What is Logistics Management? Definition from FreightRun.com

Posted On 22th January 2016

Logistics Management” or “supply chain management” is a perspective of business management with the goal of optimizing efficiency in the movement from raw materials to finished products with the goal of both increased profitability and also in the attempt to develop strategic advantages over the competition.

To these ends, logistics management focuses on planning, freight pricing, inventory optimization, process strategies, and ensuring that customer needs and orders are met.

There is a misconception that Logistics Management’s sole function is to reduce freight costs. Proper Logistics Management should enable superior planning and that should mean less expensive expedited shipments that blow up the budget because you must ship a pallet of material on a chartered jet or team-driven express trucker.

So Logistics Management does have the goal to reduce the incidence of expedited shipping since that cost is wasteful. But Logistics Management does not mean choosing the least expensive carrier every time; it means balancing that cost with the delivery requirements and on-time performance record of a particular carrier.

Logistics Management also can mean building a more robust “supply-chain” in the sense of being less fragile to inventory, production, port disruptions, weather, “Black Swans” (unexpected events), and disruptions due to labor strikes, and computer and cloud system breakdowns.

An overemphasis by Logistics Managers on cost reductions can make the supply chain vulnerable and unable to serve the customers and can severely damage the business. “Predictions” of orders based on, for instance, statistical studies or historical studies can be another source of fragility in the supply chain - they are apt to be radically wrong some years and so safeguards need to be built into the supply chain.

So logistics management done well involves excellent judgment and proper orchestration across the enterprise of all actors involved in transportation, production, distribution, and sales functions.