Logistics

Logistics involves managing the movement of resources between a point of origin and a final destination. These resources can include tangible goods, such as equipment, products, and personnel, or intangible commodities, such as information, energy, and time. Logistics management processes are typically designed to optimize efficiencies through the integrated planning, implementation, control, and monitoring of key aspects required to move resources across a supply chain. This includes production, packaging, inventory, transportation, staffing, and communication. Essentially, logistics is used to get the correct product to its intended destination at the right time for the best price.

Logistics has its roots in military supply. Early armies used the principles of logistics to ensure that weapons, food, and other supplies were available when and where required by traveling troops. Logistics management in the modern-day military uses multiple variables to predict demand, cost, consumption, and replacement requirements of goods and equipment to create a robust and easily supportable supply-chain system.

The application of logistics in the business sector is tied to globalization. As supply chains became increasingly complex, with resources and supplies located in countries across the world, businesses started looking to logistics as a way to more effectively manage their flow of resources.

Logistics in business encompasses multiple specialties. For example, inbound logistics focuses on purchasing and coordinating the movement of materials coming into a company, factory, or store. Outbound logistics pertains to processes involved in the storage and movement of resources from the business to the end user. Within a business, logistics also may be applied to a specific project. Regardless of the scope, most logistics efforts incorporate to some degree the management of both tangible and intangible assets.

Other common types of logistics applied in business operations include disposal logistics, reverse logistics, green logistics, and emergency logistics. Disposal logistics seeks to enhance service while reducing expenses associated with the disposal of waste products resulting from operations. Reverse logistics encompasses practices tied to channeling the business's surplus resources for reuse or disposal as necessary. Green logistics is aimed at minimizing the environmental impact of all of a company's logistical practices. Emergency logistics is used less frequently but is activated when circumstances such as major weather events or significant production delays warrant a change in standard logistics processes to continue to accommodate supply-chain needs with minimal disruption.

Businesses sometimes outsource some or all of their logistics activities to external providers. A typical example is when a company hires a third-party, or nonaffiliated, transportation operator to deliver goods that are otherwise produced and managed by the business itself.

—Shari Parsons Miller, MA