to as
facility location (with the special case of
site selection Site selection indicates the practice of new facility location, both for business and government. Site selection involves measuring the needs of a new project against the merits of potential locations. The practice came of age during the 20th centur ...
) while the latter to as capacity allocation. The problem of outsourcing typically arises at this level: the nodes of a
supply chain
A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...
are very rarely owned by a single enterprise. Distribution networks can be characterized by numbers of levels, namely the number of intermediary nodes between
supplier and consumer:
*
Direct store delivery, i.e. zero levels
* One level network: central warehouse
* Two level network: central and peripheral warehouses
This distinction is more useful for modeling purposes, but it relates also to a tactical decision regarding
safety stocks: considering a two-level network, if safety inventory is kept only in peripheral warehouses then it is called a dependent system (from suppliers), if safety inventory is distributed among central and peripheral warehouses it is called an independent system (from suppliers).
Transportation from producer to the second level is called primary transportation, from the second level to a consumer is called secondary transportation.
Although configuring a distribution network from zero is possible, logisticians usually have to deal with restructuring existing networks due to presence of an array of factors: changing demand, product or process innovation, opportunities for outsourcing, change of government policy toward
trade barriers, innovation in transportation means (both
vehicles or
thoroughfares), the introduction of
regulations (notably those regarding pollution) and availability of ICT supporting systems, such as
ERP or
e-commerce
E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...
.
Once a logistic system is configured, management, meaning tactical decisions, takes place, once again, at the level of the warehouse and of the distribution network. Decisions have to be made under a set of
constraints: internal, such as using the available infrastructure, or external, such as complying with the given product
shelf lifes and
expiration dates.
At the warehouse level, the logistician must decide how to distribute merchandise over the racks. Three basic situations are traditionally considered: shared storage, dedicated storage (rack space reserved for specific merchandise) and class-based storage (class meaning merchandise organized in different areas according to their access index).
Picking efficiency varies greatly depending on the situation.
For a man to goods situation, a distinction is carried out between high-level picking (vertical component significant) and low-level picking (vertical component insignificant). A number of tactical decisions regarding picking must be made:
* Routing path: standard alternatives include transversal routing, return routing, midpoint routing, and largest gap return routing
* Replenishment method: standard alternatives include equal space supply for each product class and equal time supply for each product class.
* Picking logic: order picking vs batch picking
At the level of the distribution network, tactical decisions involve mainly
inventory control and
delivery path optimization. Note that the logistician may be required to manage the
reverse flow along with the forward flow.
Warehouse management system and control
Warehouse management systems (WMS) can differ significantly from
warehouse control systems (WCS), although there is some overlap in functionality. A WMS plans a weekly activity forecast based on such factors as statistics and
trends, whereas a WCS acts like a floor supervisor, working in real-time to get the job done by the most effective means. For example, a WMS can tell the system that it is going to need five of
stock-keeping unit (SKU) A and five of SKU B hours in advance, but by the time it acts, other considerations may have come into play or there could be a logjam on a conveyor. A WCS can prevent that problem by working in real-time and adapting to the situation by making a last-minute decision based on current activity and operational status. Working
synergistically, WMS and WCS can resolve these issues and maximize
efficiency
Efficiency is the often measurable ability to avoid making mistakes or wasting materials, energy, efforts, money, and time while performing a task. In a more general sense, it is the ability to do things well, successfully, and without waste.
...
for companies that rely on the effective operation of their warehouse or distribution center.
Logistics outsourcing
Logistics outsourcing involves a relationship between a company and an LSP (logistic service provider), which, compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, is characterized by a long-term orientation, and thus has a strategic nature.
Outsourcing does not have to be complete externalization to an LSP, but can also be partial:
* A single contract for supplying a specific service on occasion
* Creation of a
spin-off
* Creation of a
joint venture
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acce ...
Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself.
According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in house. For example, if a company with its own
warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries. External 3PL providers have evolved from merely providing logistics capabilities to becoming real orchestrators of supply chains that create and sustain a competitive advantage, thus bringing about new levels of logistics outsourcing.
The concept of a fourth-party logistics (4PL) provider was first defined by Andersen Consulting (now
Accenture) as an integrator that assembles the resources, planning capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third-party logistics (3PL) service provider targets a single function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor that manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer.
Horizontal alliances between logistics service providers
Horizontal
business alliances often occur between logistics service providers, i.e., the cooperation between two or more logistics companies that are potentially competing.
In a horizontal alliance, these partners can benefit twofold. On one hand, they can "access tangible resources which are directly exploitable". In this example extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages can be achieved by combining resources. On the other hand, partners can "access intangible resources, which are not directly exploitable". This typically includes know-how and information and, in turn, innovation.
Logistics automation
Logistics automation is the application of computer software or
automated machinery to improve the efficiency of logistics operations. This typically refers to operations within a warehouse or distribution center with broader tasks undertaken by
supply chain engineering systems and
enterprise resource planning
Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suit ...
systems.
Industrial machinery can typically identify products through either
barcode
A barcode or bar code is a method of representing data in a visual, Machine-readable data, machine-readable form. Initially, barcodes represented data by varying the widths, spacings and sizes of parallel lines. These barcodes, now commonly ref ...
or
RFID
Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. An RFID system consists of a tiny radio transponder called a tag, a radio receiver, and a transmitter. When tri ...
technologies. Information in traditional bar codes is stored as a sequence of black and white bars varying in width, which when read by laser is translated into a digital sequence, which according to fixed rules can be converted into a decimal number or other data. Sometimes information in a bar code can be transmitted through radio frequency, more typically radio transmission is used in RFID tags. An RFID tag is a card containing a memory chip and an antenna that transmits signals to a reader. RFID may be found on merchandise, animals, vehicles, and people as well.
Logistics: profession and organizations
A logistician is a professional logistics practitioner. Professional logisticians are often certified by professional associations. One can either work in a pure logistics company, such as a shipping line, airport, or
freight forwarder, or within the logistics department of a company. However, as mentioned above, logistics is a broad field, encompassing procurement, production, distribution, and disposal activities. Hence, career perspectives are broad as well.
A new trend in the industry is the 4PL, or fourth-party logistics, firms, consulting companies offering logistics services.
Some universities and academic institutions train students as logisticians, offering undergraduate and postgraduate programs. A university with a primary focus on logistics is
Kühne Logistics University in Hamburg, Germany. It is non-profit and supported by Kühne-Foundation of the logistics entrepreneur
Klaus Michael Kühne.
The
Chartered Institute of Logistics and Transport
The Chartered Institute of Logistics and Transport (CILT) is a professional body representing the transport and logistics industries worldwide. It is a membership-based organisation with over 30,000 members in over 40 countries. This i ...
(CILT), established in the United Kingdom in 1919, received a
Royal Charter
A royal charter is a formal grant issued by a monarch under royal prerogative as letters patent. Historically, they have been used to promulgate public laws, the most famous example being the English Magna Carta (great charter) of 1215, but ...
in 1926. The Chartered Institute is one of the
professional bodies or institutions for the logistics and transport sectors that offer
professional qualifications or degrees in logistics management. CILT programs can be studied at centers around the UK, some of which also offer distance learning options. The institute also have overseas branches namely The Chartered Institute of Logistics & Transport Australia (CILTA) in Australia and Chartered Institute of Logistics and Transport in Hong Kong (CILTHK) in Hong Kong. In the UK, logistics management programs are conducted by many universities and professional bodies such as CILT. These programs are generally offered at the postgraduate level.
The Global Institute of Logistics
established in New York in 2003 is a
think tank
A think tank, or public policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governme ...
for the profession and is primarily concerned with intercontinental maritime logistics. It is particularly concerned with
container
A container is any receptacle or enclosure for holding a product used in storage, packaging, and transportation, including shipping.
Things kept inside of a container are protected on several sides by being inside of its structure. The term ...
logistics and the role of the
seaport authority in the maritime logistics chain.
The International Association of Public Health Logisticians (IAPHL)
is a professional network that promotes the professional development of supply chain managers and others working in the field of public health logistics and commodity security, with particular focus on developing countries. The association supports logisticians worldwide by providing a community of practice, where members can network, exchange ideas, and improve their professional skills.
Logistics museums
There are many museums in the world which cover various aspects of practical logistics. These include museums of transportation, customs, packing, and industry-based logistics. However, only the following museums are fully dedicated to logistics:
''General logistics''
* Logistics Museum (
Saint Petersburg
Saint Petersburg, formerly known as Petrograd and later Leningrad, is the List of cities and towns in Russia by population, second-largest city in Russia after Moscow. It is situated on the Neva, River Neva, at the head of the Gulf of Finland ...
, Russia)
* Museum of Logistics (Tokyo, Japan)
*
Beijing Wuzi University Logistics Museum (Beijing, China)
''Military logistics''
*
Royal Logistic Corps Museum (
Hampshire
Hampshire (, ; abbreviated to Hants.) is a Ceremonial counties of England, ceremonial county in South East England. It is bordered by Berkshire to the north, Surrey and West Sussex to the east, the Isle of Wight across the Solent to the south, ...
, England, United Kingdom)
* The Canadian Forces Logistics Museum (
Montreal
Montreal is the List of towns in Quebec, largest city in the Provinces and territories of Canada, province of Quebec, the List of the largest municipalities in Canada by population, second-largest in Canada, and the List of North American cit ...
, Quebec, Canada)
* Logistics Museum (
Hanoi
Hanoi ( ; ; ) is the Capital city, capital and List of cities in Vietnam, second-most populous city of Vietnam. The name "Hanoi" translates to "inside the river" (Hanoi is bordered by the Red River (Asia), Red and Black River (Asia), Black Riv ...
, Vietnam)
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References
Further reading
* Engels, Donald W. (1980). ''Alexander the Great and the Logistics of the Macedonian Army'', University of California Press (194 pages)
online* Hess, Earl J. ''Civil War Logistics: A Study of Military Transportation'' (2017
online review* Huston, James A. (1966). ''The Sinews of War: Army Logistics, 1775–1953'',
United States Army
The United States Army (USA) is the primary Land warfare, land service branch of the United States Department of Defense. It is designated as the Army of the United States in the United States Constitution.Article II, section 2, clause 1 of th ...
(789 pages)
online* Handfield, R.B., Straube, F., Pfohl, H.C. & Wieland, A., ''Trends and Strategies in Logistics and Supply Chain Management: Embracing Global Logistics Complexity to Drive Market Advantage'', BVL 2013
* Ronald H. Ballou, Samir K. Srivastava, ''Business Logistics: Supply Chain Management'', Pearson Education, 2007
* Donald Bowersox, David Closs, M. Bixby Cooper, ''Supply Chain Logistics Management'', McGraw-Hill 2012
* M. Christopher: ''Logistics & Supply Chain Management: creating value-adding networks'', Prentice Hall 2010
online* J. V. Jones: ''Integrated Logistics Support Handbook'', McGraw-Hill Logistics Series 2006
*
B. S. Blanchard: ''Logistics Engineering and Management'', Pearson Prentice Hall 2004
* R.G. Poluha: ''The Quintessence of Supply Chain Management: What You Really Need to Know to Manage Your Processes in Procurement, Manufacturing, Warehousing, and Logistics (Quintessence Series)''. First Edition. Springer Heidelberg New York Dordrecht London 2016.
* Preclík Vratislav: Průmyslová logistika (Industrial logistics), 359 p., , First issue Nakladatelství ČVUT v Praze, 2006, pp. 7–50, 63–73, 75–85, 123–347, Prague 2006.
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