3.1 Definition of Terms

Organising distribution logistics starts with a clear grasp of what logistics is, the forms it takes and the elements it involves. This topic defines the key terms, explains the benefits, elements and types of logistics, and covers how goods are categorised and packaged for movement. These ideas underpin the choice of transport in 3.2 and the routing and scheduling of deliveries in 3.3.

Example: a cement manufacturer in Athi River organises inbound logistics for clinker and gypsum and outbound logistics for bagged cement sent to hardware stores across Eastern Kenya.

3.1.1 Logistics

Logistics is the planning, implementation and control of the efficient and effective flow and storage of goods, services and related information from the point of origin to the point of consumption, in order to meet customer requirements. It covers transport, warehousing, inventory, materials handling, packaging, order processing and information flow. Its aim is often summarised as the "seven rights": the right product, in the right quantity, in the right condition, at the right place, at the right time, to the right customer, at the right cost.

3.1.2 Inbound and Outbound Logistics

• Inbound logistics: The movement and storage of raw materials, components and supplies from suppliers into the organisation, including purchasing support, receiving, inspection, storage and issue to production or users.
• Outbound logistics: The movement and storage of finished goods from the organisation to customers, including order processing, warehousing, picking, packing, transport and delivery.

3.1.3 Internal and External Logistics

• Internal logistics: The movement, storage and handling of materials within the organisation's own premises, such as from the receiving bay to the store, from store to production lines and from production to the finished goods warehouse. It relies on materials handling equipment, layout and internal transport.
• External logistics: The movement of goods between the organisation and outside parties, that is, from suppliers into the organisation and from the organisation to customers, usually over public roads, rail, air or sea, by own or hired transport.

3.1.4 Mode of Transport

A mode of transport is the means or medium by which goods or people are moved from one place to another, distinguished by the route used: land (road, rail and pipeline), water (sea, lake and river) and air. The modes, their advantages and disadvantages, and how to choose among them are covered in 3.2.

3.1.5 Benefits of Logistics

• Customer satisfaction: Reliable, timely and accurate deliveries.
• Cost reduction: Efficient transport, storage and handling lower total costs.
• Availability of goods: Goods are available where and when needed, avoiding stock-outs.
• Reduced damage and loss: Proper handling and packaging protect goods.
• Competitive advantage: Fast, dependable service distinguishes the organisation.
• Wider market reach: Effective logistics allows serving distant and international markets.
• Better coordination: Links suppliers, production, sales and customers.
• Efficient use of capital: Lower inventories free cash for other uses.

3.1.6 Elements of Logistics

• Transportation: Movement of goods between locations.
• Warehousing and storage: Holding goods safely until needed.
• Inventory management: Controlling stock levels to balance service and cost.
• Materials handling: Moving goods within facilities using manual and mechanical equipment.
• Packaging: Protecting, containing and identifying goods.
• Order processing: Receiving, checking and fulfilling customer orders.
• Information and communication: Data that coordinates all logistics activities.
• Demand forecasting: Estimating future requirements to plan logistics.
• Reverse logistics: Handling returns, recalls, reusable packaging and waste.

3.1.7 Types of Logistics

• Inbound logistics: Bringing materials into the organisation (see 3.1.2).
• Outbound logistics: Delivering finished goods to customers (see 3.1.2).
• Reverse logistics: Moving goods back from customers for return, repair, reuse, recycling or disposal.
• Production logistics: Moving materials through the production process.
• Distribution logistics: Managing the network of warehouses and transport used to supply customers.
• Third-party logistics (3PL): Outsourcing logistics activities such as transport and warehousing to a specialist provider.
• Fourth-party logistics (4PL): A provider that manages the whole supply chain, including other logistics providers, on behalf of the client.
• E-commerce logistics: Handling and delivering online orders, often small parcels to individual customers.
• Humanitarian logistics: Moving relief supplies to people affected by disasters and emergencies.
• Cold chain logistics: Temperature-controlled storage and transport of perishable and sensitive goods such as vaccines, dairy and fish.

3.1.8 Categorization of Goods for Logistics

Goods are grouped by characteristics that affect how they are stored, handled, packed and transported.

• Perishable goods: Food, flowers and pharmaceuticals with limited shelf life, often needing cold chain.
• Fragile goods: Glassware, electronics and instruments needing careful handling and cushioning.
• Hazardous (dangerous) goods: Fuels, gases, chemicals and explosives, requiring special labelling, packaging, licensed carriers and documentation.
• Bulk goods: Unpackaged goods such as grain, cement, fuel and fertiliser, moved in tankers, silos or bulk carriers.
• General cargo: Packaged goods in cartons, bags, drums or pallets.
• High-value goods: Jewellery, electronics and currency, needing secure transport and insurance.
• Oversized and heavy goods: Machinery and structural steel needing special vehicles and permits.
• Live animals: Livestock and day-old chicks needing ventilation, feeding and welfare arrangements.
• Temperature-sensitive goods: Vaccines and some chemicals needing controlled temperature.

3.1.9 Factors to Consider in Selecting the Logistics Method

• Nature of the goods: Perishability, fragility, hazard, size, weight and value.
• Cost: Transport, storage and handling costs compared with the value of the goods.
• Speed and urgency: How quickly goods are needed.
• Distance and destination: Local, regional or international, and accessibility of the destination.
• Volume and frequency: Quantity per shipment and how often shipments are made.
• Reliability: Dependability of the method and the provider.
• Security: Risk of theft and damage on the route.
• Infrastructure: Roads, rail, ports, airports and handling facilities available.
• Customer requirements: Delivery time windows and service expectations.
• Legal and regulatory requirements: Licences, permits and documentation needed.
• In-house capacity: Own fleet and warehouses compared with outsourcing to a 3PL.

3.1.10 Role of Packaging in Logistics

• Protection: Shields goods from damage, moisture, contamination and temperature changes during handling and transport.
• Containment: Holds goods together, especially liquids, powders and small items.
• Unitization: Groups items into standard units for efficient handling and stacking.
• Identification: Labels, barcodes and markings show contents, destination and handling instructions.
• Handling efficiency: Shapes and sizes suited to pallets, vehicles and equipment.
• Security: Tamper-evident seals and strapping deter pilferage.
• Space utilisation: Well-designed packs make full use of vehicle and warehouse space.
• Compliance: Meets legal requirements for hazardous goods and food.

3.1.11 Factors to Consider When Packaging Goods for Logistics

• Nature of the goods: Fragility, perishability, weight, shape and hazards.
• Mode of transport: Sea freight needs moisture protection; air freight needs light packaging.
• Distance and handling: Long journeys with many transfers need stronger packaging.
• Cost: The cost of packaging relative to the value of the goods and the risk of damage.
• Climatic conditions: Heat, humidity and rain along the route.
• Legal requirements: Labelling and packaging rules for hazardous goods, food and exports.
• Customer requirements: Pack sizes, labelling and returnable packaging.
• Environmental impact: Recyclable, reusable and biodegradable materials, and Kenya's restrictions on plastic bags.
• Storage requirements: Stackability and stability in the warehouse.

3.1.12 Types of Packaging of Goods in Logistics

• Primary packaging: The packaging in direct contact with the product, such as bottles, tins and sachets.
• Secondary packaging: Groups primary packs together, such as cartons and shrink-wrapped trays.
• Tertiary (transit) packaging: Used for bulk handling and transport, such as pallets, stretch-wrap and crates.
• Pallets: Wooden or plastic platforms on which goods are stacked for forklift handling.
• Crates and boxes: Wooden or plastic containers for heavy, fragile or returnable goods.
• Sacks and bags: Woven polypropylene or jute bags for grain, cement and fertiliser.
• Drums and barrels: Steel or plastic drums for liquids and chemicals.
• Intermediate bulk containers (IBCs): Large reusable tanks or bulk bags for liquids and granular goods.
• Shipping containers: Standard 20-foot and 40-foot steel containers for sea, rail and road transport.
• Insulated and refrigerated packaging: Cool boxes and reefer containers for temperature-sensitive goods.