Transportation and warehousing are an integral element of a supply chain. Warehousing involves the systematic storage of goods in the warehouse before they are delivered to the end customer.
Transportation means the movement of goods from one location to another by means of either air, rail, or land. These two elements work together and maintain the integrity of the supply chain.
Both warehouse and transport play a significant role in the success of the e-commerce business. Most businesses want space to store goods in bulk quantities. An effective warehousing will ensure that all the goods are systematically stored in the warehouse.
Warehouses should optimize the storage space, maintain inventory levels, and reduce the risk of stockout and excess inventory. Efficient transportation even helps to lessen the transit time.
Both of them help an e-commerce business to fulfill customer orders at the right time and in proper condition. It thus helps increase customer satisfaction and allows the company to expand and make more profit.
What Is Warehousing?
Warehousing means storing goods in a large facility where they can be easily stored, managed, packed, and eventually delivered to the customers when they order.
Effective warehousing is quite essential in the supply chain. It involves various processes like receiving the goods, quality inspection, and putting them in their proper place.
Whenever an item goes inside and outside of the warehouse, it is registered in the warehouse inventory management system. It helps to reduce overstock and stock-out problems. It greatly helps to reduce unnecessary costs of an e-commerce business.
Whenever customers place an order from the e-commerce site, the warehouse goods are picked, packaged, and labeled properly by the warehouse staff. They are then handed to the carrier so that they are safely delivered to the customer.
Types Of Warehouse
1. Public Warehouse
Government entities usually own a public warehouse. They are given rent either for personal use or for any business. It is an attractive option for any business that wants to store goods for a short period. A start-up or a growing company can utilize the public warehouse, as other b2b warehousing options are costly.
2. Private Warehouse
A company owns a private warehouse. It involves more capital investment for inventory management, building security, and general maintenance. It is suitable for distributors, manufacturers, and b2b distribution.
3. Smart Warehouse
Here, all the warehouse processes are automated. The AI stores raw materials or goods. It does packing and even labeling. The automated functions in the warehouse reduce human error. The inventory management is accurate compared to other warehouse partners.
4. Climate Controlled Warehouse
Climate-controlled warehouses maintain specific temperatures and humidity to maintain sensitive goods. They usually store perishable food items, pharmaceuticals, and chemicals.
5. Bonded Warehouses
Imported goods are stored in bonded warehouses without customs duties being paid. Government customs authorities supervise them.
What Is Transportation?
Transportation in the supply chain refers to the movement of goods from one location to another. Every step of the supply chain depends on transportation. For example, the raw materials require a transport facility for moving from the place they are purchased to the place where they will be manufactured.
Companies again need a transport facility from the manufacturing place to the warehouse logistics and then again from the warehouse to the customer.
Transportation allows a Company to expand its business beyond local areas. It provides an opportunity for a company to access new markets and increase its customers.
The transportation in the supply chain works through various steps. They are underlined below:
- Planning: This step involves selecting the best mode of transport based on numerous factors like cost and the type of goods that need transportation.
- Execution: This involves loading goods on either a train, truck, or ship.
- Tracking And Monitoring: Modern transportation systems utilize GPS and tracking software to monitor the movement of goods.
- Unloading: It involves the unloading of goods when the train, rail, or ship reaches its destination.
Modes Of Transportation
There are various modes of transportation in the supply chain. Here is a list of them.
1. Road Transportation
Trucks and vans are the major vehicles used in road transportation. This transport mode is highly flexible and makes it easy to deliver goods from one door to another. But it can be affected by traffic and weather conditions.
2. Rail
Rail transportation is often utilized to transport heavy or bulky goods. It is more cost-effective than road transport.
3. Air Transportation
It is the fastest mode of transport but is expensive. It is utilized to transport electronic items or pharmaceuticals.
4. Sea Transportation
It is one of the most cost-effective transportation modes. This mode is utilized when there is a need to transport goods Internationally. However, transit time is slow, and goods can be affected by weather conditions.
5. Multimodal Transportation
It involves two to three modes of transport for moving goods from one place to another.
Best Practices For Transport Management
1. Route Optimization
It involves planning and choosing the most efficient transport mode to lessen the transit time and fuel costs. Transport companies have technology to figure out fastest delivery root.
2. Carrier Selection
Choosing the right carrier will ensure timely and secure delivery of goods to the customer.
3. Freight Consolidation
It involves combining many small shipments into a single large shipment, which helps reduce cargo space and lowers the number of trips.
The Interplay Between Warehousing And Transportation
Warehousing and transport services are two main components of the supply chain. Warehousing involves receiving goods, storing them, and preparing them for shipping when receiving customer orders. Transportation involves moving the shipped products to the customer.
The timing of warehousing and transportation should synchronize with each other. Proper coordination will help in the availability of products at the right time and reduce the chances of stock out or excess inventory.
Companies can achieve profit and expand their business much faster when the warehouse and transport services are coordinated properly. Proper route planning will reduce transportation costs. Simultaneously, streamlining warehouse operations will reduce storage costs.
The Process Of Outsourcing Warehousing And Transportation
Outsourcing warehousing and transportation involves contacting a third-party logistics provider for transportation or storing products.
Outsourcing transport, warehousing, and logistics will allow a company to focus on product development and marketing tactics.
It even has advanced technologies like a warehouse management system or automation for logistics operations. 3PL logistics providers have expertise and networks. Contacting them greatly helps reduce expenses related to warehousing storage space, labor, and transportation.
Steps Involved In Outsourcing Warehouse transportation
- Identify the logistics needs and objectives of the Company.
- You need to choose the 3PL logistics company wisely. The company should choose the provider based on its experience, expertise, and adaptation to modern technology.
- There must be an agreement between the 3PL provider and the Company after selection of the 3PL provider. The contract should outline various things like price structure, scope of services, and many more.
- Continuous monitoring is helpful in evaluating outsourcing services.
Challenges In Outsourcing Services Warehouse & transportation
- Outsourcing warehousing and transportation can lead to a few risks, like data security issues.
- There must be proper communication between the Company and the 3PL providers. Improper communication can lead to delays and errors.
- The Company needs to conduct regular inspections to verify that 3PL services meet their standards.
Benefits Of Warehousing And Transportation
The benefits of warehousing and transportation are as follows.
1. Reduces Cost
Outsourcing warehousing and transportation significantly reduces costs. The Company doesn’t have to pay to maintain equipment in the warehouse. It does not have to appoint workers to take care of stored goods.
2. Access To Advance Technology
Most of the 3PL providers use advanced technology like warehouse management systems and transport management systems, which will greatly help to increase business performance.
3. Access To Wide Distribution Network
The 3PL providers have access to a wide distribution center network, which will help a company to expand its geographical presence.
4. Focus On Core Activities
Whenever a company outsources logistics services, then it has time to focus on marketing strategies, product development, or any other core activities of the business.
Key Considerations Before Outsourcing
1. Choose The Right 3PL Partner.
It would help if you had a 3PL service provider based on experience, reputation, and service quality. The provider should adopt modern technology like warehouse management systems and transport management systems.
Thirdly, the Company should evaluate its network and coverage. 3PL providers with robust networks can lessen transit times and increase the market reach.
The 3PL provider should provide numerous services, like ecommerce fulfillment, packaging, and labeling.
2. Evaluate The 3PL’s Track Record And References.
You need to evaluate the track record of the 3PL provider before committing. Try to review the customer testimonials, performance, and case studies. You can speak to the client to know their experiences with the 3PL company.
3. Cost Benefit Analysis
The Company needs to compare the in-house costs and outsourcing costs.
The in-house cost includes:
- Renting or owning space for storing goods.
- Managing them.
- Hiring staff and paying them.
The outsourcing costs include fees paid to the 3PL provider for handling warehousing transportation services.
4. Risk Assessment
You need to assess the risks before making any commitment with a 3PL provider. For example, whenever a company outsources its transportation and warehousing services, then it has less control over its operations.
Failure in any work by the 3PL provider can disrupt the supply chain and negatively affect the customer. Regular monitoring of 3PL service provider tasks can help to identify risks at an early stage and address them.
Future Trends In Warehousing And Transport
1. The Rise Of Ecommerce And Its Impact
Today, more customers are ordering products online. This has led to an increase in demand for warehousing and transportation services. Logistics Companies in India have to manage large volumes of inventory and provide faster door to door delivery to customers.
2. Increased Demand For Warehousing
The growth of the e-commerce business has resulted in an increase in warehouse space for storing goods.
3. Last Mile And Hyperlocal Delivery Solutions
Most of the consumers expect fast delivery of the products they order. Hence, Last-mile delivery solutions and hyperlocal delivery solutions are rapidly evolving.
4. Smart Warehouse And Connected Transport
Most e-commerce businesses want to deliver products to customers at the correct time. It has led to the rise of smart warehouses and connected transportation networks.
Smart warehouses use automation and AI to reduce human errors and improve their inventory management system. Transportation networks are becoming advanced because of the utilization of GPS tracking and route optimization software.
5. Sustainability Trends
Now, there is a rise in green warehouses that use solar panels to reduce their carbon footprints. There has even been an increase in electric vehicles for transportation purposes to reduce harmful gasses in the environment.
Conclusion
Outsourcing warehousing and transportation can offer numerous advantages to the Company. It allows for streamlining of all the supply chain operations, reduces the warehousing cost of a Company, and increases the overall efficiency of the Company.
However, the company should try to check the expertise, networks, and adoption of innovative technologies before making any contract with the 3PL provider. You also need to assess the risks and do a cost analysis before finalizing a 3PL provider for the logistics and warehouse operations of the Company.
AAJ Supply Chain Management
