How to Improve Logistic Operations [Copy These 4 Processes]

Logistic operations is an important element of the supply chain and entails the movement of completed items from manufacturer to consumer.

The logistics process as a whole includes inventory management, fulfillment and shipment of orders.

In this blog post, we will:

1. Define Logistics simply and more in-depth
2. Break down the key elements of logistics operations
3. Explain each of the 4 key processes of logistics operations management, which are:

• • Procurement
  • Transportation management
  • Warehousing
  • Order fulfillment

Afterwards, we will show exactly how 3PL fulfillment companies like Launch Fulfillment can help improve your logistics operations as a whole.

What are logistics?

To start simply, logistics, at its very core, is getting things to where they need to go, when they need to be there, and in the right condition.

Nowadays, the complexity of a global supply chain take the term logistics to a whole new level.

Here is a better break down of logistics and what they mean for modern ecommerce business:

• Logistics

  • Definition: Logistics Operations are a key part of supply chain management handling the forward and reverse flow of goods, services, and information from origin to consumption based on customer needs.

  • Scope: Covers everything from the movement and storage of raw materials, semi-finished, and finished goods, to essential services like garbage collection, mail deliveries, and public utilities.

  • Economic Impact: Dan Gilmore of Supply Chain Digest estimates that “logistics costs were 8.6% of [the U.S.] GDP” in 2023. While that’s down from “10.5% in 2022,” it’s still a huge portion of GDP in the United States.

• Key Aspects

  • Movement of Goods: Logistics involves transporting goods from suppliers to manufacturers, between plants, and to consumers.

  • Storage and Inventory: This includes warehousing and managing inventory to ensure goods are available when needed.

  • Information Flow: Logistics also manages the flow of information to track and control the movement and storage of goods.

  • Efficiency and Cost-Effectiveness: The main goal is to meet customer needs in a timely and cost-effective way.

Clearly, logistics operations are an integral part of the supply chain process.

So, let’s discuss exactly what these processes are and how third party logistics contribute to the detailed coordination of these goods and services.

Logistics Operations Explained in Detail

Instead of a surface level overview, let’s explore an in-depth look at each process for any logistics operation.

1. Procurement: Inventory Management Begins

Think of procurement as the “shopping department” for a business.

It’s responsible for finding the best suppliers, negotiating good deals, placing orders, and maintaining good relationships with suppliers.

This ensures the company gets what it needs to operate efficiently and at the best possible value.

It involves strategic planning, supplier selection, and purchasing activities to ensure the right items are acquired at the right time, quality, and price.

Key Activities:

Supplier Identification and Evaluation

• Research potential suppliers and assess their capabilities, reliability, and fit with organizational needs.
• Conduct due diligence on suppliers’ financial stability, quality standards, and ethical practices.

Negotiation and Contract Management

• Discuss and agree on terms with suppliers, including pricing, delivery schedules, and quality standards.
• Create, maintain, and renew contracts to ensure ongoing compliance and value.

Purchase Order Creation

• Issue a formal document to a supplier, detailing types, quantities, and agreed prices for products or services.
• Serve as a legally binding document between the buyer and seller.

Supplier Relationship Management

• Build and maintain positive, long-term relationships with key suppliers.
• Conduct regular performance evaluations, collaborative problem-solving, and strategic partnerships.

Importance in Supply Chain

It is crucial for:

• Cost reduction and control
• Ensuring quality and timely delivery of goods and services
• Mitigating supply chain risks
• Driving innovation through supplier collaboration

2. Transportation: Key Aspect to Logistics Management

Transportation is essential in supply chain management, focusing on moving goods efficiently, on time, and in good condition to ensure customer satisfaction and operational efficiency.

It connects different stages of the supply chain, ensuring a smooth flow of goods.

Key Activities in Transportation

Route Planning and Optimization

• Determine the most efficient paths for transporting goods to minimize travel time and costs.
• Analyze traffic patterns and road conditions.
• Use software tools for route optimization.
• Plan for contingencies like weather disruptions.

Carrier Selection and Management

• Choose reliable and cost-effective transportation providers.
• Evaluate carrier performance and reliability.
• Negotiate contracts and rates.
• Cultivate relationships with carriers.

Shipment Tracking and Visibility

• Monitor the movement of goods in real-time to ensure timely delivery and address any issues promptly.
• Implement tracking systems (e.g., GPS, RFID).
• Provide real-time updates to customers.
• Analyze shipment data for performance improvements.

Freight Management and Optimization

• Learn the logistics of transporting goods, including consolidating shipments and optimizing load capacities.
• Consolidate smaller shipments into larger loads.
• Optimize freight costs and load efficiency.
• Manage different modes of inbound and outbound transportation management (e.g., fleet management, air cargo, sea, etc).

Customs Compliance and Documentation

• Ensure all shipments comply with international trade regulations and maintain proper documentation.
• Prepare and manage customs documentation.
• Ensure compliance with import/export regulations.
• Handle duties, taxes, and tariffs.

Importance in Supply Chain Management

Effective transportation management is crucial for:

• Reducing operational costs
• Enhancing customer satisfaction through timely deliveries
• Improving supply chain efficiency and reliability
• Facilitating global trade and market expansion

3. Warehousing: Inventory Management Systems

In a simplified way, storing goods in an organized way to ensure they are ready for delivery when needed.

Warehousing is crucial in supply chain management, focusing on the storage and supervision of inventory.

It ensures goods are stored efficiently and are available for distribution when needed.

Key Activities in Warehousing

Receiving and Inspection

• Accept and inspect incoming goods to ensure they meet quality standards and order specifications.
• Unload goods from transportation vehicles.
• Verify quantities and quality against purchase orders.
• Inspect for damages or discrepancies.

Put-away and Storage

• Move received goods to designated storage locations within the warehouse.
• Assign storage locations based on product type and demand.
• Use warehouse management systems (WMS) for tracking.
• Your effective warehouse management system ensure optimal utilization of space.

Order Picking and Packing

• Select and prepare items from inventory to fulfill customer orders.
• Pick items based on order specifications.
• Pack items securely for shipment.
• Use technology to improve accuracy and speed.

Inventory Management and Control

• Monitor inventory levels to ensure optimal stock levels and minimize carrying costs.
• Conduct regular inventory audits and cycle counts.
• Use inventory management software for real-time tracking.
• Implement strategies to reduce excess inventory and stockouts.

Shipping and Order Fulfillment

• Prepare and dispatch orders to customers.
• Prepare shipping documents and labels.
• Coordinate with carriers for timely delivery.
• Ensure accurate and complete order fulfillment.

Importance in Supply Chain

Effective warehousing is crucial for:

• Ensuring timely and accurate order fulfillment
• Reducing operational costs through efficient inventory management
• Enhancing customer satisfaction by minimizing errors and delays
• Supporting overall supply chain efficiency and reliability

4. Order Fulfillment

Order fulfillment is the complete process from receiving a customer order to delivering the product to the customer.

It ensures that customer orders are processed efficiently and accurately.

While it is the 4th logistic operations process, there are some key elements we can clarify even further.

Key Activities in Order Fulfillment

Processing Orders

• Handle customer orders from receipt to preparation for shipment.
• Retrieve orders from the order management system.
• Verify item availability and update inventory records.
• Generate picking lists and packing slips.
• Ensures orders are accurate and ready for the next stages of fulfillment.

Picking and Packing

• Select and package items for customer orders.
• Pick: Locate and collect items from storage based on the picking list.
• Pack: Place items in appropriate packaging, add protective materials, and include necessary documentation.
• Ensures the correct items are shipped in good condition, minimizing errors and damages.

Shipping Orders

• Send the packed orders to customers.
• Choose the appropriate shipping method and carrier.
• Print and attach shipping labels with tracking information.
• Hand over packages to the carrier.
• Ensures timely and accurate delivery to customers, crucial for customer satisfaction.

Handling reverse logistics (i.e. Returns and Exchanges)

• Handle returned items from customers.
• Receive and inspect returned items.
• Process refunds or exchanges (crucial to logistic operations).
• Restock items if they are in sellable condition.
• Essential for maintaining consumer trust and inventory effectively.

Importance in Supply Chain

Effective order fulfillment is crucial for:

• Ensuring timely and accurate order fulfillment: Reduces delays and errors, enhancing customer satisfaction.
• Reducing operational costs: Efficient inventory management minimizes carrying costs and wastage.
• Enhancing customer satisfaction: Accurate and timely deliveries build trust and loyalty.
• Supporting overall supply chain efficiency and reliability: Streamlined logistic operations ensure a smooth flow of goods through the supply chain.

Can Ecommerce Business Optimize Logistics Operation?

It’s one thing to know what these logistic operations are, but it’s another thing entirely to know how to optimize operations management for your ecommerce business.

Let’s use these four key processes to see how logistic operations can be improved:

1. use Advanced Inventory Management Systems

• Description: Use advanced software to track stock levels in real-time, forecast demand, and manage replenishment.
• Benefits: Reduces stockouts and overstock situations, ensuring products are available when customers place orders.

2. Adopt Warehouse Management Systems (WMS)

• Description: Use advanced WMS to manage activities like inventory tracking, order processing, and space utilization.
• Benefits: Improves accuracy, reduces manual labor, and provides real-time visibility into inventory levels.

Pro tip: Design your warehouse layout to complement your logistics operation.

• Pro tip Strategy:
  • Use slotting optimization to place high-demand items in easily accessible locations.
  • Implement cross-docking to streamline the flow of goods.

3. Leverage Data Analytics to Improve Logistic Operations

• Description: Use data analytics to understand consumer behavior, demand patterns, and supply chain performance.
• Benefits: Helps make informed decisions, optimizing inventory management, and improving overall logistics operations

Partner with a 3PL for Peak Operations Management

Of course, if you’d like to focus on the success of your business, ecommerce brands can always gain a competitive advantage over your competitors and hire a 3PL logistics operational management team to do the work for you.

Companies like Launch Fulfillment work with ecommerce brands every day and have a strong relationship with major carriers in their network.

If your curious how 3pls improve your logistic operations, read on to the next section.

Third Party Logistics for a Competitive advantage

Now that you have a full understanding, let’s review each step in the logistic operations process one last time and hold them side by side with logistics management for 3PL services.

In doing so, we will see how each step in the supply chain management system coincides with individual 3pl services.

1. Procurement

• Description: Acquiring the necessary materials, components, and services for production or delivery.
• Key Service:
  • Supplier Management: Identifying and evaluating relationships with suppliers.
  • Inventory Management: Monitoring stock levels and placing orders to replenish inventory.
  • Purchase Order Management: Creating purchase orders in a timely manner.
  • Inbound Logistics: Coordinating the transport of goods from suppliers to the 3PL warehouse.
  • Quality Control: Inspecting goods upon arrival to ensure they meet quality standards.

2. Transportation

• Description: Moving goods from one place to another.
• Key Service:
  • Freight Management: Coordinating the transportation of goods, including truckload (TL), less-than-truckload (LTL), and intermodal transport.
  • Route Optimization: Planning and optimizing delivery routes to reduce costs and improve efficiency.
  • Carrier Management: Selecting relationships with carriers for reliable transportation.
  • Freight Forwarding: Managing the shipment of goods across different modes of transport (air, sea, land).
  • Customs Brokerage: Handling customs clearance and compliance for international shipments.

3. Warehousing

• Description: This involves storing and managing inventory, including tasks like receiving, storing, picking, packing, and shipping.
• Key Service:
  • Storage Solutions: Providing warehousing space for short-term and long-term storage of goods.
  • Inventory Management: Using warehouse management systems (WMS) to track inventory levels.
  • Picking and Packing: Selecting items from inventory and packing them for shipment.
  • Cross-Docking: Transferring goods directly from inbound to outbound transportation with minimal storage time.
  • Kitting and Assembly: Combining individual items into kits or assembling products before shipping.

4. Order Fulfillment

• Description: This process covers everything from receiving an order to delivering it.
• Key Service:
  • Order Processing: Receiving and processing orders, including order verification and inventory allocation.
  • Picking and Packing: Selecting items from inventory and securely packing them for shipment.
  • Shipping: Coordinating the shipment of orders to customers using various carriers and delivery methods.
  • Returns Management: Handling returns and exchanges, including inspecting returned items and restocking or disposing of them.
  • Customer Service: Providing support to customers regarding their orders, including tracking and handling inquiries.

Logistics Operations Can Always Be Improved

As your ecommerce brand grows, so too will the needs of your logistic operations. That’s why 3PLs focus on scaling your logistics operations and improve the material flow of finished goods to the customers.

If you aren’t sure whether you have enough demand for a 3PL company to optimize your logistics operation, get in touch with a team member at Launch Fulfillment and they will give you their honest opinion.

At the end of the day, it is essential for you to optimize your logistics operation and see how each process can benefit customers directly.

You should focus on your business – let Launch Fulfillment focus on helping you scale that successful business.