Services in Logistics: Every Logistics Service You Should Know

1/10/2023

Services in Logistics: Every Logistics Service You Should Know

Originating from the French word ‘Logistique’, logistics involves transporting goods, resources, and information from one place to another. Today it evolved to further incorporate warehousing, inventory management, shipping, and supply chain management in addition to transportation.

In simple terms, logistics is the process of storing, transporting, and distributing goods, information, and resources from the place of origin to the destination. It’s carried out holistically with an aim of timely delivery while increasing efficiency and reducing costs for improved customer satisfaction.

Logistics services are the lifeblood of the global supply chain as they facilitate the movement of cargo from manufacturers to suppliers and end-consumer. However, it’s a long, complex process and requires the coordination of several teams and individuals to radically simplify it.

Though we have a basic understanding of how logistics work, let’s understand what role it plays in the success of your business.

What Role Do Logistics Services Play in the Success of Your Business?

Crucial-role-logistics-services-play

Logistics services are practically a necessity for each industry vertical that requires sending goods or parcels across the country or internationally. The trading of goods for money is the very essence that fuels the logistics industry.

Each business that utilises logistics services should prioritise demand planning, choose suitable shipping partners, implement efficient material handling processes, and deliver goods on time. Businesses with a firm grasp on the subject can devise an effective plan to give their logistics a strategic direction.

Here’s what else logistics services will do to cornerstone your business’s success.

Promotes Business’s Growth

A good logistics strategy is critical for businesses to see better results and growth. A suitable logistics partner will help reduce the organisation's load, execute practical solutions for improved effectiveness, and strengthen your supply chain. A strategic logistics plan can include:

Must-have-of-a-strategic-logistics-plan

Improves End-user Experience

Well-satisfied customers are invaluable assets to your organisation and you should have a thorough understanding of their requirements, preferences, and desires. This would act as an impetus for your logistics & fulfilment needs to tailor the end-user experience.

In the grand scheme of things, logistics would improve the overall quality and convenience for importers and end-users. And if any company falls short of its fulfilment commitments, it may see a significant decline in its customer satisfaction levels.

Deliver Right Things at the Right Time to the Right Location

The primary objective of logistics services is to transport and deliver the right goods to the right destination in a timely manner. And in order to achieve so, companies would have to synchronise several aspects like warehouse storage, inventory management, freight forwarding, and door-to-door shipments.

Doing so will help you organise your logistics processes and prepare you to meet any short-noticed requirements. By entrusting to an experienced team of logistics services providers, you can be sure that your goods reach timely and safely to their intended destination.

Reduced Operational Expenses & Improved Cost-efficiency

Well-planned logistics will help you cut down on unnecessary expenses and at the same time aid in improving the efficiency of the process. You can outsource all your transportation, storage, and shipping needs to increase efficiency and cost-effectiveness.

By forming agreements with logistics companies, you not only save costs in a variety of other areas but make your brand stronger and more competitive.

Types of Logistics Services for Supply Chain Management

There are three logistical processes essential for supply chain management. Let’s get to know them.

Types-of-Logistics-Services-for-supply-chain-management

1. Inbound Logistics

Inbound logistics is the initial stage of the supply chain where raw materials for production are moved from suppliers to manufacturers. This can sometimes include storage of raw materials at the warehouse of the supplier or intermediary and then transported to the production facility.

The goods or raw materials such as food, minerals, crude oil, industrial spare parts, or other consumables are transported to production units. Taking care of this part of the supply chain flow makes inbound logistics more efficient and integrative.

For instance, car manufacturers require different kinds of raw materials to build a functional car. They need door-to-door logistics suppliers to get the necessary supply of spare parts so that the car can undergo production and later be launched in the market.

2. Outbound Logistics

In outbound logistics, finished goods are shipped from the manufacturer to the next link in the supply chain. Here, often the product is first moved to the warehouse by a logistics partner and then shipped to the point of consumption.

This part of the supply chain is also known as the order fulfilment process. For example, the manufacturing units from the above example would ship the finished car to the dealer’s warehouse and then sell or distribute it to the end consumer from there on.

In a nutshell, all the finished goods intended for end-user consumption would pass through the outbound logistics flow.

3. Reverse Logistics

Reverse logistics refers to getting products from customers back to the previous link in the supply chain. This part of supply chain logistics encompasses all tasks that are carried out after the point of sale.

Customers dissatisfied with the products may decide to initiate a return, which is where the reverse logistics providers come in. Apart from this, reverse logistics is required when a product needs repair, reselling, refurbishing, disposal, or recycling.

Taking the car example, when a specific part or the whole car has some fault and needs replacement, the manufacturer or the dealer will do the needful through reverse logistics flow.

Read More: Top Supply Chain Trends to Look Forward to

Types of Logistics Services Depending on the Control Over Fulfilment

As goods export and imports rise in Australia, logistics is becoming increasingly diverse and challenging.

Australias-Annual-Merchandise-Exports-and-Imports

Following are the different levels of logistics management and services offered by specialised companies to deal with the said complexity:

Levels-of-Logistics-Management-and-Services

1. First-Party Logistics (1PL)

In first-party logistics, goods manufacturers will handle warehousing and merchandise transportation on their own. They have a dedicated fleet of vehicles and other necessary resources to move cargo from the origin to the destination effectively and efficiently.

No middleman is involved here as the manufacturer or trader takes care of the whole logistics once they receive orders from the buyer. Companies and traders who are better equipped and self-capable of administering the transportation do not have to depend on others.

This gives you total control over your logistics and fulfilment processes. Such a level of control is generally needed by the healthcare and banking industries when transporting goods/money requires extra care and attention.

2. Second-Party Logistics (2PL)

Companies that don’t have their own infrastructure for transportation of goods or can’t build one will outsource it to 2PL providers. 2PLs are goods transport and freight forwarding companies that ship merchandise using rail, road, sea, or air.

Such types of carriers specialise in the goods transport and freight forwarding arena and eliminate the headache of moving goods across the country or oceans. They’ll collect goods from manufacturers and ship them to the intended supplier or distribution centre.

Since these logistics providers sometimes don’t have their own fleet or vessel to transport goods and may rely on others too. Thus, you’ll have lesser control over the transportation aspect of logistics. Automotive and industrial manufacturers generally turn to the 2PL logistics model for transporting high-value goods.

3. Third-Party Logistics (3PL)

3PL are essentially providers of all-around logistics services from offering warehousing, freight forwarding, last-mile delivery and everything in between. They offer item picking & packing, kitting, and sending to suppliers or ship them directly to consumers.

It’s a supply chain model where three parties are involved: 1) manufacturers/businesses, 2) 3PL logistics providers, and 3) carriers. 3PL providers help smoothen your logistics and fulfilment operations and act as a catalyst for your business’s growth.

In this model, you are essentially giving away the whole control to your logistics service provider. However, since they specialise in handling every little task with attention to detail, the whole process becomes sleek and efficient.

This makes it perfect for eCommerce and dropshippers to outsource the complete operation of their inventory logistics to 3rd-party logistics providers.

Read more: What is 3PL? Definition, Processes, & Resources

4. Fourth-Party Logistics

4PL is a new concept and a step further in logistics and supply chain management. It involves hiring consultants who don’t own infrastructure for moving goods but have a strong network that can take care of each aspect of your logistics.

They partner with 3PL providers, freight companies, and others on behalf of their clients and fulfil their logistics needs. 4PL logistics service providers have the necessary expertise and connections with supply chain operators that take away your worries about growing your business.

Think of them as fulfilment concierges or lead logistics providers as they are on the top for arranging partners and providers for freight transportation, delivery, and order fulfilment. So, the only thing you’ll be controlling here is the quality of your products and services.

Since 4PL providers don’t own any physical assets to move goods from one place to the next and you don’t have any control over the process, it sometimes can cause freight and fulfilment delays. But by overcoming these challenges, 4PL could be the next big thing for the logistics industry.

5. Fifth-Party Logistics (5PL)

5PL providers are known as logistics aggregators who conjure up the requirements of several 3PL and 4PL providers to arrange transport for bulk volumes. This enables them to negotiate better freight transport rates for different modes of transport.

5PL is an upgrade over the 4PL consulting model and helps providers dominate the market for favourable and affordable rates. Similar to 4PL, they handle every aspect of your logistics and fulfilment requirements to sustain your supply chain. Also, in this model, you won’t have much control over the process or you won’t need it as you can rest assured by finding an expert 5PL provider.

6. 6th to 10th-Party Logistics

Going beyond 5PL, the logistics services present a vision of what could be possible by evaluating and resolving issues in the current supply chain models.

For instance, 6PL proposes ecological solutions to companies that want to meet the high standards of social and environmental impacts. Similarly, 7PL logistics services providers have a big picture where they hold the expertise of 4PL providers and have the physical infrastructure the same as 3PL for transportation.

In 8th-party logistics, a high-level committee analyses the industry practices and proposes solutions. 9PL logistics providers seek crowd-sourced solutions for last-mile fulfilment whereas 10PL is envisioned to have a complete AI-based logistics approach.

All these logistics models are said to centre around the use of Artificial Intelligence to some extent for robust progression in the supply chain. AI can help instruct and trigger other activities in the logistics sequence for streamlined handling.

10PL, specifically, has been quoted to become fully self-aware of the supply chain and run itself on automation without interference or oversight. However, the definition is less comprehensive and not enough to be taken as an implausible solution.

Types of Logistics Services Offered Based on the Business Requirements

Essentially, 1PL, 2PL, 3PL, 4PL, 5PL… etc. are logistics providers giving you varying levels of control over your supply chain. Additionally, these providers do offer several different services to make your logistics strong and holistic. Let’s see different services in logistics your business can leverage:

Types-of-Logistics-Services

1. Warehouse Services

Manufacturers or suppliers sometimes require cargo storage facilities, especially when sending parcels internationally. Several logistics companies like 3PL service providers or freight forwarders often provide warehousing and storage services.

Warehousing is the backbone of any manufacturing and distribution business and it has to be well-organised and well-maintained. Your logistics service provider often makes it easier for you by finding reliable storage facilities.

However, when selecting your warehouse space, you often should consider the required space, period of storage, accessibility, and security.

2. Inventory Management

Inventory management forms a foundational need for running successful goods distribution and trading business. Managing large inventory and stocks would be a real pain in the neck without a proper system in place.

With the help of a robust inventory management solution, you can streamline your logistics. If you don’t have adequate resources to handle it on your own, you can find suitable 3PL logistics services providers to handle it for you.

Several 3PL providers have an inventory solution that also integrates with their warehouse management services. For instance, PACK & SEND offers complete inventory management and storage facility from unloading containers to re-palletising and coordinating short or long-term storage.

Moreover, your logistics partner can provide the necessary data that helps you improve your inventory replenishment. This would ensure fewer backorders and higher profitability for your goods trading business.

Read More: Backorder vs Backlog in eCommerce

3. Freight Forwarding

Freight forwarding and shipping is a complex process specifically when carried out on a global scale. It’s simply the process of sending goods from one place to the next, usually overseas. However, the process is not simple as it seems.

Freight transport involves export haulage, item checking, customs clearance, and import haulage, which requires the help of expert professionals. They take care of each stage aptly and transport your freight safely across borders.

However, before availing of such logistics services, you need to get acquainted and know certain things about freight forwarding. You can avail of freight transport from 2PL to 5PL providers as most of them are experts in goods transportation and can arrange truck, rail, sea vessels, or air cargo.

Depending on the freight volume to transport, you can select full truck/container load or less than truck/container load shipments. Heavy and bulky items are shipped by rail or sea while airways are used for expedited shipping.

4. Courier Shipping

Courier or last-mile shipping and logistics providers can efficiently deliver your cargo directly from the warehouse to the intended consumer. It’s suitable for online businesses such as eCommerce to meet their small order fulfilment needs or send fragile cargo.

Selecting the right courier shipping providers can give you an edge as it’s a time-saving and efficient way to send shipments directly to customers. However, the costs of such services in logistics can quickly turn up high affecting your profitability.

5. Transport Management Services

Transport management is a critical part of logistics and supply chain management. 1PL-based businesses and other transport service providers need to plan, execute, and optimise their cargo movements. You need to coordinate all the checkpoints in your transport network for efficient movement of goods.

You can even integrate a transportation management system to make it hassle-free to manage the transportation of your goods. If you don’t want to handle it on your own, you can outsource it to 2PL or 3PL logistics providers for expert handling.

Moreover, you can track the key performance indicators and monitor the transportation of shipments at every stage. With the growth in your business, you should also have plans to grow your transportation and logistics needs.

6. Supply Chain Management Solutions

As explained earlier, the supply chain in logistics is a broader term that not only encompasses the goods transportation but also includes nodes where goods are stored, handled, and processed. Supply chain management is not only managing the supply of goods but also planning the flow of goods from one place to another.

A robust supply chain solution from a 3PL or 4PL logistics provider helps you manage inventory levels, track orders, manage transportation routes, and ensure compliance with regulations. Moreover, you can optimise costs by eliminating unwanted product storage and transportation costs.

7. Dropshipping Logistics

Similar to eCommerce logistics fulfilment, dropshipping is also an order fulfilment service where you can leverage the services of 3PL providers. Here, the dropshipping business owners partner with third-party logistics providers to ship orders directly to the customers.

3PL providers offer such logistics services among others and handle all your logistics fulfilment aspects. They can handle all the product warehousing, inventory management, and transportation. You can also avail many other services to streamline your dropshipping business.

Read more: What is Dropshipping? Definition, Process, and Best Practices

Modes of Transport Used in Logistics Services

Types-of-Transport-in-Logistics-Services

Goods transportation is carried out primarily in four different ways: Road, Sea, Rail, and Air. While each mode of transport has its own advantages, selecting the right method to transport your goods requires careful consideration. Let’s see different modes of transport used in logistics services:

Slow Mode of Transports

1. Road Transport

It’s a common mode of transport used for logistics and has evolved from horsecarts to now trucks. Road transport is used for moving goods over short to long distances mostly for domestic shipments and last-mile delivery.

With the continuous enhancement of vehicles and infrastructure, the road has become a versatile and preferred mode for transporting small to medium quantities of goods. Moreover, it’s efficient for warehouse-to-warehouse or door-step delivery and has become a crucial part of logistics services.

Benefits of Road Transport Logistics:

  • Fewer restrictions for transporting heavy or hazardous materials
  • Shipment is easier to track in real-time thanks to the built-in navigation system
  • Most economical mode of transport due to lower fuel and maintenance costs
  • Offers a high level of accessibility for businesses that can’t use rail, airports, or ships
  • Better suited for the door-step delivery model

2. Sea Transport Logistics

Sea or marine transport is another most utilised mode of transport and plays a critical role in global trade. Even though they are one of the slowest modes, over 90% of internationally traded goods are transported through marine routes.

The reason for such a high volume of trade over the sea is that sea vessels can carry the highest volume of freight at a lower cost. Moreover, this transport mode is particularly better for heavy and cumbersome cargo at a fraction of the cost.

Benefits of Sea Transport Logistics:

  • Can accommodate and carry thousands of tons of cargo at once, making it best for bulky and oversized industrial goods
  • One of the economical choices as marine transport costs less than air transport
  • Offer high safety as ships operate on scheduled routes and require minimal handling

Expedited Mode of Transport

3. Rail Transport Logistics

As one of the expedited modes of transport, railways have played a critical role in the efficient handling of logistics and trade around the world. It’s an ideal mode of transport for sending minerals, fossil fuels, natural gas, and other ground freight.

Furthermore, the railways act as a connecting link between the most populated and less populated areas where road transport is not accessible. Also, it’s suitable for cross-country and long-distance hauls for expedited transport of goods.

Benefits of Rail Transport Logistics:

  • More load carrying capacity than road transport
  • Lower delays make the transport mode reliable and predictable
  • Railways tend to be less impactful on the environment than the trucks

4. Air Transport Logistics

Airways is one of the newest and quickest forms of transport available today. It’s often the best choice for sending items such as healthcare products quickly and reliably over long-distance that too overseas.

Air transport usage for logistics is growing thanks to its efficiency and dependability to send high-value goods and freights. Consequently, many companies such as Amazon have their own fleet of Aeroplanes to transport goods overseas.

However, there are certain limitations for size, weight, and type of products to send, making it difficult for companies to adopt this transport mode.

Benefits of Air Transport Logistics:

  • High-speed deliveries of critical and perishable goods
  • Provides optimal protection and secure handling of goods with no compromise on quality

Wrapping Up

There’s always a need for better logistics infrastructure and models to serve your customers the best you can. It’s an omnipresent aspect of running a successful online business that deals with moving goods from warehouse to warehouse or warehouse-to consumer’s door.

Its relevance is imperative and requires expert professionals to take care of picking, processing, storage, packing, transportation, shipping, and security. PACK & SEND is one such 3PL logistics company with a robust network to offer our clients end-to-end logistics solutions.

We offer quick, efficient, and guaranteed logistics fulfilment services that stand true to the customer’s expectations. Additionally, we offer freight forwarding, inventory management, warehouse storage, eCommerce fulfilment and many more.

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