Logistics is the heart of any business; it mobilizes the goods & services of the company from the point of origin to the consumption point. Business is not all about the product and its features only, the product might sell with good marketing but unless it reaches the customer on time the entire purpose is not served.
Logistics is one word, but it comprises an entire ecosystem about the movement of goods. It starts from raw material coming to the production site and extends up to finished goods reaching in the endpoint of retailing. For better understanding, the concept can be classified into four types.
Types of logistics:
1. Procurement logistics: Business runs on a constant flow of raw materials and equipment and they are optimally ordered to reduce stock and warehousing cost. So an on-time delivery of raw material for planned production can be achieved with a robust logistics system.
2. Production logistics: Production logistics is the movement of raw material from different production stages until the making of finished goods. It also comprises of product management, packaging, and transporting to warehouses. It is generally an in-house logistics.
3. Sales logistics: By the term logistics it typically refers to sales logistics. After production, the main goal of the producer is to deliver the goods from warehouses to wholesalers and retailers for the end purpose of sale. Nowadays the goods can also be directly delivered to the end customers via e-commerce platforms. These activities are achieved by well-managed logistics.
4. Recovery logistics: This is a reverse logistics system by which the company recovers discarded items for recycling: returned goods, containers, and reusable packaging are transported by this kind of logistics.
What is a logistics company?
Any business comprises many departments like production, administration, marketing, sales, etc. Their goal is to produce goods or services and sell them with a good marketing network and therefore products should reach the distributor. The process of distribution is done via logistics. But Logistics is an expensive & complicated affair consisting of warehousing, transportation, duties & customs, insurance, etc. Most of the companies including big companies do not want to maintain such an elaborate mechanism so they outsource the entire job to some dedicated companies. These companies are called “logistics companies” they take care of end to end services comprising shipping, etc.
There are many kinds of Logistics Company services varying on ranges of job they do and kinds of liabilities they undertake for the mother company, but mostly they are called third-party companies. The kind of company is defined by the job they undertake; let’s see what the types are:
- Transportation based 3rd party logistics company: This kind of companies offers the entire transportation solution for the client company.
- Warehouse/Distribution based Third Party Company: These kinds of companies offer warehouse facilities for distribution purposes along with transportation facilities.
- Forward based third party Logistics Company: These kinds of companies are generally act as brokers for all logistics solutions, they don’t have their own assets but they hire one to do the job. They also undertake legal compliances for the client company.
- Shipper/Management based Third Party Company: They are the professional all-rounder third party company. They take care of the freight and shipping tasks from end to end and maintain a robust transportation management system to tackle even heaviest consignments, they take care of accounting and all third party claims, etc.
The trend of outsourcing logistical job to logistical companies have created a more optimized and efficient business environment for both the producer and the logistical companies. Now the client company can focus on parameters like product design, output efficiency as well as sales & marketing. On the other hand, Logistics companies specialize in all facets of logistics be it warehousing, freight, and shipping or legal compliances, they only need to invest in assets dedicated to logistics companies to improve the efficiency of the whole process. This evolution has created a win-win situation for everyone.