Generally speaking, logistics is the management of moving things, such as products and goods from their point of origin to the end-user. Normally this is the movement of food and other consumables, supplies, hardware or material from the manufacturer to the customer or client who has ordered and purchased the item in question.
You may already understand that side of logistics, but did you know there were 6 different types of logistics? In the following post, we highlight these 6 kinds of logistics that are most used and give a brief insight into what each involves.
Inbound logistics, as inferred by the name, involves the activities required for the incoming resource flow that a company needs to manufacture a product or setup a service. It can involve the management of supplies, inventory, costs and transportation to make sure the correct components and units or sub-assemblies reach your factory or manufacturing plant on time.
Inbound logistics is perhaps the most complicated of the three as it often involves many hundreds of parts and units coming in to be manufactured into one single product or a line of products.
Outbound logistics, on the other hand, is the part of a supply chain that involves the activities required to deliver the correct product to the correct end-user or customer at the correct time for the lowest price possible. With outbound logistics, the most important thing is ensuring you provide the best experience for a customer. This is why so many companies try to offer same-day or last-mile delivery services to the customer.
Distribution systems are imperative to successful outbound logistics. The transportation systems and distribution channels a company use should support the level of value it is looking to provide to its customers. The retail sector, the online and e-commerce industry, is where effective and efficient outbound logistics is needed most. If you consider companies like Lazada, Walmart and Amazon, who are successful in this area, they are always improving and upgrading their facilities and the technology they use to enhance their logistics performance.
It may sound a little strange at first, but reverse logistics makes a lot more sense when you really think about it. Reverse logistics involves the movement of products back to their point of origin from the customer or client who is the end-user so that they can be disposed of properly or so the company can recover their value.
How is the value recovered? Through recycling or even governmental incentives for proper recycling practices and products, scrapping, reusing, refurbishment or reworking.
Take an iPhone as the perfect working example of what reverse logistics is and why it is so valuable. When an iPhone is sold, if there are any defects in it of any kind, and it is still covered by its warranty, it can be returned to their carrier network who then ships it back to Apple who then refurbishes it.
At the factory, the team inspect the phone to see what the issues are and then replace the software and parts that need to be replaced and fix whatever needs to be fixed. That iPhone is then given a new model number or serial number and put back out for reselling, so Apple benefits from the value generated.
Many different types of product returns involve reverse logistics, such as end of life, refurbishment, recall or commercial return. It is therefore important for companies to have the infrastructure and systems in place to handle returns so that they can increase their visibility and recaptured value while reducing recovery costs.