The Logistics Revolution and Transportation

Abstract

A third of a century ago, management guru Peter Drucker called logistics the last great unexplored continent of business. This is no longer true. While transportation is the largest component of logistics, ordering costs, carrying costs, warehousing costs, and administrative costs are nontrivial. Corporations and academics now have departments to handle the logistics functions. Transportation has been subsumed, in many cases, by these broader departments. Managing the supply chain—from raw material assembly, to work in progress, to the physical distribution of the final product or service—is the essence of business logistics. The field has its quantitative side, with many models that minimize costs and maximize profits. A growing area is the qualitative side, which emphasizes management awareness of the logistics chain.