What is Logistics?

Logistics is many things and it’s one thing—the storage and movement of goods and services. Logistics encompasses tangible finished products, raw materials, and intangibles such as information. It includes inventory control and distribution. It’s been said logistics is having the right product in the right place at the right time.

Logistics was first used as a military term for moving troops and support to when and where they were needed. Business logistics, or supply chain management, isn’t that different.

Supply chain management can be divided into:
• Inbound logistics – Supplying raw materials and parts to manufacturing
• Outbound logistics – Transportation and storage of finished products

How Big is Logistics in America?

According to Select USA, “Spending in the U.S. logistics and transportation industry totaled nearly $1.3 trillion in 2011 and averaged 8.5 percent of annual gross domestic product (GDP). Analysts expect industry investment to correlate with growth in the U.S. economy.” To put this into perspective, the 1.3 trillion in annual GDP, produced by logistics in the USA, is larger than the entire annual GDP of Mexico – the 14th largest GDP in the world. This is BIG business.

What Does Logistics Include?

It’s a multifaceted and complex business. In its most basic form, logistics is transportation and storage. Transportation includes trucking, air freight, maritime shipping, and freight by rail. Storage is warehousing, fulfillment, inventory control, and material handling.

Does Logistics Affect Everyone?

Moving perishable food, medications, or raw materials within various time zones and geographic parameters isn’t only a challenge, it’s a necessity. Not having the materials needed to manufacture products can ruin a business and affect the entire economy, and running short on food or medicine can be life threatening. Logistics shouldn’t be taken for granted.

The next time you pick up a prescription, purchase a head of lettuce, or take delivery of a new vehicle, consider the magic of products being delivered precisely when and where you need them. That’s logistics. Are you employed in supply chain management? How do you define logistics?

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