Logistics

Definition

Logistics is the planning and management of storing and transporting goods from origin to destination to meet customer demands efficiently and on time. Originally vital for military operations, logistics now mainly refers to the movement of commercial products along the supply chain. Businesses may handle logistics in-house or delegate the task to third-party providers (3PLs).

Functions of Logistics

The main functions of logistics are transportation and warehousing:

• Transportation: Involves planning, optimizing routes, managing orders, auditing freight, and carrier management. Transportation Management System (TMS) software helps streamline these processes.
• Warehousing: Covers storage, inventory tracking, and order fulfillment, often managed using Warehouse Management System (WMS) software. It oversees warehouse operations and infrastructure, such as fulfillment centers where product orders are collected, processed, and delivered (shipped to the customer).
• Customs Management: Ensures compliance with regulations for goods crossing borders.

Most enterprise resource planning (ERP) software providers provide TMS and WMS modules and more specialized parts for logistics tasks like inventory management.

Advanced technologies like artificial intelligence (AI) and autonomous vehicle technology are increasingly used to track shipments and predict supply chain issues.

Importance of Logistics

Timely, intact delivery is critical, especially with the rise of omnichannel shopping and same-day delivery. Efficient logistics improves supply chain visibility, speeds up delivery, and meets growing consumer expectations for convenience. For this, suppliers, manufacturers, distributors, and retailers need to connect their processes and systems better to increase supply chain visibility.