What is Logistics and Supply chain management

The broad variety of activities that make up logistics services help move items through the supply chain smoothly and effectively. These services are offered at many levels, each of which offers a special set of talents and value-added advantages. Let’s examine the various tiers of logistics services and how important they are to streamline the supply chain process.

1PL: 1st Party Logistics

A 1PL is a business or person that uses their own vehicles to transport and deliver their own goods. There won’t be any involvement of any other businesses in the movement of the products. For instance, a factory might produce tools and then transport them directly to retail establishments for sale on their own vehicles. Everything is completed internally.

2PL: 2nd Party Logistics

Possibly the most well-known, if not for the term itself. A 2PL solution entails a business employing a different transportation firm, a subcontractor, to transport its goods. A 2PL logistics company will be ‘asset-based’ and possess the transportation equipment. This would have been the first instance of “a man in a van,” in which a person or business transports the goods of other businesses using their own vehicles.

3PL: 3rd Party Logistics

The term 3PL was first applied to intermodal marketing firms in early 1970s transportation contracts. The first solution to involve outsourcing for a portion of the supply chain is now 3PL. First stage supply chain integration will be provided by a 3PL logistics provider in the following ways:

• shipping and transportation
• Cross docking and inventory management are both included in warehousing.
• Labelling and packaging

So a manufacturer may use a single 3PL provider to outsource all of their shipping, warehousing, packing, and distribution needs. The majority of 3PL businesses allow you to choose how many or how few of their services you want to use, based on your needs.

4PL: 4th Party Logistics

In the 4th Party Logistics approach, a lead logistics provider who is independent or “neutral” effectively serves as an agent. To deliver and provide the finest service for the customer’s requirements, a 4PL firm will communicate and coordinate with one or more 3PL provider companies. As a result, 4PL will feature all the advantages of 3PL suppliers as well as:

• Management of projects, sourcing, and negotiating
• Analytics and strategy for logistics
• independent service advice
• having just one point of contact

The definition of 4PL, a trademark registered in 1996, was “A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organisation with those of complementary service providers to deliver a comprehensive supply chain solution.” nonetheless, the registration has since been invalid.

5PL: 5th Party Logistics

Through a number of outsourced service providers, 5PL uses a fully integrated logistics system to cover the entire supply chain from start to finish. To enable complete visibility throughout the supply chain in “real-time,” the integration must be accomplished through the implementation of IT solutions. No matter how many different service providers were a part of the supply chain, the 5PL logistics provider would still need to be in charge of it. The 5PL system, with its emphasis on technology, is best suited for e-commerce.

6PL: 6th Party Logistics

• 6PL, sometimes referred to as “artificial intelligence driven supply chain management,” is a completely integrated and partially automated supply chain solution controlled and driven by artificial intelligence (AI). Although the idea is still mostly conceptual, it is clear that applying AI to the supply chain would result in significant technological breakthroughs.
• An integrated supply chain wide AI system, for instance, might proactively provide instructions upstream while monitoring the entire supply chain utilising trends, ordering patterns, and forecasting models. This could send instructions to transport stock automatically, start the creation of items, or point out abnormalities. Some of the components are already in use as self-driving cars, warehouse robots, and delivery drones progress.

Supply Chain Management

What is Supply Chain Management

Supply chain management is the process sourcing, procurement, production, logistics, and distribution, with the goal of delivering products or services to customers in the most efficient and effective manner. It involves meticulous planning, coordination, and optimization of all supply chain processes to minimize costs, maximize productivity, and meet customer demands.

By integrating suppliers, manufacturers, distributors, and retailers, supply chain management ensures seamless flow and timely delivery of goods, enabling organizations to gain a competitive edge and achieve operational excellence.

Types is Supply Chain Management

The supply chain manager makes an effort to reduce shortages and control expenses. The position involves more than just ordering products and managing logistics. The purpose of supply chain managers, according to Salary.com, is to “oversee and manage overall supply chain and logistic operations to maximise efficiency and minimise the cost of an organization’s supply chain.”

Increases in productivity and efficiency can directly affect a company’s bottom line. Effective supply chain management keeps businesses out of the news and away from costly recalls and legal actions. The logistics of all aspects of the supply chain, which is made up of the following five components, are coordinated by the supply chain management (SCM).

Planning :

The process normally starts with planning to match supply with customer and manufacturing demands to gain the best outcomes from SCM. Firms must forecast their future demands and act accordingly. This pertains to the raw materials required at each stage of manufacturing, the capacity and constraints of equipment, and the manpower requirements throughout the SCM process. Large organisations frequently rely on ERP system components to combine data and generate strategies.

Sourcing:

Efficient SCM operations rely primarily on strong supplier relationships. Working with vendors to deliver raw materials required throughout the manufacturing process is what sourcing implies. A corporation may be able to plan ahead of time and collaborate with a supplier to get goods. distinct industries, however, will have distinct sourcing requirements. SCM sourcing in general entails ensuring.

• The raw materials meet the manufacturing specifications required for product production.
• The prices paid for the goods are reasonable in comparison to market expectations.
• Due to unanticipated situations, the provider has the ability to deliver emergency products.
• The vendor has a track record of delivering high-quality goods on schedule.

Supply chain management is extremely important when working with perishable items. When sourcing items, businesses should consider time and how successfully a supplier can meet those requirements on time.

Manufacturing:

Assembly, testing, inspection, and packaging are examples of sub-tasks in the manufacturing process. During the manufacturing process, a company must be aware of waste and other controllable issues that may cause deviations from original plans. For example, if a company uses more raw materials than planned and sourced because of a lack of employee training, the corporation must correct the problem or return to the early stages of SCM.

Delivering:

A corporation must get its products into the hands of its customers once they have been manufactured and sales have been completed. Because the customer has not yet interacted with the goods, the distribution process is frequently viewed as a contributor to brand image. A corporation with effective SCM procedures has solid logistic capabilities and delivery channels to assure timely, safe, and low-cost product delivery.

This includes having a backup or diverse distribution mechanisms in case one mode of transportation becomes temporarily unavailable. For example, how can recording snowfall in distribution center areas affect a company’s delivery process.

Returning:

The supply chain management process is completed with product support and client returns. It’s terrible enough when a customer has to return a product, but it’s even worse when it’s due to a company error. This return procedure is known as reverse logistics, and the company must guarantee that it is capable of receiving returned products and appropriately assigning refunds for returns received. Whether a corporation is conducting a product recall or a consumer is merely dissatisfied with the goods, the customer interaction must be resolved.

The supply chain management process, the corporation transforms raw materials into something new by utilising machinery, labour, or other external forces. Although it is not the final stage of supply chain management, this end product is the ultimate goal of the production process.

Many people think of consumer returns as a two-way street between the customer and the corporation. However, intercompany communication to identify defective or expired products is a critical component of customer returns.

Types of Models in the Supply Chain Management

Supply chain management does not look the same in every company. Each company’s goals, limits, and strengths shape the SCM process. In general, there are six major models that a corporation can use to steer its supply chain management procedures.

Continuous Flow Model:

This model, one of the more traditional supply chain plans, is often well suited to advanced industries. The continuous flow concept is based on a company producing the same good over and over again and expecting little variation in consumer demand.

Agile Model:

The idea is suited to companies with unpredictable demand or products that are ordered by customers. This model focuses on capacity because a company may have a specific requirement at any time and must be prepared to shift accordingly.

Fast Model:

This model suggests an item’s high turnover and short life cycle. A company uses the rapid chain model to capitalize on a trend, swiftly make goods, and ensure the product is totally sold before the trend ends.

Flexible Model:

The adaptable strategy works best for businesses that are affected by seasonality. During peak season, some companies may have dramatically higher demand requirements, while others may have minimal volume requirements. A flexible supply chain management design ensures that production may be readily ramped up or requested down.

Efficient Model:

Companies participating in industries with extremely low-profit margins may seek to gain an advantage by improving their supply chain management process. This includes making the most use of equipment and machinery, as well as managing supplies and processing orders as smoothly as possible.

Custom Model:

If neither of the after models meets a company’s requirements, it can always switch to a custom model. This is typically the case in highly specialized fields with significant technological requirements, such as the automotive industry.

Conclusion:

Finally, in today’s competitive world, supply chain management and logistics are critical for companies to survive. Efficient supply chain management guarantees that activities from purchasing to delivery function together smoothly, resulting in lower costs, higher customer satisfaction, and increased operations. Businesses may improve product flow, reduce lead times, and increase profitability by optimizing logistics operations. In the fast-paced world of supply chain management and logistics, embracing technology, encouraging cooperation, and constantly upgrading systems are critical to success.