The five utilities in logistics include:
Logistics refers to the end-to-end process of planning, executing, and monitoring the transportation and storage of products. The primary objective of logistics is to pick up the goods from the producer and deliver them to the customer. Furthermore, the product should be preserved and delivered in time to the right customer in a cost-effective manner.
Logistics was earlier associated with transporting military personnel, equipment, and goods. But today, it denotes the movement of commercial goods within the supply chain.
There are different types of logistics. Before we get into that, let's get an understanding of the role logistics plays.
Logistics services can be simple and complex at the same. It plays a determining role in successful order implementation. Let's find out more about these roles:
The logistics department is responsible for processing all the orders placed by the customers. It is essential for a fast and effective flow of information that surrounds the delivery process.
Inventory involves stocking finished goods in a warehouse or storage facility. Inventory control and maintenance are required to support the transportation and delivery processes. The stocked goods should be stocked according to the demand or future predictions. Above all, they should be kept safe.
Warehousing is an extension of inventory management. Unlike inventory, warehousing is limited to tracking stock movement within a warehouse and not all locations. Operations take place on the individual warehouse level.
Packaging includes all the activities that ensure the safety and quality of goods transported and delivered to the customers. It is vital as the products would be handled by several people and stored under various circumstances. It is one of the factors that determine delivery success.
Handling packaged goods form the basis for safe and timely delivery. Logistics services must have an effective package and handling procedures. Customers should be delivered products of desirable quality. The procedures for return are quite extensive, and returns due to damaged products can result in a bad reputation.
Transportation is required at different stages and types of logistics services. A company's transportation system defines the success of its supply chain management system. A few steps to increase the transportation system include a shipper's portal, route optimization with Estimated Time Arrival (ETA), customer notifications and live tracking, analytics, and proof of delivery.
Logistics is a complex service enabling the product to reach the right consumer. From the source of origin to order fulfillment, different types of logistics and aspects of logistics combine to make order fulfillment possible. Some of the major types of logistics with examples are discussed below for your reference:
Inbound logistics is the process of executing the transportation between the companies and their suppliers (learn more about vendor management system). This area focuses on ensuring that the other departments or manufacturers have the necessary raw materials and supplies. Usually, a wide network and large trucks help companies transport goods at a lesser cost. An example would be receiving inventory products into your company's warehouse directly from the manufacturer.
Outbound logistics can also be referred to as order fulfillment mainly because outbound logistics involves delivering goods to the customers. It focuses on moving the goods from one supply chain to another, like manufacturers to warehouses and warehouses to customers. A significant type of logistics is that it plays a vital role in building a good relationship with customers.
One of the most complex and lesser-known types of logistics benefiting consumers is reverse logistics. It primarily deals with the returns. The reverse logistics supply chain involves procuring goods from the end-users and transferring them back to the source/ manufacturer/ warehouse. It is meant for products damaged in the delivery process or eligible for repairing, refurbishing, or recycling.
Third Party Logistics 3pl is the outsourcing of other operational logistics companies to carry out the company's logistics services. In 3PL logistics, all the logistics activities, including inventory management, warehousing, transportation, and delivery, are handled by a third party. Hence, the company gets to focus on other aspects of the business. For example, Amazon has outsourced its inventory management.
Companies use a fourth party or 4PL logistics to outsource their logistics operations to a single partner. The 4PL provider is responsible for managing the entire supply chain, including assessment, designing, building, controlling, and tracking supply chain solutions for their client.
Green logistics or eco-logistics is the curating and executing sustainable policies and measures to reduce the environmental impact caused by the logistics operation or services. It aims to achieve sustainable environmental, cultural, economic, and social advantages and reduce the impact caused by different types. For example, using eco-friendly packaging, reusing the returned products, reducing the number of packages, etc.
In a broad sense, the types of logistics systems comprise the following four kinds of logistics management focusing on the varying aspect of the supply process:
Any business, small or large, requires continuous efforts to achieve better efficiency and management. Improvement is a constant process, and it should never be butchered. Improving the logistics processes involved in different types of logistics smoothens the operations and ensures growth and business expansion. Here are a few tips for improving the logistics process:
Planning forms the basis of all logistics services. Proper planning is crucial for all types of logistics and related operations to run smoothly and successfully. From procurement to delivery, planning is integral in targeting different elements of logistics like cost, time, storage, and transportation. [Learn more about strategic procurement through our blog.] Regardless of the types of logistics, a proper plan improves the speed and efficiency of the supply chain by taking out and modifying redundant or repetitive processes.
2. Warehouse and Inventory Management
Inventory management is vital in ensuring a proper supply of goods matching demand. Smart warehouse management could project future needs with analysis and improve the logistics process. Warehouse management gives special attention to goods as different goods need to be stored in different ways. For instance, grains in a moisture-free environment and dairy products in refrigerators. Different types of logistics, but especially reverse logistics, operations can benefit from live tracking, real-time stock updating, and centralized information regarding warehouse and inventory to reduce wastage and cost.
In today's world, digitization has become a key factor in the success of any business. Automation helps to increase efficiency as well as optimize several business processes. Day by day, the logistics industry is turning out to be technology-driven. Every logistics company should deploy software that provides details about the goods at various stages. It further reduces the manual labor and the errors that come with it.
4. Value Relations
The human workforce drives any organization towards success. Every supplier, warehouse manager, clerk, or delivery partner plays a vital role in logistics. Thus, managers must provide proper training and growth opportunities to increase efficiency. Furthermore, they need to be constantly motivated and updated with the latest trends in the industry. A wide network of value relations in logistics helps gain a competitive advantage.
Efficient transportation management is essential for selecting the best route, vehicle, and driver. The route should be short but safe, the vehicle should be capable of carrying the products, and the driver needs to be reliable. All these factors help in increasing delivery efficiency and reducing costs. The complexities involved (i.e., documentation, packaging, delivery time) in transportation varies with different types of logistics, goods, consumer, company, etc.
The one thing that keeps any business ahead of the competition is innovation. It does not necessarily mean the technological aspect or production methods. Innovation can be brought in policies, analytics, and plans. The utilization of metrics, analysis, and feedback to incorporate better methods of production and supply has proven to be beneficial.
The seven R's of logistics denotes the seven core aspects of logistics to get it right. The overall functionality, efficiency, and reliability of different types of logistics are dependent on these 7R's. Let's check out what they are:
Independent of the types of logistics services, analyzing and understanding the products being shipped, i.e., knowing the product's type, size, weight, and dimension. Identifying the product correctly helps smooth the packaging, warehousing, and transportation process.
Finding the right consumer is essential to correctly executing the processes involved in different types of logistics services. Thus, conduct market research to find their target audience. It will ensure the goods are sold in the right market, generating more leads. Carefully planning the market strategy is important to reach the right audience and grab their attention.
One of the core aspects of logistics is delivering the right quantity to the right audience. The goods should be delivered in the right quantity as per the demand. As per the demand, the supply chain involved in different types of logistics should be positioned to ensure the product flow from the source to the consumer.
Safety is of utmost importance when it comes to shipping. Every logistics company should ensure the product's quality remains intact. Paying intricate attention to packaging is important to preserve the product till it reaches the customer. Product wreckage, spillage, cracking, and other transit-related issues could be avoided with the right packaging strategy.
The logistics team should pay special attention to the delivery of the product. Constant efforts must be undertaken to ensure the delivery at the right place. The company should hire qualified and experienced people for the same. Furthermore, the company should provide customers with an option to track their order.
Another important factor in logistics is time. The biggest competitive advantage in the industry is the time of delivery. Customers expect their products to be delivered on time. On-time or faster delivery is the key to making the customers happy and gaining leads. It is one of the strong suits of Amazon Business to serve consumers' rights.
Deciding the cost of the product is extremely important for any business to run. Market research and product analysis help decide the right cost of delivering the products. Also, a proper budgeting and financial analysis will not only help in increasing profits but also secures a position in the market.
7R's in logistics is important to facilitate an efficient end-to-end operation while avoiding delays and loss of resources.
The difference between logistics and supply chain management is that logistics deals with the flow and storage of goods in an organization. In contrast, supply chain management coordinates an organization's different departments or supply chain activities.
Logistics is a part of supply chain management. It involves planning, executing, and monitoring the transportation and storage of products. On the other hand, supply chain management involves all activities like procurement, production, marketing, and distribution.
There is a well-defined supply chain behind every logistics, ensuring the right product reaches the right consumer and the right time. Logistics forms a part of the extensive supply chain. Supply chain management starts from the very instance of procuring and sourcing the raw materials to delivering the products to the end user. The different types of logistics in supply chain management are mentioned below:
Enterprise Resource Planning or ERP software is an automated solution that combines various applications to streamline information flow in a company, including those within the logistics industry. ERP systems in logistics can control and manage processes more easily and efficiently. The ERP system plays a significant role in order processing, inventory control, staff management, distribution, storage, and development of a customizable system. These factors help reduce cost, increase efficiency, and facilitate a quicker flow of accurate information within the organization.
Logistics is essential for any business to function. The different types of logistics take care of the different kinds of order fulfillment, sustaining a business's internal and external operations. Ensuring the redundancies from the logistics process are removed, the wastage is reduced, and eco-friendly measures taken to execute are important to consider. We hope this blog was useful in broadening your understanding of logistics, its importance, types of logistics, and steps to improve it. Introducing automation and identifying the right software solution is the first step toward improvement. So don't hesitate to get your logistics process automated.