Logistics is the planning, management, correction and control of a flow of goods in order to make it as time and cost efficient as possible. A logistics flow includes the entire supply chain, from material supply to product delivery to the customer. Since a logistics chain involves several types of companies, such as producers, suppliers, transporters and retailers, it takes more than just a good relationship between them to keep things running smoothly. If any part of the logistics fails, everyone involved will suffer.
In recent years, e-commerce has grown exponentially, and the delivery of goods has become an important part of the shopping experience. Simply delivering the product ordered by the customer is no longer enough, the delivery must also be carried out according to the customer’s preferences. This places high demands on everyone involved in the business in one way or another, and well-functioning logistics are now a prerequisite for a profitable business. However, it is important to remember that not all types of logistics solutions work for every business – it needs to be tailored to the unique needs of the business. A small, possibly start-up, web shop has completely different needs and conditions than an internationally listed company. Finding the right logistics solution is therefore not only important for all flows to work, it is also a way to minimise unnecessary costs.
First party logistics means that a single company is responsible for the entire supply chain, i.e. everything from warehousing, packing, inventory and delivery is handled in-house. First-stage logistics is mainly possible when selling on a very small scale, as the solution quickly becomes impractical and resource-intensive as the business grows.
Second party logistics is when one company is responsible for transporting another company’s goods from one point to another, in other words a transport company. Such a solution means that the transport company only delivers the goods, but beyond that, warehouse management, packing and inventory are handled internally within the company that hired the transport company. Second party logistics requires that the company has sufficient resources to handle the remaining tasks itself.
Third party logistics is when an e-retailer hires a company other than the transport company to handle the shipping. This could mean, for example, that the 3PL provides warehousing, or handles all aspects of delivery to the end customer. There are many advantages to 3PL, not least that the solution can be adapted and adjusted according to the needs of the business. Another important benefit is that it allows the e-tailer to spend more time and energy on their own business instead of dealing with logistical challenges.
Fourth-party logistics is when a company hires a company to handle all the logistics of e-commerce. This may be relevant, for example, for larger companies that would otherwise need to employ an entire logistics department to make it all work. In these cases, the 4PL company receives the shipping information as soon as a customer places an order, and then handles everything from inventory management to packing and delivery. In other words, the e-tailer can focus on other important tasks, such as developing and improving their business.
Unfortunately, a supply chain cannot take care of itself, and what lies behind well-functioning logistics is supply chain management (SCM). SCM is about managing and controlling the flow of goods, money and information from manufacturer to end customer. The aim of SCM is not just to make things work as planned, but to provide the visibility that enables companies to reduce unnecessary costs and increase the profitability of their operations. This could include negotiating better terms and conditions and reviewing the management of stock, freight, customs and commercial documents. Larger companies often employ a supply chain manager to handle these areas, but a smaller web shop may not have the resources to hire additional staff. Fortunately, digitisation has made this easier, enabling even smaller companies to monitor and streamline their supply flows. A concrete example is Portal Business, a free tool that helps entrepreneurs to manage and streamline their workflows.
When a company needs to use several carriers to deliver a product, planning is needed to ensure that lead times are not too long – especially for longer transport distances. There are many problems that can arise during the process, and if an item is delayed and cannot be delivered at the agreed time, this can have a negative impact on the customer’s buying experience. Finding a reliable partner for transport and logistics is therefore often an important factor for profitability. If the partner has extensive experience in organising and carrying out similar transport assignments, the risk that the goods will not be delivered as agreed is often reduced.
Find out more about PostNord’s transport solutions for businesses and how we can help you with your specific challenges.
Freight forwarding is organising and managing transport, a freight forwarder thus works on organising and finding smart transport solutions for clients. In addition to ordering and negotiating with carriers, the freight forwarder is responsible for the administrative work related to deliveries. The freight forwarder can also arrange storage or cross docking, as well as insurance.
As a contract customer with PostNord, you get access to tools that help you streamline your e-commerce. As well as being able to quickly book traceable shipping with Skicka Direkt, you can create personalised alerts, manage complaints and pay VAT directly from the portal. Portal Business gives you a holistic view of your flows, and you are informed as soon as an anomaly occurs so you can quickly prevent problems. You also have the option to connect your web shop with Skicka Direkt using our integration solutions, which means that the shipping information will be sent to us fully automatically when your customer places an order.
