• control over the physical movement of inventory, and
• Storage of raw materials, semi-finished products and finished goods so that optimum demand supply equilibrium is reached at minimum costs.
Business logistics includes the inbound as well the outbound movement of inventory and supplies. It estimates the demand of the organization, the requirements of the organization for the project in hand, it decides the sources of procurement of material and the method of procurement of materials, it exercises control over the physical movement of inventory between departments and is also concerned with the process of storing the inventory at various stages so as to achieve an optimum level of demand and supply and reduce costs. It is a larger concept than distribution management as it includes the task of forecasting and procurement also. It combines physical distribution and materials management apart from dealing with the process of procurement.
A business logistics system is considered to be effective if it helps to reduce the carrying and storage costs of inventory and increase profits flow in the organisation.