The ABC of Logistics...

What Is Logistics?

In bygone eras, logistics played a vital role in moving military personnel, equipment, and goods. While logistics is as important as ever in the military, the term today is more commonly used in the context of moving commercial goods within the supply chain.

It is the process of planning and executing the efficient transportation and storage of goods from the point of origin to the point of delivery. The goal of logistics is to meet customer requirements in a timely, cost-effective manner.

Typically, large retailers or manufacturers own major parts of their logistics network. Most companies, however, outsource the function to third-party logistics providers (3PLs).

2 Major Functions Of Logistics

Transportation management

focuses on planning, optimizing, and executing the use of vehicles to move goods between warehouses, retail locations and customers. The transportation is multimodal and can include ocean, air, rail, and roads. It is a complex process that involves planning and optimizing routes and shipment loads, order management, freight auditing and payment.

Warehousing, or warehouse management

This includes such functions as inventory management and order fulfilment. It also involves managing warehouse infrastructure and processes -- for example, in a fulfilment canter, where orders for goods are received, processed, and fulfilled (shipped to the customer).

What is a Logistics Service?

Logistics services are the value chain that links the manufacturer to the consumer. They are all the elements of your supply chain, from the factory to the end customer. They include transportation from manufacturer to warehouse, warehousing and order fulfilment, and delivery to the end customer.

Logistics services include transport from the factory to the fulfilment warehouse, warehousing and order fulfilment, outbound shipping and order delivery to customers.

Types of Logistics Services

Freight Forwarding

• The process of moving a shipment from the manufacturer to the fulfilment centre.

2 Types of Freight Forwarding:

• Domestic freight forwarding- includes arranging for trucking, rail shipment, or air transport.

• International freight forwarding - involves additional layers of complexity, including customs paperwork at both ends of the journey, duties, and multi-modal transport. International freight typically travels by container ship in either FCL or LCL (less than container load) shipments or, for lighter or more valuable products, via air freight.

Inventory Management Inventory planning and management are foundational to every successful eCommerce business. Managing inventory can also be a pain in the neck. The best way to relieve the pain is to automate your inventory management as much as possible.

A logistics services provider may have an inventory management solution that integrates with warehousing services.

Third-party Logistics

Third-party logistics is a catch-all for a range of logistics services. Most 3PL services companies will provide the basics of eCommerce fulfilment: receiving, warehousing, pick and pack order fulfilment, and outbound shipping.

Logistics vs Supply Chain

While the terms “logistics” and “supply chain” are sometimes used interchangeably, logistics is an element of the overall supply chain.

Logistics refers to the movement of goods from Point A to Point B, which entails two functions: transportation and warehousing. This means, the movement of materials and goods one company receives and manages internally as well as when it moves those goods to a customer. Logistics focuses on the right products being in the right place at the right time, and how to get them there.

The overall supply chain is a network of businesses and organizations working in a sequence of processes, including logistics, to produce and distribute goods, a network of businesses involved sequentially in the production or distribution of goods or services. Supply chain management outlines the strategy and activities that go into planning, sourcing, producing, and delivering goods, as well as handling returns.

In short, logistics is generally a one-company issue while the supply chain is a multi-company issue. While logistics may be coordinated throughout part of or even the entirety of the supply chain, each segment is the responsibility of one entity until it hands off the material or product to another entity in the supply chain.

Logistics Components

In its most basic form, logistic components are:

• Intake from suppliers and material handling.

• Labeling, packaging into smaller units, organization, and warehousing.

• Inventory management for production or distribution.

• Demand planning.

• Order fulfilment; and

• Transport

Given that the movement of goods is what drives cash flow, it stands to reason that managing that movement—logistics management—is a core business concern. Indeed, logistics management impacts a company’s bottom line for better or worse. It’s best not to leave that impact to chance.

If you'd like to discuss anything in this article regarding your businesses logistics requirements please call us today to chat with one of our friendly experts, +612 9773 1378 OR email sales@imageinternational.com.au