What is Logistics? Definition and Components (2023)


Logistics describes the process of coordinating and moving resources—people, materials, inventory, and equipment—from one location to storage at the desired destination. The term logistics originated in the military, referring to the movement of equipment and supplies to troops in the field.

Logistics vs. supply chain management

Logistics and supply chain management are terms that are often used interchangeably, but they actually refer to two aspects of the process.

Logistics refers to what happens within one company, including the purchase and delivery of raw materials, packaging, shipment, and transportation of goods to distributors.

Supply chain management refers to a larger network of outside organizations that work together to deliver products to customers, including vendors, transportation providers, call centers, warehouse providers, and others.

Logistics components

The management of logistics can involve some or all of the following business functions, including:

  • Inbound transportation 
  • Outbound transportation
  • Fleet management
  • Warehousing
  • Materials handling
  • Order fulfillment
  • Inventory management
  • Demand planning

Why logistics is important

Although many small businesses focus on the design and production of their products and services to best meet customer needs, if those products cannot reach customers, the business will fail. That’s the major role that logistics plays.

But logistics also impacts other aspects of the business, too.

The more efficiently raw materials can be purchased, transported, and stored until used, the more profitable the business can be. Coordinating resources to allow for timely delivery and use of materials can make or break a company.

And on the customer side, if products cannot be produced and shipped in a timely manner, customer satisfaction can decline, also negatively impacting a company’s profitability and long-term viability.

What Is shipping Logistics? FAQ

What are the 4 types of logistics?

  • Inbound Logistics: The process of receiving and storing goods from suppliers and vendors.
  • Outbound Logistics: The process of selecting, packing, and shipping products to customers.
  • Reverse Logistics: The process of returning goods from customers and redistributing them to other customers or back to the supplier.
  • Third-Party Logistics: The outsourcing of logistics operations to a third-party provider.

What is logistics in simple words?

Logistics involves overseeing the coordination and transportation of resources, goods, and services from their source to the final destination, ensuring they satisfy customer requirements.

What are examples of logistics?

  • Inventory Management: Tracking the availability of items in a warehouse or store and making sure there is enough stock for customer demand.
  • Transportation Management: Planning and coordinating the movement of goods from one location to another.
  • Warehousing: Storing goods in a safe and efficient manner.
  • Order Fulfillment: Picking, packing, and shipping orders in a timely manner.
  • Freight Management: Negotiating rates and selecting carriers for the transportation of goods.
  • Reverse Logistics: Managing the return of products for repair, replacement, or disposal.