Contract logistics

Contract logistics
See also

Contract logistics is a service provided by outsourcing company that includes all or chosen logistics functions. Companies outsource their logistics management departments in order to lower costs of operating. The main logistics functions that can be outsourced are:

  • design of supply chains,
  • warehousing,
  • transport and distribution,
  • managing inventory,
  • processing orders,
  • collecting payments.

Design of supply chains[edit]

Supply chain - covers all activities related to transport and processing of goods, mentioning also the initial stage, that is, obtaining all kinds of raw materials and the final stage, ie delivering the product to consumers. The term also includes the flow of information that is relevant throughout the entire process.

Basic principles of supply chain management:

  1. Getting the right product, at the right price, at the right time
  2. Quality
  3. Cost
  4. Lead Time
  5. Service Level [1]


Storage is activities related to the temporary accumulation of stocks of tangible goods, their storage in appropriate conditions and the transmission to recipients. The necessity of storage results from the fact that the production time of individual goods does not coincide with the time of their consumption. These differences are mitigated by the appropriate storage of stocks in appropriate warehouses where, in addition to the collection of goods, other tasks are also performed, such: as picking, checking, packing, order picking, packing, or portioning. ,,Warehousing is an emerging technique for retrieval and integration of data from distributed, autonomous, possibly heterogeneous, information sources.[2].

Transport and distribution[edit]

Transport is based on paid services. Basic transport split: - passenger transport- moving people, -transport traffic- shipment of loads.

The distribution logistics covers the flow of goods from the finished product warehouse of the producer directly or through intermediaries to end consumers.Distribution is one of the most important elements of the company's logistics system, because the efficiency of the distribution processes allows reducing the total logistic costs, while increasing the level of customer service[3].

Managing inventory[edit]

Inventory management is the quantity or value of raw materials, services, component goods, semi-finished products and finished products, which are stored for use in the event of such a need. It focuses on 4 issues: how many units should be ordered, when to place an order, which inventory components need special attention and whether you can protect against the increase in inventory costs[4].

Logistics management becomes more and more important function in the company. It is difficult to make it efficient if the company operates at low scale. Therefore many medium and even large companies decide to outsource their logistics department. External company that provides services to multiple companies is able to make the processes much more efficient.



  1. International Journal of Physical Distribution and Logistics Management,2001 pp235-246
  2. Yue Zhuge, Hector Garcia-Molina, Joachim Hammer, Jennifer Widom page:1
  3. The Role of Transportation in Logistic Chain pp. 1657 - 1672
  4. Mananging Inventory with the prospect of absolescence, pp 215-222

Author: Magdalena Pawłowska