Logistics

Logistics covers everything related to moving and storing products. This function

involves physical distribution, warehousing, and transportation. Inbound logistics

refers to the products that are being shipped to your company by your suppliers.

Outbound logistics refers to the products that you ship to your customers.

Intralogistics refers to moving and storing products within your own facilities.

Supply chain professionals refer to intralogistics as happening “within the four

walls” meaning that it occurs inside one your buildings.

Logistics adds value because it gets a product where a customer needs it when the

customer wants it. Logistics costs money too. Transporting products on ships,

trucks, trains, and airplanes has a price tag. Also, whether a product is sitting

on a truck or gathering dust in a distribution center, it’s an asset that ties up

working capital.

The goals of the logistics function are to move things faster, reduce transportation

costs, ensure reliability, and decrease inventory. Following are some ways that a

logistics department might try to achieve these goals:

» Consolidating many small shipments into one large shipment to lower

shipping costs

» Breaking large shipments into smaller ones to increase velocity

» Switching from one mode of transportation to another, either to lower costs

or increase velocity

» Increasing or decreasing the number of distribution centers to increase

velocity or lower costs

» Outsourcing logistics services to a third-party logistics (3PL) company

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