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In general, logistics simply means coordinating the movement of people and items so that everything flows smoothly, though by definition it can refer to a wide variety of things in a business context. However, the most common use of the word logistics in the business world today has to do with the movement of merchandise from one place to another. A business that sells products, for instance, will usually contract with a third-party logistics services provider that ensures that those products get from the manufacturer to the retailer, where customers can purchase them.
What Is Logistics Services?
A business that sells products has to find a way to get those items to customers. Even if the items are sold online, they’ll still move from Point A to Point B, usually through a shipping service. If you’re a one-person operation, you may take each item to the post office, but over time you’ll want to upgrade to a shipping provider. Grow even further, and things will get a little complicated since you’ll deal with shipments using multiple carriers on a regular basis. That’s where logistics services providers come in. They specialize in managing the shipment process for business, coordinating things so that products end up where they need to be in as efficiently a manner possible.
What Is the Role of Logistics?
There are several factors in the process of getting a product from the manufacturer to the customer. First, it may go to a warehouse, where it waits for an order to send it. Whether it spends time in the warehouse or not, though, the next step is a truck or plane, which takes it to a retailer or postal carrier so that it can get in the hands of customers. However, transportation can be tricky, especially if the weather disrupts the process. Logistics providers oversee all of this, coordinating transportation services to keep products rolling forward. If a client doesn’t have enough product to fill an entire truck, for instance, a logistics company may arrange to combine that customer’s shipments with another customer’s, strategically routing the truck picking both orders up to avoid delays.
Using Technology in Logistics
In most states logistics companies work both locally and across state lines, with some even handling overseas shipments. Thankfully, providers now have the technology to help manage the process. Logistics software helps professionals in the field determine the best route, even handling the complications that come with combining multiple shipments into one truckload. Today’s solutions even make it easy to track overall productivity, thanks in large part to the sophisticated analytics now built in. As a result, analytics are becoming increasingly important as businesses search for a company that can give them an ongoing overview of their supply chain.
Supplying distribution is when businesses transport materials from supply to stock. After creating the products, manufacturers must move these products from the manufacturing plant to the retail store where the manufactured products will be purchased. Along the way, manufactured products often move to a dealer and to a distribution center. Then, the products finally reach the retail store. Businesses experience unpredictable product demands, so effective supplying distribution ensures that businesses can restock products, avoiding shortages. Supplying logistics also ensures that no steps of the process end up with surpluses of products, since facilities often have limited space to store products. To keep track of where products go, businesses use coding systems including bar codes so that products can be scanned quickly, allowing for rapid identification.
When shipping products, businesses can either hire a contract carrier to perform deliveries for a negotiated price or can hire common carriers, which are businesses that transport products in a given area for a set rate. The common carriers will provide transportation services to any business. Hired carriers will often not provide special handling, such as when the business needs a product transported with a special truck. Also, these businesses will not perform rush deliveries or direct shipments. There are some products that are exempt from regulations and operating procedures, such as trucks that transport agricultural products. Some businesses rent or own trucks and the hire drivers to distribute the products. While this costs more in the short run, businesses will have completely control of the shipping.
Businesses often use more than one form of transportation to move products, known as intermodal transportation. For example, trains can move products over long distances very cheaply, but trains lack flexibility. Businesses often move products across long distances on a train and then move the products to specific locations via truck. If a product must move overseas, products are shipped on boats to get the products across the ocean. The faster the ship, the more expensive it usually is to operate.
In addition to consistent distribution channels, businesses also sometimes send products to consumers very quickly, such as when customers request that a product arrive by first class. Air cargo can bring products more quickly to customers. Sometimes, businesses need a temporary place to store the product before the product is distributed to the customer.
Sales and Distribution
Sales and distribution modules focus on the process of getting in contact with customers, determining a price through negotiation with the customer and determining how the products will arrive at the customer’s doorstep. Customers must provide an address, choose between shipping options and confirm that a product has arrived.