What is Logistics?
Logistics refers to the process of delivering the goods or products from the point of origin to the end consumer or final destination. It is the process of planning and executing the activities of how the resources are moved, acquired, stored and distributed to the end customers. Therefore, there are different types of logistics management to enable end-to-end visibility across the value chain and foster business growth.
The term “logistics” was initially used for the military purpose as it determines the movement of supplies and equipment to troops. But, today the term is associated with the business sector and is known to be an integral part of the supply chain process. Implementing an effective logistics strategy is essential for optimizing the delivery process and enhancing the customer experience. It encompasses the activities like inventory control, storing and packaging, warehouse management, last-mile delivery etc. However, seamless movement of goods from one location to another can help the companies to gain substantial competitive advantage.
Types of Logistics Management
There are different types of logistics processes that involve the activities ranging from delivery of goods from the supplier to the final customer. Logistics offers different service aspects and are considered to be the core component of the supply chain. Here are some of the major types of logistics management:
1. Supply Management
It involves the planning, procuring, coordinating and sourcing of materials that is needed to manufacture the products. Procuring logistics is an integral part of the supply chain operations to support the process of production and to ensure that the level of supply matches the demand for the smooth functioning of the operations. Handling supply management is essential as the materials and products should be available at a certain place and time to boost the company’s production process. In the contemporary world, investing in a fleet management software can help the businesses to make better decisions and optimize supply chain more efficiently.
2. Distribution & Product Management
It is a type of logistics management that involves the handling of procured parts and materials. It determines how the supplied and stored materials should be dispersed to the exact location. The major components are transportation, loading, unloading, keeping the stock control and so on. Logistics management tends to combine the supplies into products and also control intense material movement inside a factory. Also, moving the supplies from a central warehouse to various other locations should be delivered timely.
3. Sales Logistics
The type of logistics tends to combine the distributed supplies into a product and then ensure that those products are delivered to the customers. Monitoring different stages of production within a company is essential to enhance the delivery process. In the contemporary world, the logistics process is not only limited to distributing the goods from warehouses to distribution points such as wholesalers and retailers. The direct delivery is gaining a lot of popularity as this involves delivering the warehouse storage to the customer’s doorstep.
4. Customer Service Management
Fulfilling the customers demand is one of the important types of logistics management. Companies create strategies to improve the communication and analyse the demands of customers. Optimising the customer lifecycle is beneficial for the long run as it assists the organisation in customer retention. Embracing new-age technology is to interact with the customers, ensure damage free and timely deliveries can lead to efficient working of a company.
5. Reverse Logistics
It is a type of logistics activity that involves the transportation of products from the end-users to the supply chain. As the name suggests, this process helps in managing the products returns and refunds of the unwanted, damaged, and unused products. Therefore, logistics in reverse is a part of supply chain operations that deals with returned orders sent back to distribution canters.
It also involves re-use of packaging and recycling of products and containers. Undoubtedly, these measures are also impacting the environment positively. Utilizing the material can also reduce the company cost.
Inbound vs Outbound Logistics Processes
As we have discussed, there are different types of logistics processes. The most well known are Inbound & Outbound logistics processes. Implementing effective logistics management strategy and techniques is vital for the company to simplify the processes.
Inbound logistics brings supplies or materials into a business as it involves the activities like procurement, ordering transportation etc whereas outbound logistics is the process of delivering the final goods to the end customers. Therefore inbound tends to deal with the supply and outbound fulfils the demand.
Inbound Logistics
It is a process that manages incoming supplies depending on the business model. Inbound logistics focuses on sourcing the materials by analysing the price quotes, purchasing, setting up delivery to the distribution channels like warehouses or retail stores. Therefore, manages the movement of goods or products from suppliers to production. When the goods arrive at a warehouse it is essential to monitor the storage and control the inventory level. Scope of inbound logistics also cover tracking of the orders location and receipt.
Outbound Logistics
It is the process of delivering the goods or products at the right time to the end-consumer. Therefore, it involves the activity of allocating materials outside of the warehouse such as monitoring the order fulfilment, packing, inventory management, shipping out the finished goods and so on.
This type of logistics management involves all the processes that are needed to deliver the products or goods from the distribution centre to the customer. Some of the major examples of outbound logistics are order processing, product packaging and shipping
Some of the other categories of logistics are:
– Third Party Logistics- It is the process of outsourcing of logistics services. Companies that provide the 3PL logistics services comprises warehousing, transportation, inventory management etc. Logistics from a third party can offer different types of fulfilment and warehousing.
– Fourth Party Logistics- A fourth-party logistics also known as 4PL is an operational model that provides the seamless supply chain solutions for businesses. It covers all the activities ranging inbound to outbound logistics operations.
– Green Logistics- When the transportation industry takes effective measures to minimise the environmental damage caused by logistics activities. Reducing the carbon footprint of logistics operations is beneficial in the long-run.
Conclusion
These are the types of logistics management that are associated with the supply chain processes. It helps the businesses to meet the transportation requirements which is necessary for the profitability and efficiency of an organisation.
As a proactive approach, enhancing the logistics management practices can lead to subsequent growth of more complex supply chains. Optimizing the logistics operations by embracing technological innovations is the best way to meet both demand and consumer expectations.
Frequently Asked Questions
What are the 3 types of logistics?
The three major types of logistics management are as follows- Inbound Logistics, Outbound Logistics, and Reverse Logistics.
What are the 4 major logistic functions?
Order processing, inventory control, warehousing & transportation are the major logistics functions for the smooth running of operations.
What are the 7 R's of logistics?
The success of logistics operations largely depends on the most essential concepts of 7 R’s: Right product, Right quantity, Right condition, Right place, Right time, Right customer, Right price.
What is 3PL & 4PL logistics?
Third-party logistics is the process when businesses outsource the operational activities to plan, execute, and control the movement of goods whereas fourth party logistics is when the logistics service providers manage all the aspects of the supply chain process.
How many types of logistics are there?
Logistics processes involve several activities starting from the sourcing of products to delivering it to the right customers. The four major types of logistics are: Supply, distribution, sales and reverse logistics.
