Logistics are often grouped together as a whole collective field, but there are actually various types of logistics related to different fields of focus. The area of focus and the stage a product or good is in determines the relevant type of logistics. By definition, logistics is a set of phases involved from a product’s beginning, manufacturing stage to the end stage of the consumer.
There are two basic distinctions in logistics: operations executed in the warehouse, such as storage, called intralogistics, and operations fulfilled outside of that, such as order delivery, called external logistics. After deciphering those beginning concepts, there are four types of logistics that are involved in the supply chain process: procurement, manufacturing, distribution, and reverse. Let’s take a deeper dive into each of those concepts.
Procurement Logistics
The procurement logistics stage is directly responsible for managing the supplies that are required for the manufacturing of raw materials, semi-complete goods, and completed products. Most companies have three ways they manage procurement logistics:
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Safety Stock: This tactic consists of storing more goods than necessary for the production process. Safety stock can help prevent any unforeseen circumstances, such as higher demand.
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Just-in-Time: Just-in-time refers to materials required to execute production being received when they are needed and not in advance. This eliminates the need to store the materials, but also eliminates the ability to be prepared for unforeseen circumstances.
- Synced With Production: Supply planning is implemented with the goal of being able to anticipate the manufacturing needs of individual companies. This helps us understand the quantity merchandise or materials needed ahead of time and how much will be received.
Manufacturing Logistics
Manufacturing logistics, sometimes called industrial logistics, involves optimizing all processes that take place from the purchase of raw materials to the creation of the finished product. Manufacturing logistics aims to reduce lead time or the time between a production order being placed and the product being finished. There are two common production tactics:
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Make-to-Stock – also coined the push system, make-to-stock involves goods that are manufactured in advance and stored in the warehouse. Therefore, the inventory Is available to sell at any given time.
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Make-to-Order – also coined the pull system, make-to-order involves products being manufactured once an order is received from the customer. There is no available backstock or inventory to sell until a customer places an order.
Distribution Logistics
Distribution logistics, which is sometimes also called transport logistics, consists of ensuring goods, products, or materials reach the customer in an efficient timeframe. If you cannot guarantee your customer a reasonable timeframe, a quality product, or a correct number of items, your business will not reach its full potential. There are two subsets in distribution, which are as follows:
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Indirect: as opposed to end consumers, the merchandise is sent to other wholesalers or to retailers (who sell to end consumers).
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Direct: the manufacturer is charged with distributing the product directly to end consumers.
Distribution logistics intervene right after the product has been manufactured, encompassing transportation, storage, order preparation, and delivery to the customer.
Reverse Logistics
Reverse logistics encompasses managing and executing anything after the customer has received their order, such as managing refunds and handling returns or exchanges. This specific process is crucial. If returns and refunds are not handled correctly, they can interfere with other stages of operations and cause inefficiency or confusion. There are two distinctive types of reverse logistics:
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Waste Logistics – As the name suggests, this entails any disposal or waste management, such as treatment, recycling, and any recovery of waste in order to eliminate any environmental damage.
- Returns Logistics – This specific sector of reverse logistics refers to any customer-based responsibility, such as returns or refunds. Most often these items are sent back to the distribution centers. Returns logistics have become increasingly popular due to the growing e-commerce market.
Inbound Vs. Outbound Logistics
Inbound Logistics:
Inbound logistics is centered around managing incoming inventory and supplies. This category focuses on sourcing materials required by analyzing pricing, purchasing the needed materials, and scheduling delivery to distribution centers, such as stores or warehouses. In short, inbound logistics oversees the process of products and goods traveling from suppliers to their respective production locations. Once the products or goods arrive at a warehouse, they are monitored for inventory levels and storage purposes. Additionally, inbound logistics also takes care of tracking orders and monitoring their locations.
Outbound Logistics:
Outbound logistics covers the other necessary side, like delivering products or goods to the customer at the expected time. This specific type of logistics can span several areas, such as packing, shipping out completed products, monitoring order fulfillment, inventory management, and more. Think of this management as any and all processes needed to move goods and products from a distribution center to the customer.
Types of Logistics Strategies
- Omnichannel Logistics – This strategy entails the practices implemented by a company to meet new digital consumer needs. For example, a product can be purchased online but returned to a local store. With omnichannel logistics, warehouses manage high volumes of orders containing smaller amounts of units and work under tight time frames.
- Green Logistics - Also referred to as sustainable logistics, this strategy ensures that sustainable activities are executed. Green logistics, as the name implies, aims to ensure the environmental footprint of a company is reduced.
- Logistics 4.0 – This strategy is digitally focused, with the idea centered around automating all logistics operations. Logistics 4.0 includes automated systems, but it also provides information digitization, utilizes cloud-based apps, and aims to automate the management of warehouses.