Sounds complicated, doesn’t it? The world of shipping is full of complex terms and words that often sound like an alien language. For someone coming from an entirely different background into the eCommerce world, he/she will find it a complicated task to understand the terms like “logistics” and “supply chain”.
So why not declutter the whole thing for you? Let’s get to the bottom of these complex logistics terms and understand the significance of supply chain management in logistics management via this blog.
What is Logistics Management?
Logistics management is the behind-the-scenes hero of any business that deals with physical products. It’s the process of planning, implementing, and controlling the efficient flow of goods, services, and related information from the point of origin (like a factory or warehouse) to the end customer.
Also Read: what is a logistics company
Imagine ordering a smartphone online. You click “Buy Now,” and a few days later, it lands at your doorstep. But what happens in between is not magic—it’s logistics. The company has to figure out where to pick the phone from, how to pack it, which delivery partner to choose, how to track it, and finally, how to ensure it reaches you safely and on time.
Logistics management covers a wide range of tasks, including:
- Inventory Management – Keeping track of what’s in stock and what needs to be restocked.
- Warehousing – Storing products in an organised way to ensure they’re easy to retrieve and ship.
- Transportation – Choosing the best way to move products, whether by truck, train, plane, or ship.
- Order Fulfilment – Making sure the right product goes to the right person, correctly packed and labelled.
- Delivery and Returns – Getting the product to the customer and handling it if it comes back.
Efficient logistics management helps companies save money, reduce delivery times, and improve customer satisfaction. In today’s fast-paced eCommerce world, where customers expect quick and reliable delivery, logistics has become a critical part of business success.
What are the Types of Logistics?
Logistics isn’t one-size-fits-all—it covers various activities depending on what stage a product is in, who it’s moving between, and whether it’s coming or going. Here are the primary types:
1. Inbound Logistics
Inbound logistics refers to the process of receiving goods and materials into a business. This includes the transportation, storage, and delivery of raw materials, parts, or finished goods from suppliers to your warehouse or manufacturing unit.
Example:
A clothing manufacturer ordering fabric, zippers, and buttons from suppliers and having them delivered to its factory is managing inbound logistics.
Key Activities:
- Sourcing and procurement
- Transport from suppliers
- Inventory receiving and inspection
- Storage and warehousing
2. Outbound Logistics
Outbound logistics deals with how finished products move out of a business and reach the end customer. It involves packaging, warehousing, transportation, and delivery.
Example:
An online store shipping a pair of sneakers to a customer in another city is performing outbound logistics.
Key Activities:
- Order processing
- Packaging
- Shipping and last-mile delivery
- Managing returns and reverse logistics
3. Reverse Logistics
Reverse logistics is the process of moving goods backwards in the supply chain—usually from the customer back to the seller or manufacturer. This happens in cases of returns, repairs, recycling, or disposal.
Example:
When a customer returns a damaged or unwanted product, the process of collecting it, inspecting it, and restocking or recycling it falls under reverse logistics.
Key Activities:
- Product returns
- Refurbishing or recycling
- Waste management
- Warranty recovery
4. Third-Party Logistics (3pl)
Third-party logistics refers to outsourcing logistics operations to an external service provider. A 3pl company handles warehousing, transportation, order fulfilment, and more, allowing businesses to focus on sales and growth.
Example:
An eCommerce brand using NimbusPost to store products and handle deliveries is using 3pl services.
Key Activities:
- Warehousing and inventory management
- Transportation and freight forwarding
- Order fulfillment
- Tracking and reporting
5. Fourth-Party Logistics (4pl)
Fourth-party logistics is one step beyond 3pl. A 4pl provider manages the entire supply chain, often including multiple 3PLs. They offer strategic oversight, technology solutions, and end-to-end logistics coordination.
Example:
A large enterprise is hiring a 4pl company to oversee logistics, IT systems, and vendor management across countries.
Key Activities:
- Supply chain consulting
- Technology integration
- Vendor management
- Logistics strategy planning
6. Distribution Logistics
Distribution logistics focuses specifically on how products are distributed from central warehouses or distribution centres to retail locations or end-users. It’s all about optimising delivery routes, load planning, and service speed.
Example:
A food delivery aggregator ensures fresh produce reaches grocery stores or restaurants quickly and safely.
Key Activities:
- Route planning
- Transportation scheduling
- Load optimization
- Delivery tracking
7. Production Logistics
Production logistics deals with the flow of materials and components within a manufacturing facility. It ensures that every piece reaches the assembly line at the right time to avoid delays or downtime.
Example:
In an automobile factory, ensuring that tires, engines, and seats reach their respective assembly points at the right moment is production logistics.
Key Activities:
- Internal material flow
- Inventory control during production
- Scheduling manufacturing inputs
- Waste reduction
8. Green Logistics
Green logistics focuses on making logistics operations environmentally sustainable. It includes reducing carbon emissions, using eco-friendly packaging, and optimising routes to save fuel.
Example:
A delivery company is switching to electric vehicles and using recyclable packaging to reduce its environmental impact.
Key Activities:
- Route optimisation to reduce emissions
- Sustainable warehousing practices
- Eco-friendly transportation
- Waste reduction and recycling
Difference Between Logistics And Supply Chain Management
The terms “logistics” and “supply chain management” are often used interchangeably, but they refer to different things. Understanding the difference is key to seeing how businesses operate on a broader scale.
Logistics: The Movement of Goods
Logistics is mainly focused on the movement and storage of goods. It answers questions like:
- How will the product be delivered?
- Where should we store the inventory?
- Which delivery method is the fastest or cheapest?
- How can we reduce delays in shipping?
In short, logistics is more operational. It’s the part of the business that handles the transportation, warehousing, inventory, and delivery of goods.
Also Read: top logistics software solutions for business
Supply Chain Management: The Bigger Picture
Supply chain management (SCM), on the other hand, is a much broader concept. It covers every stage of the product journey, starting from sourcing raw materials, manufacturing, packaging, logistics, and finally reaching the end customer. SCM also involves coordination between multiple players—suppliers, manufacturers, warehouses, logistics providers, and retailers.
Supply chain management is about strategy and collaboration, not just execution. It involves long-term planning, relationship management, cost optimisation, and risk mitigation.
Here’s a simple analogy:
- If logistics is like driving a car to deliver pizza, then supply chain management is planning the whole restaurant business—getting the ingredients, making the pizza, managing the kitchen staff, and ensuring every customer gets their order fresh and on time.
Let’s Understand The Importance of Logistics Management In Supply Chain Management
Now that we’ve seen how logistics fits into the larger supply chain, let’s explore why logistics management is so crucial. Simply put, even the best business strategy can fail if logistics isn’t managed properly.
Here are a few reasons why logistics plays a key role in the supply chain:
1. Enhances Customer Satisfaction
In the age of same-day deliveries and real-time tracking, customers have higher expectations than ever. Efficient logistics management ensures that products are delivered on time, in good condition, and to the right place. This leads to happier customers, repeat purchases, and positive word-of-mouth marketing.
2. Reduces Operational Costs
Good logistics management helps businesses avoid unnecessary expenses. For example, storing too much inventory leads to higher warehousing costs, while inefficient delivery routes waste fuel and time. By optimising routes, improving packaging, and managing inventory better, logistics can save a company a significant amount of money.
3. Improves Supply Chain Visibility
Modern logistics uses technology like GPS tracking, warehouse automation, and real-time inventory systems. This gives businesses better visibility into their operations, knowing exactly where a product is, how long delivery will take, and what needs to be restocked. This visibility allows businesses to respond quickly to changes in demand or supply chain disruptions.
4. Supports Business Growth
As businesses scale up, the complexity of logistics increases. A strong logistics system provides the foundation needed to expand to new markets, serve more customers, and offer better delivery options. Whether it’s a local delivery startup or a global eCommerce giant, logistics management is what turns growth plans into reality.
5. Minimises Risks and Delays
Unexpected events like bad weather, supplier delays, or transportation issues can affect deliveries. A well-managed logistics system includes contingency plans and backup solutions to handle such challenges smoothly, reducing the impact on the overall supply chain.
6. Builds Competitive Advantage
In today’s market, businesses are not just competing on price or product quality—they’re also competing on delivery speed and reliability. Companies with strong logistics management can offer better delivery timelines, flexible shipping options, and smoother return processes, which gives them an edge over competitors.
Conclusion
Integrated logistics management is no longer just a back-end function—it’s a vital part of business success. From ensuring smooth deliveries to cutting costs and delighting customers, logistics plays a major role in the overall supply chain. Understanding the difference between logistics and supply chain management helps businesses strategise better and operate more efficiently.
In short, if the supply chain is the body of a business, logistics is its beating heart—pumping products where they need to go, when they need to get there.
To make your eCommerce shipping hassle-free, NimbusPost leverages the power of technology to streamline your shipping and logistics process via an integrated platform. To learn more, sign up for free today!
FAQs
What is the scope of logistics?
Logistics covers the entire flow of goods—from sourcing raw materials to delivering finished products and handling returns. It includes procurement, transportation, warehousing, inventory, distribution, and even after-sales support.
What is the main point of logistics?
The main goal of logistics is to deliver the right product, to the right place, at the right time, in the right condition and at the lowest possible cost.
