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Introduction
What do we understand by logistics?
the industry today
Today, the logistics industry is going through great changes, most of them driven since the pandemic of 2020. In a context where the world is recovering from what this situation meant, this sector is experiencing an accelerated transformation in its operations and the forms of work hitherto known.
In this period, the importance of logistics to interconnect markets was reassessed: if logistics stopped its processes, the supply of food, merchandise and inputs of all kinds would be harmed. At the most critical stage of the pandemic, while the world was at a standstill, its role was central to supplying and keeping global transport connected in times of confinement.
For all this, the logistics are necessary to reach such material to the required site, at the right time, in the most cost-effective way possible and in the best conditions.
This industry has evolved in recent years and industry leaders agree that the volume of cargo is much higher than in previous years. Online commerce grew 16.8% in revenue in 2021, representing approximately USD $4.9 billion over the last year. If there are more purchases, there is more logistical movement of transport and immediate deliveries, which is known as last mile logistics.
The proliferation of online sales channels has increased the demand for transporting this merchandise, differentiating the immediate delivery of large shipments.
These changes in the industry led to rethinks and new challenges to address.
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Our analysis
1. Customers.
In the logistics industry, depending on the type of business established, there is a wide variety of customers. Some companies choose to be intermediaries, being the product marketed to another company, which responds to a business to business (B2B) model. This is the case of companies that offer their logistics services (storage, distribution) having as a customer another company that will market those goods or services.
On the other hand, a logistics company can also distribute and market with a final consumer (B2C), this being the typical case of e-commerce, with a delivery of the products directly to its buyer.
Most of the logistics managers consulted with Drew agree that they diversify and work with clients of all kinds: some companies bet on the B2B and B2C models, some are only intermediaries and operate on a B2B basis.
The diversity of customers is exemplified when the same company can transport vital supplies for health centers or pharmacies, as well as clothing or small loads.
E-commerce was a change in the way logistics operators relate to their customers, since by bringing their services to the final consumer, customers could understand and immerse themselves in processes that they previously did not know or contemplated.
Today the customer has more information than in the past: he can visualize the route of his product, he gets involved in the delivery, he has certain schedules in which he can attend the delivery of his package. In general, it is a customer committed to the process, especially if it is an end consumer.
Also, the expansion of e-commerce, led to end consumers become more knowledgeable about the logistics process: it is a new customer for the sector, which before was not instructed with regard to home delivery.
Communication channels are often little targeted at this consumer. Industry managers indicated that they optimize the Google search engine, and its web pages, as it is a great window for potential customers. Most of those who find their service online do so by this search engine, according to their own studies, 65% of users and from the mobile version. Likewise, they have social networks in activity, but that is not where the majority of the recruitment comes from.
Some smaller companies still use traditional media to advertise, as well as signage on the public road. Many managers consulted by Drew indicate that there is no feedback with the final consumer, although they are a fundamental part of their business chain.
Today an advisory sale is privileged, in which the client has knowledge and presence throughout the process. The logistics operator must understand their timing to accommodate order preparation. However, their marketing and advertising actions in traditional logistics companies still have few defined actions.
In general, marketing teams within logistics, should enhance omnichannel and not forget that customer service is key to continue attracting them.
On the other hand, a logistics company can also distribute and market with a final consumer (B2C), this being the typical case of e-commerce, with a delivery of the products directly to its buyer.
Most of the logistics managers consulted with Drew agree that they diversify and work with clients of all kinds: some companies bet on the B2B and B2C models, some are only intermediaries and operate on a B2B basis.
The diversity of customers is exemplified when the same company can transport vital supplies for health centers or pharmacies, as well as clothing or small loads.
E-commerce was a change in the way logistics operators relate to their customers, since by bringing their services to the final consumer, customers could understand and immerse themselves in processes that they previously did not know or contemplated.
Today the customer has more information than in the past: he can visualize the route of his product, he gets involved in the delivery, he has certain schedules in which he can attend the delivery of his package. In general, it is a customer committed to the process, especially if it is an end consumer.
Also, the expansion of e-commerce, led to end consumers become more knowledgeable about the logistics process: it is a new customer for the sector, which before was not instructed with regard to home delivery.
Communication channels are often little targeted at this consumer. Industry managers indicated that they optimize the Google search engine, and its web pages, as it is a great window for potential customers. Most of those who find their service online do so by this search engine, according to their own studies, 65% of users and from the mobile version. Likewise, they have social networks in activity, but that is not where the majority of the recruitment comes from.
Some smaller companies still use traditional media to advertise, as well as signage on the public road. Many managers consulted by Drew indicate that there is no feedback with the final consumer, although they are a fundamental part of their business chain.
Today an advisory sale is privileged, in which the client has knowledge and presence throughout the process. The logistics operator must understand their timing to accommodate order preparation. However, their marketing and advertising actions in traditional logistics companies still have few defined actions.
In general, marketing teams within logistics, should enhance omnichannel and not forget that customer service is key to continue attracting them.
2. Role of e-commerce.
As mentioned above, the pandemic and confinement precipitated a boom in online sales, so today e-commerce represents an increasingly established form of shopping.
The user prefers the convenience of buying from home with only an internet connection without going to a physical store. In this the distribution of such a purchase plays an important role, so the buyer puts his confidence in the arrival of that product in the established time. As an almost direct consequence, the volume of logistics activity soared.
The managers consulted agree that e-commerce increased their work fivefold: this leads to a rethink of business planning and organization, and often, evaluate whether they had the entire infrastructure to support more packages.
According to statistics, in the last three years in Argentina online commerce grew 90% interannual. This generated a change in consumption and a great impact that, in the words of the experts of the sector, forced them to restructure.
"We have not pushed the market, we have received it", is usually a phrase repeated among managers. While in other times the shipment of the order was optional, now the logistic service is imposed within the e-commerce.
In addition, this new form of trade forced the sector to be more flexible, as the increase in workload fluctuates. "On holidays, consumption can go from 0 to 1000 deliveries," they say.
However, this high demand also gives more profitability, especially when it comes to smaller packages: they are called as priority cargo and sometimes as express cargo, since delivery times are usually very fast, such as shipments on the same day.
As mentioned above, the pandemic and confinement precipitated a boom in online sales, so today e-commerce represents an increasingly established form of shopping.
The user prefers the convenience of buying from home with only an internet connection without going to a physical store. In this the distribution of such a purchase plays an important role, so the buyer puts his confidence in the arrival of that product in the established time. As an almost direct consequence, the volume of logistics activity soared.
The managers consulted agree that e-commerce increased their work fivefold: this leads to a rethink of business planning and organization, and often, evaluate whether they had the entire infrastructure to support more packages.
According to statistics, in the last three years in Argentina online commerce grew 90% interannual. This generated a change in consumption and a great impact that, in the words of the experts of the sector, forced them to restructure.
"We have not pushed the market, we have received it", is usually a phrase repeated among managers. While in other times the shipment of the order was optional, now the logistic service is imposed within the e-commerce.
In addition, this new form of trade forced the sector to be more flexible, as the increase in workload fluctuates. "On holidays, consumption can go from 0 to 1000 deliveries," they say.
However, this high demand also gives more profitability, especially when it comes to smaller packages: they are called as priority cargo and sometimes as express cargo, since delivery times are usually very fast, such as shipments on the same day.
3. Importance of planning.
Planning is a key stage in any industry, which cements the foundations and establishes the "where to go". Particularly in logistics, it becomes imperative to have these guidelines, since delivery times must be strictly adhered to.
Planning is a central part of logistics management, as resources, routes and delivery times must be anticipated in good time. In addition, it is important to anticipate the inconvenience that may arise and coordinate all actions between suppliers, transport and customers.
Planning in logistics management involves the prior organization of the tasks necessary for the correct development, as well as the strategy, techniques and methods to be employed.
When talking with industry leaders, we could identify that planning in logistics is scarce or without a common criterion, keeping to the demand of the week, or even the day. Most managers point out that in an industry that is driven by day-to-day logistics, it is difficult to plan.
However, planning could be carried out to ensure better results: at a strategic level, planning involving manufacturing and handling equipment, warehouse design, shipment volume, transport fleet dimensions, as well as its distribution policy.
At an operational level, for its part, it would involve the setting of lead-times (delivery times), reliability of supplies, reduction of stock, speed of supply to the customer.
Overall, the logistics managers consulted noted that planning and agreeing with suppliers is a difficult task. "There is always an unforeseen, never everything calculated," they point out, although the reality is that incidents can be mitigated by being able to establish a medium or long-term planning.
In this, technology is of great help, which allows to control and have information in real time to anticipate risks or reduce them to the maximum possible. It is suggested to have a contingency management to be prepared for risks such as poorly proportioned delivery address, absence of person who can withdraw the order, lack of stock, planning of the necessary transport fleet.
Planning is a key stage in any industry, which cements the foundations and establishes the "where to go". Particularly in logistics, it becomes imperative to have these guidelines, since delivery times must be strictly adhered to.
Planning is a central part of logistics management, as resources, routes and delivery times must be anticipated in good time. In addition, it is important to anticipate the inconvenience that may arise and coordinate all actions between suppliers, transport and customers.
Planning in logistics management involves the prior organization of the tasks necessary for the correct development, as well as the strategy, techniques and methods to be employed.
When talking with industry leaders, we could identify that planning in logistics is scarce or without a common criterion, keeping to the demand of the week, or even the day. Most managers point out that in an industry that is driven by day-to-day logistics, it is difficult to plan.
However, planning could be carried out to ensure better results: at a strategic level, planning involving manufacturing and handling equipment, warehouse design, shipment volume, transport fleet dimensions, as well as its distribution policy.
At an operational level, for its part, it would involve the setting of lead-times (delivery times), reliability of supplies, reduction of stock, speed of supply to the customer.
Overall, the logistics managers consulted noted that planning and agreeing with suppliers is a difficult task. "There is always an unforeseen, never everything calculated," they point out, although the reality is that incidents can be mitigated by being able to establish a medium or long-term planning.
In this, technology is of great help, which allows to control and have information in real time to anticipate risks or reduce them to the maximum possible. It is suggested to have a contingency management to be prepared for risks such as poorly proportioned delivery address, absence of person who can withdraw the order, lack of stock, planning of the necessary transport fleet.
The referents of the logistics sector consulted by Drew indicate that, when the company begins its activities, it is difficult because they are forced to adapt their time and tasks to customers. Then, as they grow, they can impose their processes.
The need to plan, they agree, was seen in the pandemic more than in other times. When planning it becomes essential to know in which seasonal periods there is more demand, as well as separate shipments according to their priority.
4. Key activities and traceability.
Traceability refers to the monitoring of the evolution of the different processes, being able to observe the steps that a product travels from its beginning to its final location.
Knowing the traceability becomes a key activity of the logistics industry, which allows to verify and track all the steps that the product travels, which gives seriousness to the process.
It is a tool that allows the customer to participate in the delivery, knowing the origin of the product from the time it leaves the warehouse to reach the door of your home.
Nowadays, the logistics company that is unaware of its traceability is at a disadvantage, as it gives credibility and customer satisfaction. The same is applied not only in the monitoring of products by the customer but also in the management of any asset that the company owns.
Knowing the traceability becomes a key activity of the logistics industry, which allows to verify and track all the steps that the product travels, which gives seriousness to the process.
It is a tool that allows the customer to participate in the delivery, knowing the origin of the product from the time it leaves the warehouse to reach the door of your home.
Nowadays, the logistics company that is unaware of its traceability is at a disadvantage, as it gives credibility and customer satisfaction. The same is applied not only in the monitoring of products by the customer but also in the management of any asset that the company owns.
5. Objectives.
Setting goals is important for every company. Particularly in logistics, the imperative is to provide a service of quality and efficiency by reducing costs as much as possible, to make it a profitable activity.
There are three fundamental edges: gaining flexibility due to high demand, reducing costs and increasing service levels.
Meeting these three objectives is not always an easy road. Industry leaders need to balance these three variables to provide an effective service while generating profits.
6. Technology.
There are three fundamental edges: gaining flexibility due to high demand, reducing costs and increasing service levels.
Meeting these three objectives is not always an easy road. Industry leaders need to balance these three variables to provide an effective service while generating profits.
6. Technology.
The role of technology is crucial in logistics processes. Its contribution maximizes and accelerates processes, also allows automating tasks that decades ago could only be solved manually.
The totality of those consulted by Drew, affirms that the application of software constitutes a before and after and that today the logistics industry cannot be understood without this contribution.
Today, visibility systems, dashboards and automatic commands are used. Technological developments have made it possible to detect errors, control storage and check how the distribution is going.
In recent years, with a simple download of an application on smartphones you can control a large number of processes and perform real-time controls. This breakthrough represented a momentous milestone in the industry, in addition to satellite systems.
For customers it is also a facility, since they can generate a shipment, receive reminder mails and track their purchase.
In past decades, it was difficult to call the driver of the vehicle to find out where it was: today tracking systems facilitate this part.
The technology crosses all parts of the logistics process, although, according to what was consulted, some manual processes still exist: handovers and little automation.
The totality of those consulted by Drew, affirms that the application of software constitutes a before and after and that today the logistics industry cannot be understood without this contribution.
Today, visibility systems, dashboards and automatic commands are used. Technological developments have made it possible to detect errors, control storage and check how the distribution is going.
In recent years, with a simple download of an application on smartphones you can control a large number of processes and perform real-time controls. This breakthrough represented a momentous milestone in the industry, in addition to satellite systems.
For customers it is also a facility, since they can generate a shipment, receive reminder mails and track their purchase.
In past decades, it was difficult to call the driver of the vehicle to find out where it was: today tracking systems facilitate this part.
The technology crosses all parts of the logistics process, although, according to what was consulted, some manual processes still exist: handovers and little automation.
How to optimize shipments?
Ideally, the vehicle carrying the goods should be full to its maximum capacity a month before. As this is impossible (in some cases), many logistics companies transport standard volumes. The goal is for the truck to be 100% saturated, which is known as cargo consolidation. It is assumed that, if the vehicle travels all night to the assigned destination, if the end of the day arrives and the basket is not full many logistics companies try to "sell" that empty space. The goal is always truck saturation.
In the case of the model of deliveries in 24 hours, in order to be effective its application, it must have constant stock in the centers of loads of the cities, but it does not work. Each has an installed capacity, from where orders are dispatched to customers. For example, if an order is placed at 16 hours and is transferred in the same city, the order is dispatched in the morning shift, always in order to fill to maximum capacity.
Ideally, the vehicle carrying the goods should be full to its maximum capacity a month before. As this is impossible (in some cases), many logistics companies transport standard volumes. The goal is for the truck to be 100% saturated, which is known as cargo consolidation. It is assumed that, if the vehicle travels all night to the assigned destination, if the end of the day arrives and the basket is not full many logistics companies try to "sell" that empty space. The goal is always truck saturation.
In the case of the model of deliveries in 24 hours, in order to be effective its application, it must have constant stock in the centers of loads of the cities, but it does not work. Each has an installed capacity, from where orders are dispatched to customers. For example, if an order is placed at 16 hours and is transferred in the same city, the order is dispatched in the morning shift, always in order to fill to maximum capacity.
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Logistics functions as a funnel, in which transports are measured:
6 axes (Route between different provinces)
4 axes (Route from one city to another)
2 axles or last mile logistics (Motorcycles, bicycles)
The question is, how do I plan if I depend on my client’s sale?
On a 6-axis tour, in a 24-hour sale, viability depends on having a stock: this business model does not work without an intermediate inventory.
Most logistics companies are not counting on this, and depend on their customer. Without intermediate stock, deliveries cannot be made within 24 hours, making planning difficult.
Some companies, not having a defined business model, carry any kind of burden, regardless of their proportions, dimensions. This is incompatible with an instant delivery model: the 24-hour variable involves planning. It does not matter to take all24-hour variable involves planning. It does not matter to carry everything that is not comparable in one compartment.
In this type of shipment, it is important the information offered by the historical database, where the days that there is more demand for transport are displayed: holidays like Christmas, etc.
Historical database
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The importance of the historical database is that it allows forecasting, setting trends, making a statistical control of processes.
The data provided by the historical base serve to analyze how much demand increases at certain points, and depending on this data, manage transport loads (if necessary outsource or internalize).
In addition, it allows to know the market behavior, since it provides information of the consumption and the movement of goods in certain periods.
This basis allows to predict the volume of certain times. Generally, there is a large decline in January, which picks up mid-year, and in November - December the volume is on the rise.
The right thing would be to have a business model associated with companies with a certain market behavior, otherwise the logistics would be to look for an empty space in a vehicle and carry what is needed.
It is important to anticipate market growth. Today, it is not difficult to implement technological tools that allow data to be loaded on a historical basis. Logistics companies must stop working with manual systems to load data into a system and generate a statistical model, with data that allows planning.
The data provided by the historical base serve to analyze how much demand increases at certain points, and depending on this data, manage transport loads (if necessary outsource or internalize).
In addition, it allows to know the market behavior, since it provides information of the consumption and the movement of goods in certain periods.
This basis allows to predict the volume of certain times. Generally, there is a large decline in January, which picks up mid-year, and in November - December the volume is on the rise.
The right thing would be to have a business model associated with companies with a certain market behavior, otherwise the logistics would be to look for an empty space in a vehicle and carry what is needed.
It is important to anticipate market growth. Today, it is not difficult to implement technological tools that allow data to be loaded on a historical basis. Logistics companies must stop working with manual systems to load data into a system and generate a statistical model, with data that allows planning.
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