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What Is Logistics?

Logistics is important to industries and markets around the globe, but it's especially relevant in the world of supply chain management. Logistics refers to the process and coordination of products, raw materials, and services across the supply chain. From manufacturing and production to distribution, fulfillment, and final delivery to customers and end users, logistics is a critical and essential component of a successful supply chain.

Why is logistics important to a business?

At the most basic level, logistics is important because it is a core process that deals with the movement and management of both the people and resources required to keep products flowing from manufacturers to end customers. In order for supply chain organizations to effectively balance supply and demand, manage inventories and ensure customer satisfaction, they need strong logistical processes that have been defined, tested and optimized for maximum efficiency. This involves ensuring that products are delivered on time, that the correct products are being sent, that businesses are able to boast increased value for their customers and that costs for all parties can be reduced.

supply chain logistics

Logistics processes

There are three types of logistics:

Inbound logistics

The process of moving raw materials or components from suppliers to manufacturers is called inbound logistics. Often, inbound logistics management will involve automated ordering and fulfillment so that manufacturers always have the materials required to produce new goods. The lists of raw materials and components are vast, but the purpose is the same: supply manufacturers, distributors and retailers with the goods they need to keep products moving through the supply chain to customers and end users.

Inbound logistics
Outbound logistics

Outbound logistics refers to the movement of completed or finished products and other goods to the next stage of the supply chain. This could mean moving products from manufacturers to warehouse facilities, fulfillment centers or distribution centers, as well as shipping them to customers, retailers or other final destinations. If an organization's inbound logistics management is inefficient it causes a chain reaction within their outbound logistics processes and eventually disrupts the entire supply chain.

Outbound logistics
Reverse logistics

Reverse logistics is the process of returning goods back through the supply chain from customers and end users back to fulfillment centers, distribution centers, retailers and manufacturers. This can occur when products are damaged or dysfunctional, require repairs or refurbishment or when they have reached the end of their useful service life and require special or specific disposal procedures. The process of reverse logistics begins at the point of sale and lasts until final disposal.

Reverse logistics

Logistics versus reverse logistics

Both logistics and reverse logistics can significantly affect your supply chain if not optimized for enhanced performance and efficiency. Delivering products and other goods to customers quickly and at a low cost is essential to their satisfaction, but so is processing and handling returns that must go back through your supply chain in the opposite direction. Inventory management, supply planning, demand planning and other core supply chain processes all work together along with both logistics and reverse logistics to form an efficient supply chain, and these systems must all interact and share data in order to function correctly and deliver positive results.

Logistics versus reverse logistics

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ASCM's Certified in Logistics, Transportation and Distribution (CLTD) designation enables supply chain professionals to determine the best ways to enhance and optimize components of their supply chains from streamlining logistics to improving inventory and warehouse management.

Transform your organization's supply chain

To enhance your knowledge of logistics and develop the skills to help you transform your organization's supply chain for the better, visit our CLTD product page.

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