Logistics management is a branch of operations management that deals with the systematic planning, control, and execution of processes involved in the transfer of goods or services from one point to another.
Transportation management deals with finding the cheapest, fastest, and most reliable way to transfer goods or services.
For example, companies delivering goods do not simply hop on a van or a truck and drive from Point A to Point B. To ensure efficiency, they carefully plan the whole transportation process in advance taking into consideration things like weather forecasts, traffic rerouting, and other sources of potential delays. They also decide on which mode of transport (motorcycle, van, truck, train, ship, plane) would be best for a particular batch of deliveries based on the distance expected to be traveled and the total amount or weight of the cargo that needs to be transported.
Warehouse management deals with the monitoring and control of goods before they are dispatched for transport. Depending on whether the warehouse is exclusively used by the company that owns it or rented out to third parties that do not have warehouses of their own, warehouse management may involve buying the goods that need to be stocked, ensuring that they are properly stored (perishable goods are stored in storage facilities with the right temperature settings, sensitive electronics are kept away from sources of dust and heat), ensuring that they are safely packed before being dispatched (fragile materials are packed with protective wrappings to prevent breakage), and ensuring that everything is accounted for (number of ordered items matches the number of delivered goods, total number of damaged goods is properly recorded).
Order Fulfillment deals with the systematic handling of purchase orders starting from the time the customer or potential customer inquired about the company’s goods or services up to the time they were finally received by the client.
This may include supplying customers with information that can help customers decide what products to buy and in what quantity, confirming the details of the order and forwarding it to the appropriate department for processing, sending the bill to the client, shipping the purchased item, tracking the progress of the delivery, confirming that the item has been received, collecting the payment agreed upon (may be collected before or after the receipt of item), and in the case of damaged goods, the processing of a replacement product.
As of 2015, DHL is the largest logistics company in the world in terms of revenues, reporting more than 59 Billion Euros in profits for the said year with almost 500,000 employees across their more than 220 offices around the world.
Target, the second largest discount retailer in the United States after Walmart, owns one of the largest warehouses in the world. Its import warehouse in Washington is built on a 2 million square feet (185, 800 square meters) lot and handles large shipments of overseas imports — sending the merchandise to regional distribution centres around the United States.
Amazon is a retail giant known for its online stores. For Cyber Monday (November 30) 2015 alone, Amazon was estimated to have processed 500 orders per second in their 13 fulfillment centers scattered across the United States. Because of the sheer size of their fulfillment centers and the huge volume of orders that they process everyday, Amazon has been known to use special robots in order to speed up processing time.
Resources for Further Reading
- Logistics Management: An Overview
- Video: What is Logistics Management
- Retail Automation: A Look at Amazon’s Fulfillment Centers Where Robots Process Your Orders
- The Role of Transportation in Effective Logistics Management
- Logistics Managers: 7 Reasons That Make Them Valuable to Companies
- Why Logistics Efficiency is Getting More Important Than Ever: Facts and Figures