Many think that logistics activities are limited to transportation of goods. However, the scope of any logistics company is way beyond transportation. In fact, transportation (by air, water, and road) is only one of the main logistics activities. There are several other logistics activities that any logistics company undertakes. This article explains logistics activities with examples, and their importance in overall business operations.
6 Key logistics activities and functions
As mentioned earlier, logistics is more than transportation. Considering the important role that logistics and supply chain play in the overall economy, there are several value-added functions that logistics operators provide.
Here are key functions of logistics with examples.
Managing warehouse and storage is one of the important activities of logistics. Nowadays, warehouses are humongous in size and space within them has to be managed well. Movement of goods within the warehouse needs to be tracked and recorded and location of all goods has to be updated. This makes locating items easier when they need to be dispatched. Efficient warehouse management enables space optimization, easy location of goods, fulfilling orders on time, etc.
Many businesses, large and small, as such outsource logistics operations to third-party logistics operators to leverage the benefits of 3PL warehouses. This ensures less burden on the business for managing inventory, stocking, and warehousing, as the 3PL provider undertakes end-to-end responsibility. This is also a cost-effective solution in comparison to maintaining inhouse warehousing space.
Once a customer places an order, it is a logistics company’s task to verify the order. The logistics company accepts the order, checks inventory, verifies payment method and the order is processed. For example, if a customer has placed an order for 10 units of watches, then the commercial team of the logistics company will verify the product variant and other details, its availability in inventory, payment method and then will process the order. Once the order is processed, 10 units will automatically be deducted from the inventory. Additionally, it gives go ahead to the inventory and warehousing team to dispatch the product to deliver it on the specified timeline. In B2B business activities, volume of an order is more and hence, orders need to be processed accordingly.
Note: Most logistics companies in India prefer to use software solutions to manage logistics functions. While earlier, most functions were done manually and through intensive paperwork, today there is greater reliance on technology for efficient solutions. Inventory management, warehouse management software, Transportation Management Systems, billing and payments collection software – these are all an integral part of logistics operations today.
The activity of material handling refers to movement of ordered goods withing the warehouse. Often the warehouses are huge in size. As a result, the ordered products need to be located and brought to the preparing station for packaging and dispatch. This may seem like a mechanical and mundane job. However, it is one of the important functions of logistics. The right product in accordance with the placed order need to be identified and prepared for dispatch. Otherwise, there is a risk of consumers returning the product.
Returns management and reverse logistics plays a critical role in modern logistics. Among the several reasons products are returned, incorrect order/product delivery is a common reason. This not only makes materials handling important, but also a task that needs to be performed with minimal errors.
This is yet another important function. Keeping track of the available inventory is essential for having an overview and control over inventory. However, inventory management function also touches upon various other important aspects such as keeping track of available inventory, analysing preferred stock levels, tracking reorder patterns of the customers, etc. With the adoption of manufacturing techniques such as just in time production, lean manufacturing, and so on, the importance of inventory management has increased.
The products that have to be transported need to be transport ready. Although attractive packaging that the consumers see is usually done by the manufacturer, there is yet another kind packaging that it the responsibility of the logistics company. Products that need to be transported need to be packed in bulk to avoid damage and spillage during transport. Hence, once the order is processed, products depending on its nature are carefully packed so that they are intact when they reach the destination.
For example, milk packets are further packed in crates to avoid damage and spillage during transport. Or glass items are bulk packaged in a plastic wrapping or bubble wrap sheets.
Packaging, along with labelling and shipping is often offered as a value-added service by 3PL providers. This is more relevant for online and eCommerce businesses where the end user/customer can be from different geographic locations.
It is the most critical aspect of the logistics function as it is more cost as well resources intensive. The products are taken from the warehouse to its destination. The mode of transport depends on the cost of transportation and delivery timelines.
For example, transporting goods from Pune to Chennai will be cheaper via road transportation. However, depending on the timelines and volume of goods, the option of air cargo may also be considered. Timely deliveries are important business as customer delight is directly linked with it.
When it comes to eCommerce logistics, transportation is a key factor in enhancing customer satisfaction and even gives the business competitive advantage. Last-mile delivery solutions or the actual delivery of the product to the customer in a proper condition and within promised timelines is often the reason for repeat business and customer loyalty.
Most logistics activities in the supply chain can be well managed with the help of automation. There are various software solutions for warehouse management and inventory management available in the market. You can choose the right one by analysing your needs and budget.
Transportation is one of the most cost-intensive tasks of the logistics activities. Solutions such as Tata nexarc’s Logistics offers affordable solutions. Moreover, you can track your shipments easily.