Logistics

What are 'Logistics'

Logistics is 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.

BREAKING DOWN 'Logistics'

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.

RELATED TERMS
  1. Contract Logistics

    The outsourcing of resource management tasks to a third-party ...
  2. Distribution Management

    Overseeing the movement of goods from supplier or manufacturer ...
  3. Supply Management

    A broad term describing the various acts of identifying, acquiring ...
  4. Value Chain

    A high-level model of how businesses receive raw materials as ...
  5. Supply Chain

    The network created amongst different companies producing, handling ...
  6. Transportation Sector

    A category of stocks relating to the transportation of goods ...
Related Articles
  1. Investing

    Making Sense Of Amazon's Move Into Logistics (AMZN)

    Amazon provided confirmation of its ambitions in logistics this week by signing a lease for 20 Boeing 767 jets from Air Transport Services Group (ATSG) for a period ranging from five to seven ...
  2. Markets

    How UPS Plans to Benefit from Its Coyote Acquisition

    Understand the business models of UPS and Coyote Logistics. Learn about the top four ways in which UPS will benefit from the acquisition of Coyote Logistics.
  3. Markets

    Explaining the Supply Chain

    A supply chain is the cumulative network involved in moving raw materials, components and finished products from original suppliers to end users.
  4. Professionals

    Why You Should Consider A Career In Supply Chain Management

    Supply chain managers ensure that increasingly global companies can coordinate distant sources of materials, labor, and manufacturing to successfully bring products to market.
  5. Entrepreneurship & Small Business

    What Is The Difference Between A Direct And An Indirect Distribution Channel?

    After a firm makes its products, it must find an efficient way to deliver them to a retail store or customer’s home. Distribution channels fill that role.
  6. Markets

    3 Stocks to Invest in the Oil Transportation Industry

    Learn about the oil and gas transportation industry, and discover some of the best oil transportation stocks for investors to consider.
  7. Markets

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  8. Insights

    Chevron Stock: Analyzing 5 Key Suppliers (CVX)

    Discover which companies are some of the biggest suppliers to Chevron and depend on their relationships with the company for their survival.
  9. Personal Finance

    Amazon Plans Ambitious Logistics Program (AMZN)

    After a dismal fourth-quarter earnings report showed rising shipping costs cut into profits, Amazon is planning to take on the world's shipping giants.
  10. Insights

    Target Tells Suppliers To Move Faster Or Pay-Up (TGT)

    Target has begun cracking down on its vendors in an attempt to increase its supply chain efficiency, says a report.
RELATED FAQS
  1. What is the difference between a value chain and a supply chain?

    Understand the difference between a value chain and a supply chain. Learn why a company would want to maximize the value ... Read Answer >>
  2. How does a strong value chain management team help a company?

    Understand what makes up a company's value chain and the point of a value chain. Learn how a strong value chain management ... Read Answer >>
  3. How can I use value chain analysis to evaluate investment decisions?

    Understand how an investor can use value chain analysis to evaluate an investment decision. Learn what activities add value ... Read Answer >>
  4. What are the primary activities of Michael Porter's value chain?

    Understand the primary activities of Michael Porter's value chain, and learn how a company can optimize those activities ... Read Answer >>
  5. How are distribution channels generally organized?

    Find out how distribution channels are commonly organized, and learn about the most important elements in the distribution ... Read Answer >>
  6. How can a company control its holding costs?

    Learn about the specific costs that go into a company's overall inventory holding costs, and understand how a company can ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center