When moving cargo, typical constraints are maximum weight and volume. It's not a field that many people are aware of. Many wholesalers operate distribution centers where they hold goods acquire from manufacturers prior to resale. Logisticians have a lot to do every day, but exactly where do they do it from?
BREAKING DOWN 'Logistics'
The tasks for which a logistician is responsible vary depending on the business. Primary responsibilities include overseeing and managing inventory by arranging for appropriate transportation and adequate storage for the inventory. A qualified logistician plans out these and other aspects of the logistics process, coordinating the steps as inventory and resources move along the supply chain.
What are 'Logistics' Logistics is the overall process of managing how resources are acquired, stored and transported to their final destination. An indicator that provides information on the monthly sales volumes Purchase order lead time is the number of days from when a company The Chinese logistics firm, of which Alibaba owns Chinese logistics company Best Inc. XPO , an eager buyer of fellow logistics operators, has delivered news of a fresh acquisition. On Wednesday, it announced it signed a definitive agreement to purchase trucking Amazon's push into the shipping logistics industry in China could pressure Alibaba to do more.
Air, ground and ship methods are all common. Many wholesalers operate distribution centers where they hold goods acquire from manufacturers prior to resale. Retailers sometimes have distribution centers where they hold extra inventory purchased from wholesalers prior to store distribution.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since He has been a college marketing professor since Kokemuller has additional professional experience in marketing, retail and small business.
Skip to main content. Logistics Basics Logistics involves the planning, design, coordination, management and improvement of the processes of moving goods and resources. Informational Flow Logistics includes a significant flow of information, which contrasts the physical movement of goods pervasive in distribution. Distribution Basics Distribution is one of the four elements of the marketing mix.
Transportation Execution One way to distinguish distribution is to say that it is the physical execution of transportation logistics. There are two fundamentally different forms of logistics: There may be some intermediaries operating for representative matters between nodes such as sales agents or brokers.
A logistic family is a set of products which share a common characteristic: The following metrics may be used by the company to organize its products in different families: Other metrics may present themselves in both physical or monetary form, such as the standard Inventory turnover. Unit loads are combinations of individual items which are moved by handling systems, usually employing a pallet of normed dimensions. Order processing is a sequential process involving: Picking can be both manual or automated.
Manual picking can be both man to goods, i. Automatic picking is done either with dispensers or depalletizing robots. Sorting can be done manually through carts or conveyor belts, or automatically through sorters. Unit loads are usually assembled into higher standardized units such as: ISO containers , swap bodies or semi-trailers.
Especially for very long distances, product transportation will likely benefit from using different transportation means: When moving cargo, typical constraints are maximum weight and volume. Operators involved in transportation include: Merchandise being transported internationally is usually subject to the Incoterms standards issued by the International Chamber of Commerce.
Similarly to production systems, logistic systems need to be properly configured and managed. Actually a number of methodologies have been directly borrowed from operations management such as using Economic Order Quantity models for managing inventory in the nodes of the network. Traditionally in logistics configuration may be at the level of the warehouse node or at level of the distribution system network. Regarding a single warehouse, besides the issue of designing and building the warehouse, configuration means solving a number of interrelated technical-economic problems: Some important constraints have to be satisfied: Although picking is more of a tactical planning decision than a configuration problem, it is important to take it into account when deciding the racks layout inside the warehouse and buying tools such as handlers and motorized carts since once those decisions are taken they will work as constraints when managing the warehouse, same reasoning for sorting when designing the conveyor system or installing automatic dispensers.
Configuration at the level of the distribution system concerns primarily the problem of location of the nodes in a geographic space and distribution of capacity among the nodes. The first may be referred to as facility location with the special case of site selection while the latter to as capacity allocation. The problem of outsourcing typically arises at this level: Distribution networks can be characterized by numbers of levels, namely the number of intermediary nodes between supplier and consumer:.
This distinction is more useful for modeling purposes, but it relates also to a tactical decision regarding safety stocks: Although configuring a distribution network from zero is possible, logisticians usually have to deal with restructuring existing networks due to presence of an array of factors: Once a logistic system is configured, management , meaning tactical decisions, takes place, once again, at the level of the warehouse and of the distribution network.
Decisions have to be made under a set of constraints: At the warehouse level, the logistician must decide how to distribute merchandise over the racks. Three basic situations are traditionally considered: Picking efficiency varies greatly depending on the situation. A number of tactical decisions regarding picking must be made:. At the level of the distribution network, tactical decisions involve mainly inventory control and delivery path optimization.
Note that the logistician may be required to manage the reverse flow along with the forward flow. Although there is some overlap in functionality, warehouse management systems WMS can differ significantly from warehouse control systems WCS.
Simply put, a WMS plans a weekly activity forecast based on such factors as statistics and trends , whereas a WCS acts like a floor supervisor, working in real time to get the job done by the most effective means. For instance, a WMS can tell the system that it is going to need five of stock-keeping unit SKU A and five of SKU B hours in advance, but by the time it acts, other considerations may have come into play or there could be a logjam on a conveyor.
A WCS can prevent that problem by working in real time and adapting to the situation by making a last-minute decision based on current activity and operational status. Working synergistically , WMS and WCS can resolve these issues and maximize efficiency for companies that rely on the effective operation of their warehouse or distribution center. Logistics outsourcing involves a relationship between a company and an LSP logistic service provider , which, compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, is characterized by a long-term orientation, and thus has a strategic nature.
Third-party logistics 3PL involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself. For example, if a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. Logistics is an emerging business area in many countries.
The concept of a fourth-party logistics 4PL provider was first defined by Andersen Consulting now Accenture as an integrator that assembles the resources, planning capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions.
Whereas a third-party logistics 3PL service provider targets a single function, a 4PL targets management of the entire process. Some have described a 4PL as a general contractor that manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially taking responsibility of a complete process for the customer. Horizontal business alliances often occur between logistics service providers, i.
On one hand, they can " resources which are directly exploitable. On the other hand, partners can "access intangible resources, which are not directly exploitable.
Logistics automation is the application of computer software or automated machinery to improve the efficiency of logistics operations. Typically this refers to operations within a warehouse or distribution center with broader tasks undertaken by supply chain management systems and enterprise resource planning systems. Information in traditional bar codes is stored as a sequence of black and white bars varying in width, which when read by laser is translated into a digital sequence, which according to fixed rules can be converted into a decimal number or other data.
Sometimes information in a bar code can be transmitted through radio frequency, more typically radio transmission is used in RFID tags. An RFID tag is card containing a memory chip and an antenna which transmits signals to a reader.
RFID may be found on merchandise, animals, vehicles and people as well.
1. Logistics is a BIG business
Logistics involves the planning, design, coordination, management and improvement of the processes of moving goods and resources. In some cases, logistics involves more internal systems, while in others it involves collaboration with distribution partners. This is a difference, because distribution inherently includes more than one channel partner. Distribution logistics has, as main tasks, the delivery of the finished products to the customer. It consists of order processing, warehousing, and transportation. Distribution logistics is necessary because the time, place, and quantity of production differs with the time, place, and quantity of consumption. Distribution logistics includes a wide range of activities. These all focus on achieving efficient distribution and movement of finished products. This takes goods from the end of a production line to reach consumers. Aside from that, it provides a wide set of optimization methodologies and tools.