Taxonomy of Logistics Decisions


Level Description
Production structures Commercial decisions on outsourcing, offshoring and sub-contracting. Number, location and capacity of production units.
Transport structures Choice of a freight network linking a company and its suppliers and customers. Choice of modes and terminals; the transport chain.
Distribution structures Choice concerning the number, location and capacity of distribution centers. Frequency and timing of distribution (e.g. just-in-time).
Logistics structures Usage of production, transport and distribution capabilities to fulfill short, medium and long term strategies (e.g. lower costs, gain market share, improve service efficiency, reduce response time, reduce environmental footprint). Usage of third party logistics providers.

Taxonomy of Logistics DecisionsThe implementation of logistics structures is the outcome of decisions related to the usage of production, transport and distribution capabilities. Since the requirements of each supply chain is different, the decisions about how to use these capabilities will result in different strategies:

  • Production structures. Concerns the materials management aspects of logistics with locational decisions related to factors such as available land, labor costs and the regulatory framework. The outcome is the choice of production locations and their capacity. This will influence the transport and distribution aspects of logistics.
  • Transport structures. Concerns the physical distribution aspect of logistics with decisions concerning the choice of modes and terminals along the transport chain linking different components of the supply chain. This choice is commonly related to the nature of what is being transported in terms of load units.
  • Distribution structures. Concerns how the distribution of resources, parts and finished goods associated with the supply chain will take place. This particularly relate to the frequency and timing of distribution, with the location and setting of distribution centers an important aspect.
  • Logistics structures. Taking all of the above into consideration, decisions are made to use production, transportation and distribution structures to fulfill strategic goals such as cost reduction, improve service efficiency or to reduce response time (cycle or lead). As making decisions about the setting and operation of supply chains can be a complex task, corporations often contract in whole or in part the management of their supply chains to third party logistics providers.