Logistics

How can logistics be defined?

In logistics, everything revolves around the use and control of flows of goods and information. In this context, the main task of logistics is to plan, coordinate and control the value chain in order to make the execution of the necessary processes as efficient as possible.

Each stage of the value chain entails new logistics activities. Therefore, logistics can also be divided into different components. For a better overview, the terms are based on the respective process steps. These include: procurement logistics, production logistics, distribution logistics and disposal logistics. The first three areas form a logistics chain from the procurement of raw materials to the shipment of the goods. However, disposal logistics is a continuous process along the entire chain, which is important for the waste generated in the other logistics areas.

Objectives of logistics

The goals of logistics are diverse. Among other things, it must be ensured that materials, goods, people and information are properly procured, transported, stored, provided and distributed. In addition, all processes are to be constantly optimized, managed and controlled, and costs are to be reduced as far as possible. As a summary of the goals of logistics, the Seven Rights definition has become accepted, according to which logistics ensures that

the right good
in the right quantity
in the right state
in the right place
at the right time
for the right customer
at the right cost

is available.

Subsections of logistics

Procurement logistics

Procurement logistics links the distribution logistics of the company's suppliers with the company's own internal production logistics. It deals with the purchase of raw materials and parts, as well as the selection of the appropriate supplier, ordering, transportation and initial storage. In addition, the quality inspection of these materials and the monitoring of the punctuality of all suppliers and service providers also fall within the scope of responsibility of a procurement logistician. Procurement logistics also provides the goods, to ensure production starts smoothly.

Production logistics

Production logistics follows procurement logistics and comes before distribution logistics. The main focus is on the control and optimization of transport routes and production. It ensures that materials flow smoothly from the raw materials warehouse to the finished goods warehouse. This includes the planning, control and execution of the transport and storage of all materials, raw materials, auxiliary materials and spare parts. Also included is the lowering of manufacturing and warehousing costs and the associated calculation of the supply of goods as well as the reduction of inventories.

Distribution logistics

In the next step of the logistics chain, the goods or information are shipped or transmitted. This is where distribution logistics, also known as sales logistics, comes into play. Distribution logistics ensures that all finished goods arrive at the consignee's premises on time and without damage and covers all storage, handling and transport processes between completion and final acceptance. In addition, reducing the amount of packaging and optimizing the delivery service also play an important role.

Disposal logistics

Disposal logistics is an ongoing process along the entire value chain, as packaging material or other remnants are always produced. It is distinguished from the other subsectors by the fact that it does not transport manufactured goods, but all kinds of leftovers that are generated during the production process. These must be disposed of or recycled properly and efficiently. Before that, they are collected, stored, sorted and packed by the disposal logistics. Disposal logistics then deals with the questions of how waste is transported and how costs and emissions can be reduced. The focus is on ecological disposal with the aim that waste can be reused after recycling.

Differentiation from fulfillment

In summary, logistics is the planning, organization, control and handling of material and good flows as well as the associated information flows. The goal is always high performance, quality and cost reduction.

Fulfillment, on the other hand, deals with all activities that occur after the contract has been concluded in order to ensure delivery to the customer and to fulfill all other contractual obligations. The following terms must be distinguished in order fulfillment, service fulfillment and omnichannel fulfillment. Learn more here.

Back to glossary overview

This might also interest you

CEP service

The term CEP service covers courier, express and parcel service providers. The difference compared to other shipping methods is that there are restrictions on volume and weight.

Learn more

Warehouse Management System

A warehouse management system is a software-based solution for managing warehouses and controlling material flows.