Logistics is the business process of coordinating the flow of information and goods within a company or through the distribution channel. Some companies employ logistics managers and staff. Others hire third-party logistics providers to manage some or all logistics duties.
Transportation and logistics often go hand-in-hand since transporting goods is a common element of the logistics definition. Transportation management means planning, scheduling and developing the most efficient transportation system possible to move materials and goods. This includes deciding what transportation methods to use and developing a routing plan that maximizes efficiency and avoids redundancy and waste by having overlapping transports.
Coinciding with transportation is the flow of information. Logistics relies on computer tools to monitor inventory, track its location and movement and replenish products when they reach critical levels. Companies ideally keep enough inventory on hand in stores to meet demand, but not so much that it causes waste or extra storage requirements that are costly. Information management is often automated to allow for rapid response and effective organization of materials and goods.
Inventory tracking responsibilities with logistics vary. Some companies maintain their own distribution centers that hold inventory to ship to stores. Others order directly from vendors for store shipment. Tracking inventory from vendors involves getting invoices, entering them into the computer, verifying inventory accuracy at stores and checking inventory periodically for loss. With distribution centers, logistics includes receipt, management and storage of goods along with distribution of inventory to stores.
Supply Chain Relationships
Supply chain management is a prominent 21st century business concept that expanded the responsibility of logistics to include interaction and collaboration with suppliers. Retailers often sync computer systems with supplier computers through a process called electronic data integration. This allows the supplier to receive automated alerts when a distribution center or store needs inventory replenished. This removes some costly and time-consuming manual communication and processes typically involved in historical inventory ordering.