What is logistics in business

As we have explored as part of our recent series of blogs looking into the world of logistics, this is the industry that manages the acquisition, transport, storage and distribution of resources, typically on behalf of a third party client. While logistics is clearly still a vital component that helps to keep the public sector moving, it is private business contracts that make up the backbone of the contemporary logistics industry. 

A well-designed and effectively executed logistics strategy is essential for every business. Whether that’s a manufacturing company that needs to get its goods from one place to another in order to trade, or a retailer that requires an efficient warehousing and distribution process to help store and ship their products, logistics is key. But how does this work in practice? What processes need to be in place? And why are good logistics so important in determining a business’ success? 

In this blog, Freightline Carriers will answer all of these questions to ensure you are up to speed on this broad topic.  

What does logistics mean in business?

From highly-specialised international air freight services and professional freight forwarding to day-to-day warehousing and distribution solutions, when we talk about logistics in the business sector, we are specifically referring to how these services and solutions are used by private companies (particularly in the manufacturing and retailing sectors) to keep the supply chain moving. In a nutshell, this is the entire process involved in managing stock and transporting a business’ goods and products from point A to point B – including everything required in between. From distribution plans and inventory management to custom clearances and any storage requirements at both ends – this makes up what is meant by business logistics. 

With this in mind, businesses have two options when it comes to their logistics needs – they can either manage all their requirements in-house or they can hire a third-party business logistics partner (3PL), such as Freightline Carriers, to manage all, or just certain aspects, of their logistical processes on their behalf. 

What is a logistics business process?

Logistical processes refer to tasks, jobs, and procedures your business is required to carry out in order for the supply chain to operate effectively. For example:

• Sourcing materials

Manufacturing businesses need to have logistical processes in place that help them to efficiently procure and distribute the raw materials and other components they need to make their products. Not only relating to the transportation of the materials needed, the logistical processes involved in procuring these items requires physically locating, negotiating deals for, storing, and eventually using them.

• Transportation

The first process most people think of when considering business logistics processes, the physical movement of materials, goods and products from one location to another (both inbound and outbound) requires a lot of planning. From sourcing and implementing the best shipping methods for the job to ensuring deadlines are met and goods are kept safe, this is an area in which 3PLs can be particularly helpful. 

• Warehousing

An often overlooked aspect of business logistics, processes that manage and control the storage of a business’ goods need to be well thought out. Not only a case of locating the physical building used to store your goods, warehousing processes should cover everything from the installation and maintenance of the infrastructure to and from your warehouse(s) to the day-to-day use of inventory management systems. This can help you to forecast demand, control stock levels and improve order fulfillment efficiency. 

• Order fulfillment

This is a broader term that can encompass a number of the previous processes mentioned. Order fulfillment is essentially the tracked management of customer orders, from the point a purchase is made to the time it is physically delivered. This process typically involves the use of sophisticated logistical software tools including order management programmes and shipment tracking applications.

Why is logistics important for business success?

The efficiency of a business’ logistical processes have a direct impact on the wider supply chain the organisation operates within, meaning if your processes are not as optimised as they could be, your business may perform less successfully overall. 

To put it as simply as possible, if your business has poor logistics strategies in place, it is likely that this will have a knock-on effect on your supply chain, in turn impacting how effectively you can operate. If, for example, you don’t have an efficient shipping and distribution process in place, customers may be left waiting longer than needed for their orders, or if your warehousing processes are inefficient, your ability to properly manage stock and inventory can suffer. These small inefficiencies can soon snowball and start to affect how your business functions, potentially increasing costs, damaging your business’ reputation and impacting your relationships with supply chain partners. For this reason, ensuring you have a well thought out business logistics strategy in place is absolutely essential