Often we see many people use transportation and logistics interchangeably in their conversations. Maybe this is because they think that transportation management and logistics are the same. Over the years, I have tried to explain to many people that transportation and logistics are not the same but different in many ways.
Let me try to put it in the right perspective through this blog.
The logistics sector is much broader than the transportation industry. Why we call logistics management a sector is that it constitutes a number of industries such as transportation, e-commerce, warehousing, packaging, etc.
First of all, let us understand the meaning of the terms transportation, and logistics separately.
Transportation is a function as well as an industry that utilizes various transportation modes such as air, rail, road, water, and pipeline to move people, animals, and goods from one location to another. The transportation industry depends on infrastructure, vehicles, and operations to achieve its objectives. From time immemorial, people have always strived to innovate to reduce the time, cost, and effort in transportation.
The term Logistics was coined initially by the military. Logistics is the process of planning & managing resources about how to source, procure, store, and transport from origin to destination in an efficient manner, taking care of the information flow among all the stakeholders. The end objective of logistics is thus to ensure the product is delivered by its raw material, semi-finished or finished, at the right time, right quantity, right cost, right condition, and right quality. The functions of logistics are demand planning, inbound & outbound transportation, warehousing or storage, inventory management, material handling, order fulfillment, inventory management, packaging, and fleet management.
Now, what is the difference between transportation and logistics?
The main difference is that while logistics requires planning to move, store the products and transportation executes the physical movement of products using either a single mode or multiple modes of transportation. As you can see, transportation is a subset of logistics, which uses transportation to move the product from point A to point B. To make it clearer, let us consider logistics as the brain to manage the flow of goods & related information of a supply chain management and transportation as the muscle that executes the flow of goods.
Let us conclude by summarising that transportation and logistics are two entirely different & intermingled sectors that play an important role in the most efficient and effective way to move goods to achieve the objectives of the supply chain they are part of.