Logistics and distribution are part of a larger industry, also known as the supply chain, that has increased tremendously in the last few decades. These two terms are often misconstrued to denote the same thing. However, each has a distinct meaning and role in the transportation industry.
Here are some fascinating things that you most likely didn’t know about logistics and distribution.
1) The logistics and distribution industry moves trillions of dollars of goods every year
The first thing you should know is that logistics is one of the largest industries in the world. Millions of products are transported from one location to another, from raw materials to finished products, ready for sale.
Every large company today is involved in exporting and importing their products. Items ranging from food, vehicles, furniture, and clothing make up the highest number of goods in transportation at any given time.
2) Distribution centers come in all shapes and sizes, depending on the company’s needs
A distribution center, where all company products are stored and shipped, makes up one of the most important parts of distribution and supply chain management. A distribution center will allow for order fulfillment and a place where goods can be stored before they are shipped to their customers, whether retail or end consumers.
Sometimes manufacturers will have a distribution center right next to their facility, where they can share space, equipment, and inventory. They are also placed in different locations across the country to serve their market effectively.
Depending on the business needs, a distribution center may be fitted with special requirements such as refrigeration or heated spaces.
3) There are a variety of transportation methods used for moving goods around, including trucks, trains, planes, and boats
There are four main transportation methods used in logistics and distribution management.
- Sea or marine shipping
- Road or truck shipping
- Aviation or air shipping
- Railway or train shipping
Each of these methods has its advantages and can be used depending on the needs of your business. Most bulk shipments, including raw materials and crude, are transported by sea using giant ships carrying huge cargo.
Carrying goods by train is only possible if the area you work in has the benefit of a well-defined rail system. If you are located near a rail station, then it’s possible for you to transport your goods directly using rail.
Some businesses will combine both rail and truck shipping, especially where there is no railway line in a certain area. Truck shipping has the advantages of having greater flexibility than a train, shorter transit times, and transporting goods using the less than truckload option when you cannot fill an entire freight truck.
Transporting goods by air is one of the fastest methods available. One disadvantage of this method is that it is costly. Large companies such as Amazon will lease planes from airlines to fulfill their fast shipping needs.
4) Logistics and distribution is a complex process that involves many different systems
Logistics management and distribution involve a myriad of systems for the planning, design, and coordination of moving goods or products, including:
- Inventory management
- Warehouse management
- Transportation management
- Order management
- Fleet management
Ordering, fulfillment & transportation of goods from warehouses to final shipping to the end consumer can be done in-house or outsourced to third-party logistics services providers.
An organized flow of information coordinates the entire framework. Organizations are now embracing the use of technical solutions that will track and predict demand into the future. It is evident that data-driven logistics will continue to drive the future of the industry.
5) There are many different types of jobs in the logistics and distribution industry
Suppose you are looking to start a career in the logistics and distribution industry. There are numerous roles and specialties for logistics and distribution managers. You can become an aerospace engineering technician, a port operation technician, or even a freight controller.
To work in this industry, logistics management activities typically revolve around the following areas:
- Supply chain management
- Demand forecasting
- Materials handling
- Inventory control
- Vehicle routing
- Mathematical programming
One advantage of joining this industry is that you can begin small and steadily grow into your field. For example, you could start by interning in the stock control department and work your way up to become a stock control manager. It is easy to learn the entire process on the job if you have the basic skills and understanding of the industry.
6) Robotics and automation are becoming increasingly important in the logistics industry
Rapid technological advancements have brought about the introduction of better solutions into the logistics industry, resulting in greater efficiencies and even lower operations costs.
Robotics have been introduced in the industry for work operations and labor assistance. They are therefore reducing defects and redundant processes, becoming part of the labor workforce, and increasing overall productivity.
Many of the 3PL providers and the large companies in the industry stand a great chance of gaining the benefits introduced by robotics and advanced automation. The key components that are likely to benefit more are warehousing and shipping.
7) Key components of distribution and logistics
Since logistics is a complex process of managing the movement of goods from the manufacturer to the end consumer, it is imperative to have a general understanding of all key components involved in the process.
These are:
- Planning & forecasting
- Order processing
- Warehousing
- Inventory control
- Distribution management
- Packaging and handling
Proper planning is essential to ensure that all pieces of the process have been implemented and that goods are transported to where they are needed on time.
Inventory control is another aspect that is vital within the supply chain to ensure that businesses do not carry too much inventory or have too little and fail to meet the demand of the customers. Proper inventory management will ensure accuracy and levels are consistent all along the supply chain to satisfy customer requirements.
Packaging and handling of goods is another key component. All products must be stored and packaged correctly to reach customers in ideal conditions. Understanding what is needed to support outbound transportation management effectively can provide better assurance that goods from all distribution channels are handled appropriately.
Frequently Asked Questions
What is the difference between logistics and distribution, and what are their purposes?
Logistics is the overall process of planning, coordinating, implementing, and controlling the movement of goods from the manufacturer to the end-user. It starts at the manufacturing stage to the delivery of goods.
Logistics ensure that there is a smooth flow of information in the supply chain, and its role is to create effective solutions to achieve the goal of storing and moving goods in the most efficient manner possible.
On the other hand, distribution is a subset of logistics and deals with getting products or goods delivered efficiently and cost-effectively.
Distribution considers the physical distribution of goods through a definite channel. It takes into account the transportation costs, methods, and any challenges that may affect the delivery of goods.
How do you determine which service is better for your business needs-logistics or distributions?
Depending on your business needs, you may find out that you need help in distribution at a particular time, while in another instance, you will need help in logistics.
For an online business, it will be of utmost importance that you consistently meet the customer demands, fulfill their orders, and deliver on time.
What are the benefits of using a 3PL provider for your business needs?
Working with a 3PL provider allows you to concentrate on increasing your business revenue while leaving the logistics headaches to someone else.
A 3PL provider will take care of warehousing, distribution, and order fulfillment, thus ensuring that your inventory is managed efficiently and stored in the right conditions and in the right place.
Companies are also able to benefit from working with a 3PL provider, especially when they are working in geographically diverse markets. They are able to fulfill orders quickly and ship them immediately, without waiting for goods to be delivered from a single location.
How can you ensure that you are choosing the right 3PL provider for your business needs?
It can be overwhelming to choose one provider to work with. Conduct your own research internally to see what you need, then move externally to find out what options are available.
The right 3PL provider for your business should be able to meet you at your point of need. If you are looking for more flexibility, then this is what you should get.
- Look for a provider with a collaborative transportation network in the industry that can reduce your overall shipping costs.
- Look for a provider that knows the freight management function and it’s role within supply chain management.
- Ensure that you choose a provider that can facilitate on-time inventory across a wide scope of geographical locations.
- Ensure you work with a competent, recognized, and renowned provider for their experience in a particular area so that they work effectively.
What are some things to consider when planning your logistics and distribution strategy?
- Need for flexibility
- Focused functions
- Lowest costs possible
- Planning team and/or warehouse team
- Use of technology and availability
- High-quality standards
- Government regulation
- Transportation system available
- Energy restrictions
Final Thoughts
Supply chain management is complex and logistics and distribution management play key roles in ensuring the impact of supply chain issues are minimized for an organization that understands how to use the processes and systems within the logistics framework.
Understanding the areas where the supply chain continues to cause issues with production and distribution logistics can help an organization manage unique situations where the physical movement of goods is impacted, especially when it applies to delivering goods to their final destination.
Logistics involves multiple moving parts and complexities that must be overcome to employ a best practice overall strategy for your business. Understanding the key differences for your particular business and the practical distinction between operating in-house vs outsourcing your logistics management needs is critical to meet customers’ requirements and creating all-encompassing strategies that will truly benefit your company’s growth.