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A warehouse in South Jersey, a U.S. East Coast epicenter for logistics and warehouse construction outside Philadelphia, where trucks deliver slabs of granite[1]

Logistics is the part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the point of consumption according to the needs of customers,[2][3] and a logistician is a professional working in the field of logistics management. Logistics management is a component that holds the supply chain together.[3] The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other edible items. Military logistics is concerned with maintaining army supply lines with food, armaments, ammunition, and spare parts, apart from the transportation of troops themselves. Meanwhile, civil logistics deals with acquiring, moving, and storing raw materials, semi-finished goods, and finished goods. For organisations that provide garbage collection, mail deliveries, public utilities, and after-sales services, logistical problems must be addressed.[2]

Logistics deals with the movements of materials or products from one facility to another; it does not include material flow within production or assembly plants, such as production planning or single-machine scheduling.[2]

Logistics accounts for a significant amount of the operational costs of an organisation or country. Logistical costs of organizations in the United States incurred about 11% of the United States national gross domestic product (GDP) as of 1997. In the European Union, logistics costs were 8.8% to 11.5% of GDP as of 1993.[2]

Dedicated simulation software can model, analyze, visualize, and optimize logistic complexities. Minimizing resource use is a common motivation in all logistics fields.

Nomenclature

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A warehouse implementing a pallet rack storage system
A logistics specialist inventories supplies in a storeroom aboard the aircraft carrier USS George H. W. Bush during Operation Enduring Freedom in the Persian Gulf in October 2011.

The term logistics is attested in English from 1846. It is from the French logistique, which was either coined or popularized by a Swiss military officer and writer, Antoine-Henri Jomini, who defined it in his Summary of the Art of War (Précis de l'Art de la Guerre). The term appears in the 1830 edition, then titled Analytic Table (Tableau Analytique),[4] and Jomini explains that it is derived from French: logis, lit.'lodgings' (cognate to English lodge), in the terms French: maréchal des logis, lit.'marshall of lodgings' and French: major-général des logis, lit.'major-general of lodging':

Autrefois les officiers de l’état-major se nommaient: maréchal des logis, major-général des logis; de là est venu le terme de logistique, qu’on emploie pour désigner ce qui se rapporte aux marches d’une armée.
Formerly the officers of the general staff were named marshal of lodgings, major-general of lodgings; from there came the term logistics [logistique], which we employ to designate those who are in charge of the functioning of an army.

The term and its etymology were criticized in 1832 by Georges de Chambray [fr]:[5]

Logistique: Ce mot me paraît être tout-à-fait nouveau, car je ne l'avais encore vu nulle part dans la littérature militaire. … il paraît le faire dériver du mot logis, étymologie singulière …
Logistic: This word appears to me to be completely new, as I have not yet seen it anywhere in military literature. … he appears to derive it from the word lodgings [logis], a peculiar etymology …

Chambray also notes that the term logistique was present in the Dictionnaire de l'Académie française as a synonym for algebra. The French word: logistique is a homonym of the existing mathematical term, from Ancient Greek: λογῐστῐκός, romanizedlogistikós, a traditional division of Greek mathematics; the mathematical term is presumably the origin of the term logistic in logistic growth and related terms. Some sources give this instead as the source of logistics,[6] either ignorant of Jomini's statement that it was derived from logis, or dubious and instead believing it was in fact of Greek origin, or influenced by the existing term of Greek origin.

Definition

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Jomini originally defined logistics as[4]

... l'art de bien ordonner les marches d'une armée, de bien combiner l'ordre des troupes dans les colonnes, les tems [temps] de leur départ, leur itinéraire, les moyens de communications nécessaires pour assurer leur arrivée à point nommé ...

... the art of well-ordering the functionings of an army, of well combining the order of troops in columns, the times of their departure, their itinerary, the means of communication necessary to assure their arrival at the right time ...

The Oxford English Dictionary defines logistics as "the branch of military science relating to procuring, maintaining and transporting material, personnel and facilities". However, the New Oxford American Dictionary defines logistics as "the detailed coordination of a complex operation involving many people, facilities, or supplies", and the Oxford Dictionary on-line defines it as "the detailed organization and implementation of a complex operation".[7] As such, logistics is commonly seen as a branch of engineering that creates "people systems" rather than "machine systems".

According to the Council of Supply Chain Management Professionals (previously the Council of Logistics Management),[8] logistics is the process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements and includes inbound, outbound, internal and external movements.[9]

Academics and practitioners traditionally refer to the terms operations or production management when referring to physical transformations taking place in a single business location (factory, restaurant or even bank clerking) and reserve the term logistics for activities related to distribution, that is, moving products on the territory. Managing a distribution center is seen, therefore, as pertaining to the realm of logistics since, while in theory, the products made by a factory are ready for consumption they still need to be moved along the distribution network according to some logic, and the distribution center aggregates and processes orders coming from different areas of the territory. That being said, from a modeling perspective, there are similarities between operations management and logistics, and companies sometimes use hybrid professionals, with for example a "Director of Operations" or a "Logistics Officer" working on similar problems. Furthermore, the term "supply chain management" originally referred to, among other issues, having an integrated vision of both production and logistics from point of origin to point of production.[10]

Logistics activities

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Loading of a thermal oxidizer in preparation for its transport to a manufacturing plant
A forklift truck loads a pallet of humanitarian aid to Pakistan on board a C-17 aircraft following devastating floods in the country in August 2010.
The Logistics Centre of the Finnish Red Cross in Tampere, Finland

Logistical activities can be divided into three main areas: order processing, inventory management, and freight transportation. Modern freight transportation relies heavily on fleet management to improve efficiency and safety. Traditionally, order processing was a time-consuming activity, but with new technologies such as bar code scanning and computers, the availability of stocks can be checked in real time. The purpose of having an inventory is to reduce the overall logistical cost while improving service to customers. Having a stockpile of finished goods beforehand can reduce the frequency of transportation and cope with the randomness of customer demands. However, maintaining an inventory requires capital investment and maintaining a warehouse. Freight transportation is a central part of logistics and allows access to broad markets. Transportation policies and warehouse management are closely intertwined.[2]

The rise of e-commerce has led to the development of "e-logistics". Compared to traditional logistics, e-logistics handles parcels valued at less than a hundred US dollars to customers scattered at various destinations worldwide. In e-logistics, customers' demands come in waves when compared to traditional logistics, where the demand is consistent.[2]

Inbound logistics is one of the primary logistics processes concentrating on purchasing and arranging the inbound movement of materials, parts, or unfinished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores.

Outbound logistics is the process related to the storage and movement of the final product. The related information flows from the end of the production line to the end user.

Given the services performed by logisticians, the main fields of logistics can be broken down as follows:

  • Procurement logistics, which consists of market research, requirements planning, make-or-buy decisions, supplier management, ordering, and order control. The targets in procurement logistics might be contradictory: maximizing efficiency by concentrating on core competencies, outsourcing while maintaining the company's autonomy, or minimizing procurement costs while maximizing security within the supply process.
  • Advance logistics involves the activities required to set up or establish a supply base in advance of other resources arriving. The term is used, for example, in military logistics for the assembly of resources ahead of troop arrival or the delivery of infrastructure components.[11]
  • Global logistics is technically the process of managing the "flow" of goods through a supply chain from its place of production to other parts of the world. This often requires an intermodal transport system via ocean, air, rail, and truck. The effectiveness of global logistics is measured in the Logistics Performance Index.
  • Distribution logistics has, as its main task, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Modern distribution often includes the use of a vehicle tracking system to monitor shipments by collecting real-time vehicle location data. Distribution logistics is necessary because production time, place, and quantity differ with the time, place, and quantity of consumption.[12]
  • Disposal logistics has the function of reducing logistics cost(s) and enhancing service(s) related to the disposal of waste produced during a business's operation.
  • Reverse logistics denotes all operations related to the reuse of products and materials. The reverse logistics process includes the management and the sale of surpluses, as well as products being returned to vendors from buyers. It is "the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin to recapture value or proper disposal".[13] More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. The opposite of reverse logistics is forward logistics.
  • Green logistics describes all attempts to measure and minimize the ecological impact of logistics activities, including all activities of the forward and reverse flows. This can be supported by fleet digitalization initiatives aimed at optimizing routes and reducing fuel consumption.
  • RAM logistics (see also Logistic engineering) combines both business logistics and military logistics since it concerns highly complicated technological systems for which reliability, availability and maintainability are essential, e.g., weapon system and military supercomputers.
  • Asset control logistics: companies in the retail channels, both organized retailers and suppliers, often deploy assets required for the display, preservation, and promotion of their products. This can involve using a tracking system to monitor the location and status of these assets.
  • Humanitarian logistics or emergency logistics: these terms are used by the logistics, supply chain, and manufacturing industries to denote specific time-critical modes of transport used to move goods rapidly in the event of an emergency.[14] The reason for enlisting emergency logistics services could be a production delay or anticipated production delay, or an urgent need for specialized equipment to prevent events such as aircraft being grounded (also known as "aircraft on ground"—AOG), ships being delayed, or telecommunications failure. Humanitarian logistics involves governments, the military, aid agencies, donors, non-governmental organizations, and emergency logistics services are typically sourced from a specialist provider.[14][15][16]

In addition, the term production logistics describes logistic processes within a value-adding system (e.g., a factory or a mine). Production logistics aims to ensure that each machine and workstation receives the right product in the correct quantity and quality at the right time. The concern is with production, testing, transportation, storage, and supply. Production logistics can operate in existing as well as new plants. Since manufacturing in an existing plant is a constantly changing process, machines are exchanged and new ones added, which allows for improving the production logistics system accordingly.[17] Production logistics provides the means to achieve customer response and capital efficiency. Track and trace solutions, which provide visibility of products through the production line, are an important part of modern production logistics, especially in the automotive and medical industries.

The term construction logistics has also been employed by civilizations for thousands of years.[citation needed] Now, construction logistics is an important part of the sector. In recent years, it has emerged as a distinct field of study within supply chain management and logistics. Modern construction logistics uses automatic vehicle location (AVL) to manage the movement of heavy equipment and materials.

Seven R's

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The Seven R's is a popular concept used to enforce best practices in logistics management which consists of the following:[18]

  • Right product (including the right information about it)
  • (At) right quantity
  • Right time
  • Right condition
  • Right place
  • (to) the right customer
  • (with the) right (financial) resources

Military logistics

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The Punjab Regiment using mules for transporting cargo in Burma during World War II. Animals have been used for logistical transport throughout history; the Roman army preferred mules over donkeys for cargo transport.[19]

In military science, maintaining one's supply lines while disrupting those of the enemy is a crucial element of military strategy, since an armed force without resources and transportation is defenseless. The historical leaders Hannibal, Alexander the Great, and the Duke of Wellington are considered[by whom?] to have been logistical geniuses: Alexander's expedition benefited considerably from his meticulous attention to the provisioning of his army,[20] Hannibal is credited to have "taught logistics" to the Romans during the Punic Wars[21] and the success of the Anglo-Portuguese army in the Peninsula War was due to the effectiveness of Wellington's supply system, despite the numerical disadvantage.[22] The defeat of the British in the American War of Independence and the defeat of the Axis in the African theater of World War II are attributed by some scholars to logistical failures.[23]

Militaries have a significant need for logistics solutions and so have developed advanced implementations. Integrated logistics support (ILS) is a discipline used in military industries to ensure an easily supportable system with a robust customer service (logistic) concept at the lowest cost and in line with (often high) reliability, availability, maintainability, and other requirements, as defined for the project.

In military logistics, Logistics Officers manage how and when to move resources to the places they are needed.

Supply chain management in military logistics often deals with a number of variables in predicting cost, deterioration, consumption, and future demand. The United States Armed Forces' categorical supply classification was developed in such a way that categories of supply with similar consumption variables are grouped together for planning purposes. For instance, peacetime consumption of ammunition and fuel will be considerably lower than wartime consumption of these items, whereas other classes of supply such as subsistence and clothing have a relatively consistent consumption rate regardless of war or peace.

Some classes of supply have a linear demand relationship: as more troops are added, more supply items are needed; or as more equipment is used, more fuel and ammunition are consumed. Other classes of supply must consider a third variable besides usage and quantity: time. As equipment ages, more and more repair parts are needed over time, even when usage and quantity stay consistent. By recording and analyzing these trends over time and applying them to future scenarios, the US Armed Forces can accurately supply troops with the items necessary at the precise moment they are needed.[24] History has shown that good logistical planning creates a lean and efficient fighting force. The lack thereof can lead to a clunky, slow, and ill-equipped force with too much or too little supply.

Business logistics

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A forklift operator stacking warehouse of goods on pallets in Allentown, Pennsylvania, in April 2004

One definition of business logistics speaks of "having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer".[25] Business logistics incorporates all industry sectors and aims to manage the fruition of project life cycles, supply chains, and resultant efficiencies.

The term business logistics has evolved since the 1960s[26] due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for professionals called supply chain logisticians.

In business, logistics may have either an internal focus (inbound logistics) or an external focus (outbound logistics), covering the flow and storage of materials from point of origin to point of consumption, a key factor in supply-chain management. The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation, and the organizing and planning of these activities. Logisticians combine professional knowledge of each of these functions to coordinate resources in an organization.

There are two fundamentally different forms of logistics: one optimizes a steady flow of material through a network of transport links and storage nodes, while the other coordinates a sequence of resources to carry out some project, such as restructuring a warehouse.

A journey planner or route optimization software is often used to solve the complex logistical problem of determining the most efficient delivery paths for a fleet of vehicles. These systems, which are a key component of an intelligent transportation system, analyze factors like traffic, delivery windows, and vehicle capacity to create optimized routes that reduce fuel consumption and improve on-time performance.[27]

Nodes of a distribution network

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A distribution network would require several intermediaries to bring consumer or industrial goods from manufacturers to a user. Intermediaries would markup the costs of the products during distribution, but benefit users by providing lower transportation costs than the manufacturers. The number of intermediaries required for the distribution network depends upon the types of goods being distributed. For example, consumer goods such as cosmetics and handicrafts may not require any intermediaries as they can be sold door-to-door or can be obtained from local flea markets. For industrial goods such as raw materials and equipment, intermediaries are not needed because manufacturers can sell a large number of goods to a user. Generally, there are three types of intermediaries, namely: agent/broker, wholesaler, and retailer.[2]

The nodes of a distribution network include:

  • Factories where products are manufactured or assembled
  • A depot or deposit, a standard type of warehouse for storing merchandise (high level of inventory)
  • Distribution centers for order processing and order fulfillment (lower level of inventory) and also for receiving returning items from clients. Typically, distribution centers are way stations for products to be disbursed further down the supply chain. They usually do not ship inventory directly to customers, whereas fulfillment centers do.[citation needed]
  • Transit points for cross-docking activities, which consist of reassembling cargo units based on deliveries scheduled (only moving merchandise)
  • Traditional "mom-and-pop" retail stores, modern supermarkets, hypermarkets, discount stores or also voluntary chains, consumers' co-operatives, groups of consumers with collective buying power. Note that subsidiaries will be mostly owned by another company and franchisers, although using other company brands, actually own the point of sale.

Logistic families and metrics

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A logistic family is a set of products that share a common characteristic: weight and volumetric characteristics, physical storing needs (temperature, radiation, etc.), handling needs, order frequency, package size, etc. The following metrics may be used by the company to organize its products in different families:[28]

  • Physical metrics used to evaluate inventory systems include stocking capacity, selectivity, superficial use, volumetric use, transport capacity, transport capacity use.
  • Monetary metrics used include space holding costs, such as building, shelving, and services, and handling costs, such as people, handling machinery, energy, and maintenance.

Other metrics may present themselves in both physical or monetary form, such as the standard inventory turnover.

Handling and order processing

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Unit loads, which serve a protective function, for transportation of luggage at the airport

Unit loads are combinations of individual items which are moved by handling systems, usually employing a pallet of normed dimensions.[29]

Handling systems include: trans-pallet handlers, counterweight handler, retractable mast handler, bilateral handlers, trilateral handlers, AGV and other handlers.

Storage systems include: pile stocking, cell racks (either static or movable), cantilever racks and gravity racks.[30]

Order processing is a sequential process involving: processing withdrawal list, picking (selective removal of items from loading units), sorting (assembling items based on the destination), package formation (weighting, labeling, and packing), order consolidation (gathering packages into loading units for transportation, control and bill of lading).[31]

Picking can be both manual or automated. Manual picking can be both man-to-goods, i.e. operator using a cart or conveyor belt, or goods-to-man, i.e. the operator benefiting from the presence of a mini-load ASRS, vertical or horizontal carousel or from an Automatic Vertical Storage System (AVSS). Automatic picking is done either with dispensers or depalletizing robots.

Sorting can be done manually through carts or conveyor belts, or automatically through sorters.

Transportation

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Consolidating small shipments into large shipments can help to save transportation costs. There are three methods to do this: facility consolidation, multi-stop consolidation, and temporal consolidation. Facility consolidation uses the economics of scale by transporting small shipments over short distances and large shipments over long distances. Multi-stop consolidation makes multiple stops to consolidate small shipments in the case of less-than-truckload shipping. Temporal consolidation adjusts the shipping schedules forwards or backward so as to make a single large shipment rather than several small shipments over time.[2]

Cargo can be consolidated into pallets or containers. There are five basic modes of transport, namely, ship, rail, truck, air, and pipeline operated by different carrier. These shipping methods can be combined in various ways such as intermodal transport (no handling), multimodal transport, and combined transport (minimal road transport). A shipper chooses a carrier by taking into account the total cost of shipment and transit time. Air is the most expensive type of transport, followed by truck, rail, pipeline, and ship.[2]

Cargo can be organized in different shipment categories. Unit loads are usually assembled into higher standardized units such as: ISO containers, swap bodies or semi-trailers. Especially for very long distances, product transportation will likely benefit from using different transportation means: When moving cargo, typical constraints are maximum weight and volume.

Operators involved in transportation include: all train, road vehicles, boats, airplanes companies, couriers, freight forwarders and multi-modal transport operators.

Merchandise being transported internationally is usually subject to the Incoterms standards issued by the International Chamber of Commerce.

Configuration and management

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A LIFO rack system for storage of motorcycles
In this particular airline logistic network, Denver serves as a network hub for the Midwestern U.S.

In the logistics business, a logistical system is designed at a minimum cost based on the expected customer service level. As the service improves, the number of sales also increased. As service is further improved, more sales are captured from competing providers. Further increase in customer service levels after these only increases sales marginally.[2]

Similarly to production systems, logistic systems need to be properly configured and managed. Actually a number of methodologies have been directly borrowed from operations management such as using economic order quantity models for managing inventory in the nodes of the network.[32] Distribution resource planning (DRP) is similar to MRP, except that it does not concern activities inside the nodes of the network but planning distribution when moving goods through the links of the network.

Traditionally in logistics, configuration may be at the level of the warehouse (node) or at level of the distribution system (network).

Regarding a single warehouse, besides the issue of designing and building the warehouse, configuration means solving a number of interrelated technical-economic problems: dimensioning rack cells, choosing a palletizing method (manual or through robots), rack dimensioning and design, number of racks, number and typology of retrieval systems (e.g. stacker cranes). Some important constraints have to be satisfied: fork and load beams resistance to bending and proper placement of sprinklers. Although picking is more of a tactical planning decision than a configuration problem, it is important to take it into account when deciding the layout of the racks inside the warehouse and buying tools such as handlers and motorized carts since once those decisions are taken they will work as constraints when managing the warehouse, the same reasoning for sorting when designing the conveyor system or installing automatic dispensers.

Configuration at the level of the distribution system concerns primarily the problem of location of the nodes in geographic space and distribution of capacity among the nodes. The first may be referred to as facility location (with the special case of site selection) while the latter to as capacity allocation. The problem of outsourcing typically arises at this level: the nodes of a supply chain are very rarely owned by a single enterprise. Distribution networks can be characterized by numbers of levels, namely the number of intermediary nodes between supplier and consumer:

  • Direct store delivery, i.e. zero levels
  • One level network: central warehouse
  • Two level network: central and peripheral warehouses

This distinction is more useful for modeling purposes, but it relates also to a tactical decision regarding safety stocks: considering a two-level network, if safety inventory is kept only in peripheral warehouses then it is called a dependent system (from suppliers), if safety inventory is distributed among central and peripheral warehouses it is called an independent system (from suppliers).[28] Transportation from producer to the second level is called primary transportation, from the second level to a consumer is called secondary transportation.

Although configuring a distribution network from zero is possible, logisticians usually have to deal with restructuring existing networks due to presence of an array of factors: changing demand, product or process innovation, opportunities for outsourcing, change of government policy toward trade barriers, innovation in transportation means (both vehicles or thoroughfares), the introduction of regulations (notably those regarding pollution) and availability of ICT supporting systems, such as ERP or e-commerce.

Once a logistic system is configured, management, meaning tactical decisions, takes place, once again, at the level of the warehouse and of the distribution network. Decisions have to be made under a set of constraints: internal, such as using the available infrastructure, or external, such as complying with the given product shelf lifes and expiration dates.

At the warehouse level, the logistician must decide how to distribute merchandise over the racks. Three basic situations are traditionally considered: shared storage, dedicated storage (rack space reserved for specific merchandise) and class-based storage (class meaning merchandise organized in different areas according to their access index).

Picking efficiency varies greatly depending on the situation.[31] For a man to goods situation, a distinction is carried out between high-level picking (vertical component significant) and low-level picking (vertical component insignificant). A number of tactical decisions regarding picking must be made:

  • Routing path: standard alternatives include transversal routing, return routing, midpoint routing, and largest gap return routing
  • Replenishment method: standard alternatives include equal space supply for each product class and equal time supply for each product class.
  • Picking logic: order picking vs batch picking

At the level of the distribution network, tactical decisions involve mainly inventory control and delivery path optimization. Note that the logistician may be required to manage the reverse flow along with the forward flow.

Warehouse management system and control

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Warehouse management systems (WMS) can differ significantly from warehouse control systems (WCS), although there is some overlap in functionality. A WMS plans a weekly activity forecast based on such factors as statistics and trends, whereas a WCS acts like a floor supervisor, working in real-time to get the job done by the most effective means. For example, a WMS can tell the system that it is going to need five of stock-keeping unit (SKU) A and five of SKU B hours in advance, but by the time it acts, other considerations may have come into play or there could be a logjam on a conveyor. A WCS can prevent that problem by working in real-time and adapting to the situation by making a last-minute decision based on current activity and operational status. Working synergistically, WMS and WCS can resolve these issues and maximize efficiency for companies that rely on the effective operation of their warehouse or distribution center.[33]

Logistics outsourcing

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Logistics outsourcing involves a relationship between a company and an LSP (logistic service provider), who, when compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, and is characterized by a long-term orientation; thus the relationship has a strategic nature.[34]

Outsourcing does not have to be complete externalization to an LSP, but can also be partial:

  • A single contract for supplying a specific service on occasion
  • Creation of a spin-off
  • Creation of a joint venture

Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself.[35] According to this definition, third-party logistics includes any form of outsourcing of logistics activities previously performed in house. For example, if a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries. External 3PL providers have evolved from merely providing logistics capabilities to becoming real orchestrators of supply chains that create and sustain a competitive advantage, thus bringing about new levels of logistics outsourcing.[36]

The concept of a fourth-party logistics (4PL) provider was first defined by Andersen Consulting (now Accenture) as an integrator that assembles the resources, planning capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third-party logistics (3PL) service provider targets a single function, a 4PL targets management of the entire process. Some[who?] have described a 4PL as a general contractor that manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer.

Horizontal alliances between logistics service providers

[edit]

Horizontal business alliances often occur between logistics service providers, i.e., the cooperation between two or more logistics companies that are potentially competing.[37] In a horizontal alliance, these partners can benefit twofold. On one hand, they can "access tangible resources which are directly exploitable". In this example extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages can be achieved by combining resources. On the other hand, partners can "access intangible resources, which are not directly exploitable". This typically includes know-how and information and, in turn, innovation.[37]

Logistics automation

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An automated storage and retrieval system used by both the U.S. military at March Air Reserve Base in Riverside County, California, in December 1995

Logistics automation is the application of computer software or automated machinery to improve the efficiency of logistics operations. This typically refers to operations within a warehouse or distribution center with broader tasks undertaken by supply chain engineering systems and enterprise resource planning systems.

Industrial machinery can typically identify products through either barcode or RFID technologies. Information in traditional bar codes is stored as a sequence of black and white bars varying in width, which when read by laser is translated into a digital sequence, which according to fixed rules can be converted into a decimal number or other data. Sometimes information in a bar code can be transmitted through radio frequency, more typically radio transmission is used in RFID tags. An RFID tag is a card containing a memory chip and an antenna that transmits signals to a reader. RFID may be found on merchandise, animals, vehicles, and people as well.

Logistics: profession and organizations

[edit]

A logistician is a professional logistics practitioner. Professional logisticians are often certified by professional associations. One can either work in a pure logistics company, such as a shipping line, airport, or freight forwarder, or within the logistics department of a company. However, as mentioned above, logistics is a broad field, encompassing procurement, production, distribution, and disposal activities. Hence, career perspectives are broad as well. A new trend[as of?] in the industry is the 4PL, or fourth-party logistics, firms, consulting companies offering logistics services.[citation needed]

Some universities and academic institutions train students as logisticians, offering undergraduate and postgraduate programs. A university with a primary focus on logistics is Kühne Logistics University in Hamburg, Germany. It is non-profit and supported by Kühne-Foundation of the logistics entrepreneur Klaus Michael Kühne.[citation needed]

Organizations

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The Chartered Institute of Logistics and Transport (CILT), established in the United Kingdom in 1919, received a Royal Charter in 1926. The Chartered Institute is one of the professional bodies or institutions for the logistics and transport sectors that offer professional qualifications or degrees in logistics management. CILT programs can be studied at centers around the UK, some of which also offer distance learning options.[38] The institute also have overseas branches namely The Chartered Institute of Logistics & Transport Australia (CILTA)[39] in Australia and Chartered Institute of Logistics and Transport in Hong Kong (CILTHK)[40] in Hong Kong. In the UK, logistics management programs are conducted by many universities and professional bodies such as CILT. These programs are generally offered at the postgraduate level.

The Global Institute of Logistics,[41] established in New York in 2003, is a think tank for the profession and is primarily concerned with intercontinental maritime logistics. It is particularly concerned with container logistics and the role of the seaport authority in the maritime logistics chain.

The International Association of Public Health Logisticians (IAPHL)[42] is a professional network that promotes the professional development of supply chain managers and others working in the field of public health logistics and commodity security, with particular focus on developing countries. The association supports logisticians worldwide by providing a community of practice, where members can network, exchange ideas, and improve their professional skills.

Logistics museums

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There are many museums in the world which cover various aspects of practical logistics. These include museums of transportation, customs, packing, and industry-based logistics. In particular, the following museums are fully dedicated to logistics:

General logistics

Military logistics

See also

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References

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Further reading

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Logistics is the process of planning, implementing, and controlling the efficient and effective flow and storage of goods, services, and related information from the point of origin to the point of consumption, ensuring customer requirements are met as part of broader supply chain management. The term originates from the French word logistique, coined in the early 19th century by military strategist Antoine-Henri Jomini, deriving ultimately from the Greek logistikos, meaning "skilled in calculating," and initially referred to the movement, quartering, and supply of troops in military operations. Its modern application expanded significantly during World War II, when Allied forces developed sophisticated systems for transporting vast quantities of materiel across global theaters, marking a shift from ad hoc provisioning to formalized processes that influenced postwar civilian applications. In contemporary and , logistics encompasses core functions such as transportation management, which involves selecting optimal modes like , rail, air, or to minimize costs and time; warehousing and storage, ensuring safe and accessible inventory holding; , balancing stock levels to avoid shortages or excesses; , coordinating picking, packing, and shipping; and , handling returns and to support . These elements are critical for , with effective logistics reducing global costs, which account for 10-15% of the final cost of finished products in developed economies, and enabling just-in-time delivery models that enhance competitiveness. In the global economy, logistics underpins by facilitating the movement of approximately 80% of world goods by volume via maritime shipping and supports growth, where rapid fulfillment has become a key differentiator for retailers. Advances in technologies like AI-driven , for traceability, and automated warehousing have further transformed logistics, improving resilience against disruptions such as pandemics or geopolitical tensions.

Fundamentals

Definition and Scope

Logistics management is defined as that part of that plans, implements, and controls the efficient, effective forward and reverse flow and storage of , services, and related between the point of origin and the point of consumption to meet customers' requirements. This definition emphasizes the operational focus on movement and storage, ensuring that resources are available where and when needed while minimizing costs and delays. Logistics serves as a critical subset of (SCM), which encompasses broader activities including sourcing, , conversion, and coordination with channel partners such as suppliers and customers to integrate across organizations. Whereas SCM addresses end-to-end integration of all processes from raw materials to final delivery, logistics specifically targets the tactical execution of flows and storage within that framework, often involving activities like transportation and warehousing. Key components of logistics align with core supply chain processes, including inbound logistics to facilitate material flows from , production support through just-in-time and , distribution for outbound delivery, and after-sales support via for returns and . These elements ensure seamless integration across the , with logistics optimizing efficiency in each stage through coordinated planning and control. The scope of logistics has evolved from its military origins, where it primarily involved the strategic movement of troops and supplies, to a modern discipline that incorporates information flows for real-time visibility and to manage product returns and . Global standards, such as those established by the Council of Supply Chain Management Professionals (CSCMP), provide authoritative frameworks for this expanded role, promoting best practices in efficiency and .

History and Evolution

The origins of logistics trace back to ancient civilizations, where organized supply chains supported campaigns and networks. In , particularly during the New Kingdom period (c. 1550–1070 BCE), the state developed sophisticated logistics systems to provision armies and facilitate trade along the River and overland routes, utilizing boats for bulk transport of grain, timber, and metals, as well as pack animals for desert crossings to secure resources from and the . Similarly, the Romans established extensive supply lines for their legions, exemplified by the , constructed around 312 BCE as a paved road from to , which enabled efficient movement of troops, equipment, and provisions across and beyond, integrating warehouses (horrea) and waystations for sustained operations. The Industrial Revolution in the 19th century marked a pivotal shift toward systematic logistics, driven by technological innovations in transportation. The advent of steam-powered locomotives and railroads, beginning with George Stephenson's Rocket in 1829, revolutionized bulk goods movement by enabling faster, more reliable overland shipping of raw materials like coal and iron, which fueled factory production and expanded markets across Britain and later Europe and North America. Concurrently, steamships transformed maritime logistics, allowing for scheduled transoceanic voyages that reduced travel times from months to weeks, as seen in the rapid growth of steam-powered trade routes connecting industrial centers to colonial resource suppliers. World War II accelerated logistics advancements through the formalization of and innovative supply strategies. In the 1940s, Allied forces in Europe applied —pioneered by scientists like —to optimize resource allocation, such as in , which improved convoy protection and reduced shipping losses by over 50% in the Atlantic. The U.S. Army's development of convoy systems and the , a truck-based supply route established in 1944 to deliver 12,500 tons of cargo daily to advancing troops across , exemplified scalable, high-volume logistics under wartime constraints. Post-war commercialization in the mid-20th century saw the rise of (3PL) providers, evolving from basic transportation services in the to integrated solutions by the , as multinational corporations outsourced warehousing and distribution to specialize in core competencies amid global expansion. A key enabler was , innovated by Malcolm McLean in 1956 when he transported 58 truck trailers on the from Newark to , slashing loading times from days to hours and cutting shipping costs by up to 90%, which standardized intermodal transport and boosted volumes. The digital era from the to the 2000s integrated into logistics, enhancing coordination and visibility. Electronic Data Interchange (EDI) standards, such as ANSI X12 developed in 1979 and widely adopted in the , enabled automated electronic document exchange between trading partners, reducing paperwork errors in supply chains by facilitating real-time order and invoice processing. By the 1990s and 2000s, GPS tracking, fully operational for civilian use after the 2000 deactivation of selective availability, allowed precise real-time monitoring of shipments, optimizing routes and reducing fuel consumption in fleet operations. Recent trends up to 2025 have emphasized AI-driven predictive logistics and for enhanced transparency, building on post-2010 digital evolution. AI algorithms now forecast demand and disruptions with high accuracy, as demonstrated by Amazon's integration of for optimization, which improved delivery efficiency amid global volatility. platforms, leveraging distributed ledgers, provide immutable tracking of provenance, reducing in multi-tier s through smart contracts that automate compliance verification. Sustainability milestones, particularly the ' 2015 (SDGs), have profoundly influenced green logistics by targeting reduced emissions and resource efficiency; for instance, SDG 9 (Industry, Innovation, and Infrastructure) and SDG 13 () have driven adoption of low-carbon transport modes, with logistics firms aligning practices to cut sector-wide CO2 emissions by promoting electric fleets and circular supply models.

Key Principles

Core Activities

Inbound logistics encompasses the processes of sourcing raw materials, components, and supplies from external vendors, including activities such as supplier selection, , and to ensure timely and cost-effective acquisition. This stage also involves coordinating transportation and storage of incoming goods to facilities, optimizing the flow from the point of origin to internal operations while minimizing delays and inventory holding costs. Effective inbound logistics supports production continuity by aligning supplier deliveries with demand forecasts, often through just-in-time strategies that reduce excess stock. Internal logistics, also known as production or factory logistics, manages the movement, , and storage of materials within a facility or across internal operations to support and assembly processes. This includes activities like via conveyors, forklifts, or automated systems, as well as to ensure components are available at workstations without bottlenecks. By facilitating efficient intra-facility flows, internal logistics bridges inbound receipts and outbound preparations, enhancing overall and reducing production . Outbound logistics focuses on the fulfillment of orders through picking, , and shipping finished products from warehouses or production sites to end-users or distribution centers. This process ensures accurate order assembly, secure to prevent damage, and coordinated transportation modes to meet delivery timelines while controlling distribution expenses. Outbound activities often integrate with to provide real-time shipment visibility, supporting principles like the right product at the right time as outlined in the Seven R's framework. Information flow in logistics involves the systematic , exchange, and analysis of across all activities to enable tracking, , and . This includes systems for monitoring shipment statuses, predictions using historical , and coordination signals between suppliers, internal teams, and customers to synchronize operations. Robust information flows, often facilitated by software, ensure transparency and responsiveness, preventing disruptions from miscommunication. At a basic level, handles the return of products from customers to origin points for reasons such as defects, excess , or end-of-life disposal, encompassing collection, inspection, and or refurbishment processes. This backward flow aims to recover value from returned goods while complying with environmental regulations, though it requires distinct to avoid contaminating forward flows. These core activities are highly interdependent, with seamless integration essential to minimize total costs—primarily including transportation, warehousing, labor, depreciation, outsourcing, and administrative expenses—reduce lead times, and mitigate risks from disruptions like supplier failures or transportation delays. For instance, accurate from inbound processes informs internal movements, which in turn enable efficient outbound fulfillment, while feedback loops refine future sourcing decisions. strategies, such as contingency planning and diversified suppliers, address these interdependencies to maintain resilience across the logistics network.

The Seven R's

The Seven R's represent a core mnemonic framework in logistics that ensures the effective and customer-centric delivery of , emphasizing and . This principle guides logistics professionals in aligning processes with end-user expectations, minimizing errors, and optimizing resource use. Originating from the evolution of physical distribution management practices in the United States, the framework is closely associated with the National Council of Physical Distribution Management (NCPDM), which played a pivotal role in standardizing logistics concepts during the late . The Seven R's consist of the following elements: the right product, right , right condition, right place, right time, right , and right price. The right product ensures that the exact item specified by the customer is supplied, avoiding substitutions that could lead to dissatisfaction. Right involves delivering the precise amount ordered, preventing overstocking or shortages that disrupt balance. Right condition mandates that goods arrive undamaged and in suitable to maintain integrity throughout transit. Right place requires accurate to the designated , whether a , retail outlet, or end-user site. Right time focuses on punctual delivery to meet deadlines and synchronize with customer schedules. Right targets the correct recipient, safeguarding against misdeliveries that could compromise or . Finally, right price encompasses delivering at an economically viable , balancing logistics expenses with value to sustain profitability. These components collectively inform in logistics planning, such as route optimization, , and supplier selection, thereby enhancing overall . In practice, adherence to the Seven R's drives execution strategies across the . For instance, during , logistics managers evaluate suppliers based on their ability to meet product specifications and condition standards; in transportation, scheduling algorithms prioritize time and place to avoid ; and in fulfillment, cost analyses ensure economical and without compromising other R's. This integrated approach reduces operational risks and fosters reliability, as evidenced by industry benchmarks where compliance with these principles correlates with higher service levels. Modern adaptations have extended the framework to address contemporary challenges, particularly environmental concerns. Some sources propose an expansion to eight R's by incorporating additional elements such as right supplier, right returns, right , and right compliance. Right emphasizes eco-friendly practices, such as using low-emission modes, recyclable , and carbon-neutral to minimize ecological impact while upholding the original R's. Adopted increasingly since the amid regulatory pressures and consumer demand for green logistics, these extensions integrate metrics into traditional without altering the core mnemonic. A illustrative case in retail logistics involves a major fulfilling an order for smartphones during a holiday peak season. The ensures the right product by verifying model compatibility against specifications, ships the right quantity of 500 units to avoid excess costs, packages them in protective, tamper-evident boxes for right condition, routes via expedited air freight to the right place (a regional store), arrives on the promised date for right time, directs to the verified retailer account for right , and prices the delivery at a competitive rate covering surcharges but undercutting market averages for right . In this scenario, all R's align to prevent stockouts, maintain product quality, and boost retailer loyalty, demonstrating seamless execution.

Military Applications

Overview and Strategies

In military contexts, logistics is defined as the process of planning and executing the sustainment of forces in support of military actions, encompassing supply, , deployment, and evacuation to ensure operational continuity. This sustainment function integrates logistics and personnel services to maintain , from initial through redeployment, distinguishing it as a core warfighting element. Key strategies in military logistics emphasize efficiency and adaptability under duress, including just-in-time delivery to minimize stockpiles and enable rapid response, forward basing to position resources closer to the theater for quicker access, and multi-modal transport integration to leverage air, sea, land, and rail systems for seamless distribution. Just-in-time approaches streamline supply chains by synchronizing deliveries with operational needs, reducing to prolonged storage disruptions. Forward basing enhances and flexibility, allowing prepositioned stocks to support immediate surges in contested environments. Multi-modal integration, as outlined in U.S. Department of Defense distribution strategies, unifies pipelines for global reach, ensuring flows from strategic bases to tactical units without bottlenecks. Military logistics differs fundamentally from logistics by prioritizing , rapid deployment, and resilience in combat conditions over cost-driven efficiency. While systems focus on optimized, lean supply chains for commercial gain, operations incorporate redundancy and adaptability to withstand threats like , enabling forces to in hostile terrains or under enemy fire. measures, such as concealed routes and protected convoys, are integral to prevent compromise, contrasting with emphasis on transparency for . Rapid deployment capabilities allow for swift of forces and supplies across global distances, often within days, to seize initiative in dynamic conflicts. Resilience is built through diversified networks that can reroute or regenerate under attack, ensuring sustainment even when primary lines fail. Organizational structures in military logistics are designed for hierarchical coordination and global responsiveness, exemplified by units like the U.S. Sustainment Command (ASC). Established in , ASC serves as the 's strategic logistics integrator, overseeing readiness, distribution, and contingency support worldwide through its network of field support brigades. It synchronizes resources from national inventories to forward-operating bases, enabling unified sustainment across joint operations and ensuring alignment with combatant commands' priorities. Challenges in military logistics often stem from adversarial disruptions and environmental factors, requiring robust mitigation to maintain operational tempo. Enemy interdiction, such as targeted strikes on supply lines or cyber attacks on logistics networks, poses a primary threat by aiming to sever sustainment flows and force resource diversion. Terrain obstacles, including rugged landscapes, urban clutter, or weather extremes, complicate movement and increase vulnerability to ambushes, demanding engineering solutions like route clearance and alternative pathways. These issues are compounded in peer conflicts, where adversaries exploit logistics as a center of gravity to degrade force projection. Post-2020 developments highlight innovative strategies to address such challenges, notably the use of drone resupply in the ongoing conflict since 2022. Ukrainian forces have employed commercial and modified unmanned aerial vehicles to deliver critical supplies like and medical kits directly to forward positions, bypassing vulnerable ground convoys and reducing exposure to Russian . This approach enhances resilience in contested environments by enabling precise, low-signature deliveries over short ranges, informing broader military adaptations for distributed operations.

Historical and Modern Case Studies

One of the most infamous examples of logistical failure in military history is Napoleon's 1812 invasion of Russia, where the Grande Armée's advance deep into hostile territory led to catastrophic supply line overextension. The campaign involved over 600,000 troops advancing more than 1,000 miles from friendly bases, relying on foraging and limited wagon trains that proved insufficient against Russia's vast distances, scorched-earth tactics, and harsh winter conditions. By late 1812, supply shortages, disease, and attrition had reduced the force to fewer than 50,000 survivors during the retreat from Moscow, marking a turning point in Napoleon's downfall. In contrast, the Allied during exemplified effective improvisation in high-speed logistics to sustain rapid advances. Launched on August 25, 1944, following the breakout, this truck convoy system—primarily operated by African American soldiers—delivered over 412,000 tons of supplies, including hundreds of thousands of gallons of fuel daily, across to support the U.S. First and Third Armies' push toward . Operating round-the-clock on a one-way, priority highway network marked by red ball symbols, the Express averaged 450 truckloads per day until November 16, 1944, preventing a logistical collapse amid port delays and rail disruptions. Turning to modern operations, U.S. forces in the 1991 leveraged pre-positioning to achieve swift deployment and sustainment. Maritime Prepositioning Ships (MPS) stored equipment and supplies in and other forward sites, allowing the rapid offload of over 1.3 million tons of within weeks of Iraq's invasion of Kuwait, reducing reliance on vulnerable and enabling the Marine Corps to assemble a full expeditionary force in theater. This strategy supported the coalition's 100-hour ground campaign, minimizing deployment timelines from months to days and highlighting the value of prepositioned stocks in . NATO's logistical support for from 2022 to 2025 demonstrated multinational coordination in a protracted conflict, utilizing rail networks and air bridges to deliver aid while circumventing Russian . Allies transported over €50 billion in military assistance, including and vehicles, via European rail corridors from and to Ukraine's borders, supplemented by airlifts through NATO hubs like for time-sensitive items. As of late 2025, total military aid from allies exceeds €100 billion, with continued adaptations in logistics such as increased shell production. In the 2010s, U.S. Marine Corps operations in pioneered drone-based resupply to mitigate risks in asymmetric environments. The unmanned K-MAX helicopter, deployed from 2011 to 2014, conducted thousands of missions, transporting more than 4.5 million pounds of to remote outposts without exposing pilots to improvised devices on treacherous roads. This autonomous system, capable of lifting up to 6,000 pounds per flight, reduced the need for manned helicopter sorties in , enhancing sustainment in contested terrain. These cases underscore key lessons in , particularly the need for adaptability in , where non-state actors exploit vulnerabilities through ambushes and supply disruptions. Operations like those in revealed that flexible, distributed networks—combining air, ground, and unmanned assets—outweigh rigid lines, as seen in the shift from Pakistan-dependent routes to northern overland alternatives amid 2011 border closures. The integration of cyber logistics has also emerged as critical, protecting supply chains from digital threats like and GPS jamming, as evidenced in where implemented encrypted tracking to secure rail shipments against Russian cyberattacks. Lessons from these conflicts emphasize redundant cyber-hardened systems to maintain visibility and resilience in hybrid threats. Aerial refueling, experimentally demonstrated in the 1920s and first used in combat during the in 1951 to extend fighter range, evolved from hose-and-drogue methods to the modern flying boom system, supporting global strikes as initially tested postwar. Containerized military shipping, refined during the , revolutionized by standardizing 20- and 40-foot ISO containers for seamless transfer between ships, rail, and trucks, handling approximately 40,000 TEUs in Desert Shield without repacking. This innovation cut handling times by 50% and improved in-transit visibility, becoming a cornerstone of U.S. Transportation Command doctrine.

Business Applications

Supply Chain Networks

Supply chain networks in logistics form interconnected systems that facilitate the movement of , , and finances from origin to end-user, emphasizing in commercial operations. These networks typically comprise key nodes including suppliers, which provide raw materials; manufacturers, responsible for production; distribution centers, which serve as intermediate storage and sorting facilities; retailers, acting as points; and customers, the final points. The structure enables coordinated activities to minimize disruptions and maximize value delivery in competitive markets. Within these networks, flows are categorized as forward (outbound) chains, which move products from through distribution centers and retailers to customers, and backward (inbound) chains, which handle the upstream movement of raw materials and components from suppliers to sites. Forward flows prioritize outbound efficiency to meet customer , while backward flows ensure timely inbound replenishment to support production continuity. These dual flows create a bidirectional that balances supply with fulfillment. Design principles for networks focus on optimization for and speed, often comparing hub-and-spoke models—where centralized hubs consolidate shipments before distribution to regional spokes—with direct shipping models that route goods point-to-point without intermediaries. The hub-and-spoke approach reduces transportation s by enabling consolidated, high-volume shipments from a single point, though it may increase cycle times due to additional handling; in contrast, direct shipping enhances speed for time-sensitive deliveries but escalates s in complex, multi-destination scenarios. Optimization involves trade-offs, such as selecting hub-and-spoke for broad geographic coverage to lower per-unit expenses, or direct models for high-value, low-volume goods to prioritize velocity. Performance in supply chain networks is evaluated using key indicators like fill rate, which measures the percentage of customer orders completed fully and on time, calculated as (number of orders fulfilled in full and on time / total orders received) × 100; cycle time, representing the duration from order placement to delivery, derived as (delivery date - order date) / total orders shipped; and total logistics , a comprehensive metric summing core expenses. The total logistics formula is: Total Logistics Cost=Transportation Cost+Warehousing Cost+Inventory Holding Cost\text{Total Logistics Cost} = \text{Transportation Cost} + \text{Warehousing Cost} + \text{Inventory Holding Cost} This formula arises from basic cost allocation principles, where transportation covers movement expenses, warehousing includes storage and handling fees, and inventory holding accounts for capital tied up in stock (e.g., opportunity costs and depreciation), providing a holistic view of operational efficiency without administrative overhead. Typical benchmarks show fill rates above 95% indicating strong reliability, cycle times under 5 days for competitive e-commerce, and total costs comprising 8-12% of sales revenue in optimized networks. Global considerations in networks include trade compliance, which ensures adherence to international regulations to avoid penalties, and , which impose duties on imports that can inflate costs by 10-25% depending on product origin and trade policies. Multi-echelon strategies address these by distributing stock across multiple tiers (e.g., suppliers, central warehouses, and local depots) to buffer against tariff-induced delays and volatility, optimizing holding costs while maintaining service levels. For instance, mapping multi-tier networks helps identify tariff exposure and alternative sourcing routes. In , networks have evolved significantly post-2020, with Amazon exemplifying adaptations to surging demand during the by regionalizing its U.S. fulfillment into eight self-sufficient zones in early 2023. This restructuring increased intra-regional order fulfillment from 62% to 76%, shortening delivery distances and improving truck utilization to 70-80%, thereby enhancing speed and cost efficiency through localized placement and optimized via tools like the Adaptive Transportation Optimization Service.

Transportation and Distribution

Transportation and distribution in business logistics encompass the physical movement of from production facilities to end consumers, emphasizing , cost-effectiveness, and reliability. The logistics industry exhibits strong cyclicality, driven by fluctuations in global trade volumes and freight rates aligned with broader economic cycles, impacting demand for transportation and related services. This process relies on selecting appropriate transportation modes and distribution strategies to align with demands, such as delivery speed, volume, and geographical coverage. Optimization techniques and technologies further enhance these operations by minimizing delays and expenses while addressing inherent risks. The primary modes of transportation in logistics include road, rail, air, sea, and intermodal combinations. Road transport, primarily via trucks, offers flexibility for short- to medium-distance hauls and last-mile delivery due to its extensive network and door-to-door accessibility, though it is susceptible to traffic congestion and higher per-unit fuel costs. Rail transport excels in bulk, long-distance movement of heavy commodities like coal or containers, providing lower costs per ton-mile compared to road but requiring fixed infrastructure and intermodal transfers. Air transport is the fastest mode for high-value or time-sensitive goods, such as electronics or perishables, but incurs the highest costs and is limited by payload capacity and airport dependencies. Sea transport, including ocean shipping, dominates global bulk cargo like oil or grains, offering economies of scale for international routes yet facing delays from port congestion and weather. Intermodal transportation integrates these modes—such as sea-rail or road-rail—using standardized containers to optimize cost and efficiency, as seen in combined sea-road-railway systems for transcontinental freight. Distribution strategies streamline the flow of within these modes to reduce handling and storage time. involves unloading incoming shipments from suppliers and immediately loading them onto outbound with minimal or no storage, typically less than 24 hours, to accelerate just-in-time deliveries and lower costs. Milk runs employ a sequential route where a single collects from multiple suppliers and delivers to various destinations, optimizing vehicle utilization for regional distribution but potentially increasing travel time for remote locations. Last-mile delivery focuses on the final leg from a to the , often using smaller or to navigate urban areas, where challenges like inaccuracies and traffic amplify costs, which can account for up to 50% of total logistics expenses. These strategies integrate with broader networks by facilitating seamless handoffs at key nodes. Optimization of transportation and distribution involves route planning, load balancing, and carrier selection to minimize operational inefficiencies. Route planning uses algorithms to determine the shortest or least costly paths, considering factors like traffic and delivery windows, often addressing the (VRP), which seeks efficient routes for a fleet serving multiple locations while respecting capacity and time constraints. Load balancing ensures vehicles are filled to optimal capacity without exceeding limits, reducing empty miles and fuel waste through techniques like consolidation. Carrier selection evaluates providers based on reliability, rates, and service levels, often via or metrics to match specific shipment needs. These methods, such as capacitated VRP for load limits or VRP with time windows for scheduled deliveries, can reduce transportation costs by 10-20% in practice. Key costs in transportation include , which fluctuates with prices and can represent 30-40% of operating expenses, labor for drivers and handlers amid shortages and pressures, and environmental factors like emissions regulations imposing fines or carbon taxes. Risks encompass delays from or breakdowns, , and supply disruptions, potentially increasing costs by 15-25%. Mitigation strategies, such as shipment consolidation—combining multiple loads into fewer vehicles—lower per-unit and labor expenses while reducing emissions through fewer trips. Technologies like RFID and enable real-time tracking and oversight in transportation. RFID tags attached to provide automated identification and location data during transit, supporting routing adjustments and reducing errors in distribution centers. systems, using GPS and sensors in vehicles, deliver live updates on position, speed, and conditions, facilitating and theft prevention to enhance overall efficiency. As of 2025, advancements include electrified fleets and autonomous vehicle pilots to address and labor challenges. Heavy-duty electric trucks, such as battery-electric models, are increasingly adopted for regional logistics, with global sales projected to grow rapidly due to declining battery costs and improved charging . The , an all-electric Class 8 truck, has demonstrated strong performance in pilots, achieving 1.55 kWh per mile efficiency in real-world tests by ArcBest in July 2025, with also conducting pilots demonstrating strong performance, matching diesel counterparts in over-the-road operations while cutting emissions. Autonomous vehicle integrations remain in testing phases, focusing on highway pilots to optimize routes and reduce driver fatigue.

Warehousing and Inventory Management

Warehousing and inventory management form the backbone of logistics operations, enabling the efficient storage, tracking, and distribution of goods while minimizing costs associated with excess stock or shortages. These functions ensure that products are available when needed, bridging the gap between production and consumption in supply chains. Effective warehousing optimizes space and flow, while inventory management employs models and systems to balance holding costs against ordering and shortage risks. Advances in technology, particularly in warehouse management systems (WMS), have further enhanced accuracy and responsiveness. Various warehouse types cater to specific logistical needs. Automated storage warehouses utilize robotic systems and automated guided vehicles (AGVs) for high-density storage and retrieval, reducing manual labor and increasing throughput in high-volume environments. Cross-dock facilities focus on rapid transfer of goods from inbound to outbound transport with minimal storage time, often lasting less than 24 hours, to streamline distribution and reduce inventory holding costs. Fulfillment centers, tailored for , emphasize order picking, packing, and direct shipping to end customers, integrating with online platforms for real-time order processing. Inventory models provide frameworks for optimizing stock levels. ABC analysis classifies inventory items into categories A, B, and C based on their value and usage frequency, applying the where A items (high-value, low-quantity) receive rigorous control, B items moderate attention, and C items basic tracking to allocate management efforts efficiently. Just-in-time (JIT) inventory minimizes stock by synchronizing deliveries with production or sales needs, reducing waste and storage costs but requiring reliable suppliers and precise scheduling. The (EOQ) model calculates the ideal order size to minimize total costs from ordering and holding . The EOQ derivation starts with the total cost function: TC(Q)=DQS+Q2HTC(Q) = \frac{D}{Q} S + \frac{Q}{2} H where DD is annual demand, QQ is order quantity, SS is ordering cost per order, and HH is holding cost per unit per year. To find the minimum, take the with respect to QQ: dTCdQ=DSQ2+H2=0\frac{dTC}{dQ} = -\frac{D S}{Q^2} + \frac{H}{2} = 0 Solving yields: DSQ2=H2\frac{D S}{Q^2} = \frac{H}{2} Q2=2DSHQ^2 = \frac{2 D S}{H} Q=2DSHQ = \sqrt{\frac{2 D S}{H}}
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