Basically,the whole complex of logistics services is the value chain that links the manufacturer to the consumer. These are all the elements of your supply chain that spans across from your supply chain from the manufacturer to the end customer.
These include the transport of the goods from the manufacturer to the warehouse, the warehousing and order fulfilment, and finally, the delivery to the end-user customer.
Logistics services dynamics
However, this is basically a simplified view of the logistics services. On closer look, there are many different options, choices, and dynamics that are present in each of the stages across the supply chain.
The dedicated businessmen can choose different types of logistics services in order to follow the needs of their ecommerce companies. The following are some of the most common types of 4PL services by ecommerce companies.
When you place your purchase order with your manufacturer, or with a wholesale supplier, or with a distributor, logistics is involved. This is the main process of getting the freight from the point of origin to your fulfilment warehouse.
In short, freight forwarding is the main process of shepherding a shipment from the manufacturer to the fulfillment center.
Forwarding domestic freight includes the arrangement for the trucking, rail shipment, or air transport. The transport of full truckloads (FTL) or less than atruckload (LTL) shipments of bulky or heavy items is almost always by rail or truck.
Freight forwarders might use air freight for orders that need to be expedited shipping or those considered high-value products.
In international freight forwarding, there usually is the involvement of additional layers of complexity. This includes customs paperwork at both ends of the journey, duties, and multi-modal transport.
International freight typically travels by container ship in either FCL (full container load) or LCL (less than container load) shipments. For lighter or more valuable products, this is done via air freight.
During the COVID-19 pandemic, the orders of PPE were shipped by air freight. Electronics manufacturers also commonly use air freight to transport their goods. On the other hand, container ships transport everything from automotive parts to clothing.
At present, when supply chains become ever more global, international freight forwarding is something that many ecommerce businesses need.
You can work directly with a freight forwarding company to handle the paperwork and arrange transport for your goods. You can also use a logistics services provider to manage international freight forwarding along with other 4PL services.
Whatever option you choose will be dependent on the size of your company. To save you money on shipping, a freight forwarding company can bundle your LCL shipments with those of other companies.
The advantage of using a logistics services provider is that the 4PL aggregates a large volume of shipments. The freight forwarderswork with by having an incentive to provide better service.
Every successful commerce business has the foundation of using inventory planning and management. This had been proven to relieve the pain of automating your inventory management as much as possible.
A logistics services provider usually has an inventory management solution that integrates with warehousing services. This is employed to give inventory visibility, stock out projections, and the data on order trends.
An inventory management solution from your logistics provider can provide data to help you generate inventory forecasts and improve your inventory replenishment processes. The net result of better inventory management is fewer backorders and greater profitability.
The catch-all for a range of logistic services is called third party logistics (3PL). most of the 3PL services companies will provide the basics of ecommerce fulfilment: receiving, warehousing, pick and pack order fulfilment and outbound shipping.
The 3PL may also provide additional logistics services, including returns (reverse logistics), kitting and assembly, as well as FTL and LTL shipping. For ecommerce companies that outsource their order fulfilment, 3PL companies become valuable business partners.
Example: logistics services
A furniture company sells comfortable chairs and couches online to U.S. consumers. The furniture is manufactured in China, so the company needs help with the logistics to transport the products to its U.S. third-party logistics company.
The shipments weigh a minimum of 40 pounds. When someone orders a living room set, the total weight can top 150 pounds.
The company’s logistics provider evaluates its shipping options and finds the right freight forwarder to ship bulky chairs and sofas by ocean rather than air.
The company’s freight forwarder makes sure the paperwork meets local border control requirements before the container of furniture is loaded onto the ship in China. It also ensures that the container has cargo insurance in place.
If the container isn’t full of couches and chairs, the freight forwarder tries to save the company some money by consolidating the shipment with other compatible goods.
When the container ship reaches port in the U.S., the freight forwarder once again makes sure the paperwork is in order so the furniture can clear customs. After the container arrives in the U.S., one 4PL service might help to break the bulk of the goods or split the container into LTL shipments for distribution to multiple fulfillment centers.
The final step for the freight forwarder is arranging for truck transportation to the fulfillment warehouse. Because the company uses a logistics provider, its supply chain manager has a single contact point throughout the process. In addition, the 4PL handles any issues that arise during the freight forwarding process.
Inventory management / fulfillment
In the warehouse, the company further benefits from more logistics services. Its 3PL warehouses the furniture and ships wholesale orders to retailers using LTL freight shipping.
This is true, for customer deliveries that weigh more than 150 pounds are also good candidates for LTL shipping.
The freight company can deliver the items directly to the customer’s home. For furniture shipments under 150 pounds, the fulfilment company may use UPS and FedEx services.
The 4PL inventory management system helps the company to stay on top of its inventory and avoid stockouts. The system analyzes order trends to help the company know when its inventory hits the reorder point.
By taking advantage of a full range of logistics services, the company frees its staff to actually focus on higher-level tasks, expanding the business and boosting its bottom line.
In logistics services, collaboration is one great way to find efficiencies that can save money. There is also an advantage of getting to have one point of contact for all your logistics services rather than juggling multiple vendors.