Best Practices from Renewal Logistics:
A Retailer's Guide to Integrated Logistics
Moving items from one place to another is easier in theory than in practice.
Once you begin to envision the scale (51 million tons of freight moved daily in the U.S. alone), you can start to see the challenges faced by smaller retailers and eCommerce businesses!
A common mistake made by entrepreneurs is confusing “shipping” with “logistics.” While the former term describes moving product from Point A to Point B, the latter encompasses every other element of a transaction. Think, where products are stored, how much is available in stock, where it is located in a warehouse, where and how an order should be sent out and how a return or exchange should be handled if necessary. Knowing the answer to all of these inquiries at all times is a major factor in ensuring customer satisfaction and overall business success.
Building out an integrated logistics model for your retail or ecommerce operations is an excellent way to understand the relationship between different business activities, reduce your shipping and supply chain costs and better serve your customers. In this article, we’ll take a close look at exactly what integrated logistics is and how you can benefit from its implementation!
What You Need to Know:
What is Integrated Logistics?
Integrated logistics management is a method in which all parts of the supply chain are broken out of their individual silos, to instead operate together to improve efficiency. This process brings together the internal functions of an organization with its service providers, which could include transportation, warehousing, 3PL or other agents. Operating as a single unit, integrated logistics puts infrastructure and personnel to optimum use and allows for flexibility and scaling within a supply chain, as required by the market.
To further understand the flow of operations, let’s break down the typical stages of the supply chain for a physical goods retailer and how each works within an integrated logistics model.
The Stages of the Supply Chain
Procurement – For both raw materials and finished goods, the procurement process can be perfected with inventory management software that tracks products through every step of their fulfillment journey. This technology provides a real-time look at current inventory and can accurately forecast demand, even in wake of shifting production lead times or unexpected disruptions. Inventory and warehouse management software can be integrated in-house or left to a 3PL company. At Renewal Logistics, we provide our clients access to highly accurate real-time reporting on your inventory.
Distribution – Following the procurement stage, integrated logistics calls for inventory to be strategically distributed to retail partners, warehouses or distribution centers, depending on the type of business needs and overall consumer demand. Once again, visibility of real-time data helps business owners make these decisions.
Fulfillment – Warehouse and fulfillment centers use automation technology to pick and pack orders efficiently, while still maintaining a high level of accuracy. Our retail fulfillment capabilities include on-demand and customized solutions across all DTC sales channels and retail trading partners.
Shipping – Shipping and receiving organizations are key players in this process, and streamline operations with auto-generated shipping labels and order tracking tech, granting full visibility to businesses and customers.
In summation, here are the key characteristics you’ll find in any efficient and successful integrated logistics system
- A Warehouse Management System with access to accurate information and insights into each product as it moves through the supply chain
- A fully deployed transportation management system with automated order entries, full item visibility and effective partner communication
- A real-time location system with the ability to identify, find track and manage the location of products
- A robust reverse logistics process fully implemented to allow for customer returns and exchanges and account for any potential errors or product damage.
Integrated Logistics Benefits for Retailers and eCommerce Businesses
The main objective of an integrated logistics system is to allow for increased efficiency in operations, thus maximizing profit. Although parts of this process might seem complicated or technical, businesses of all sizes can implement and benefit from this process, especially when working with a 3PL provider. Here are just a few reasons you might want to get started with integrated logistics.
1. Increased Collaboration and Visibility
You would be surprised how often business owners lack clear data into operations that occur within their own organization. In an integrated supply chain, enterprise functions work together to seamlessly share information and reduce disruptions. The simple act of collaborating can help you identify bottlenecks and areas of improvement.
As visibility improves, you’ll also be able to better stay on top of demand and nimbly pivot your operations to account for product life cycles, emerging markets and fluctuating economies. This is especially important for business stocking seasonal products, and can prevent wasted or excess inventory.
3. Maintain Flexibility
If the past several years of global events have demonstrated anything to retailers, it’s the need to be agile and meet a given moment. Integrated logistics provides management with the ability to respond rapidly to external events, while continuing to grow their business.
4. Reduce Operational Costs and Waste
The massive volume of global shipments unfortunately means a massive amount of waste. Whether due to product returns or damaged goods, this can quickly add up to lost revenue for a retailer. With strong analytics on each product, and an integrated returns platform, you can make better buying decisions that will eliminate future waste.
5. Increase Profit Margins
Each of the factors listed above ultimately roll up to yield increased profit margins. From a more efficient labor force, to better forecasting of what your customers want, to less product waste, it’s easier for organizations to maintain and increase their revenue with integrated logistics!
6. Scale Your Business More Quickly
With profit coming in more consistently and trusted partners able to implement flexible operations, you might just find your business growing faster than r expected. Although upfront investment costs may be high, this management method can provide excellent results over time.
What to Look for in an Integrated Logistics Provider
There’s no doubt that putting an integrated logistics program in place for your business will require a lot of planning. Consolidating and outsourcing your logistics operation is one method to efficiently expand your footprint. In fact, as we’ve previously mentioned, about 90% of Fortune 500 companies outsource their warehouse and fulfillment operations to take advantage of their efficiency and well-tested systems. If you decide to go this route, here are a few factors to consider when bringing on a potential partner:
- Evaluate the company’s full suite of service and solutions. Consider what offerings you may or may not need, such as pick-and-pack services, order and inventory management, last-mile delivery and parcel tracking.
- Consider the integrations you might need to fully supply all your sales channels and partners across ecommerce, retailer order platforms, marketplaces and carriers.
- Know any potential partner’s pricing tiers or packages offered, keeping one eye towards the future of your business. Fractional warehousing is a great option for those looking to flexibly scale.
- Read reviews or testimonials from other clients of the provider. Ask to be connected with other retailers or complete your own research online on the organization’s track record.
- Look at your business’ current state of affairs and analyze where you might be in 1, 5 or even 10 year’s time. Identify the areas in most immediate need of improvement and keep in mind how your outsourcing needs might change in the future. Keep in mind that as your business changes, you may need to change partners in order to ensure you maintain a customized fit.
How to Get Started with Integrated Logistics
When implemented correctly, integrated logistics can ultimately lead you to spending a lot less time worrying about your supply chain and a lot more time focused on innovating your business. At Renewal Logistics, we know entrepreneurs and business owners wear several hats, and streamlining your logistics process is just one of many challenges that can seem confusing or overwhelming. Luckily, we’re here to help!
We take pride in providing a delightful customer experience, and consider our fulfillment and distribution operations to be an extension of your brand promise. Our full suite of fulfillment and 3PL Value Added Services provide a single source for your entire distribution network, with capabilities like smart warehousing, on demand packaging and kitting operations, and a user-friendly portal allowing you to view real-time order activity.
We’d love the opportunity to show you the strategic business objectives we can achieve by partnering with your business. If you would like to learn more about our services or chat through your logistics process, send us an email or give us a call today!