Transportation and logistics go hand and hand, and they play a symbiotic role as materials and goods make their way through the supply chain. Because these two business units are so closely related, people often have difficulty differentiating between the two.
Today, we’re going to take a closer look at the role of transportation in logistics and how logistics work to move the business forward across the globe.
The concept of logistics was born from the military, and it’s the term used to describe the movement of troops, supplies, and equipment from one point to the point where they’re deployed in battle.
The term has since evolved into its current business application, but the basic concept of logistics is still the same. Today, businesses understand logistics as the movement and storage of supplies, inventory, human capital, and equipment from one location to another and throughout the manufacturer's supply chain to the end user.
This may include moving from one storage destination to another, from storage to a distributor or retailer, or from the retailer to the end-user. As goods are made from raw materials and then shipped throughout the world for purchase, logistics are involved in every step of the process.
The goal of logistics management is to streamline the different logistics aspects to help improve efficiency while reducing costs across the board. There are many complex logistics functions, and managing them is as much an art as a science.
Logistics is a multifaceted discipline that encompasses several different critical business functions. To fully understand logistics, it can be helpful to consider each of the areas that make up the field, which include:
● Transportation - inbound and outbound● Warehousing● Fleet management● Material handling● Fulfillment● Inventory management● Inventory planning and forecasting● Demand planning and forecasting
Together, all of these different functions make up logistics. Beyond these higher-level functions of logistics, it’s also possible to take a more granular look, as well. Logistics will also include things such as:
● Containerization● Packaging● Storage● Import/export regulations● Partner and vendor relationship management● Insurance● Documentation
While transportation is merely one component of logistics, the role it plays cannot be overstated. Transportation is a requirement of logistics running smoothly, and without transportation, the logistics department wouldn’t be able to get anything done.
It might be helpful to think about transportation in logistics as a means to an end. Logistics is the careful planning that goes into moving goods, materials, or people from point A to point B. Transportation is merely the vehicle that gets you from one point to the other. If transportation is a tractor-trailer, then logistics is the truck driver, moving the whole operation forward.
Since so much of logistics involves transportation, it’s easy to mistake transportation as the central point of logistics. But, logistics managers are tasked with many responsibilities and obligations outside of transportation.
Logistics managers must also make decisions related to packaging, importing and exporting, insurance, documentation and regulations, freight damage, and so much more. As the logistical demands of a business grow, it’s common for them to partner with a company that provides logistics solutions for their needs.
From receipt to production to distribution, logistics encompasses every function of getting your customers the goods or services they’ve requested. Beyond that, logistics is also the company’s strategy for warehousing products and materials, tracking orders, and ensuring safe delivery.
In short, logistics is the business aspect that oversees the process from when a customer places an order to when they receive it.
We know that transportation is the process of goods or materials moving from one place to another and that it’s a function of logistics. Under the umbrella of transportation are three subsets which a business must engage to move goods or materials from point A to point B. These areas are:
● Operations Management● Infrastructure Administration● Fleet Management
Operations management oversees transportation as a whole and makes decisions to improve transportation systems' efficiency throughout the supply chain.
Infrastructure administration is responsible for implementing and maintaining the systems that each department relies on.
Finally, fleet management handles the vehicles necessary to move goods and materials throughout the supply chain.
Depending on the size of a business, a single department or even a single employee may handle all three functions. Keeping in mind that there’s more to logistics than transportation, it’s easy to see how logistical needs increase as the business grows.
Now that you’re armed with a solid understanding of what separates transportation and logistics, let’s take a closer look at how these two disciplines work hand in hand to move the business forward.
To effectively and efficiently manage the logistics of a company, you’ll also need to develop a transportation network that’s flexible enough to respond to the business's needs while also keeping costs as low as possible.
An effective transportation network allows a business to forecast and anticipate issues and concerns while eliminating downtime or disruption to the logistics department as a whole. By optimizing these workflows, your business can respond to the needs of your customers, provide them with a great experience, and keep costs low.
As businesses grow, they’re often overwhelmed by the growing logistical demands that their company faces. Many businesses find themselves outgrowing their current logistical structure, and streamlining the processes and functions of the department is a requirement for continued growth.
A third-party logistics partner, or 3PL, can assume the logistics department's growing responsibilities, such as transportation, packaging, labeling, order fulfillment, and much more. Moreover, a logistics partner brings expertise to the table that many businesses lack.
If your business is outgrowing your current logistical arrangement, consulting with a third-party logistics partner is a great way to position yourself for continued growth. In many cases, outsourcing logistics can also save you money.
At Gilbert International, we work with businesses across a broad range of industries to provide logistical support throughout the supply chain. Our diligent work allows our customers to focus on continued growth and success instead of the demands of logistics management.
There are many reasons to outsource logistical responsibilities to a specialist. Let us look at some of the many benefits that your business can realize by working with a third-party logistics partner.
A third-party logistics provider has a depth of experience, technology, and processes that would be prohibitively costly for even the richest companies in the world to develop in house.
Not only does an experienced logistics provider bring the personnel your business needs to optimize your operations, but they also have a suite of analytics-driven technology that can help further streamline your business while reducing logistical costs.
For businesses expanding into foreign markets, this expertise is especially important. A logistics partner with experience internationally can help you find new opportunities while also reducing the massive costs of trial and error as you get your bearings in new territories.
Consumer expectations are higher than ever, and if your logistics department is unable to keep up, it’s going to lead to poor experiences for your customers. A strong management strategy that strives to optimize transportation and logistical processes can help meet and exceed those expectations while also limiting disruptions.
Many businesses that lack their own fleet work with transportation brokers to move their goods or materials from point A to point B. The relationship between a business and a transportation broker is purely transactional, whereas a third-party logistics provider strives to build long-term relationships that result in mutual success.
By outsourcing logistics, you’ll be working with an experienced professional who will work to provide you the best in service while streamlining costs.
When a business partners with a 3PL, they can delegate logistical responsibilities without losing control over them. A capable 3PL will work with you to deliver optimal results based on your guidance.
Plus, the added insight that a 3PL can provide into your logistical operations can help guide future decisions, helping to achieve greater synergy between you and your 3PL.
One of the largest benefits of outsourcing logistics is that it insulates your business from the hazards of scale. With a trusted logistics partner, you can quickly scale up or down to respond to customer demand without concern for personnel costs, equipment, real estate, or other investments.
For businesses just getting their footing, a third-party logistics partner can provide the basic services you need without requiring massive investments in personnel or infrastructure. As your business grows, your logistics partner will be able to increase capacity or add services as necessary.
For businesses looking to expand their distribution throughout North America, a 3PL is especially useful, as they can provide services like customs brokerage and bonded warehousing.
As intelligent software is deployed throughout the supply chain, businesses must make significant investments into systems and technology that support customers and suppliers' demands.
Perhaps the greatest benefit to working with a 3PL is the vast technology at their fingertips that your business wouldn’t otherwise have access to. Working with a 3PL provider eliminates the need for you to make significant investments in these systems or the personnel requirements that come with them.
These systems seamlessly integrate with the tools your business already uses, and they can provide added benefits like real-time inventory updates, AI insights, delivery teams, status updates, and more.
Partnering with a logistics provider can also provide you with enhanced visibility into your supply chain. Through historical analysis and real-time tracking, your 3PL can provide your executive team with new insights and a clearer picture of how goods or materials move throughout the supply chain.
From there, those insights can be used to inform decision making and help you further optimize your logistical processes.
A solid logistics partner has a myriad of different services that they can provide their partners. Since each business is unique, you’ll work with your logistics partner to create a tailored plan of action, and you’ll never pay for services that don’t add immediate value to your business.
As a business grows, managing logistical demands becomes a full-time business in and of itself.
Not only will you need more specialized personnel, but the costs of equipment, storage, and transportation can be excessive, especially for smaller businesses with limited cash flow.
With 3PL, you can focus your resources on what you do best without having to worry about the significant logistical demands that come with your business.
Transportation is one of the largest and most critical aspects of logistics. Without transportation in logistics, businesses wouldn’t be able to move goods and materials efficiently throughout the supply chain.
While transportation encompasses a large part of logistics as a whole, the other pieces of the puzzle, such as warehousing, fulfillment, and inventory management, are just as vital to efficient and effective logistics.
Gilbert International is a leader in the transportation, distribution, and logistical services space, and we serve as the trusted partner our customers need to manage their logistical concerns. We’re a veteran-owned company with over 80 years of experience in the industry, and we maintain one of the largest distribution facilities along the United States-Mexico border.
At Gilbert, we’re experienced in all phases of logistics management, including transportation, distribution warehousing, customs brokerage, and more. No matter how specialized your business, we have the equipment, personnel, technology, and expertise to manage all of your logistical needs.
Our focus is on providing each customer with exceptional and personal service at a competitive price. With our sterling reputation and an ideal location, Gilbert International is proud to be a leading 3PL provider, and we’re eager to learn what we can do to help propel your business forward.