Since logistics involves the range of activities related to the production and distribution of goods for consumption, it is composed of two separate but integrated branches; materials management and physical distribution. Material management involves all the activities related to the production of parts and finished goods, including their packaging and eventual recycling or reusing. Physical distribution involves all the activities related to making parts and finished goods available for consumption, particularly transportation and warehousing.
The more integrated a supply chain is, the harder it is to distinguish between physical distribution and materials management as distribution channels extend from suppliers to consumers and as responsibility for transport and warehousing is shared between manufacturers, wholesalers, and retailers. Logistics must be consistent with the products it supports as customers usually do not have any distinctions between a product and the distribution system that supplies it.
Logistics also involves a fundamental relationship between the derived and induced demands of its activities. Materials management commonly creates a derived demand for physical distribution since what is being produced must be transported, stored, and sold to consumers. However, physical distribution has an induced demand effect on materials management as distribution capabilities will shape production in terms of its organization and location. Supply chains can be considered an integrated relation between production and distribution. Manufacturing and mobility requirements are embedded (synchronized) as what is being produced has to be moved at a similar rate along the supply chain.