What’s the Difference Between Transportation and Logistics?
Transportation and logistics are both parts of the supply chain industry but aren’t necessarily synonymous. However, people not familiar with these industries usually use these words interchangeably. The two work together to ensure goods move from the source of raw materials to the customer’s door as finished products. But the two processes are not equal. A simplistic way of looking at this, would be to see transport as the muscle that moves things, while logistics is the thinking behind the actions of the muscle. Every business that must move people or goods must plan well for both. Partnering with a transportation and logistics company ensures these functions are in good hands.
An Overview of Transportation
Transportation is the process of moving goods and materials from one place to another. It is an essential part of the supply chain, and it helps to ensure that products are delivered to consumers quickly and efficiently. There are a variety of transportation methods available on land, sea and air.
An Overview of Logistics
Logistics is the process of organizing and managing the flow of goods and services from supplier to customer. This includes the planning and execution of the movement and storage of goods, as well as the associated information and communication systems.
What is the difference between logistics and transportation?
The differences are in the components of the two processes, and their role in business supply chains:
Transportation Concentrates on Managing Physical Delivery
Transportation concentrates on managing physical delivery of goods and services to meet different needs along the supply chain. It is the process of moving people or goods from one place to another by various means; ship, truck, rail, air etc. The components of effective transportation are:
Modes of Conveyance
This involves planning for the mobility and conveyance of freight. The mode could be rail, ship, truck, airplane, or any other means of moving freight from Point A to Point B.
This component plans for the support of modes of conveyance. For example, when a truck is moving from Point A to Point B, what routes will it take and where are the pit stops? These are the physical structures that support the supply chain.
This component looks at the nodes that connect to the transport function. Planning for it looks at efficiency and practicalities of the job. For example, why should a truck move from Point A to Point D, and bypass Points C and D?
Flow of Goods
Supply chains are only as good as the planning of the flow. What are the origins, intermediate and final destinations of the freight?
Logistics is About the Whole Process
The entire scope of logistics includes the study of all aspects of transport, distribution, and storage in order to achieve high levels of operational efficiency. Logistics is based on the fundamental concepts of process planning, inventory management, and order fulfillment.
These activities are closely related to each other and dependent on an overall mission plan that is continuously refined in response to business requirements. For efficiency, most businesses delegate all these functions to a transportation and logistics company.
The Dimensions of Logistics
Complex supply chains are often managed using two- or multi-dimensional logistics. The first of these dimensions is the geographical dimension, usually referred to as the “warehouse-to-wharf” dimension. This concerns the links in the supply chain between the warehouse and port facilities, e. g. the warehouse, the port and any transshipment points (stops in order to change transport modes) along the way.
The second dimension concerns transit or transportation modes along the supply chain. The transportation modes could be air, road, rail or sea. The planning of logistics should take into account such considerations as transit time, the cost of transport and service reliability.
The third dimension concerns the actual nature of the cargo itself. It could be physical goods, like a box of bricks or a truckload of timber, or financial assets like securities or cash.
The fourth dimension concerns the sales channel, i. e. the customers involved in the transaction. For example, when buying a delivery truck, the transportation providers (transporters) and final end users have to have an agreement about the kind of transport used.
Role of Transportation Under the Logistics Umbrella
The role of transport in the bigger process of logistics management is to move goods from the point of origin to the point of consumption.
The “transport” is the most crucial part of the whole process, not only because it carries all of the goods, but also because the proper management of transport has a big impact on the other processes. The other processes can be seen as enablers of the transport function.
Transport plays a central role in logistics management. However, it is only one cog in the larger goal of logistics of achieving fast and cost-efficient order fulfillment. In this sense, transport and logistics are inseparable. Any business that intends to keep its customers happy must perfect both processes. The surest way of getting it right is working with a skilled and experienced transport and logistics company.