• Procurement Logistics is the entire process used to select suppliers and negotiate contracts

for delivery of goods or services. It consists of activities such as market research,

requirements planning, make or buy decisions, supplier management, ordering, and order
controlling.
• Production Logistics concerns itself with streamlining and controlling the flow through the
supply chain from point of entry to the end, which is distribution logistics. Production
logistics activities are related to organizational concepts, layout planning, production
planning, and control.
• Distribution Logistics [PDF] is concerned with the delivery of finished products to the
customer. It consists of order processing, warehousing, and transportation. Major sub-sectors
within the industry include air, rail, water, and truck transportation, urban transit and ground
passenger transportation, warehousing and storage, and motor vehicle repair. Logistics
involve the integration of these sub sectors, including information, transportation, inventory,
warehousing, material-handling, and packaging.
• Disposal Logistics, also known as reverse logistics, stands for all operations related to the
reuse of products and materials. The main function of this field is to reduce logistics cost,
enhance service, and save natural resources.

Why Logistics is Important to Your Company

Even small businesses deal with finding suppliers, if not with transporting merchandise to a store.
Small business owners also conduct distribution logistics with inventory and warehousing. And,
every small business owner can tell you about how they handle reverse logistics, with returned
merchandise or refusal of services. Larger businesses may deal in all four logistic fields.
In the business environment, logistics either have an internal or external focuses (inbound or
outbound). Depending upon the business involved, this part of the chain can be simple or
complicated. For more complicated procedures, third parties often are hired to conduct any one of
the four fields within business logistics.
Third-party logistics (3PL) involves using external individuals or organizations to execute logistics
activities that have traditionally been performed within an organization itself. If, for example, a
company decides to export its product, it may hire a person or organization to help with distribution
logistics. Today, there is a movement toward building fourth-party logistics (4PL), which integrates
3PL competencies and other organizations to design, build, and run comprehensive supply chain
solutions. A 4PL general contractor would manage other 3PLs, truckers, forwarders, custom house
agents, and others, essentially taking responsibility of a complete process for the customer.
Another specialty includes logistics consulting services. Firms in this industry specialize in the
production and distribution of goods, from the first stages of securing suppliers to the delivery of
finished goods to consumers. Such firms give advice on improvements in the manufacturing process
and productivity, product quality control, inventory management, packaging, order processing, the
transportation of goods, and materials management and handling. In the process, these consulting
firms might suggest improvements to the manufacturing process in order to use inputs better,
increase productivity, or decrease the amount of excess inventory. Consulting firms in this segment
of the industry also advise on the latest technology that links suppliers, producers, and customers
together to streamline the manufacturing process.
Even project management requires logistics, as one vein of this science coordinates a sequence of
resources to carry out projects. Typical constraints in project management include scope, time, and
budget, or the same constraints involved in business logistics. The time constraint refers to the
amount of time available to complete a project. The cost constraint refers to the budgeted amount
available for the project. The scope constraint refers to what must be done to produce the project’s
end result.
There are specific firms within the industry that focus on the production and distribution of goods
from the first stages of suppliers, and there are those who focus on the delivery of finished goods to
consumers. These firms might not actually take any of the work off the company’s hands, but they
can provide advice on materials management and handling, the transportation of goods, order
processing, packaging, inventory management, product quality control, the manufacturing process,
and productivity.

As an ecommerce business owner, you'll have to familiarize yourself with logistics. Back-end
supply chain management is a critical component of any business today, but that's especially the
case in ecommerce. Since you don't have a brick-and-mortar storefront to house inventory, you have
to rely on third parties to help store and ship your products and services. This is crucial for basic
time management — and for your bottom line.

What is logistics?
Logistics is simply the management of the way resources are obtained, stored and shipped to their
end destinations. The planning, execution and control of the movement and placement of these
goods and services must all occur within a given system that's designed to achieve specific
objectives, which may vary by industry.
Taking a more macro view, logistics management entails a few steps:
• Locating and identifying potential suppliers and distributors
• Determining their accessibility and effectiveness in terms of business production
• Forming relationships and finding the most cost-effective solutions for your business

Larger companies often work with multiple parties to keep pace with demand. However, your small
business doesn't necessarily need to partner with different organizations to manage your ecommerce
website logistics. If your operation is small enough, you can work with local businesses and
organizations to ship and store your products.

What is the logistical process like for my business?

Logistics on a small-business scale aren't overly complex. Once a customer completes his or her
order on your website, the transaction will trigger any inventory software you have. As a retailer,
most ecommerce platforms will have integrated inventory management software, so a completed
payment will automatically adjust your inventory accordingly.
Once you get the notification an order has been confirmed, it's time to ship the product. Depending
on the size of your operation, the next steps could vary:
• Home/office operation: If you're running your website from your home or a separate office
and store inventory there, all you have to do it package the product and send it to the buyer.
This is a great option for newer and small businesses because they save money on overhead
by not having to outsource their warehouse management to a third party.
• Brick-and-mortar retailer: If you own a storefront location and have the room to store the
products you sell online there, the same principle applies as above. Just pack up the product
and send it to the awaiting customer.
• Outsourced logistics: If your operation is large enough to outsource your online operation
logistics, you'll likely have to sync your platform with the third party you partner with. That
way, once a customer makes a purchase, the distribution center will know and they can send
the package out quickly. This hands-off approach is well organized and eases the stress of
shipping so you can focus on other aspects of your website.

Can you track items on the back end?

Yes. Since logistics has become so complex and reliant on digital technology, there are options for
you to keep tabs on your inventory and where it is in the supply chain. Inventory management
solutions within your ecommerce platform give you visibility into how much of a given product you
have left. Inventory management tools give you real-time insight into your products so you're never
behind on customer orders.
If your business partners with a service like UPS, FedEx or the USPS, you can also track items
based on the fulfillment numbers they provide. Once the product leaves your hands, it may be a
good idea to keep tabs on certain orders to make sure they reach the customer. It's also an industry
best practice to provide the same tracking numbers to customers in their confirmation email so they
can keep track of where their package is

Procurement logistics consists of activities such as market research, requirements planning, make-
or-buy decisions, supplier management, ordering, and order controlling. The targets in procurement
logistics might be contradictory: maximizing efficiency by concentrating on core competences,
outsourcing while maintaining the autonomy of the company, or minimizing procurement costs
while maximizing security within the supply process.
Advance Logistics consists of the activities required to set up or establish a plan for logistics
activities to occur.
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.
Disposal logistics has as its main function to reduce logistics cost(s) and enhance service(s) related
to the disposal of waste produced during the operation of a business.
Reverse logistics denotes all those operations related to the reuse of products and materials. The
reverse logistics process includes the management and the sale of surpluses, as well as products
being returned to vendors from buyers. Reverse logistics stands for all operations related to the
reuse of products and materials. It is "the process of planning, implementing, and controlling the
efficient, cost effective flow of raw materials, in-process inventory, finished goods and related
information from the point of consumption to the point of origin for the purpose of recapturing
value or proper disposal. More precisely, reverse logistics is the process of moving goods from their
typical final destination for the purpose of capturing value, or proper disposal. The opposite of
reverse logistics is forward logistics."
Green Logistics describes all attempts to measure and minimize the ecological impact of logistics
activities. This includes all activities of the forward and reverse flows. This can be achieved through
intermodal freight transport, path optimization, vehicle saturation and city logistics.
RAM Logistics (see also Logistic engineering) combines both business logistics and military
logistics since it is concerned with highly complicated technological systems for which Reliability,
Availability and Maintainability are essential, ex: weapon systems and military supercomputers.
Asset Control Logistics: companies in the retail channels, both organized retailers and suppliers,
often deploy assets required for the display, preservation, promotion of their products. Some
examples are refrigerators, stands, display monitors, seasonal equipment, poster stands & frames.

A forklift truck loads a pallet of humanitarian aid to Pakistan on board a C-17 aircraft, following
devastating floods in the country in 2010.
Emergency logistics (or Humanitarian Logistics) is a term used by the logistics, supply chain,
and manufacturing industries to denote specific time-critical modes of transport used to move goods
or objects rapidly in the event of an emergency.[8] The reason for enlisting emergency logistics
services could be a production delay or anticipated production delay, or an urgent need for
specialized equipment to prevent events such as aircraft being grounded (also known as "aircraft on
ground"—AOG), ships being delayed, or telecommunications failure. Humanitarian logistics
involves governments, the military, aid agencies, donors, non-governmental organizations and
emergency logistics services are typically sourced from a specialist provider.[8][9]
The term production logistics describes logistic processes within a value adding system (ex:
factory or a mine). Production logistics aims to ensure that each machine and workstation receives
the right product in the right quantity and quality at the right time. The concern is with production,
testing, transportation, storage and supply. Production logistics can operate in existing as well as
new plants: since manufacturing in an existing plant is a constantly changing process, machines are
exchanged and new ones added, which gives the opportunity to improve the production logistics
system accordingly.[10] Production logistics provides the means to achieve customer response and
capital efficiency. Production logistics becomes more important with decreasing batch sizes. In
many industries (e.g. mobile phones), the short-term goal is a batch size of one, allowing even a
single customer's demand to be fulfilled efficiently. Track and tracing, which is an essential part of
production logistics due to product safety and reliability issues, is also gaining importance,
especially in the automotive and medical industries.
Construction Logistics is known to mankind since ancient times. As the various human
civilizations tried to build the best possible works of construction for living and protection. Now the
construction logistics emerged as vital part of construction. In the past few years construction
logistics has emerged as a different field of knowledge and study within the subject of supply chain
management and logistics.
Digital logistics is driven by a new generation of web-based, enterprise logistics applications that
enable collaboration and optimization, leveraging a central logistics information backbone that
provides visibility across the enterprise and extended supply chain.

Logistic families and metrics

A logistic family is a set of products which share a common characteristic: weight and volumetric
characteristics, physical storing needs (temperature, radiation,...), handling needs, order frequency,
package size, etc. The following metrics may be used by the company to organize its products in
different families:[19]
• Physical metrics used to evaluate inventory systems include stocking capacity, selectivity,
superficial utilization, volumetric utilization, transport capacity, transport capacity
utilization.
• Monetary metrics used include space holding costs (building, shelving and services) and
handling costs (people, handling machinery, energy and maintenance).
Other metrics may present themselves in both physical or monetary form, such as the standard
Inventory turnover.

Handling and order processing

Unit loads for transportation of luggage at the airport. In this case the unit load has protective
function.
Unit loads are combinations of individual items which are moved by handling systems, usually
employing a pallet of normed dimensions.[20]
Handling systems include: trans-pallet handlers, counterweight handler, retractable mast handler,
bilateral handlers, trilateral handlers, AGV and
handlers. Storage systems include: pile stocking, cell racks (either static or movable), cantilever
racks and gravity racks.[21]
Order processing is a sequential process involving: processing withdrawal list, picking (selective
removal of items from loading units), sorting (assembling items based on destination), package
formation (weighting, labeling and packing), order consolidation (gathering packages into loading
units for transportation, control and bill of lading).[22]
Picking can be both manual or automated. Manual picking can be both man to goods, i.e. operator
using a cart or conveyor belt, or goods to man, i.e. the operator benefiting from the presence of a
mini-load ASRS, vertical or horizontal carousel or from an Automatic Vertical Storage System
(AVSS). Automatic picking is done either with dispensers or depalletizing robots.
Sorting can be done manually through carts or conveyor belts, or automatically through sorters.

Transportation
Main article: Cargo
Cargo, i.e. merchandise being transported, can be moved through a variety of transportation means
and is organized in different shipment categories. 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:
multimodal transport, intermodal transport (no handling) and combined transport (minimal road
transport). When moving cargo, typical constraints are maximum weight and volume.
Operators involved in transportation include: all train, road vehicles, boats, airplanes companies,
couriers, freight forwarders and multi-modal transport operators.
Merchandise being transported internationally is usually subject to the Incoterms standards issued
by the International Chamber of Commerce.

Configuration and management

Push-back rack for motorcycles, a LIFO rack system for storage

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.[23] Distribution resource planning (DRP) is similar to MRP, except that it doesn't concern
activities inside the nodes of the network but planning distribution when moving goods through the
links 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: dimensioning
rack cells, choosing a palletizing method (manual or through robots), rack dimensioning and design,
number of racks, number and typology of retrieval systems (e.g. stacker cranes). Some important
constraints have to be satisfied: fork and load beams resistance to bending and proper placement of
sprinklers. 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: the nodes of a supply chain are
very rarely owned by a single enterprise. Distribution networks can be characterized by numbers of
levels, namely the number of intermediary nodes between supplier and consumer:
• Direct store delivery, i.e. zero levels
• One level network: central warehouse
• Two level network: central and peripheral warehouses

This distinction is more useful for modeling purposes, but it relates also to a tactical decision
regarding safety stocks: considering a two level network, if safety inventory is kept only in
peripheral warehouses then it is called a dependent system (from suppliers), if safety inventory is
distributed among central and peripheral warehouses it is called an independent system (from
suppliers).[19] Transportation from producer to the second level is called primary transportation,
from the second level to consumer is called secondary transportation.
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: changing demand,
product or process innovation, opportunities for outsourcing, change of government policy toward
trade barriers, innovation in transportation means (both vehicles or thoroughfares), introduction of
regulations (notably those regarding pollution) and availability of ICT supporting systems (e.g. ERP
or e-commerce).
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: internal, such as using the available infrastructure, or external, such as
complying with given product shelf lifes and expiration dates.
At the warehouse level, the logistician must decide how to distribute merchandise over the racks.
Three basic situations are traditionally considered: shared storage, dedicated storage (rack space
reserved for specific merchandise) and class based storage (class meaning merchandise organized in
different areas according to their access index).

Airline logistic network. Denver works as a hub in the network.

Picking efficiency varies greatly depending on the situation.[22] For man to goods situation, a
distinction is carried out between high level picking (vertical component significant) and low level
picking (vertical component insignificant). A number of tactical decisions regarding picking must
be made:
• Routing path: standard alternatives include transversal routing, return routing, midpoint
routing and largest gap return routing
• Replenishment method: standard alternatives include equal space supply for each product
class and equal time supply for each product class.
• Picking logic: order picking vs batch picking
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.

Warehouse management and control

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.[24]

Logistics outsourcing
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.[25]
Outsourcing does not have to be complete externalization to an LSP, but can also be partial:
• A single contract for supplying a specific service on occasion
• Creation of a spin-off
• Creation of a joint venture

Third-party logistics (3PL) involves using external organizations to execute logistics activities that
have traditionally been performed within an organization itself.[26] According to this definition,
third-party logistics includes any form of outsourcing of logistics activities previously performed in
house. 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 alliances between logistics service providers
Horizontal business alliances often occur between logistics service providers, i.e., the cooperation
between two or more logistics companies that are potentially competing.[27] In a horizontal
alliance, these partners can benefit twofold. On one hand, they can " resources which are directly
exploitable". In this example extending common transportation networks, their warehouse
infrastructure and the ability to provide more complex service packages can be achieved by
combining resources. On the other hand, partners can "access intangible resources, which are not
directly exploitable". This typically includes know-how and information and, in turn, innovation.
[27]

Activities involved in logistics are related to:

1. transportation and
2. warehousing
For transportation
Activities are primarily related to getting the following details right. You do one of these things
wrong and you can lose a lot of money.
· the right mode (ship, air, train, truck),
· right carrier,
· right vehicle,
· right fill rate,
· right stowage,
· right lashings,
· right speed,
· right discharge rate,
· right back haul,
· right payment at
· right time.
For warehousing, there are similar activites of equivalent nature.
Very few logistics companies get all the details right. They just do not have staff which is good
enough. That is the reason why the customers employ 4PL or Managed Logistics Service providers
who help them get the best results from the logistics companies. Customers themselves do not have
the expertise to do this - otherwise, why would they outsource to the 3PLs.
6 Benefits of Logistics Automation in a TMS

1. Decrease in Costly Errors: Logistics

automation features such as integration to your commodities via your ERP system and
access to your address book, as well as automatic storage and entry of fuel surcharges and
accessorials, will have you never again worrying about keying in the wrong information.
These kinds of manual data entry errors will lead to increased shipping costs such as having
to pay for shipping twice or paying a higher freight rate due to entering an incorrect
commodity freight classification.
2. Availability of Transportation Mode Choice and Real Time Freight Rates: To combat
rising transportation costs the logistics automation features in a TMS makes it easy for users
around the country to execute policies that deliver immediate freight savings. That means
the TMS application is built with a state-of-the-art web services architecture, in order to
receive live carrier rates over the Internet. No more theoretical savings, but hard ROI based
on live, vendor neutral access to real-time market rates. When you have multiple carriers to
choose from based on cost, transit time, and insurance, it empowers you to make the best
choice for your specific shipment, thus saving you money over the long haul.
3. Increased Customer Service: How much does it cost for you to LOSE a customer? With
logistics automation features in a TMS such as real time freight tracking, auto pick-up,
proper insurance and freight accounting built to your custom specifications, you and your
customer are empowered to know exactly how much the freight will cost and when the
freight will arrive at it’s destination through automatic notifications.
4. Access to Real Time Freight Data and Analysis: When you have access to real time
freight data and the ability to run reports, you are better served at making better business
decisions based on your trends and history. For example, you may find out through the data
that 80% of the time you picked Carrier “A” because they were the least cost carrier, but you
find out in the data that that carrier is late 20% of the time, causing you to create a stigma of
bad customer service. In the long run, creating such a bad stigma so you can save money on
the front end of shipping, could hurt you over and above the freight savings by not being
able to gain new customers or possibly losing customers. Access to valuable data at your
fingertips with the push of a button empowers you to see the total cost of your decisions and
mitigate future expensive bad decisions.
5. Organizational Control: With logistics automation features in a TMS you are able to regain
control over freight management, freight costs, and risk, by using the TMS’ rules engine,
which is based on optimized plans and routing guides. A TMS is flexible enough to
 accommodate custom company business rules, yet powerful enough to force all users, both
internal and external, to follow the policies that ensure efficient and cost effective shipping.
The system’s usability must be such that controls can be designed and implemented by
logistics experts with decades of hands-on experience in logistics, rather than by computer
technicians.
6. Scalability and Speed: With such powerful logistics automation features in your TMS there
are no additional resources needed to manage your logistics, freight, and transportation
departments, even as your business grows and ships more freight. As your company grows
and ships more freight, a TMS allows you to easily input new users into the system and
manage them easily. Furthermore, with a great freight accounting automation feature within
the TMS, all freight invoices can be consolidated into one weekly invoice, no matter how
many shipments each location has, making your CFO or controller’s job much easier to
manage!
Automation at it’s finest, and when employed correctly, drives many benefits to help a company’s
bottom line. Whether it’s automation in the way of robotics on the manufacturing floor, or
automation features which eliminate manual process, or automation features that give you
information seamlessly at will, one thing is for sure, automation in every industry is on the rise.
Logistics automation in a transportation management system surely helps drive efficiency, eliminate
waste, and most importantly helps save money in your transportation department. How have you
employed automation in your every day life and in your workplace? Let us know in the comments
section below!