How Logistics Functions ? 6 Major Functions of Logistics.

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Logistics is a process of movement of goods across the supply chain of a company. However, this process consists of various functions that have to be properly managed to bring effectiveness and efficiency to the supply chain of the organization.

Logistics Functions

Order processing

The logistics operations begin with the processing of the order which may be the business department’s job in an organisation. The business department verifies that the payment and delivery conditions have been fulfilled and the order is subsequently processed by the firm.

The team that puts orders for the commercial customers works hand-in-hand with the warehousing crew. A commercial team informs the warehouse that the client has placed an order of 15 units and has to be filled.

In many businesses, the warehouse inventory is deducted when calculating the commercial revenue. A commercial team’s affirmative authorization for a buy order of 15 units means that 15 units will be withdrawn from the inventory to ensure that the purchasing of more units does not occur. Every incorrect entry in this stage of the logistics process affects the whole process.

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Inventory Management & Control

There are inventory choices connected with warehousing that are critical for the effectiveness of physical delivery, especially when inventory costs are as high as 30%-40%. (e.g., automobiles and steel). That is why the new idea of just-in-time inventory is gaining traction with a growing number of businesses.

Inventory level is calculated taking into consideration the demand for the product. It is essential to have a good handle on demand in order to keep inventory demand in check and manage inventory expenses.

This ensures that inventory costs and supply to consumers are kept at a constant level, while also keeping output consistent.

The following variables significantly influence the list level:-

  • The firm’s philosophy on customer service and the degree of accuracy with which sales forecasts are made.
  • Feedback from the delivery system, i.e., the system’s ability to communicate inventory, is needed to ensure that the manufacturer receives the goods on time.
  • The cost list contains both fixed expenses (such as storage, capital tying up, and depreciation) and replenishment costs.
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Warehousing is the process of keeping completed products until they are sold. It is critical to a business’s logistical operations. The success of an organization’s marketing is contingent upon making the right warehousing choice.
Today, warehousing is seen as a switching facility rather than as a repository for poor warehouse management. Warehousing is a critical area of decision-making in logistics.

The critical choices in warehousing are as follows:

  • Warehouse facilities are located across the United States.
  • The quantity of warehouses
  • Warehouse dimensions
  • Layout of the warehouse
  • The structure’s design
  • Warehouse ownership
Logistics Functions

Logistics Functions Logistics Functions


Now we’ll discuss one of the main logistical operations, one of the most resource-intensive and revenue-generating segments of logistics. Transportation is expensive for a simple reason: fuel. Fuel is expensive, whether it be petrol, diesel, or natural gas, and it is mostly used in transportation operations. This is why businesses invest millions to manage transportation costs, since transportation is one of the most variable expenditures for any business.

Transportation is the process of physically delivering products from the manufacturer to the distributor or dealer, as well as from the dealer to the ultimate consumer. Generally, businesses are engaged just until the distributor or dealer receives the product. Following that, the distributor is responsible for delivery to the final consumer. However, transportation is a cost to the dealer as well, reducing his profit – forcing the business to increase the dealer’s profit to offset his expenses.

The better a company’s storage and inventory management, the cheaper the company’s transportation costs. Scale economies are critical to transportation’s cost efficiency. FMCG companies used the “splitting the bulk” technique to decrease shipping costs and also to enhance the overall function of logistics.

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Logistical Packaging

Logistical or industrial packaging is a crucial component of a product’s physical distribution, since it has an effect on the logistical system’s efficiency. This is in contrast to product packaging, which is determined by marketing goals.

However, logistical packing is critical for damage prevention, material handling, and storage space optimization. The load utilisation has a significant impact on the cost of logistical packing.

Logistics Functions

Logistics Functions Logistics Functions


Physical distribution managers must stay current on inventory management, transportation, and warehousing.
For instance, each site needs continuous information regarding its present supply status, future commitments, and replenishment capacity.

Similarly, prior to selecting a carrier, it is necessary to get information about the availability of various means of transport, their costs, and their appropriateness for services and extra products.

It is necessary to provide information on warehousing, including space use, work schedules, and so forth.

To get all of the information stated before, efficiency will be heavily used in managing the information system, enhancing services, and evaluating overall delivery effectiveness.

Of course, estimating the cost of physical delivery is challenging. However, if the appropriate data is provided, it may be evaluated and significant savings can be realised.

Logistics Functions

Logistics Functions Logistics Functions

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