In terms of maximizing the flow of raw materials and finished goods moving in and out of your business, what are your options, and how do you put together the perfect logistics network?

Your business depends on efficient supply chain management and distribution processes. By choosing the right intermediary partners and leveraging current technology, developing a sustainable logistics network that achieves the goal of perfect orders is becoming that much more attainable.

What Is A Logistics Network?

Being an essential component of the supply chain, a logistics network is a system that coordinates the movement of goods between suppliers, manufacturers, wholesalers, retailers and consumers. In particular, a logistics network directly or indirectly manages the transportation, warehousing and distribution of products from point of manufacture to end user.

Logistics networks can be incredibly complex. Just as there are innumerable types of businesses there are just as many combinations of logistics components required to manage day-to-day operations. An optimal logistics network is one that operates at the lowest cost, includes efficient distribution and maintains a reasonable level of customer service. The “right” combination is the one that balances your acceptable level of customer service with asset management, inventory control and operating costs.

Furthermore, the importance and inherent costs of transportation cannot be understated. How well your products move through your logistics network has a direct impact on overall profitability. Therefor choosing the right intermediary and 3PL companies is essential for success.

Logistics Network Modelling

In application, there’s no need to re-invent the wheel in terms of the underlying needs a logistics network serves. Modern logistics can be broken down into individual components that, when assembled in a way that serves a category of business efficiently becomes a model for reuse and adaptation. This logistics network “modelling” concept takes into consideration the following points:

• Production systems
• Locations
• Size of facilities
• Distribution centres
• Transportation modes
• Inventory tracking and tracing
• Management systems
• Operational policies

How these factors are prioritized will be dependant on your type of business. For instance, if you’re in the business of working with hazardous materials, adhering to regulatory and legal guidelines will hold sway over virtually all other modelling aspects.

Regardless of the culture created by your business operations, a perfect logistics network must anticipate likely contingencies associated with profitable growth. That is, include the ability to deal with the occasional unforeseen downturns and market corrections that do pop up over time, and still be able to manifest long term expansion goals.

Logistics Network Design

Logistics network design has become extremely dependent on data. How this data is collected and interpreted has become an art-form in itself. The process of gathering relevant data and interpreting it into meaningful actions can make the difference whether a company thrives or just survives.

Being able to design a logistics network that responds dynamically to market conditions requires data collection and the expertise to translate it into profits. With increasing automation and dependencies on information systems, the inevitable rise of (helpful) AI is also becoming more generally excepted:

“According to Gartner, supply chain organizations expect the level of machine automation in their supply chain processes to double in the next five years. At the same time, global spending on IIoT Platforms is predicted to grow from $1.67B in 2018 to $12.44B in 2024, attaining a 40% compound annual growth rate (CAGR) in seven years.”

Source: Tina Jacobs – Throughput.world

Taking the ten thousand foot view, we can break logistics network design down into two major operating systems: inbound and outbound logistics. Inbound logistics links raw materials suppliers to their respective manufacturers. From there, finished goods flow through intermediary warehousing and distribution centres using outbound logistics to deliver finished goods to customers.

How to Develop a “Perfect” Logistics Network

While no logistics network is truly 100% flawless, there are critical steps that should be followed to get as close to the bullseye as possible. These are:

1. Define your requirements
2. Identify current and potential future demands
3. Research candidate networks to model
4. Analyze transportation, distribution, and service costs
5. Identify alternative networks and contingencies
6. Determine the highest value criteria that matters most to you

Furthermore, it’s important to realize as your business grows, different parts of your business will likely take priority over time. Developing a future-proof logistics network is a matter of planning an expected growth trajectory and fully understanding all the facets that make up, and will make up your supply chain.

What are the Different Types of Logistics Networks?

Modern logistics networks are continuously adapting to the pressures of demands and at the same time, realizing the benefits of incorporating new technologies and forecasting models. The type of logistics network for any given business is wholly dependant on the nature of its related supply chain.

For instance, e-commerce has changed how logistics networks function from the ground up by redefining product fulfilment and last mile delivery. Drop-shipping and third party suppliers have become mainstays for many small businesses which in many cases, never come in direct contact with the products they sell. Their entire type of logistics network operates at arms length through remote partnerships.

Nevertheless, types of logistics networks can be broken down into a handful of core competencies:

• Procurement logistics
• Production logistics
• Warehousing and distribution logistics
• Recovery logistics
• Recycling logistics

We could also add, the cost of applying each type of logistical network could in itself be considered a logistics network in the managerial sense.

Closing Thoughts

Over the past few years we’ve seen increasing pressure being put on logistics networks to deliver more using tighter time frames. One such disruptor is Amazon which has transformed the entire shopping experience.

This type of disruption has put enormous strain on traditional retail outlets. We now have a workforce that has adapted to doing business from home and enjoying the convenience of online shopping. Perhaps this explains why major retailers such as Nordstroms, Starbucks and even Walmart are closing locations in major urban centres.

Regardless, it’s fair to say the logistics landscape will continue to change as it adapts to emerging markets and operational systems. This means logistics networks themselves will continue to change.

Incredible changes are currently redefining the path of moving goods from one business to another. As we continue to move into the future of B2B third party logistics and order fulfilment, what signs should we be paying attention to?

The challenges of dealing with the pandemic both revealed and accelerated opportunities in the supply chain. Combined with technological advances enabling the ability to drill down on specific customer needs, B2B 3PL partnerships have in front of them new paths to success on all fronts.

Let’s have a closer look at the challenges facing B2B 3PL operations, and how emerging technologies are providing solutions.

B2B 3PL Defined

To be specific, B2B 3PL is the process by which businesses outsource their order fulfilment, warehousing, shipping, and other logistics needs to a third-party provider.

This allows businesses to focus on their core competencies while leaving the logistics to the experts. Thanks to the rise of e-commerce, B2B third party logistics is a booming industry, with many businesses outsourcing their logistics needs to third-party providers in order to save time and money.

Differences Between B2B and B2C

A quick look at the interior of a related 3PL warehouse will give you a very good idea of whether an operation is B2B or B2C.

For example, a B2B fulfilment warehouse will tend to handle large items or irregularly shaped products on their way downstream through the manufacturing chain. A B2C warehouse on the other hand will often store large quantities of the same item such as FMCG products bound for retail store shelves, or multiple types of items in smaller quantities being prepared for last mile delivery.

With the ongoing evolution of the supply chain, unified supply chains are streamlining processes even further to include more wholistic B2B2C operations within some market segments. This provides complete control over the entire logistics process from intake of raw materials and manufacturing to final delivery.

Challenges Facing B2B Shipping

The major challenges in fulfilment faced by both B2B, B2C and even B2B2C, lie in the immediacy of demand for timely delivery of goods and the ability of logistics partners to keep up with operational needs.

“Only when fulfillment demands are met can a manufacturer plan for exponential growth”

Source: John Hayes: Director of Sales for Balyo USA as quoted in Forbes

From a 3PL point of view, a growing B2B client will not only require more flexible warehouse space, but the means to handle orders quickly, efficiently and accurately.

In the best of times, some businesses must have the ability to adjust to the massive roller coaster swings of seasonal trends. There are also labour issues, both of which tend to be relatively constant compared to the need for staying on top of technologies designed to make orders and tracking more efficient.

Like it or not, the pandemic spurred a 77.6% increase in e-commerce due to the need for safety and fuelled by convenience. 3PL providers had no choice but to adapt by proving themselves to be agile and more flexible than ever before. As we’ve seen in the last couple of years, the pandemic also exposed liabilities in a fragile supply chain that manifested in a shortage of truckers and empty store shelves.

With B2B e-commerce taking up more and more market share, and ever-impatient customer demands, business leaders find themselves with their hands full trying to navigate developmental challenges.

In general, the rapid growth of e-commerce has significantly impacted B2B shipping expectations and the logistics industry as a whole. With the rise of online shopping, businesses feel more pressure to ensure that their products are delivered quickly and accurately. This has led to an increase in demand for 3PL providers who can offer fulfillment services such as warehousing, packaging services, inventory management, and last-mile delivery.

Opportunities and Solutions

Wherever there’s a bottleneck in the supply chain, whether it be in the physical transportation of goods or in data management, there’s an opportunity.

“Companies are facing unprecedented change due to innovation, technology disruptions, and evolving customer expectations. Supply chains are becoming unbundled and customized to reduce costs and meet evolving customer needs. Logistics structures will also shift to more specialized solutions tailored to different customer segments, modes of transportation, and distribution networks.”

Source: KPMG Advisory on the Future of Logistics

If you drill down into the specifics of oncoming capabilities, the opportunities are staggering – and fully capable of becoming new market segments all on their own. Take for example the drone technology and fully automated vehicles which, quite possibly, could become the mainstays of  intelligent logistics.

Nonetheless, here’s an overview of some of the more immediate solutions both currently in use and on the horizon:

Automation And Robotics

Automation and robotics are revolutionizing the logistics industry, and by extension providing serious benefits to B2B shipping. Robotic process automation (RPA) and artificial intelligence (AI) are being used to streamline processes, reduce costs, and improve efficiency. Automated guided vehicles (AGVs) are used in warehouses to transport goods, while drones are being tested for last-mile delivery.

Big Data Analytics

Data is the new oil in today’s digital age. Big data analytics is a game-changer for the logistics industry. Businesses can use data to optimize their supply chain, identify inefficiencies, and make informed decisions. Predictive analytics can help 3PL providers to forecast demand and optimize inventory levels.

Sustainability And Green Logistics

Sustainability and environmental concerns are increasingly becoming critical issues for businesses. Consumers are demanding eco-friendly products and environmentally responsible practices. Green logistics is an approach that focuses on reducing the environmental impact of logistics operations. It involves using renewable energy, reducing waste, and optimizing transportation routes.

Personalization And Customer Experience

Personalization and customer experience are crucial in today’s consumer-centric world. B2B businesses are also starting to recognize the importance of providing a personalized customer experience. 3PL providers can help businesses to achieve this by offering customized logistics solutions tailored to their specific needs.

In Closing

The future is coming, some would say the future is already here. Either way one thing is for certain, there will always be advancements and challenges in B2B logistics. Moving forward, the dependancy on technology to provide solutions may be the answer, but benefits do not always come without associated costs.

Does your 3PL provider live up to your expectations and deliver what your company needs? Are they paying attention to the trends and demands shaping the future of your business? As a growing family owned company with operations in Brantford and Etobicoke Ontario, Brimich Logistics and Packaging is willing and able to serve all your transportation and climate controlled warehouse needs. Contact us today!