In this day and age of online business and e-commerce, the rules of businesses are being re-written. The marketer no longer enjoys the status of 'the king'. Today, the customer is the king, and it is the customer who decides what stays in the market and what perishes.

         In such a situation, customer satisfaction becomes the key objective for all organizations to survive and grow. Hence, companies look for better and more cost-effective ways to serve customer needs. The logistics process or supply chain is a result of this search.

What are Logistics & Types of Logistics?

Having originated from the military dictionary, the term 'logistics' was initially used to describe how armed forces obtain, store, and move their equipment and supplies. In recent times, the business sectors have borrowed this term and are using it to describe the overall process of moving goods from their shop floor to the customer's home along the supply chain. The logistics processes involve various activities like acquiring, storing and transporting goods and services to their final destination. 

Types of Logistics:

Depending upon the direction of material flow and the processes involved, there are different types of logistics. Most logistics companies, like Varuna Group offer broadly following types of logistics:

1.  Inbound Logistics: This refers to the flow of information, goods and services from vendors into the production facilities. The activities include managing vendors, ordering and procuring raw material, managing inventory and transportation. The most critical aspect of inbound logistics is procuring different materials that differ in size, cost, place of origin, use and nature. While placing the order, all these factors need proper consideration. 

2.  Outbound Logistics: Just the opposite of Inbound logistics, this refers to the flow of information, finished product or service from production facilities to the next link in the supply chain. The activities include packaging, warehousing and transporting to the customer location. 

The most critical aspect of outbound logistics is ensuring safe and timely product delivery to the right customer, even at remote locations. It is this aspect, which ensures customer satisfaction.

3.  Reverse Logistics: In the e-Commerce industry, this is a widespread practice. If a product is delivered to the wrong customer, or if the customer wants to return the product, it has to be collected from the customer and returned to the warehouse. This is called Reverse Logistics. 

The most critical aspect of reverse logistics is customer service. The customers should be able to quickly contact the customer care team and send the product back using the 'path of least resistance.  

4.  Third-Party Logistics: For most companies, the logistics cycle is beyond their area of expertise. For such companies, it makes business sense to outsource it to an external third party. This type of logistics is called Third-Party Logistics (or commonly 3PL). This involves end-to-end management of the entire logistics process. 

The critical aspect of 3PL is to design a logistics process that suits the customer's needs. 3PL logistics companies like Varuna Group use the latest techniques and technology to meet customers' needs in a professional manner.   

5.  Distribution Logistics: This refers to the activities and processes involved to ensure that the finished goods reach the delivery location quickly and safely. The delivery location may range from processors to distributors and wholesalers to even end-customers.

Since distribution logistics involves final delivery to end-customers, ensuring delivery to remote locations and even 'Last Mile Delivery' becomes very important.

Main Processes of Logistics Cycle

Having understood the types of logistics, let's understand the Logistics Cycle or the various steps involved in the Logistics Process. The following are the 5 processes involved in a logistic cycle:

• Serving Customers (right place, time, and cost)
• Product Selection (right product)
• Quantification (right quantity and cost)
• Inventory Management (right place, time, and cost)
• Logistics Management Information System (right information at the right time)

1. Serving Customers: The primary objective of the logistic cycle is to provide the customers with the product they need, when they need it, and where they need it. That clearly defines the role of logistics experts as they need to monitor the demand for the products in different locations continuously.
2. Product Selection: To ensure a proper logistics process, it is essential to select the right product to move across the supply chain. This is because product selection has a direct impact on the supply chain.

As a business owner or logistics expert, you need to decide what product(s) you want to move from one point to another. This process of defining the product is crucial as it will determine the kind of warehouse (dry or cold), packaging, mode of transportation, and place of establishment.

3. Quantification: As the name indicates, Quantification estimates the amount or number of products or material to be procured or sourced from the manufacturer or the supplier. This step focuses on assessing the quantity and making a demand forecast accordingly. 

There are times when there is a sudden or unexpected demand for your product. In such cases, you have to import the product or procure it to fulfill the impending demand.

4. Inventory Management: One of the critical steps of the logistics cycle is keeping the inventory carrying cost in control. This calls for a proper and scientific way of managing the inventory. This involves planning when to order, how much to order, where to order, and how to use the inventory.  

Logistics companies like Varuna Group use various techniques like Economic Order Quantity (EOQ), Just in Time (JIT), among others to manage inventory properly.

5. Logistics Management Information System: To ensure the complete success of the logistics process, it is vital to have proper communication between the sender, the supplier and the receiver. 

The entire logistics management system of the supply chain system depends on the efficacy of this communication. To make the process seamless and error-free, it is critical to have proper coordination among these elements. The Logistics Management Information System performs this role. The LMIS plays a crucial role in delivering the right products, in the right quantity, at the right place, at the right time.

Goals of Logistics Process Management Cycle: 

Any logistical cycle is performed with some objectives. Some of the clear cut goals of the logistics process management cycle are as follows:

1. Increasing Efficiency: Be it inbound, outbound, reverse logistics, or any other logistics process, the first goal is the increase the efficiency of the logistics process. The company needs to adopt processes that reduce the time and cost involved in overheads, ordering, transportation and carrying the inventory. This makes the overall process cost-effective.

2. Quick Response: In addition to achieving cost-efficiency, it is important to achieve time efficiency. Today customers expect a faster turn-around-time (TAT). They start expecting the delivery the moment they place the order. Similarly, if they want to return a product or get in touch with the company, a quick response is critical to ensure customer satisfaction.

3. Fewer Surprises: The logistics cycle is a long process involving several steps. An unexpected event can occur at any stage, disrupting the entire supply chain. An unforeseen or surprise disruption during ordering, receiving raw material, manufacturing, packing, dispatch, or even transit can delay or even derail the process. All this may lead to wastage of time and money. Traditionally, a safety stock was maintained for unforeseen events. However, maintaining this stock involves huge costs. Recently, technology has made it possible to track every stage of the logistic process and take precautionary steps to avoid or minimize that delay.

4. Minimum Inventory: To achieve cost-effectiveness in the logistics process, one crucial component is inventory management. Inventory is money, and keeping too much inventory means blocking too much funds. At the same time, having less inventory could result in a stock-out position forcing you to halt the production. The logistic process involves assessing raw material requirements and placing an order using critical metrics like EOQ, lead time, average order cost and JIT to ensure there is never a position of under-stocking or over-stocking. 

5. Reduced Transportation Cost: One more important area of logistics is transportation. It is worthwhile to mention here that the transportation costs are directly determined by the nature and size of the product, time available for delivery, condition of the roads, and delivery location. 

Many logistics companies provide quick, high-quality, small-shipments at a premium. As a rule of thumb, the larger the order size, the larger the shipment, and the longer the distance, the lower the transportation cost per unit will be. 

6. Quality Improvement: The last goal of the logistics process is long-term quality improvement, increasing sales, and enhancing customer satisfaction to build loyalty. This thought has been the breeding ground for the concept of Total Quality Management (TQM), which has become a significant trend throughout the business landscape. 

If a product gets damaged during any stage or if a service promise is not kept, there's nothing much that can be done about it from a logistics perspective. A logistic expense, once made, cannot be reversed. And in case there is an error here, the entire process has to be repeated. This means double the cost. Hence, everyone understands and appreciates the cost and time implications of having to rework a customer order due to an incorrect shipment or in-transit product damages. The aim is to get the delivery right the first time itself. 

Conclusion:

Logistics is no more just moving goods from one point to another in today's competitive world. Well-known logistics companies like Varuna Group have made supply chain management a specialized activity that involves several elements like warehousing, sorting, packaging, and transporting to the desired location within prescribed timelines. 

For a manufacturer or distributor, logistics is like the veins that carry the blood from the heart to the various parts of the body according to the requirements.

The efficiency of the delivery service depends on the various factors listed above. If you are planning to use logistic services, you must keep the above factors in mind.