DEFINITION of 'Logistics'

The overall management of the way resources are obtained, stored and moved to the locations where they are required. Logistics management entails identifying potential suppliers and distributors; evaluating how accessible and effective they are and establishing relationships and signing contracts with the companies who offer the best combination of price and service. A company might also choose to handle its own logistics if it is cost-effective to do so.


This term originated in a military context, referring to how personnel acquire, transport and store supplies and equipment. In the business community, the term refers to how resources are acquired, transported and stored along the supply chain.

For example, in the oil and natural gas industry, logistics consists of the systems for gathering and transporting oil, including pipelines and trucks, along with storage and distribution facilities.

By having an efficient supply chain and proper logistical procedures, a company can cut costs and increase efficiency. On the other hand, a company with poor logistics will fail to meet customers' expectations and see its business suffer.

  1. Overall Turnover

    A synonym for total revenues, commonly used in Europe and Asia. ...
  2. Contract Logistics

    The outsourcing of resource management tasks to a third-party ...
  3. Assembly Service

    Combining a number of small shipments from multiple parties into ...
  4. Consignment

    An arrangement whereby goods are left in the possession of another ...
  5. Inventory Turnover

    Inventory Turnover is a ratio showing how many times a company's ...
  6. Just In Time - JIT

    An inventory strategy companies employ to increase efficiency ...
Related Articles
  1. Entrepreneurship

    5 UPS Tools to Help Your Small Business Go Global

    Understand small businesses' struggles and the types of tools they need to go global. Learn about the top five UPS tools that help small businesses go global.
  2. Savings

    The Pros and Cons of Buying on Amazon

    Learn how buying works with Amazon. Amazon has become the dominant player in online retail with its ruthless focus on lower prices and customer service.
  3. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  4. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  5. Markets

    The Amateur Investor's Guide To Analyzing Corporate Efficiency

    Find out how the amateur investor can measure the success of management.
  6. Entrepreneurship

    10 Breakout Ideas For Small Businesses

    If your business has hit a wall, we've got the answer to break through and increase sales and earnings.
  7. Investing

    Latin America’s Economic Forecast

    After a ten-year run, the economies of Latin America are in a decline. For sustainable, long-term growth, the region needs structural reforms.
  8. Economics

    Why the Euro Failed to Become the World's Reserve Currency

    Examine the current state of the U.S. dollar as the world's reserve currency; learn the major reasons why the euro has failed to replace it in that capacity.
  9. Economics

    The 4 Countries That Produce the Most Food

    Learn about the four food superpowers -- China, India, the United States and Brazil -- and what sets them apart from the rest of the world.
  10. Economics

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
  1. What are some advantages and disadvantages of value chain analysis?

    There are many advantages of value chain analysis, which all result in a company's ability to understand and optimize the ... Read Full Answer >>
  2. What metrics can be used to evaluate companies in the wholesale sector?

    The largest wholesale distribution industries include motor parts, commercial equipment, electronics, petroleum products, ... Read Full Answer >>
  3. What are the primary activities of Michael Porter's value chain?

    The primary activities of Michael Porter's value chain are inbound logistics, operations, outbound logistics, marketing and ... Read Full Answer >>
  4. How can I use value chain analysis to evaluate investment decisions?

    It is possible for an investor to use value chain analysis to evaluate an investment decision since analysis of a company's ... Read Full Answer >>
  5. How does a strong value chain management team help a company?

    A company's value chain allows it to create a competitive advantage over its competitors. A strong value chain management ... Read Full Answer >>
  6. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!