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It is commonly used to coordinate and move resources, people, materials, inventory, and equipment from one storage location to another. It originated in the military, referring to the movement of equipment and supplies to troops on the battlefield.

Logistics vs. Management of the supply chain

Supply chain logistics and Management are terms often used interchangeably, but they refer to two process aspects.

Logistics refers to what happens within a company, including purchasing and delivering materials, packaging, shipping, and transporting goods to distributors.

At the same time, supply chain management refers to a more significant connection of organizations that work together to deliver products to consumers, including vendors, transportation providers, call centers, warehouse providers, etc.

What are logistics for?

Logistics aims to serve as a link between the different actors in the supply chain. Thus, it is in charge of guaranteeing that, within the agreed times, stages such as the supply of raw material, the preparation of orders, or ensuring that no late deliveries are met.

The logistics function in a company can divide into four depending on the state in which the item is located within the supply chain. Thus, it is possible to distinguish between the following:

Procurement

Logistics is responsible for tasks such as stock management within the warehouse, receipt of items, synchronization between the multiple locations of the facility, or order processing, which will later go to another logistics stage.

Production

Manufacturing has been decentralized from production centers, and today, many low-complexity manufacturing processes are carried out in a warehouse. Logistics is in charge of coordinating phases such as the assembly of kits or the passage of the product through value-added stations.

Distribution

Once stored, the next step is the preparation of orders according to the demand for the product that has been produced. Thus, logistics is used for tasks such as order consolidation, delivery dispatch, truck loading, or ensuring that delivery occurs according to the terms agreed with the end customer.

Post-sales

E-commerce has provided this stage of the supply chain with extra work. Today, logistics must manage the high cost of product returns and try to eliminate this additional cost by being efficient in all the previous phases.

Why is Logistics necessary?

Although many small businesses focus on designing and producing their products and services to meet the needs of their consumers, if those products don’t reach consumers, the company will fail. That is the significant role that logistics plays.

But it also impacts other aspects of the business.

The more efficient the purchase, transport, and storage of materials until their use is, the more profitable the business will be. Coordinating resources allows for on-time delivery, and using materials can guarantee a company’s success or failure.

From a consumer perspective, if products are not produced and shipped on time, customer satisfaction may decline, negatively impacting the company’s profitability and long-term viability.

Logistics functions

Logistics comprises several activities to meet its objectives:

Order processing

Everything related to purchase orders.

Material Handling

Includes all the material means to move the products both in the warehouses and between these and the points of sale (belts, conveyors, forklifts, etc.)

Packaging

Systems used for the protection and preservation of products.

Merchandise transportation

Determines the material means to transport the product (truck, train, ship, etc.) and the planning of routes that provide the lowest possible cost.

Storage

Location of the product, size, and characteristics of the warehouse.

Stock control

Determine the stock of the product that the seller must have available for sale.

Customer service

Includes the services and means necessary for the customer to purchase the product.

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