Why Is Logistics Important? What It Is and What It Does

Logistics is a field of business management whose main role is to make sure materials and products are available wherever they’re needed, efficiently and at the lowest possible cost.

The work done in logistics is vital to how society functions, since nearly every company or institution depends on it to operate fully and efficiently.

In this article, we explain what logistics is, why it matters, and its main types.

What is logistics, and why does it matter?

It’s hard to imagine today’s world without logistics, yet not everyone knows what the term means or what the function is responsible for. To understand why it matters, let’s first define it.

What is logistics?

Logistics is the business function responsible for running the supply chain. It enables both the production of goods and their availability to consumers. To do that, it covers activities such as:

• procurement;
• transportation;
• warehousing;
• packaging;
• distribution;
• delivery.

It’s there when raw materials are shipped to a factory, when they’re stored and moved inside the plant, and when finished, packaged products are sent to the right distribution channels, within reach of the end consumer.

That’s the classic example, but logistics goes far beyond retail. It’s essential to manufacturing, hospitals, e-commerce, supermarkets, and any business that works directly or indirectly with materials or products.

What is the main goal of logistics?

The main goal of logistics is to get the right products to the right place at the right time and at the lowest possible cost. To get there, logistics teams constantly look for ways to make processes more efficient, which delivers benefits such as:

• higher productivity;
• better-quality operations;
• lower costs;
• greater customer satisfaction.

What are the types of logistics?

Logistics is usually divided into four main areas, based on the stage of the supply chain it covers:

• inbound (procurement) logistics: purchasing, receiving, and storing raw materials and supplies;
• production logistics: moving materials inside the plant, from inventory to the production line to finished goods;
• distribution (outbound) logistics: storing, shipping, and delivering finished products to customers;
• reverse logistics: bringing back products, packaging, and waste through returns, exchanges, or end-of-life collection.

Why is logistics important for businesses?

Logistics brings together know-how, practices, and innovation that make processes higher-quality, more efficient, and faster, always with an eye on cutting costs. That’s why good logistics planning can make all the difference in any business’s performance.

Logistics spans the entire production cycle, from receiving raw materials to delivering finished products to retailers or consumers. That broad view makes it possible to spot problems and opportunities for improvement across every process.

Why does logistics matter in our everyday lives?

As we’ve seen, logistics is essential to how society works, giving us access to all kinds of products and services.

From the gloves your doctor wears during an exam to the fresh bread you pick up in the morning, everything depends on logistics to be produced and to reach the right place.

But logistics does more than that. Beyond making all of this available, it aims for better service, with a direct impact on our shopping experience.

For example, when it’s very expensive to store or ship a raw material, production costs rise, and that shows up in the price the end consumer pays.

That’s where logistics’ constant drive for better processes comes in: lowering storage costs and optimizing transportation through more efficient route planning to achieve the cost savings businesses need.

Technology: what makes logistics more efficient

It’s almost impossible to imagine the world without logistics. After all, it’s what keeps the supply chain running and gives consumers access to what they need, when and where they need it.

The more efficient a company’s logistics, the better its operations, the lower its costs, and the happier its customers. And much of that efficiency comes from technology.

Maplink Cloud has spent more than 25 years bringing together geolocation, cloud, and data intelligence for companies across Latin America:

• with Platform APIs such as Planning, Trip, Toll, and Tracking, you can plan routes, calculate tolls, and track deliveries;
• with Google Maps Platform, you can bring maps, addresses, and routes into your systems and apps;
• with Google Cloud, you can bring together and analyze your operational data to make better decisions.

As a Premier Partner for Google Cloud and Google Maps Platform, we integrate these solutions with your TMS, ERP, or WMS through Maplink Cloud Managed Services, working alongside your IT team.

We support companies that lead their markets, including Mercado Libre, Despegar, Gol Linhas Aéreas, Nestlé, and BRF. [validate client list]

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