INTRODUCTION

The components of an ecommerce logistics supply chain

Ecommerce logistics is a complex multi-step process. Each component is reliant
on the others and ecommerce brands must ensure that each of them is running
smoothly to get online orders to customers quickly and efficiently.

ecommerce logistics process infographic

Ecommerce order fulfillment
Ecommerce fulfillment involves all the steps in the ecommerce logistics process
that occur within a warehouse up to the shipping stage. These can include
warehousing, storage, packing, and handing off the order to the carrier. This also
includes inventory management across other warehouses within the ecommerce
supply chain.

The ecommerce fulfillment process is also the part of the supply chain that has
the greatest impact on the customer’s unboxing experience. During the
fulfillment process, an ecommerce brand can dictate what packaging and packing
materials get used, what free samples get included, and which carrier will ship the
order.

The fulfillment process allows a brand to connect with the customer through the
online transaction and can impact how a customer perceives the brand.
Inventory management
No matter if you have a single warehouse or several, things can get very messy
without proper ecommerce inventory management. By properly tracking what
merchandise is situated in which warehouse, employees can keep supply levels in
check based on current and predicted demand. With proper inventory
management, online orders can get shipped faster and online shoppers can avoid
waiting for their items.

Inventory management becomes especially important if an ecommerce brand

sells shoes, apparel, or any item that is available in multiple sizes and colors.
They’ll need to ensure that they have the right inventory management software
and warehouse management software in place to find and track merchandise
across their entire supply chain network. Ecommerce brands can also outsource
their inventory management process to a trustworthy 3PL partner who can
handle these activities on their behalf.

Ecommerce warehousing
An ecommerce brand needs additional space to keep inventory in stock when
sales are growing. When selecting a warehouse, they’ll need to consider how
much inventory to keep in stock, and where in the world they want inventory
stored. An ecommerce brand needs to ensure that it can communicate with the
other parts of the supply chain. This ensures that the right levels of inventory are
maintained and that customers are not left waiting for their orders.

Another important factor that an ecommerce brand needs to consider is

warehouse location. When merchandise needs to travel from a fulfillment center
to a transportation hub, it can add time to tight delivery windows. Where a
warehouse is located can be a big factor when it comes to calculating shipping
times and delivering orders to customers on time.
packages on a conveyor belt
Order packing and shipping
Order packing goes beyond just ensuring the right products are in the box. Once
the order has been processed, a shipping carrier will be selected. Sometimes the
customer can select a specific shipping option (if offered), but in most cases, the
warehouse management system will decide. The order will then be gathered and
packed by an employee who will apply the shipping label afterwards.

The packer preparing the box needs to know how to protect fragile items, which
packing materials to use for specific items, and what free samples to include
when required. If the package requires kitting, they’ll need to know which items
go into the box together.
When an ecommerce brand is using a 3PL warehouse, they’ll need to ensure that
their logistics partner can accommodate any personalized packaging the company
wishes to use.

Ecommerce returns and reverse logistics

With so many shoppers returning items they bought and expecting a speedy
refund, the ecommerce returns process is becoming a very important part of the
post-purchase experience. Online companies need to ensure their reverse
logistics are just as well-oiled as their fulfillment process. Lost packages can lead
to delayed refunds, which can affect customer satisfaction. Lost items can also
result in a double loss, as those products can no longer be resold after having
already issued a refund.
What is an ecommerce supply chain?
An ecommerce supply chain is the set of systems, processes, and infrastructure
that supplies the product and delivers it to the customer. It is the overall chain
that dictates the logistics of an online store.

An ecommerce supply chain includes the manufacturer, the inventory

management system, the warehouses, the distribution center, the fulfillment
center, the delivery carrier, and more. As an ecommerce brand, it is important
that every link in the supply chain is running as efficiently as possible. Not only is
this more cost-effective, but it also keeps online shoppers happy.

What is ECommerce logistics?

While the world was battling Covid-19, and struggling with new norms of social
distancing, eCommerce platforms were able to overcome all the obstacles and
deliver essential goods to people at their doorstep. Not many industries have
seen a sea change as those in eCommerce logistics, in the past couple of years.
The pressure to keep up with the flaring demands of the customers paved the
way for innovations to take place within the logistics sector. In the year 2020
itself, the growth in the eCommerce sector was accelerated by a decade.
According to several eCommerce, providers, the trend of virtual buying is here to
stay, and it is important that businesses have an online presence.
What is eCommerce logistics?
Ecommerce logistics is defined as the supply chain of a company’s online
customer orders being fulfilled. It is the process of getting a product from the
point of manufacturing to the point at which it is delivered to consumers. It
involves managing inventory, shipping, warehousing, and distribution.
An eCommerce company has an effective management system when it comes to
logistics. They need to manage their inventories, plan and forecast so that they do
not run out of products during peak sales periods. They are required to have a
system in place for shipping products both domestically and internationally, and
also for warehousing them when necessary. Finally, it is for them to ensure that
distribution channels continues to run efficiently and are reliable,that ascertaining
timely delivery of goods to customers.
Customer’s expectations for fast delivery and low prices have now changed which
changed the whole way of looking at ecommerce logistics. To keep up the
changing dynamics of business here are some ways that cam assist you optimize
your logistics operations for a better customer satisfaction and improved delivery.
The first step towards managing eCommerce logistics is to know your customers
and their expectations. This will help you figure out what kind of shipping service
they need. Offer them various delivery options to assess what suits them best.

Understanding international deliveries.

When it comes to international deliveries, there are several things that you need
to understand. Firstly, there is a difference between international and domestic
deliveries and how these affect different modes of transportation like air and sea
freight services, speed and so on. Next, one must understand the nuances of
shipping goods internationally as it differs from country to country. There is also
an issue with customs that needs attention as this might lead to delays in
deliveries as well as customs duties and taxes on some items.
Keep tabs on your inventory.
Tracking your inventory is vital for any kind of business but for eCommerce
logistics, where products need to be delivered fast, it becomes even more
important. It helps keep track of stock levels and reorder times while also
reducing losses due to theft and damage done by suppliers/customers/theft etc.,
during transit.

Choose a reliable logistics partner.

One of the most important aspects of managing eCommerce logistics is to have a
reliable and dependable shipping partner. There are many companies that offer
domestic, international, and even air freight services. Take your time in
researching these companies to identify the best for your needs. For businesses
that sell internationally, it is essential to have a reliable international shipping
company for handling orders coming from other countries. Remember, there are
different rules and regulations for each country, so it is important to figure out
which country you will be exporting from before finalizing a shipping company.

Table of Contents
What is Ecommerce Logistics?
Scope of Logistic and E-commerce in the Supply Chain
Ecommerce Impact on Logistics Industry
Ecommerce Logistics Challenges
Conclusion
What is Ecommerce Logistics?
In an era where digital connectivity dominates, the e-commerce industry has
emerged as a powerhouse of economic activity, transforming the way consumers
shop and businesses operate. The convenience of online shopping, coupled with a
vast array of products at one’s fingertips, has catapulted e-commerce into a
booming sector with unprecedented growth.
E-commerce logistics refers to the specialized processes and activities involved in
managing the flow of goods, information, and services from the point of origin to
the final consumer in the context of online retail. It encompasses a range of
operations designed to ensure the efficient and seamless movement of products
through the various stages of the supply chain, ultimately leading to timely and
accurate delivery to the end customer.

What is Logistic and Ecommerce ?

Scope of Logistic and E-commerce in the Supply Chain
The scope of e-commerce logistics extends across the entire supply chain, playing
a pivotal role in shaping the success and sustainability of online businesses. Here’s
a breakdown of its scope:

Order Fulfillment.
Picking and Packing: Efficiently selecting and preparing products for shipment.
Shipping: Choosing appropriate carriers, managing shipping costs, and ensuring
timely deliveries.
Last-Mile Delivery: The final leg of the delivery process, from the distribution
center to the customer’s doorstep.

Inventory Management.
Stocking: Storing and managing inventory in fulfillment centers or warehouses.
Real-time Tracking: Implementing systems for accurate and real-time tracking of
inventory levels.
Warehousing.
Storage and Distribution: Warehouses strategically located for optimal
distribution and reduced shipping times.
Technology Integration: Utilizing technology for efficient warehouse operations,
including automation and robotics.

Technology Integration in E-commerce Logistics

Inventory Management Systems: Tracking and managing inventory levels in real-
time.
Order Tracking Systems: Providing customers with visibility into the status and
location of their orders.
Transportation Management Systems: Streamlining transportation processes,
optimizing routes, and reducing shipping costs.

Returns Management.
Efficient Handling: Developing strategies to manage returns seamlessly.
Customer Satisfaction: Using returns as an opportunity to enhance customer
satisfaction and trust.

Scope of Logistic and E-commerce.

Ecommerce Impact on Logistics Industry.
The e-commerce logistics sector is exploding and has a significant influence on the
logistics industry these days. E-commerce has had a significant influence on
logistics since the expansion of e-commerce has increased customer needs and
expectations. Consumers are becoming more particular about the timeliness of
delivery according to their preferences.
According to reports, e-influence commerce in the logistics industry is so
significant that the worldwide logistics market for e-commerce is predicted to
reach $720 billion by 2020.

This growth has compelled organizations like FedEx to be inventive and

sophisticated in their services to connect to the global network. Efforts are being
made to improve logistics, particularly in the transportation sector.

Shift in Consumer Expectations.

Speed of Delivery: E-commerce has given rise to the expectation of faster
deliveries. The traditional logistics model, designed for bulk shipments to physical
stores, is now adapting to the demand for quick, often next-day, deliveries to
individual consumers.

Visibility and Tracking: Online shoppers expect real-time visibility into the status
and location of their orders. This necessitates advanced tracking systems and
communication channels throughout the supply chain.

Last-Mile Logistics Challenges.

Last-Mile Delivery Optimization: The “last mile” of the delivery process, from the
distribution center to the customer’s doorstep, is a critical focus. Logistics
providers are experimenting with innovative solutions, including drones,
autonomous vehicles, and local distribution centers.

Urban Logistics: With the increasing urbanization of populations, logistics

companies are developing strategies to navigate complex urban environments
efficiently, addressing issues like traffic congestion and limited parking.
Inventory Management and Warehousing Evolution.
Dynamic Warehousing: E-commerce’s demand for smaller, more frequent
shipments has led to a rethinking of warehouse management. Warehouses are
becoming more dynamic, often automated, and strategically located to facilitate
faster order fulfillment.

Just-in-Time Inventory: The shift towards just-in-time inventory models is

reducing storage costs and minimizing the risk of overstock or stockouts.

Technology Integration and Automation

Advanced Tracking Systems: The integration of technology in logistics has become
imperative. Technologies like RFID, IoT (Internet of Things), and AI-powered
analytics enhance tracking, visibility, and overall supply chain efficiency.

Automation in Warehousing: Robotics and automation streamline warehouse

operations, reducing labor costs, minimizing errors, and accelerating order
processing.

Reverse Logistics Growth

Returns Management: E-commerce’s inherent challenge of managing returns is
reshaping the logistics landscape. Efficient returns management processes are
becoming a key differentiator for e-commerce businesses.

Globalization and Cross-Border Logistics

Global E-commerce: E-commerce has facilitated a global marketplace, increasing
the need for efficient cross-border logistics. Logistics providers are adapting to
handle the complexities of international shipping and customs procedures.
Environmental Sustainability
Green Logistics: With the increasing awareness of environmental sustainability,
logistics companies are exploring eco-friendly options. This includes optimizing
routes to reduce emissions, using electric vehicles, and adopting packaging
practices with lower environmental impact.

Collaborative Logistics Networks.

Partnerships and Collaboration: The complexity of modern e-commerce logistics
often requires collaboration among various stakeholders. Logistics providers, e-
commerce platforms, and technology companies are forming partnerships to
create more integrated and efficient supply chains.

You Might Also Like To Read: What is Logistics for eCommerce and How it Works ?

Ecommerce Logistics Challenges.

The exponential growth of the e-commerce industry has brought forth a myriad
of opportunities, but it has also presented significant challenges for the logistics
sector. As consumer expectations evolve and the volume of online transactions
continues to surge, logistics providers face the daunting task of adapting to a
landscape that demands speed, precision, and flexibility. Let’s delve into the
Ecommerce Logistics Challenges.
Cost Efficiency: Achieving last-mile efficiency while keeping delivery costs in check
is an ongoing struggle. Balancing speed and cost-effectiveness is a delicate
equation.

Inventory Management Complexity.

Dynamic Demand: E-commerce’s nature, characterized by fluctuating demand
and seasonal spikes, challenges traditional inventory management systems.
Predicting and meeting demand while avoiding overstock or stockouts is a
constant challenge.
Product Variety: A diverse range of products often requires customized storage
and handling solutions, adding complexity to inventory management.
Returns Management Dilemmas
Volume and Complexity: E-commerce experiences higher return rates compared
to traditional retail. Managing the volume and complexity of returns, including
restocking, refurbishing, and reselling, is a significant challenge.
Customer Expectations: Efficient and hassle-free returns processes are essential
for customer satisfaction. Navigating customer expectations while minimizing the
impact on logistics operations requires strategic planning.
Technology Integration Hurdles
System Compatibility: Integrating various technologies such as order management
systems, warehouse management systems, and transportation management
systems can be challenging. Ensuring seamless communication between these
systems is crucial for efficient operations.
Cost of Implementation: Adopting advanced technologies like IoT, RFID, and
automation requires a significant initial investment. Balancing the cost of
implementation with long-term benefits is a key consideration.
Transportation Challenges
Scalability: Adapting transportation networks to accommodate the scaling
demands of e-commerce, especially during peak periods, is a persistent challenge.
Sustainability: Balancing the need for speed with sustainable transportation
practices is becoming increasingly important. E-commerce logistics must address
environmental concerns and reduce the carbon footprint.
Globalization and Cross-Border Complexities.
Customs and Regulations: Navigating diverse international regulations, customs
procedures, and varying taxation systems complicates cross-border logistics.
Delivery Timeframes: Maintaining competitive delivery times for cross-border
shipments, often subject to longer transit times, challenges the traditional notion
of rapid e-commerce deliveries.
Talent and Workforce Issues
Skilled Workforce: The evolving nature of e-commerce logistics demands a skilled
workforce capable of managing advanced technologies and adapting to changing
industry dynamics.
High Turnover: High turnover rates and labor shortages in the logistics industry
can hinder the consistent quality of service.
Security Concerns
Package Security: The risk of theft or damage during transit raises security
concerns. Implementing measures to secure packages throughout the supply
chain is crucial.
Data Security: The reliance on digital systems for tracking and communication
necessitates robust cybersecurity measures to protect sensitive customer and
operational data.

Conclusion.
In conclusion, e-commerce logistics is a dynamic and critical aspect of online retail
that demands careful attention and strategic planning. Businesses that prioritize
efficient supply chain management stand to gain a competitive edge in the
increasingly competitive world of e-commerce. By understanding the key
components, importance, and effective strategies of e-commerce logistics,
businesses can navigate the complexities of the digital marketplace and deliver a
seamless and satisfying experience to their customers.
Managing Logistics is the greatest challenge for any eCommerce company
especially in a country like India with a vast territory. With the advancements in
eCommerce, even the logistics industry is witnessing innovation and
implementing technological support to cater to such high demands.

ecommerce logistics.
And now it is possible for online buyers to track their consignment from the date
of dispatch from the factory or warehouse till its’ delivery at the consignee’s
address. The task of delivering shipments becomes even more strenuous during
weather disturbances such as the rainy season or when extensive areas get
flooded and many bridges are damaged.
Before the advent of the eCommerce industry, retailers sourced goods either
from manufacturers or distributors. And now that we have a plethora of online
shopping stores, the intermediaries cease to exist, leading to deals directly done
between the supplier and end-user: C&F (clearing and forwarding agents),
distributors, dealers, and retailers have no role in this direct selling process.
With these intermediaries removed, eCommerce shipping has become an
essential part of supply chain management and emerged as a highly specialized
service with the majority of them being managed by eCommerce companies
themselves.
How Does eCommerce Logistics Work?
eCommerce logistics is a congregation of various processes such as inventory
management, warehousing, packaging, labeling, billing, shipping, payment
collection, return, and exchange that work in synchronization leading to a supply
chain. All these put together turn into an exigent task, that requires a full-proof
strategy to be accomplished.
The eCommerce Logistics Company Functions in Two Directions
Forward Direction – Distribution and delivery of goods to buyers.
Reverse Direction – Exchanging or replacement of defective, damaged, or wrong
shipments.
Both these processes become easy if logistics are managed and controlled by an
eCommerce company.
ecommerce logistics
Working in the Forward Direction
Receiving the order on an eCommerce store
Providing a payment option
Preparing inventory
Packaging the item
Preparing its invoice
Dispatching the order
Handing over the parcel to the courier company
For an eCommerce company logistics in the forward direction involves receiving
an online order, arranging for the item, packaging, preparing its invoice, arranging
the payment, dispatching, and delivering the item to the customer’s doorstep.
The time between receiving the order and its distribution depends on the
availability of the material and the location of the consignee. For specific
locations, a separate delivery charge could be applicable
From the time of dispatch until delivery of a consignment, it is the responsibility
of the seller to notify the exact location of a shipment to its respective consignee
through tracking SMS or email notifications.
Payment collection is essential for any eCommerce business owner, analogous to
a retailer. An online retail company should have multiple payment options for a
better customer experience such as debit/ credit cards, bank transfers, and COD
(cash on delivery). In a country like India where buyers are more comfortable with
dealing with physical money, the COD option is of utmost significance.

Working in Reverse Direction.

In spite of the best efforts the possibility of incorrect or damaged shipments
cannot be ruled out. In such situations efficient reverse logistics is essential.
responsibility of logistics to take back these defective or damaged materials and
replace them with proper order that satisfies the customer within a reasonable
time. A hassle-free exchange or replacement process goes a long way in building
trust between the buyer and an eCommerce company.

Interpersonal Relationship.
For any logistics or online retail company-customer relationship is critical. This
relationship is established by delivery boys who are the face of an eCommerce
company to buyers. Delivery boys must always be well-behaved and patient with
customers. Attention must be paid to complaints with assurances of rectifying
them soon. It is advisable to have delivery boys with a cheerful disposition.
A change in consumer mindset encourages evolution in the way eCommerce
retailers plan on serving them. Two years ago, what began as a force majeure
became a habit, where customers were able to receive everything that they could
possibly think of, right at their doorstep. The answer is vast as to what is logistics
for eCommerce. The eCommerce industry’s heavy reliance on a solid supply chain
backbone has triggered a revolution in the logistics industry. But what is
eCommerce logistics and what are the factors that it encompasses? Let’s take a
look.
Table Of Contents
What is eCommerce Logistics?
How Does eCommerce Logistics Work?
Forward Logistics
Inventory Management
Smart Inventory Placement
Order Preparation
Shipping Processes
Reverse Logistics
Returns Management
Value Recovery of Goods
Disposal of Unusable Items
How Does eCommerce Logistics Differ from Brick and Mortar Logistics?
How to Choose the Right Type of eCommerce Logistics for Your Business in 2024?
Know Your Requirements
Find Suitable Partners
Top 10 Latest Trends in eCommerce Logistics in 2024
eCommerce Warehousing
Inventory Management
Order Packaging & Labelling
Order Shipping
Weight Locking
Order Tracking
Last-Mile Delivery
Fast Shipping
Same Day & Next Day Delivery
Reverse Logistics
Conclusion: Do You Need to Outsource Your eCommerce Logistics?
What is eCommerce Logistics.
What is eCommerce Logistics.
eCommerce Logistics is the complete supply chain process undertaken by an
eCommerce company to get their products from the seller or warehouse to the
customers and back via reverse logistics if needed. All the proper systems and
processes need to be in place for the millions of packages being shipped across
the country to multiple different locations daily.
Amazon-prime Like Logistics for Modern Brands in India
an eCommerce fulfillment company, empowers online brands with a superior-
tech platform to compete with Amazon like service levels by bringing their
average delivery timelines from 5-10 days to 1-2 days.

"With WareIQ, UTH is able to consolidate common inventory for all platforms and
get much closer to the customer through access to WareIQ’s strong nationwide
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are excited about being able to offer same day delivery in several pin codes due to
WareIQ."
- Samit Mehta, Founder, UTH Beverages
Contact Us Now
How Does eCommerce Logistics Work?
As mentioned above, eCommerce logistics refers to the entire series of processes,
from receiving an online order to the safe delivery of the package to the customer
by the estimated date and time. The 2 major processes involved in eCommerce
Logistics are listed below:

Forward Logistics.
Inventory Management.
This process is highly critical to keeping regular track of inventory. While stacking
products in the warehouse or fulfillment center, warehouse management should
occur where the high-demand products must be kept handy or easily reachable,
followed by the goods where their accessibility is in proportion to their demand.
eCommerce Logistics companies need to put in measures to ensure the safety and
security of the inventory in their warehouses or storage spaces.
Smart inventory placement refers to the automated recommendation of the best
storage facility to place your inventory at based on a variety of factors specific to
each SKU, such as seasonal demand, proximity to areas of high demand, market
trends and more.
Order Preparation
The next step is to gather the inventory and prepare the final order per the
customer’s request. The next step is packaging and labelling. Products are
packaged in a single SKU or a kit with several SKUs before being labelled as per
their batches and destinations. Many companies have adopted eco-friendly
packaging and labelling to lure more aware customers.

Shipping Processes
Safe and timely delivery of orders is critical to the overall customer experience.
This involves updating the customer regularly with the whereabouts of their
package and ensuring that there are no errors or delays while shipping or
transporting the product to their location.

Suggested Read: What are Shipping Labels?

Reverse Logistics
Returns Management
Around one-third of all products bought online are returned to eCommerce
companies. The reverse logistics process comes into play when the customer or
delivery agent triggers the return request. However, brick-and-mortar stores
experience lower returns than online retail as the customers get the look and feel
of the product before buying. However, both models employ a different set of
logistical procedures to reach the final goal.

Value Recovery of Goods

This enables you to recover value from returned items by selling them on the
secondary market, recycling and upcycling them, donating them and turning them
into energy. This ensures that every returned product can fetch some amount of
value rather than simply laying idle and eventually becoming obsolete.

Disposal of Unusable Items

For products that cannot be recovered or resold, they need to be disposed of in a
healthy and environmentally conscious way. This involves the sustainable disposal
of items for all categories, including food, clothing, electronics, health & hygiene,
etc.

How Does eCommerce Logistics Differ from Brick and Mortar Logistics?
Brick and Mortar Logistics eCommerce Logistics
Warehousing They serve a local area and hence need smaller warehouses or
storage spaces. eCommerce logistics companies serve many cities, and most of
them cater to customers across the country. Hence, they need larger warehousing
spaces closer to customer demand hubs.
Inventory As they usually serve customers in local areas, brick and mortar
stores need less inventory as their demand is less than an eCommerce business
because they only have to cater to one location as opposed to the whole country.
Since they serve national and sometimes international customers,
eCommerce logistics companies need to be heavily stocked with multiple
products from multiple sellers. As a result, their stock-keeping processes are more
extensive than brick and mortar stores.
Distribution Brick and mortar stores need transportation from the warehouse to
their outlet and thus don’t need omnichannel flexibility and don’t require
complex supply chain processes for distribution. eCommerce logistics
companies’ pickup and delivery processes vary and are much more complex and
intricate. They employ multiple channels to ensure delivery to hard-to-reach
locations in tier 3, 4, and 5 towns and villages.
Technology Brick and Mortar stores usually don’t employ extensive software for
their supply chain management as most processes are done physically, in-house
and in just one location. Serving a larger customer base comes with many
challenges in managing orders, inventory, warehousing, distribution and returns.
That’s why all eCommerce logistics companies rely on advanced software, backed
by AI or ML, for each stage of the logistics process, to avoid unwarranted manual
error and delays.
Logistical ExpensesContrary to popular belief, brick and mortar stores don’t
always prove to be more expensive. The major cost for these stores is the initial
cost of setting up the shop and maintaining it, hiring labour, regular stocking etc.
and logistics is limited to transporting items between the warehouse and the
outlet. The logistics costs of setting up an eCommerce business are
significantly lower than Brick and Mortar retail. But companies begin to incur
costs of infrastructure, shipping aggregation, returns, loss of customers, and
website maintenance and development. And above all, attempting to keep up
with emerging trends burns a major hole in their pockets. This is why it is
advisable for these retailers to partner with dedicated eCommerce logistics
companies.
How to Choose the Right Type of eCommerce Logistics for Your Business in 2024?
Know Your Requirements
An eCommerce business has many requirements for which they need to hire an
eCommerce logistics partner. However, shortlisting a 3PL logistics company for
eCommerce, the retailer should have an understanding of their own
requirements, the services that companies offer that they seek to partner with,
and their available budget. An eCommerce company can ascertain which
eCommerce logistics company would be the best fit for them through the
following points:

Customer Demand Per Day: This refers to how many orders the retailer receives
in a day and how much they expect to receive in the future.
Product Categorization: Grouping products into different categories helps
companies better understand their eCommerce shipping requirements. For
instance, perishable products require time and temperature-sensitive eCommerce
logistics, while glassware demands fragile-safe transportation.
Technological Requirements: It is important to understand what technological
services you require for daily operations and which companies provide those
services.
Staff Requirements: This is determined by the amount of demand and what would
be the maximum and minimum operational load.
Speed of Order Fulfillment: This depends on the number of orders that need to be
fulfilled per day and which parts of the country those orders need to travel to.
Storage Space Needed: It is important for businesses to understand the scale of
their operations and how much storage space they would need for available,
unsold inventory.
Find Suitable Partners
After assessing all the requirements that are needed in different areas,
eCommerce retailers can scout for eCommerce logistics companies that offer the
same services. It is important to weigh your options as per the following criteria
to find the best eCommerce logistics partner:

Customer Service and Customisation: All businesses live to serve their customers.
If the customer is dissatisfied, it affects sales and, in turn, the company’s growth.
Online retailers need to check if the logistics partner can provide decent customer
service, what their success rate is, and whether their services can be customised
as per the customer and the product that the business caters to.
Performance History: The performance of these companies influences the
operations of an online retailer. Therefore the eCommerce business must collect
all the relevant information on their past performance to analyse their track
record and identify certain failures and how they were addressed. Same-day or
next-day deliveries have become the norm these days, and the logistics company
for eCommerce must be able to provide these services. If the eCommerce
business has certain demands, the eCommerce logistics partner must keep a
provision for exceptional distribution timelines like 10-minute deliveries without
affecting the service quality.
Omnichannel Presence: With severe competition coupled with rising customer
expectations, it has become essential for businesses to employ multiple channels
for order fulfillment. Before onboarding an eCommerce logistics provider, the
business must ascertain if the 3PL company has an omnichannel presence to be
able to reach as many customers as possible. Besides distribution, the partner
should also provide multiple channels to ensure seamless communication and
data flow between the two organisations.
Technological Capability: This drives business operations productively. There are
many tools utilised by 3PL eCommerce logistics providers, such as a Warehouse
Management System (WMS), platforms to fulfill and track orders, inventory and
distribution management, and any other cloud-based tech that empowers a
business’ supply chain. Having a good onboard tech platform improves efficacy
and productivity, leading to fewer errors and higher performance. Their system
should also be able to integrate with other fulfillment services to enable seamless
transfer of data and insights between multiple platforms, smooth order
fulfillment, and customer service.
Financial Strength: Without a solid financial backbone, no company can thrive. If
an eCommerce logistics partner is monetarily weak, it can take down the
eCommerce business’ supply chain, thus affecting the latter’s market image.
Therefore, every company must thoroughly check the 3PL provider’s financial
books before sealing the deal. The logistics provider for eCommerce must also be
able to survive all kinds of business disruptions with stable financial backing.
Having good relations with banks and financial institutions proves helpful in many
different situations. If the logistics provider assures them of such support, they
could be the ideal business partner.
Scalability: The eCommerce logistics provider should have an expandable business
model that inflates as the eCommerce business grows its reach. The logistics
provider should be able to adapt to the growing demand and expansion of the
retailer they have partnered with.
Geographical Reach: Today, eCommerce businesses thrive on their reachability of
tier 2, 3, 4, and lower towns and villages. The deeper and quicker their
reachability, the more orders they can receive and fulfill, thus securing a better
customer satisfaction ratio and obtaining access to new customers in different
regions of the country.
Overall Cost: The overall package deal offered by the eCommerce logistics
provider is very important to observe. Your company should be able to afford
them, with all the services they offer, rather than paying less for a company that
does not offer important services. Companies need to strike the right balance
between services and cost.
Top 10 Latest Trends in eCommerce Logistics in 2024
eCommerce Warehousing
what is ecommerce logistics_eCommerce Warehousing
Source
This practice is focused on storing inventory and products for the daily operations
of an eCommerce business. eCommerce warehouses are storage spaces
dedicated to operating an online retail business. An eCommerce business needs
to ensure that it operates and sets up storage closer to its customer hubs to
reduce the time and expense of transporting goods. Partners like WareIQ help
store the inventory closer to areas of high customer demand, thus enabling
businesses to offer shortened delivery timelines.

Inventory Management
what is ecommerce logistics_Inventory Management
Source
Many new trends in inventory management have emerged in light of the
pandemic and other disruptions like the Ukraine-Russia war. A few such
developments are the Just-in-Case method of managing inventory and the
extensive automation of the supply chain. Simply termed as just-in-time inventory
management.
Just-in-Time meant procuring the inventory as and when the demand arose. The
Just-in-Case method pushes businesses to procure excess inventory to avoid
hassles in case of a contingency like a lockdown or an interruption due to war.
This inventory management trend has seen an upsurge in the past few months by
eCommerce companies wary of being unable to meet the existing or increased
customer demand due to unforeseen contingencies.

The shortage of workforce and other interruptions have pushed companies to

look for measures that can support and maintain the speed and efficiency of the
supply chain. Automating important processes is one such method. Advanced
tech like AI and Machine Learning are driving the evolution of eCommerce
logistics management systems like WareIQ. These tools enable real-time tracking
of inventory nationwide which has pushed the efficacy levels higher, especially in
the case of cross-country shipping.

Order Packaging & Labelling

what is ecommerce logistics_Order Packaging & Labelling
Sustainability is not the only trend catching up with eCommerce packaging;
minimalistic design is also gaining mileage. Besides eco-friendly packaging
material, companies prefer labels and designs with minimal amounts of text and
designs. (All that is covered under custom packaging for eCommerce). This trend
has taken the ‘Less is more opinion to the next level. For example, Apple’s plain
white boxes usually outshine other manufacturers. Sending the orders in generic,
uninspiring brown boxes will create an unwelcoming and impersonal client
experience. Instead, choosing an eCommerce logistics firm that provides branded
packaging services can help companies create a brand and raise the visibility of
their business.

Besides just visual appeal, companies are also using packaging to communicate
with customers. Adequate packaging needs three layers. When orders get
punched, there’s a label printed and stuck on another two layers of packaging and
then dispatched. eCommerce logistics companies provide a wide variety of
packaging strategies. For instance, bubble foil, padded paper, and plastic emailer
bags help to prevent the damage of goods during transportation.

Order Shipping
what is ecommerce logistics_Order Shipping
Shipping the order to the customer safely and on time has always been the
priority for eCommerce businesses. But they can never ignore the affordability of
the shipping charges. While companies have been tying up with eCommerce
logistics providers for decades now, the pandemic has proved that loyalty is
overrated. It has changed the priority from allegiance to cost and benefits.

There has been an upsurge in the spot pricing market for shipping, wherein
companies shy away from long-term contracts and focus on getting the best price
for their shipping right now. Another trend that is catching up is the need for
business intelligence behind every shipment. Advanced tech backs every order
from the origin to the customer and back.

Weight Locking
what is ecommerce logistics_Weight Locking
Source
This is a great trick to avoid product weight discrepancies in order shipping
services. When the eCommerce logistics partner picks up the order from the
business’ warehouse, it weighs and measures the dimensions again before
pushing the parcel out to the customer. Unfortunately, many times, there happen
to be differences in the weight of the package due to unavoidable variations in
weighing machines. There are a few useful hacks to ensure that this doesn’t
happen:
Calculate the Volumetric Weight of the shipment. This is done by multiplying the
product of package dimensions in centimetres by 5000 (which may vary as per the
carrier). The resulting weight will remain the same globally. For odd-sized
packages, automating the weighing system helps avoid discrepancies in a manual
cubic calculation.
Associate with a supportive eCommerce logistics partner who resolves such
discrepancies in a timely and effective manner.
Click pictures while weighing the package which helps as an application of proof in
case of a dispute
Order Tracking
what is ecommerce logistics_Order Tracking
Source
Online retail customers want real-time information on the whereabouts of their
shipments. Therefore, companies invest in advanced tech like superior order
management systems to ensure effective mapping of the orders and timely
communication with the customer through fulfillment statuses.

Last-Mile Delivery
what is ecommerce logistics_Last-Mile Delivery
Source
It needs to offer sustainability, timeliness, safety, flexibility, real-time updates,
and much more. These criteria define a significant share of a customer’s
experience with an eCommerce retailer. And the statistics say that it is an
essential part of customer engagement.

Moreover, peak season shipping has become a perennial trend. Customers prefer
to receive their orders at home than shopping amongst huge crowds and queuing
up for payments, especially during the pandemic. As a result, they push online
retailers to invest heavily in last-mile delivery management software to manage
last-mile deliveries and recruit and retain the right personnel.

Fast Shipping
what is ecommerce logistics_Fast Shipping with WareIQ
No words can stress the significance of fast shipping. Customer expectations have
crossed all boundaries, pushing eCommerce companies to strive toward
delivering orders within ten minutes. This scenario is in the process of making
next-day delivery obsolete. This requirement has pioneered the invention of dark
stores across the nation to cater to the growing demand for superfast supplies.
One can only imagine how much faster it can possibly get.

Same Day & Next Day Delivery

what is ecommerce logistics_Same Day & Next Day Delivery
Source
Many eCommerce companies now focus on speedy deliveries so that customers
get guaranteed next-day or even same-day delivery. Quick commerce is the next
generation of online delivery systems, which enables the delivery of items within
a concise time bracket of one or two days or less than 10 minutes for some
business models. Convenience, delivery speed, and efficiency continue to define
customer experience.

Reverse Logistics
returns management_reverse logistics services
WareIQ’s Reverse Logistics for Efficient Returns Management
An unsatisfied customer will initiate a return, and many eCommerce logistics
companies oblige. This trend has given birth to advanced reverse logistics.
Superior technology, sustainability, and creativity are driving the backward supply
chain. With a high share of products bought online being returned, the
eCommerce industry has been forced to revisit its return policies and invest in
reverse logistics.

Conclusion: Do You Need to Outsource Your eCommerce Logistics?

eCommerce is no longer linear, and fulfillment is now Omnichannel. eCommerce
customers may order online via mobile apps, phones, or online marketplaces.
They may want home delivery, in-store delivery, or curbside delivery. All those
fulfillment systems need to be taken care of by eCommerce logistics partners for
efficacy and punctuality. eCommerce logistics strategies help to level up a
business’s digital presence by bringing radical shifts in the business paradigm.
Hiring a logistics partner is one such remarkable strategy. Here are a few benefits
of delegating the task to an external expert.

The eCommerce industry is slated to experience massive growth and evolution in

the coming years. As customer demand widens, every nook and corner of the
sector will need to be organised. eCommerce businesses cannot manage these
processes on their own. The expectations are too heavy to be borne solely by
them. Delegation of the major parts of logistics can assist them in taking some
load off. Teamwork will play a vital role in the sector’s development. Experienced
players like WareIQ can lead your expansion story with creative ideas and are
bound to enhance and improve supply chain processes.

WareIQ, a Y-combinator-backed eCommerce fulfillment company for same/next

day delivery. We execute this by helping you store inventory closer to your
customers using our platform connected to 20+ top marketplaces & D2C
websites, a nationwide network of fulfillment centers, and prominent last-mile
couriers. WareIQ manages the entire range of complex operations in the
eCommerce fulfillment process, such as inbound functions like scanning and
quality check, 100% accurate Pick and Pack, and inventory management across all
channels, with a centralized platform for core fulfillment and shipping operations
and post-shipping apps for a delightful experience and zero to minimal supply
chain leakages.
With world-class WMS functionalities, WareIQ handles the entire range of
intricate operations in the eCommerce fulfillment process, ranging from Inbound
Operations such as scanning and quality check, through 100% accurate Pick and
Pack, to Inventory Management across all channels. WareIQ’s next-day delivery
and same-day delivery services are helping eCommerce businesses set new
standards with respect to setting customer expectations and fulfilling them with
high efficacy. WareIQ will definitely prove to be a more reliable and trusted long-
term fulfillment partner compared to dropshipping and conventional 3PL
companies.

Are you eager to know more about WareIQ's offerings if you sign up now? Find
the features of the best-in-class, category-defining fulfillment services for
eCommerce & D2C brands below:
Pan India Fulfillment & Darkstore Network: Plug-and-play fulfillment
infrastructure with no minimums, which is compliant with Amazon Seller Flex,
Flipkart Assured, Myntra and other marketplaces
Inventory & Network Planning Excellence: Best-in-class AI models for sales
forecasting, product segmentation, and inventory management to reduce
inventory by 40% and increase revenue by 10%.
Vertically Integrated Fulfillment Tech Stack: Our Fulfillment Tech Solution
supports integrations with 20+ top marketplaces & D2C platforms, and prominent
national, regional and hyperlocal couriers, enhancing reach by covering deliveries
for 27,000+ pin codes
Supply Chain Productivity Applications: Integrate a host of supply chain
productivity apps with a single-click to your existing CRMs, ERPs & accounting
software to manage your logistics workflows from one command center. Use
Apps like RTO Shield to get 100% RTO protection, Branded Tracking to turn your
order tracking page into a profitable marketing channel, and many more.
Trusted by 300+ top Indian brands, we are helping them accelerate online sales
and expedite their growth through a synergistic combination of advanced
technology, robust fulfillment infrastructure & seller enablement services!WareIQ
is backed by leading global investors including Y Combinator, Funders Club,
Flexport,BLUE DART E-COMMERCE LOGISTICS

Blue Dart Express Ltd., South Asia's premier express air, integrated transportation
& distribution company, offers secure and reliable delivery of consignments to
over 55,400+ locations in India. Blue Dart is a provider of choice for its
stakeholders due to its customer centric approach and aims to further strengthen
this partnership. As part of DHL Group’s DHL eCommerce division, Blue Dart
accesses the largest and most comprehensive express and logistics network
worldwide, covering over 220 countries and territories, and offers an entire
spectrum of distribution services including air express, freight forwarding, supply
chain solutions, customs clearance etc.
The Blue Dart team drives market leadership through its motivated people,
dedicated air and ground capacity, cutting-edge technology, wide range of
innovative, vertical specific products and value-added services to deliver
unmatched standards of service quality to its customers. Blue Dart's market
leadership is further validated by its position as the nation’s most innovative and
awarded express logistics company for exhibiting reliability, superior brand
experience and sustainability which include recognition as one of ‘India's Best
Companies to Work For’ by The Great Place to Work® Institute, India, ranked
amongst ‘Best Multinational Workplaces in Asia’ by The Great Place to Work®
Institute, Asia, voted a ‘Superbrand’ and ‘Reader’s Digest Most Trusted Brand’,
listed as one of Fortune 500’s ‘India's Largest Corporations’ and Forbes ‘India's
Super 50 Companies’ to name a few. Blue Dart’s Diversity and Inclusion initiatives
have also led to it being recognized as one of India’s ‘Best Workplaces for
Women’ in 2021 and ‘Best Organizations for Women’ in 2022 by the Economic
Times.
State-of-the-art Technology, indigenously developed, for Track and Trace, MIS,
ERP, Customer Service, Space Control and Reservations.
Blue Dart Aviation, dedicated capacity to support our time-definite morning
deliveries through night freighter flight operations.
A countrywide Surface network to complement our air services.
Warehouses at 85 locations across the country as well as bonded warehouses at
the 7 major metros of Ahmedabad, Bangalore, Chennai, Delhi, Mumbai, Kolkata
and Hyderabad.
ISO 9001:2015 countrywide certification by Lloyd's Register Quality Assurance for
our entire operations, products and services.
E-commerce B2B and B2C initiatives including partnering with some of the prime
portals in the country.
Blue Dart’s commitment towards the betterment of the environment and
communities has been unwavering since its inception in 1983. Over the years, the
company has been consistently reporting on its corporate responsibility
performance, and each year, expanding its scope to include a higher number of
beneficiaries that can be impacted. As part of its Corporate Social Responsibility,
Blue Dart runs various programs for the upliftment of disadvantaged, vulnerable,
underprivileged and marginalized sections of society. All programs are classified
under the 3 pillars of Living Responsibility – GoTeach, GoGreen and GoHelp. These
include students and young adults from poor financial backgrounds, hearing
impaired, women, senior citizens, etc. in areas of education, preventive
healthcare, women empowerment, sanitation, waste management etc.
Blue Dart has partnered with several non-profit organizations of high repute in
various capacities to run programs that are aligned under the 3 pillars. Blue Dart
works closely with each of its NGO partners to identify the stakeholders and
beneficiaries of each intervention. Blue Dart also extends assistance to various
NGOs by providing free of cost logistics support to them. The company reaches
out to help in the best possible way to support NGOs that work for the elderly,
less privileged children, disabled people, those providing relief material in disaster
hit areas and many more noteworthy causes.
As part of DHL Group, Blue Dart also celebrates Global Volunteer Day (GVD), an
opportunity to employees, partners, customers and various other stakeholders to
become responsible citizens and conducting initiatives that benefit the
environment, communities and society. In 2017, Global Volunteer Day (GVD) was
celebrated from 18th September to 1st October, Great volunteering efforts were
witnessed from over 4,209 XBU employees who spent over 10,501 employe hours
and came together to participate in various activities under the GoGreen, GoHelp
and GoTeach pillars. GVD is an opportunity for employees, partners, customers
and various other stakeholders to become responsible citizens by helping those in
need. Volunteers participated in various initiatives which included blood donation
drives, planting saplings, teaching children from marginalized sections of society,
cleaning their schools and volunteering time with senior citizens and
underprivileged children in many old age homes and orphanages. Blue Dart
Express Ltd is South Asias leading integrated air express carrier and premium
logistics-services provider. It offers secured and reliable delivery of consignments
to over 55,000 locations in India. As a part of the Deutsche Post DHL Groups (DHL
Express, DHL Global Forwarding & DHL Supply Chain) Post - e-commerce - Parcel
(PeP) division (DPDHL Group), the Company accesses the largest and most
comprehensive express and logistics network worldwide through DHL, covering
over 220 countries and territories and offers an entire spectrum of distribution
services including air express, freight forwarding, supply chain solutions, customs
clearance etc.Presently, Blue Dart operates with its fleet of 6 Boeing 757-200
freighter aircraft, two Boeing 737 aircraft (to be inducted soon), offering a
payload of 500+ tonnes per night, a flotilla of 12,000+ vehicles, 2,347 facilities and
286 e-vehicles across 55,400+ locations in India.Over 12,500 passionate and
trained Blue Darters work in perfect harmony to deliver over 35+ shipments every
second. Blue Dart has 2,347 facilities / hubs / offices across India. It is engaged in
the business of integrated air and ground transportation and distribution of time
sensitive packages to various destinations, primarily within India.Started as a
partnership firm in 1983 under the name Blue Dart Courier Service, the company
was registered as a private limited company with the new name Blue Dart Express
Pvt Ltd in 1990. The company was incorporated on April 05, 1991 and became a
public limited company in 1994.The company is the global service participant of
Federal Express International, US, with exclusive rights for pick-up and delivery
services in India. Federal Express, which has an extensive service network in
around220 countries, is recognized all over the world for its innovation in the air-
express business. The famous hub-and-spoke system of distribution, which is
widely followed by almost every airline in the world today, was pioneered by
Federal Express. Under the agreement between Blue Dart and Federal Express, all
international shipments of Blue Dart are distributed through the Federal Express
system and Federal Expresss inbound shipments to India are delivered through
Blue Darts network.The company launched IXF 2, a door-to-door service for heavy
international cargo to the US. In the domestic sector, the company has a number
of products which includes domestic priority for the movement of domestic
documents and packages to 237 locations across the country - Dart Apex, a
special multi-modal distribution service for medium and heavy shipments; and
Dart Surface line, a door-to-door express surface product. Its range of products
include Voice Dart, Power Dart, Dart Collect, Dart Apex, etc.Blue Dart has the
largest private E-mail in India. It tracks all its domestic shipments through its
tracking system COSMAT and is linked with COSMOS, the Federal Express satellite
communication system for tracking international shipments. The company has
started aircraft leasing business & leased to its wholly owned subsidiary Blue Dart
Aviation. It has acquired on lease its third aircraft (Boeing737-200) for addition to
its existing fleet of two Boeing Aircrafts.In Mar. 2001, in order to provide value-
added service and maintain its market share, Blue Dart Express has launched a
new web-tool MobileDart -the first wireless initiative developed and launched by
a domestic express company.The company has signed an agreement with French
Express, a leading courier in South India. The agreement covers the domestic
priority and APEX (AirPackages Express) services of the company. With this the
company has added over 1000 locations to its existing network in the southern
region. Further it also signed an agreement with Crown Couriers, a leading courier
company in North India. With this, the company has added an additional 74
locations to its existing network in North India.During the year 2001, the
Company upgraded Indias first interactive logistics and e-Business Solutions site,
www.bluedart.com. The website gives customers, complete and valuable
information on the Companys operations, products, services and provides contact
and communication capabilities for all its 13,880 locations serviced.During 2002-
03, the company has been re-certified as one amongst a handful of Indian
companies to the new global ISO 9001-2000 standards for Design, management
and operations of countrywide express transportation and distribution services
within the Indian sub-continent and to international destinations serviced through
multinational express companies.DHL Express (Singapore) Pte Ltd has acquired
81.03% equity stake of the company during 2004-05. Further the company has
added the fifth aircraft to carry over 42 million domestic and 500000 international
shipments together weighting over 110000 tonnes across its network. Further the
company has divested 60% of the equity capital of Blue Dart Aviation Ltd in favour
of Mr. Tushar Jani and Mr. Khushroo Dubash in the ratio of 30% each respectively
during 2004-05. Consequent to this divestment Blue Dart Aviation Ltd ceased to
be a subsidiary of the company with effect from March 11 2005.Skyline Air
Logistics Ltd and Concorde Air Logistics Ltd became subsidiaries of the company
with effect from May 7 2004.During the nine months period from April 2005 to
December 2005, the company successfully added new facilities by setting up
regional headquarters for its North Region at Delhi and also expanded state-of-
the-art facilities of about 91,000 Sq Ft at Bangalore, Ahmedabad, Delhi and
Jaipur . 30 operations and service centres were also set up in Delhi, UP, Rajasthan,
Punjab and Chandigarh in the North, Gujarat, Maharashtra and MP in the west
and Tamil Nadu and Karnataka in the South for increased capacity
requirements.In 2005, DHL Express (Singapore) Pte. Ltd. completed the
acquisition of 81.03% of the equity capital of Blue Dart Express Limited. In 2006,
Blue Dart launched its unique SMS based Mobile Tracking Service. On 1 June
2006, Blue Dart introduced the first Boeing 757 freighter in the Indian skies with 2
of these aircraft connecting the 5 major metros of Delhi, Mumbai, Chennai,
Bangalore and Kolkata. A second flight launched from Hyderabad and Ahmedabad
is the 7th airport connected to Blue Darts network.During the year, the company
divested 60,000 Equity Shares constituting 100% of Equity Capital of Skyline Air
Logistics Ltd, a wholly owned subsidiary of the company for a total consideration
of Rs.4.42 million. Consequently, Skyline Air Logistics ceased to be a subsidiary of
the company with effect from August 10, 2006.In 2007, Blue Dart launched its
fortified Ground Express Service - Dart Surfaceline with time bound deliveries and
features like DOD (Demand Draft on Delivery), FOD (Freight on Delivery) and FOV
(Freight on Value) - Insurance Arrangement. During the year, Blue Dart added 3rd
Boeing B757 freighter to its fleet.In 2008, the first integrated Blue Dart-DHL
facility was launched in Bangalore. During the year, Blue Dart added 4th Boeing
B757 freighter to its fleet.In 2010, the company was certified to the ISO 9001-
2008 standards. In 2011, Blue Dart launched Smart Truck technology designed to
provide solutions to urban logistic challenges such as traffic restrictions, density
and clogging, while ensuring environmental protection and fulfilling customer
needs for on-time delivery. Blue Dart also launched GOGREEN Carbon Neutral
Service which allows customers to neutralize their carbon footprint by paying a
marginal offset charge over and above their shipping rates. Carbon emissions
from customer shipments are offset by reinvesting in environmental protection
projects verified by SGS (Societe Generale de Surveillance), a United Nations
independent auditor.In 2012, Blue Dart added 5th B757-200 freighter to its fleet.
During the year, DHL reduced its stake in Blue Dart Express to 75% in order to
company with statutory requirements. In 2015, the company launched its 1st
eFulfillment Centre in Delhi-NCR. During the year, the company acquired
additional 21% stake in Blue Dart Aviation. In 2016, the company acquired its 6th
Boeing 757-200 freighter. On 15 April 2016, Blue Dart Express announced that the
companys Board of Directors has accorded its approval to enhance companys
stake into Blue Dart Aviation from present 74% to 100%. Later, on 24 November
2016, Blue Dart Express completed the acquisition of the entire remaining 26%
stake in Blue Dart Aviation, thereby making it a wholly owned subsidiary. In
August 2017, Blue Dart launched Blue Dart Rakhi Express, a unique, customized
service for secure and timely delivery of Rakhis. On 30 October 2017, Blue Dart
Express launched electric vehicles in Gurugram, another step towards operating
its last mile e-tail delivery service with clean pick-up and delivery solutions. The
electric vehicles are being piloted in Gurugram and will be subsequently inducted
across Blue Dart country.During the year 2018, the Company received repayment
of Loan from its wholly owned subsidiary company, only cargo airline, Blue Dart
Aviation Limited (BDAL) of Rs 2441 Lakhs. The Company paid Rs 8,735 Lakhs as
Inter-Corporate Deposit to BDAL and the same was fully repaid as on March 31,
2018.During the year 2018, Blue Dart Aviation Limited (BDAL) uplifted 91,471
tones on its network and also handled 38 charters. This was possible with an
unprecedented additional 170- day flights in addition to the scheduled night
operations to handle additional loads within limited resources and it significantly
contributed to companys performance.During the year ended 31 March 2018,
Blue Dart handled over 1,958.86 lac domestic shipments, 9.15 lac international
shipments and over 696,961 tonnes of documents and parcels across the nation
and 220 countries worldwide.During the year 2019, the Company received
repayment of Loan from its wholly owned subsidiary company, Blue Dart Aviation
Limited (BDAL) of Rs 1903 Lakhs. The Company paid Rs 17,782 Lakhs as Inter-
Corporate Deposit to BDAL and the same was fully repaid as on March 31,
2019.During the year 2019, Blue Dart Aviation Limited (BDAL) expanded its
footprint across airports in Chennai, Delhi and Mumbai, relocating to new, state
of the art, dedicated facilities constructed at these airports. These long-term,
purpose-built facilities are unique to Blue Darts operations and help to establish
much needed, critical infrastructure to secure its operations and ensure
sustainability over the long term to meet growing demand, productivity and
service quality enhancement. This subsidiary company handled 52 charters and
uplifted 88,132 tonnes on its network. The As One Project initiated during the last
quarter of 2017 at Hyderabad station was extended to the Kolkata and Bangalore
stations. Under the said project, the city side and airside operations of both
companies and Blue Dart Aviation Limited were integrated under a single
authority and worked in tandem as a single force As One. During the year, the
Company successfully redeemed Series II Debentures amounting to Rs 9,491
Lakhs in November 2018.During the year 2019, Company carried over 2,332.71
lakhs domestic shipments and over 9.16 lakhs international shipments both
weighing more than 754,981 tonnes. In FY19, Company added two new AIR HUBs
at Chennai and Mumbai Airport in 2019 to further strengthen the Air Express
service and build operational excellence and efficiency and became a part of the
newly restructured DHL eCommerce Solutions division. During the year 2020,
Company has carried out four major checks and completed an engine shop visit
(ESV). ESV costs were controlled by procuring life limited parts (LLPs) and other
components from the open market. A few hundred LLPs were shortlisted for
procurement from hundreds of parts identified by the purchase team and
reviewed by technical services, which helped to control the ESV cost.During the
year 2020, Company carried over 2,403.98 lakhs domestic shipments and over
8.44 lakhs international shipments both weighing more than 769,490 tonnes.In
FY2020-21, Every Blue Dart team member played their role as an essential service
provider to perfection, displaying the organizations core values of Passion, Can
Do, Right 1st Time and As One at every single juncture. As the nationwide
lockdown continued, Blue Dart frontliners were on the field every day. Blue Dart
pilots operated the six Boeing 757- 200 freighters through the lockdown - across
the nation as well as across borders - ensuring essential and non-essential supply
chain continuity. It continued to offer unwavering support and was honored to be
a part of the Indian Governments Lifeline Udan initiative to ensure uninterrupted
supply chain continuity of medical equipment ventilators & PPE, testing kits,
reagents, enzymes, respirators, surgical masks and gloves among other vital
supplies. The organization worked closely with the Government of India and
several other institutions, to ensure door pick-up and door deliveries across major
Indian and International cities. It operated close to 1,108 flight cycles, uplifting
thousands of tonnes nationally and internationally, carrying urgent medical
supplies and COVID-19 related relief material from Guangzhou, Shanghai, Hong
Kong, Dhaka, Yangon and Hanoi during pandemic.During the year 2021, Company
carried over 1,853.16 lakhs domestic shipments and over 7.52 lakhs international
shipments both weighing more than 718,548 tonnes. During FY22, the Company
launched the Blue Dart Med-Express Consortium as a part of the Medicine from
the Sky project, initiated by the Government of Telangana, the Ministry of Civil
Aviation, World Economic Forum & Niti Aayog. It carried over 2,632.48 Lakhs
domestic shipments and over 8.62 Lakhs international shipments weighing more
than 932,690 tonnes. It remained focused on continuing to fulfill its role as the
nations trade facilitator. It began the year supporting the nation in the vaccination
drive by ramping up its Temperature Controlled Logistics (TCL) solutions. Given
the industry limitation to provide efficient last mile delivery of mission critical
medical and pharmaceutical equipments, the Company leveraged its capabilities -
its fleet of Boeing 757 aircraft, ground network that enables to reach over 35,000
locations across the country and its team of industry experts, to bridge the gap in
the supply chain. The Company, along with its partners, supported the
Government of Telangana, the Ministry of Civil Aviation, World Economic Forum,
Niti Aayog and Healthnet Global in the Medicine from the Sky initiative. Under
this initiative, it leveraged the use of drone flights through the Blue Dart Med-
Express Consortium, to enable pick-ups and deliveries of mission critical
shipments in the remotest areas of the nation. Through 2021, Blue Dart teams
worked 24x7 in ensuring supply chain continuity despite arduous
circumstances.During the year 2023, the Company acquired two Boeing 737-800
freighters to increase its network penetration. In addition to 74 international
charters, the Company operated 343 additional flights and 2481 hours,
supplementing the scheduled night operations with more than a fight daily on
average, to meet the increased capacity demand. It launched the Blue Dart Med-
Express Consortium, in their effort to offer healthcare services across the nation.
It launched the Rakhi Express, Diwali Express, Merry Express, and Ugadi Express;
launched Smart Box Lite, a special packaging for laptop delivery, and Digital
Prepaid Solution, an additional service to manage their booking with real-time
visibility of payments and balance along with a view of the summary and ledger.
CHAPTER 1 – THE ROLE OF LOGISTICS IN SUPPLY CHAINS
1.1 Introduction
A supply chain is a network that creates products and services and delivers those
products and services to customers. Supply chains include marketing, sales,
financing, procurement, processing operations, maintenance, service, and
logistics. The focus of this Open Educational Resources (OER) digital textbook is
logistics. Logistics refers to the processes and networks used to move and store
materials within supply chains and move products to their final destination.
Logistics is considered a subset or part of a supply chain.

The coffee sitting on your desk and the food in your home arrived via a product
supply chain. The computer you are using to access the information in this OER
came via a product supply chain. The digital information you are reading (in the
form of electrons and signals) is available for use thanks to an information supply
chain. A haircut appointment or a lawyer’s appointment are examples of activities
that provide services to you as part of a service supply chain. In this chapter, we
will explore the role of logistics in supply chains.

Figure 1.1

Coffee Cup on Desk

Desk with a laptop, cup of coffee, a book titled Freakonomics and credit cards on
it.

Note: From Scott, 2021. CC BY 2.0

1.2 Chapter Learning Objectives
Explain the role of logistics in supply chains.
List the factors considered when designing the logistics in a supply chain.
Explain the elements that make up a logistics network.
Examine the importance of logistics to the economy.
Review supply chain professional organizations and associations.
1.3 Pre-Assessment

1.4 The Role of Logistics in Varying Types of Supply Chains

Product Supply Chains
Product supply chains start with the demand from a customer for a product.
Products begin in the form of raw materials that must be sourced, gathered,
converted, and manufactured into the required products. Then, the product is
transported to end-users. Products will often stop at warehouses as they move
through the product supply chain. There are many steps to convert and transform
raw materials into final products that will be delivered to a consumer. Logistics
supports the transportation steps in supply chains. Logistics can be categorized
as :

Internal logistics
The logistics of moving materials, parts, and products inside a facility or single
location
External Logistics
The logistics of moving materials, parts, and products between multiple locations,
such as:
suppliers
factories
distributions centres
receiving/ shipping docks (inbound and outbound logistics)
customers
Figure 1.2

Product Supply Chain.

Product supply chain flowchart. Complete image description at the end of this
chapter.

Note. From Kukhta, 2021. [Image Description]

Information Supply Chain

The information generated by each process in a supply chain supports the supply
chain’s logistics networks and operations. This information is itself a supply chain.
Consider that similar to products, information is comprised of raw materials such
as data and artifacts, that are processed into information such as knowledge,
documents like bills of lading, certificates such as health and safety certificates,
approvals, and reports. Logistical activity is required to move that information and
then store it. In contrast to the physical movement of products, information is
moved or transmitted through information systems and electronic data
interchange (EDI). Information can be found in reports that need to be distributed
in hardcopy, digital, and electronic formats. Storage then takes place in
databases, servers, and data warehouses.

Service Supply Chain

Services like haircuts, accounting services or legal advice also have a supply chain.
Services unlike products are typically intangible and require supply chain
processes that acquire products, knowledge, and develop talent that will be used
in the provision of services to customers. Logistics for services depends on
producing and supplying products like scissors for barbers, computers for
accountants, and cyber-secure information systems to ensure confidentiality of
electronic documents for paralegal services.

Reverse Supply Chain

Whilst downstream logistics refers to the forward movement of raw materials
through multiple steps of production, storage, and transportation of final
products, upstream logistics refers to the reverse direction movement of products
from the customer back through one or more steps of the forward logistics
process.

Reverse Supply Chains, therefore, refer to the backward flow of products from
downstream to upstream in a supply chain. This process may occur if an item is
returned to the manufacturer due to damage, for example, reverse logistics
would move these products back to their point of origin or another destination,
such as a repair center, upstream in the process.

Circular Supply Chain

Circular Supply Chains are a development from the traditional linear product
supply chain. They start with raw materials, convert them to products, and then
back to the raw materials from whence they started. These types of supply chains
emphasize reusing waste materials and returned or old products. Sustainability,
social, and economic responsibility are integral to circular supply chains.

Logistics in supply chains considers the total system cost in planning and
managing the transportation and storage of products. Starting from the extraction
point of the raw materials back to the re-entry of these same raw materials after
their initial product life has expired, back into the beginning of a new supply chain
in the next life cycle they will experience.

Flow in Supply Chains

Figure 1.3 shows a simple linear supply chain. In the supply chain, Tier 2
represents raw materials suppliers. Tier 1 represents the sub-assembly parts
made from those raw materials. They are then manufactured into products and
distributed to retailers where customers, the end-consumer or user, acquire
them. This progression represents the forward flow of materials/goods. Other
“flows” include the flow of information that runs up and downstream, the flow of
money which runs from downstream to upstream, and the reverse flow of
materials when a product is returned to the manufacturer (for example, if a
product is damaged). Logistics, represented by the blue arrows that connect each
tier and each step in the supply chain, are required to manage all of the flows and
movement in a supply chain.

Figure 1.3

Upstream and Downstream of a Supply Chain and its Flows

Note: From Faramarzi, H., & Drane, M. CC-BY-NC-SA 4.0 [Figure Description]

1.5 Variations for Consideration when Designing Logistics in Supply Chains

The following is a list of common variations to a linear supply chain:
There can be many sub-tiers in a supply chain.
Many different modes of transport and steps may be used to move products from
a distribution center to a customer. For example, a large truck may handoff to a
smaller vehicle with a driver to walk to the final delivery point. A person might
even then wrap the product as a gift and send it back into the logistics network
for yet another journey to a new final destination (gift recipient).
There might be fewer steps than this in a local, self-sufficient environment.
The online shopping world can see products bypass some of these steps.
There is a reverse flow from downstream to upstream for products returned to
the manufacturer or an alternate destination for refund, scrap, repair, rework or
upgrade.
The terms supply chain and value chain have slightly different meanings, but for
this OER, they will be considered to mean the same thing.
Supply chains for information flow move:
back and forth (upstream and downstream)
manual (paper) and digital forms
synchronously and asynchronously
with established protocols and security in place for accessing data and
information
Information is generated from data collected throughout the supply chain.
Data integrity, timeliness, and accuracy are vital to this information.
Example: A Bottle of Water Moves Through A Supply Chain
This video demonstrates a product supply chain for bottled water. The logistics
component of this supply chain is made up of the trucks that transport the
bottled water and the forklifts that load and unload the inventory. Consider the
cost of a bottle of water, typically $1.50 or $2.00. How much of that cost goes
toward the water, processing, packaging, and the cost of logistics that is spent
moving and storing the bottle of water?
W.P. Carey School of Business. (2010, April 6). Module 1: What is supply chain
management? (ASU-WPC-SCM) – ASU’s W. P. Carey School [Video]. YouTube.
https://youtu.be/Mi1QBxVjZAw

1.6 Supply Chain Management

Supply Chain Management is often abbreviated as SCM. Supply chain
management is the management of goods and services from the initial idea to the
end-users and back to their origin. Supply Chain Management includes
procurement (or purchasing) demand planning, sales and operations planning
(S&OP), execution and management of supply chain activities, strategic sourcing,
transportation management, warehouse management and inventory
management. According to APICS Dictionary, 13th edition, it involves the design,
planning, execution, control, and monitoring of all supply chain activities. SCM
includes:

Demand planning
Purchasing
Sales and Operations Planning
Operations / execution
Distribution
1.7 Managing Elements in Logistic Networks
This video offers definitions and explains the role of managing logistics in a supply
chain.
Aims Education, UK. (2016, July 21). What is logistics management? Definition &
importance in supply chain [Video]. YouTube. https://youtu.be/4-QU7WiVxh8

External Logistics
Materials and products also need to be moved and stored when they are inside a
manufacturer’s facility, inside a distribution centre and when you bring them
home. This OER will focus on the logistics between Suppliers and Manufacturers,
between Manufacturers and Distribution Centres, between Distribution Centres
and Retail stores and between Distribution Centres and Customers, in other
words, before and after the manufacturing/assembly process.

Forward Logistics
Logistics occur at every step and help the product move through the supply chain
from origin to end-user. This is known as Forward Logistics which means product
moving forward or downstream from the point of origin (e.g. supplier,
manufacturer) to point of consumption (e.g. end-user, customer), or expressed
differently, from raw materials to the final product destination. Forward logistics
can take place between:

Suppliers and Manufacturers

Manufacturers and Distribution Centres
Distribution Centres and Retail stores
Distribution Centres and Customers
Reverse Logistics
Product moving backward or upstream from the customer back to the supplier or
manufacturer is called reverse logistics.
Reasons for using reverse logistics:

The defective product needs to be returned for replacement or repair.

The product needs servicing.
The product needs to be disposed of or scrapped.
The product is returned for upgrading or refurbishment.
The product is repurposed.
Figure 1.4

Nespresso Expands Aluminum Recycling and Reuse

Nespresso expands aluminium recycling and reuse

Note. From Nestlé, 2008. CC BY-NC-ND 2.0

Further Reading: Reverse Logistics Examples

“Reverse logistics has been a part of retailing for over 100 years when retailers
like Sears Roebuck and Montgomery Ward began delivering goods by railroad. In
the past few years, e-commerce has led to an explosion of reverse logistics — or,
shipping goods from the consumer back to the retailer. Consumers have come to
expect no-fuss return policies; that’s why returns on e-commerce orders are three
to four times higher than brick and mortar purchases, according to the Reverse
Logistics Association. That means reverse logistics is a fact of life for most
companies.” (Syverson, 2021, paras. 1-2).

Read the full article.

“Reverse logistics are a very important part of a circular supply chain that finds
new uses and/or ensures proper disposal of products that are at the end of their
life cycle. Recycling bottles, plastics, batteries and other materials are part of the
reverse supply chain.” (Guest Blogger, 2017). Reverse Logistics 101 discusses
several successful examples of manufacturers like Apple, H&M, and Dasani using
reverse logistics in their processes.

Read the full article.

1.8 The Role of Logistics in Inventory in the Supply Chain

Managing inventory is one of the most important activities in a supply chain.
Materials/goods are needed to provide manufacturers with the exact items they
need, in the right order, the right quality delivered to the right location, and at the
right time. Without all of this happening, it will be impossible to produce high-
quality goods and meet commitments to our customers. In addition, when goods
are ready for shipment, the outbound supply chain needs to be organized in such
a way that customers receive their requested orders in a cost-efficient manner.”
(Faramarzi & Drane, n.d., Chapter 7)

Types of Inventory in the Supply Chain

Finished goods: These are goods or products that are ready to be shipped to a
customer.
Raw materials: These are materials used at the beginning of the manufacturing
process. These are the composite materials used to make materials or products—
for example, commodities and substances like iron ore which will eventually be
used to make steel.
Purchased components: These are parts that have had some processing done to
them or some level of assembly into more complex products
Operating supplies: These are materials and products used to support
manufacturing, such as stationary, oils, gaskets, and water.
Work-in-process: These products have had some processing done to them and
are at a stage between raw materials and finished goods in the manufacturing
process.
This section was adapted from Chapter 7: Supply Chain Management from
Introduction to Operations Management by Hamid Faramarzi and Mary Drane,
Seneca College, licensed for reuse under CC BY-NC-SA.

Reasons for Holding Inventory

Many reasons exist for keeping stocks of inventory. Some of the most common
include:

Seasonal demand
An example is a chocolate manufacturer that does not have the capacity to
produce all the needed product for Christmas. They may begin building inventory
in late spring to have enough on hand for orders in November and December.
Risk
A manufacturer may carry large amounts of inventory if they have some
uncertainty or risk in their supply base. If suppliers have some risk of shortages,
work stoppages, poor quality, or late deliveries, then more stock may be carried.
Discounts
Firms may be tempted by extra discounts often provided by purchasing large
order sizes. Perhaps they may want to minimize transportation costs. There may
also be some worry about future price increases that can cause organizations to
build up their inventories.
Anticipated demand
Retailers carry inventory to ensure that they do not run out of what they
anticipate their customers may want. Distributors and retailers may try to balance
the cost of keeping extensive inventories on hand and providing excellent
customer service with few disappointed customers. However, it is often a
challenge to anticipate exact customer behaviour.
Scheduling logistics
It is challenging to synchronize the incoming flow of materials and goods to meet
production schedules and ship to customers as promised. As a result, inventory
may be stored at many locations along the supply chain. This extra storage causes
extra costs and inefficiencies for each organization. (Faramarzi & Drane, n.d.,
Chapter 7)
Inventory that is moved and stored in the logistics network can be of any of the
types listed above. The cost of inventory and logistics increases as you move
downstream through the supply chain. Finished goods are more expensive than
other types of inventory because they acquire value through the manufacturing
process and the supply chain.

This section was adapted from Chapter 7: Supply Chain Management from
Introduction to Operations Management by Hamid Faramarzi and Mary Drane,
Seneca College, licensed for reuse under CC BY-NC-SA.

After Logistics
Is there an end to logistics? Is the life cycle of a product linear or straightforward;
a product starts with an idea or a need, then is finished when the product is no
longer needed or can no longer perform its intended purpose? So what happens
to the product at this point? It might just sit around. Do you have a drawer full of
old electronics products?

Figure 1.7 shows a drawer open with an old hard drive, a Blackberry, an iPhone 3,
and various memory storage devices. In a linear economy, they would just be
thrown out into landfills. Could obsolete products be repurposed? I re-purposed
my old iPhone 3 as an iPod that I hooked up to my stereo to listen to saved songs
and streamed content from the internet for a long time.

Figure 1.5

Obsolete Electronics in a Drawer

Open drawer with various obsolete electronics in it including a voice recorder,

iPod, Blackberry, headphones, charging cable, and various memory cards.

Note. From Kukhta, 2021

In a circular economy, obsolete products such as those shown in Figure 1.7 might
be repurposed, reused, or recycled for parts. They might be broken down into
their sub-components or raw materials so they can re-enter the supply chain in a
new form. In a circular economy, the initial design of products, supply chain, and
logistics need to be planned and managed differently. They need to take into
account reverse logistics for the successful continuation of the product’s life cycle.

1.9 The Importance of Logistics and the Economy

Moving from a Linear to a Circular Economy
A good question to consider is what happens to materials and products on a
supply chain after consumers are done with them? Look around you and ask
yourself what will happen to your clothes, products you are using, or the leftovers
from services with which you engage? There are many ways to make products
and services. There are a wide variety of materials and processes used to make
them. Products and services are made using energy from many different sources
– both renewable and from sources that produce much pollution.
This image shows a linear economy with a straight line from raw materials to
landfills; a reuse economy showing new use of materials, and a circular economy
cycle that re-uses materials.

Figure 1.6

Linear, Reuse, and Circular Economies

Linear economy: raw materials, production, use, disposal, waste/pollution

Linear Economy
Reuse economy: raw materials, production, use, disposal, recycling back to
production, then waste/pollution
Reuse Economy
Circular economy stages: raw materials, production, use, disposal, recycling,
production again
Circular Economy
Note. From Kukhta, 2021 [Image Description]

Linear Economy
A linear economy, shown at the top of Figure 1.8, follows a traditional “take-
make-dispose” plan. This type of economy involves collecting raw materials and
transforming them into products that will be used until they are discarded as
waste. In the linear economic system, value is created by producing and selling as
many products as possible.
The linear economy often ignores the costs of waste generated during
manufacturing and costs incurred after the useful product life has ended. The
total system costs, including processing, disposal, and logistics (handling and
storage) are considered.

Further Reading: The Narwhal

An example of linear supply chains and unaccounted for costs of disposal and
cleanup are discussed in an article in The Narwhal about Canada’s oilsands and
old oil wells:

“Ottawa is paying to clean up Alberta’s inactive wells. Are the oilsands next? As $1
billion in federal funds go to clean up inactive wells, experts are sounding alarm
bells about the ‘super experimental’ realm of tailings ponds reclamation and what
could be more than $100 billion in unfunded liabilities in the oilsands” (Riley,
2020, para. 1).

Read the full article.

Reuse or Recycling Economy

A reuse or recycling economy, shown in the middle of Figure 1.8, includes
collecting raw materials and transforming them into products. It is similar to a
linear economy model. However, unlike the linear economic model, some of
those product materials can be put back into the value stream and reused to
manufacture new products or distribute more products. In contrast, other
products are disposed of as waste. The design, planning, and managing of logistics
must consider the recycling process steps, transportation modes, storage, and
costs in this type of economy.

Further Reading: Ontario’s Blue Box Program

An example of this is the Blue Box program for collecting recyclable materials in
Ontario, Canada. This article by Stewardship Ontario discusses how costs for
processing recycled materials are going up, yet revenues from them are
decreasing.

Read the full article.

Circular Economy
The circular economy, shown at the bottom of Figure 1.8, is an alternative to
Canada’s dominant linear economic model. It is grounded in the study of living
systems and nature itself. We are pretty used to collecting and transforming
resources that are later consumed and become waste once their lifespan ends.

If you look at nature, you can see that processes are different. A tree is born from
a seed, it grows and reproduces, and when it dies, it goes back to the soil,
enriching it and providing nourishment for new life. How could we apply that
process to the objects we use at home and work?

The circular economy looks at all the options across the supply chain to use as few
resources as possible. It seeks to keep resources in circulation for as long as
possible, extract the maximum value from them while in use, and recover and
regenerate products at the end of their service life. The circular economy tries not
to view garbage as waste but as a potential resource to be reused. This new way
of understanding goods also means designing products using materials that can
be easily dismantled and recycled when their initial life cycle is done.

In a circular economy, one considers the impact of materials, resources, and

energy used to make products, move them and store them. The goal is to
maintain their value for as long as possible, including returning them back into the
manufacturing cycle.
Further Reading: Government of Ontario Supply Chain Rules
The Government of Ontario is changing supply chain rules by shifting
responsibility for recycling products at their end of life to their producers. This
change will impact where costs are assigned in the logistics networks: “the price
of packaged goods expected to go up as costs of recycling shift entirely to
producers” (Dunn, 2020, para. 1).

Read the full article.

1.10 Supply Chain Professional/Industry Organizations

The following organizations are led by experts and interested members who work
in supply chains. They conduct research, share knowledge, advocate, train, and
provide platforms for learning and discussing what is happening in the industry.
They often have student chapters.

The Council of Supply Chain Management Professionals (CSCMP)

The Council of Supply Chain Management Professionals (CSCMP) is an
organization based in the United States that helps people working in the supply
chain field connect, network, understand and develop supply chain networks.
Professional organizations like this have current and relevant information about
supply chains and logistics within supply chains.

CSCMP defines logistics management as “that part of supply chain management

that plans, implements, and controls the efficient, effective forward and reverses
flow and storage of goods, services and related information between the point of
origin and the point of consumption in order to meet customers’ requirements.”
(Council of Supply Chain Management Professionals, n.d., para. 5).
CSCMP further defines the boundaries and relationships that logistics
management has in relation to the rest of the supply chain:

“Logistics management activities typically include inbound and outbound

transportation management, fleet management, warehousing, materials
handling, order fulfillment, logistics network design, inventory management,
supply/demand planning, and management of third-party logistics services
providers. To varying degrees, the logistics function also includes sourcing and
procurement, production planning and scheduling, packaging and assembly, and
customer service. It is involved in all levels of planning and execution–strategic,
operational, and tactical. Logistics management is an integrating function, which
coordinates and optimizes all logistics activities, as well as integrates logistics
activities with other functions including marketing, sales manufacturing, finance,
and information technology.” (Council of Supply Chain Management
Professionals, n.d., para. 7).

Supply Chain Canada (SCC)

Supply Chain Canada (SCC) is a Canadian organization that is similar to CSCMP.
SCC’s vision is “to ensure Canadian supply chain professionals and organizations
are recognized for leading innovation, global competitiveness, and driving
economic growth” (Supply Chain Canada, 2021, para. 1). Its mission is to “provide
leadership to the Canadian supply chain community, provide value to all
members, and advance the profession” (Supply Chain Canada, 2021, para. 2).

The Association for Supply Chain Management (ASCM)

The Association for Supply Chain Management (ASCM) is “the global leader in
supply chain organizational transformation, innovation, and leadership. As the
largest non-profit association for supply chains, ASCM is an unbiased partner,
connecting companies around the world to the newest thought leadership on all
aspects of the supply chain.” (6). ASCM has many resources for supply chain
professionals. ASCM has certificate training programs on supply chain subjects,
including a Warehousing Certification program.

Joining and participating in activities with professional organizations like these are
valuable for networking, learning, and staying current with the activities and
practices in supply chains.

1.11 Post Assessment (Check Your Understanding)

1.13 A Message From the Author

“While in Tokyo, Japan, I noticed that there were two sizes for cans of Coca-Cola
in a vending machine – 10 fluid oz. (approx. 296 ml) and 12 fluid oz. (approx. 355
ml). However, both were the same price. I asked a Japanese friend why this was
the case. Wouldn’t everyone just pick the bigger one, as I did, for the same
price? He said that he usually bought the 10 oz. can because that was all he
wanted to drink. He did not need the other two oz., so why buy it and waste it?
The message is that the Coca-Cola supply chain satisfied the demand for two
different customers, but the cost of the extra 2 oz. of Coke was insignificant to the
cost of the logistics of supplying the product, leading to the same end cost.”
(Kukhta, 2021)

1.14 Summary
In this chapter, we have explained the role of logistics in supply chains. Logistics
supports the transportation of raw materials and products between locations or
facilities as they move along the supply chain ending their initial life with the
consumer. The circular economy follows a product through its next phases where
it is discarded or moves back into the supply chain. We have considered elements
such as defective products and inventory that make up a logistics network,
examined the importance of logistics to the economy, and provided a review of a
supply chain professional organizations and associations.
1.15 Chapter References
Association for Supply Chain Management. (2021). Contact us. ASCM.
https://www.ascm.org/contact-ascm/

Council of Supply Chain Management Professionals. (2021). CSCMP supply chain

management definitions and glossary. CSCMP.
https://cscmp.org/CSCMP/Academia/SCM_Definitions_and_Glossary_of_Terms/
CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms.aspx?hkey=60879588-
f65f-4ab5-8c4b-6878815ef921

Dunn, T. (202, October 20). Ontario’s new blue box plan will recycle more, but it’ll
cost you more as well, experts say. CBC.
https://www.cbc.ca/news/canada/toronto/ontario-s-new-blue-box-plan-will-
recycle-more-but-it-ll-cost-you-more-as-well-experts-say-1.5768577

Faramarzi, H., & Drane, M. (n.d.) Introduction to operations management. Seneca

College Pressbooks Network.
https://pressbooks.senecacollege.ca/operationsmanagementintro/. Licensed for
reuse under CC BY-NC-SA.

Faramarzi, H., & Drane, M. (n.d.) Upstream and downstream of a supply chain and
its flow [Image]. Seneca College Pressbooks Network.
https://pressbooks.senecacollege.ca/operationsmanagementintro/chapter/
supply-chain/ Licensed for reuse under CC BY-NC-SA.

Guest Blogger. (2017, July 10). Reverse logistics 101. All Things Supply Chain.
https://www.allthingssupplychain.com/reverse-logistics-101/
Nestlé. (2008, May 8). Nespresso expands aluminum recycling and reuse
[Photograph]. Flickr. https://www.flickr.com/photos/nestle/16354467964.
Licensed for reuse under CC BY-NC-ND 2.0.

Riley, S.J. (2020, June 5) Ottawa is paying to clean up Alberta’s inactive wells. Are
the oilsands next? The Narwhal. https://thenarwhal.ca/ottawa-paying-clean-up-
albertas-inactive-wells-oilsands-next/

Scott, C. (Photographer). (2006, September 8). Coffee cup on desk [Photograph].

Flickr. https://www.flickr.com/photos/callumscott2/265229417/in/photolist-
prnsZ. Licensed for reuse CC BY-NC 2.0

Supply Chain Canada. (2021). Who we are. SSC.

https://www.supplychaincanada.com/about/who-we-are

Syverson, S. (2021, October 7). 45 Things you should know about reverse logistics.
Warehouse Anywhere. https://www.warehouseanywhere.com/resources/45-
things-about-reverse-logistics/

1.16 Image Descriptions

Figure 1.2 This figure shows a generic product supply chain flowchart: Raw
materials selection then logistics (movement and storage, warehouses and bulk
storage), then manufacture stage, then logistics (movement and storage,
distribution centres and warehouses), to retail stores and/or consumers, then to
product end use. [Back to Image]

Figure 1.3: This figure illustrates the upstream and downstream of a supply chain
and its flows. In this chain, Tier 2 represents raw materials suppliers. Tier 1
represents the parts of the product made from those raw materials. They are
then manufactured into products and distributed to retailers where customers,
the end-consumer or users acquire them. This progression represents the forward
flow of materials and/or goods indicated in Figure 1.3. Other “flows” include the
flow of information that runs up and downstream, the flow of money which runs
from downstream to upstream, and the reverse flow of materials when a product
is returned to the manufacturer (E.g., if a product is damaged). Logistics,
represented by the blue arrows that connect each tier and each step in the supply
chain are required to manage all flows and movement in a supply chain. [Back to
Image]

Figure 1.6: The first figure shows a linear economy following a traditional “take
make- dispose” plan. Starting from the left to the right, there are Raw materials;
Production; Use by the consumer; Disposable; Waste Pollution. This type of
economy involves collecting raw materials and making them into products that
will be used until they are discarded as waste. The second figure is reuse Economy
is a reuse or recycling economy which includes collecting raw materials and
transforming them into products. This economy is like a linear economy, the only
difference is that some materials can be put back into the value stream and
reused to manufacture new products or distribute more products.The third figure
is Circular Economy which shows an alternative to Canada’s dominant linear
economic model. From raw materials; Production; Use; Disposable to recycling.
The circular economy looks at all options across the supply chain to use as few
resources as possible and tries not to view garbage as waste but instead as a
potential resource to be reused. [Back to Image]

Previous/next navigation
Previous: Acknowledgements
Next: Chapter 2 – Technology and Logistics.

CHAPTER 2 – TECHNOLOGY AND LOGISTICS

2.1 Changing Times
Believe it or not, the typewriter was being used to prepare what we refer to today
as a bill of lading 150 years ago. Technology evolved from the 1800s when the
telegraph transmitted Morse code. Next came the telephone, then the radio. In
1950 computers entered the scene, and the internet surfaced in the 1990s. Today
the Internet of Things, blockchain, GPS tracking, and the electronic transmission
of data provide advanced technological advantages to the logistics industry. This
chapter explores how technology is being used to improve logistics processes.

How Does Amazon Do It?

Tech Vision. (2020). Inside Amazon’s Smart Warehouse [Video]. YouTube.

https://www.youtube.com/watch?v=IMPbKVb8y8s.

2.2 Learning Objectives

Describe the impact of information technology on Logistics management.
Understand the role of technology in Logistics planning, and security
Recognize the changing Logistics Landscape due to the evolvement of technology
applications in transportation.
2.3 Pre-Assessment

What are the barriers to the widespread application of RFID?

How have Drivers’ log books changed?
What are the two areas of technology applications?
2.4 Technology in Logistics
The pandemic has highlighted the need for a robust supply chain, and one of the
integral elements of an efficiently functioning supply network is the logistics link.
In 2021, part shortages, backlogged ocean freight, closed borders, and driver
shortages emphasized the importance of logistics in supply chain networks
operating effectively. The logistics market in North America is estimated to
expand to more than $12 trillion by 2023. (Bohdan, 2021) Logistics operators are
looking to technology to gain operational advantages to meet the market
demand. According to the Supply and Demand Chain Executive (Bodhan, 2021),
six technological trends are leading the way in the transportation industry:

Blockchain
Big data analytics
Artificial intelligence
Automating warehouses
Autonomous vehicles
Sustainability through technology
Although we will not be exploring all of the recent evolving technological trends,
it is crucial to understand that technology adoption in the transportation industry
is a dynamic process requiring agile management practices. When looking to
technology for an operational advantage, we look to two areas of application:
hardware applications and software applications.

Technology generally falls into one or more categories in the logistics world, as
outlined in the table below.

Table 2.1. Categories for Operational Advantage

System TypeDescription Logistics Example
Office Automation Helps to process business data, perform calculations and
documents. Spreadsheets, route planning software
Communication Provides supply chain visibility, freight visibility, facilitates
sharing of information. Virtual meetings, GPS, voice to text technology
Transaction Processing Records BOL, stores transaction information. EDI,
Bar Codes, POS

Management Information Business analytics, Provides management info in

real-time. Logistics Information Systems
Decision Support Software that enables simulation modes and analysis tools.
WMS, Data mining

Enterprise Creates and maintains data processing and integrates databases.

ERP systems
The ultimate goal of technology in the Logistics Information Structure (LIS) is to
provide real-time information to management. The LIS collects, analyzes, stores,
retrieves, and disseminates data. It provides regular and customized reports. The
sole purpose of all this data is to enable data-based decision-making. When
failures occur in the supply chain, the first step is to find a solution to keep the
freight moving. Once that is completed, root cause analysis routinely follows. One
type of technology assisting in the root-cause analysis arena is blockchain
technology.

2.5 Blockchain
The rise of blockchain technology provides solutions for dispute resolution, order
tracking, and administrative efficiency.
What is Blockchain?
“Blockchain technology is based on the concept of a distributed ledger. Instead of
a centralized authority, power is distributed across participants on a network”
(Shoukry, 2020).

What is a Distributed Ledger?

According to Majaski (2021), a distributed ledger can be described as a ledger
(collection of accounts or other financial information) of any transactions or
contracts maintained in a decentralized form. It is a synchronized database
accessible across different locations by a multitude of participants. This type of
decentralized information is less prone to cyber attack, fraud, and other
manipulation since there is no single point or central authority required. A
distributed ledger is a record-keeping of everything that happens in a transaction,
and it is stored in sequential order. The information is recorded as it happens and
is stored by many participants. Since the ledger storage is decentralized, changing
it is nearly impossible.

How does Blockchain Work?

There are six steps in a typical blockchain transaction (PricewaterhouseCoopers,
2020):

A transaction is requested.
The request is broadcast to a network of nodes that validate the transaction and
the users’ status using known algorithms.
A verified transaction might involve records or other information.
Once verified, the transaction becomes a block of data for the ledger.
The block is added to the existing blockchain, becoming permanent and
unalterable.
The transaction is complete.
Blockchain technology provides excellent opportunities for supply chains and
logistics. Blockchain technology improves the traceability and visibility of freight
along the supply chain. Processes can be automated, and any issues or
bottlenecks can be seen, allowing participants to resolve the issue immediately
(Ceulemans et al., 2020).

Blockchain operates within a network, and no one server holds the data. Instead,
all the participants in the network each hold the data. This methodology
empowers all network participants and prevents data from being altered. The
data remains secure because it exists on many servers, not at a single point. This,
in turn, improves data integrity and security. Blockchain is not yet universally
adopted in the logistics community, but networks are being developed, and the
interest in blockchain is gaining momentum.

Blockchain in 7 Minutes

Simplilearn. (2019, February 27). Blockchain in 7 minutes [Video]. YouTube.

https://www.youtube.com/watch?v=yubzJw0uiE4&t=2s.

Further Reading: Blockchain in Logistics

Learn more about the potential impacts blockchain can have on logistics and the
supply chain in this report from PricewaterhouseCoopers.

Read the full report here [opens a PDF file].

2.6 GPS and Telematics

GPS technology allows fleet managers to track trucks, trailers, and drivers.
Through Global Positioning Systems (GPS), companies can harvest real-time data
and improve their supply chain visibility. However, GPS used in isolation limits a
fleet manager. Companies need a complete Transportation Management System
(TMS) to enable the use of GPS as an input into the logistics of the TMS. TMSs
refer to the “category of software that deals with the planning and execution of
the physical movement of goods across the supply chain” (Gartner, 2022). These
systems focus on aspects of shipping like freight management, carrier rating, and
route, mode, and carrier optimization (Essex and Kakade, n.d.).

Telematics is an interface that utilizes GPS, ELD- Electronic Logging Devices, IoT-
Internet of Things, to integrate the data and aid in real-time supply chain
monitoring. Through a telematics system, fleet managers can re-route drivers
based on changing traffic trends, avoid accidents, monitor a driver’s
attentiveness, find equipment, and be integral in routing autonomous vehicles.

The supply chain is only as efficient as the data driving it. With the development
of new real-time supply chain data sources such as telematics, combined with an
interpretative platform, supply chain managers are proactive and more
responsive.

2.7 Electronic Logging Devices (ELD)

ELD is a technology that is significantly impacting the trucking world. A driver’s
logbook was updated manually by the driver in the past. The driver would record
all on-service hours, driving hours, rest hours, and waiting hours. The logbook is a
required document used by Ministry of Transportation officials to validate driver
compliance with legislated service hours. Most highway drivers are compensated
based on miles driven, not hours of service, so it was not uncommon for drivers to
manipulate their logbooks. If the driver could change a couple of entries to enable
them to log more miles, they often would. The introduction of electronic logging
devices has limited the ability of a driver to manipulate their hours of service.
ELDs are becoming a federal requirement in many jurisdictions and driving
compliance within the industry.

2.8 Automating Warehouses

One element of the supply chain that can improve the utilization and efficiency of
logistics is warehouse management. Effective warehouse management allows the
logistics arm of the supply chain to function optimally.

Warehouse Management System

Warehousing & Distribution Tips By LaceUp. (2020, December 11). Live tour of a
real warehouse management system [Video]. YouTube.
https://www.youtube.com/watch?v=8dlHBh_q06A.
Electronic Data Interchange (EDI)
Electronic Data Interchange (EDI) is the computer-to-computer exchange of
business documents, such as purchase orders and invoices, in a standard
electronic format between business partners, such as retailers and their suppliers,
banks and their corporate clients, or car-makers and their parts suppliers.

EDI enables the companies to transfer the documents without having any people
involved. The documents are automatically transferred from one computer
(account) to another. As a result, there are many advantages to using EDI. The
primary benefit is the speed and accuracy of the information transmitted.
Information is made available in real-time and errors that may have previously
been caused during the data entry process are eliminated.

Common information exchanged using EDI include:

Purchase orders
Invoices
Advance shipment notices (ASN)
Customs documents
Inventory information
Shipping status
Payment documents
Bill of lading
Sales/price catalogues
Shipment status messages
Barcodes
Barcodes have been used extensively since the 1970s, and consist of data that is
displayed in a machine-readable form that can be scanned by barcode readers.
The information contained on the barcode is typically pricing information, product
number and description and any other pertinent information. Barcodes have
become the norm in retail operations allowing for pricing accuracy and easy price
changes. This data provides point-of-sale information to allow retailers to track
items being sold, update inventory, identify fast and slow-moving products and
assist in forecasting.

QR
Quick Response (known as QR) is using bar codes and EDI to make sales data
available to vendors so that vendors can quickly replenish goods in the correct
quantity. This is thought of as JIT in the retail industry. The goal is to reduce out-
of-stock incidents, as well as use smaller more frequent deliveries to reduce
inventory and operating expenses.
Radio Frequency Identification Device (RFID)
This technology uses radio waves to communicate the information contained on a
tag attached to an object. The information contained on a tag may include things
such as the product’s origin, date of production, shipment information, pricing
info, and any other pertinent info. To transfer this info, both a tag and a reader
are needed. There are two types of tags, active and passive. An active tag contains
a power source such as a battery and can operate a great distance from the
reader. Passive tags use energy from the reader. Unlike barcodes, the RFID tag
and reader do not require a line of sight to transmit the information.

RFID applications include the following plus many more:

Retail use to protect from theft

Toll road payments
Identification (i.e. tracking of animals and people)
Passports
Shipping tracking – to identify location and contents of orders
Asset tracking (e.g. laptops, expensive tools, medical devices in hospitals)
Race timing for marathons
Tracking luggage during travel
2.10 Summary
The complexity of the supply chain is rapidly increasing, and understanding how
to integrate technology into logistics is crucial. The key takeaway from this
chapter is the notion that a supply chain expert must stay abreast of current
technology. More importantly, they must understand how to utilize the
technology, put it to work; how to harness it.

2.11 Post Assessment (Check Your Understanding)

2.12 Chapter References
Bohdan, A. (2021, March 31). Top 6 global logistic technology trends in 2021.
Supply and Demand Chain Executive.
https://www.sdcexec.com/transportation/article/21307643/amconsoft-top-6-
global-logistic-technology-trends-in-2021.

Ceulemans, R., Diefenbach, T., & Guthmann, M. (2020). Blockchain in logistics.

PwC. https://www.google.com/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwittIjWh
pb1AhUKXc0KHaX5BlAQFnoECAgQAQ&url=https%3A%2F%2Fwww.pwc.de%2Fde
%2Fstrategie-organisation-prozesse-systeme%2Fblockchain-in-
logistics.pdf&usg=AOvVaw2Wxnaf4X0-EWQfEj55BQuR [opens a PDF]

Essex, D., & Kakade, S. (n.d). Transportation management system (TMS). Tech
Target. https://searcherp.techtarget.com/definition/transportation-management-
system-TMS

Majaski, C. (2021, October 9). Financial technology and automated investing:

Distributed ledgers. Investopedia.
https://www.investopedia.com/terms/d/distributed-ledgers.asp

Creative Commons Attributions

Section 2.9 was adapted from Chapter 7: Supply Chain Management from
Introduction to Operations Management by Hamid Faramarzi and Mary Drane.
Licensed for reuse under CC BY-NC-SA 4.0)

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Previous: Chapter 1 – The Role of Logistics in Supply Chains
Next: Chapter 3 – The Cost of Logistics

CHAPTER 3 – THE COST OF LOGISTICS

3.1 Introduction
Strong competition in the open transportation market has driven down profit
margins. Even though the profit margin per move in logistics transportation is
often slim, the volume of opportunities is great. This combination of low margin
and high volume can maximize profits. In a low-margin environment,
understanding and controlling costs is imperative.

3.2 Learning Objectives

Identify the cost for over-the-road moves.
Understand how variable and fixed costs are applied in transportation.
3.3 Pre-Assessment

3.4 Logistics Cost

Logistics cost is simply the total cost of moving freight from one location to
another. The definition does not need to be complicated. However, depending on
the mode of transportation, the Incoterms, headhaul and backhaul opportunities,
figuring out how to allocate and control costs can be confusing. When purchasing
logistics services either directly or through a third party, determining the
purchase price results from both market supply and demand. As a logistics
professional, the ability to maximize profits is determined by finding the balance
between cost from a service provider’s perspective and price from the service
purchaser’s perspective.
The Service Provider Perspective
Depending on the mode of transportation, a logistics service provider (LSP) could
be a trucking company, a shipping line, a railway, or an airline. This chapter will
focus on trucking, also known as over-the-road transportation (OTR). Trucking,
like all LSPs, has both fixed and variable costs. A key characteristic of the OTR
industry is high variable costs and low fixed costs. The fact that roadways are
funded through public revenues contributes significantly to the low fixed costs of
the OTR industry. Approximately seventy percent of all costs in the OTR industry
are variable costs and attributable to operational costs. (Atri & Murray, 2021)

Fixed costs in trucking are those expenses that will need to be paid regardless of
whether or not the operation is hauling any freight. Examples of fixed and
variable costs associated with trucking are listed in Table 3.1.

Table 3.1. Fixed and Variable Costs Associated with Trucking

Fixed Variable
Equipment Lease costs (trucks, trailers,) Labour (drivers)
Depreciation Fuel
Office Leases or rent Maintenance -parts and labour
Garage Leases or rent and/or Property tax Roadway tolls
Interest on vehicles Insurance,
Management costs (salaries) LIcense, Registrations
Fuel Surcharge

The cost of fuel is a significant variable cost for any OTR operation. In order to
safeguard a motor carrier from operational losses caused by rising fuel costs, the
industry has developed a Fuel Surcharge (FSC) formula to offset rising fuel costs.
The premise behind the FSC is to pass along increasing fuel costs to the shipper.
FSC is based on a peg rate and a national average of fuel costs per month. The
difference between the peg rate and the national average diesel price is paid to
the OTR carrier as an FSC. The FSC is added to the price of the freight move.

The Service Purchaser’s Perspective

A purchaser of logistics services is a company requiring freight to be transported

from one location to another. Understanding the market rate for a move is
imperative to operate an efficient supply chain. As a transportation service
purchaser, the ideal outcome is to have goods delivered at the right time to the
right location at the right price. Market factors such as supply and demand impact
the price charged by OTR carriers. Truck driver supply dramatically affects the
availability and price of OTR services. A buyer of logistics services needs to be in
tune with crucial industry factors such as a truck driver shortage.

Further Reading: Truck Driver Availability

A new study into driver availability – Understanding the Truck Driver Supply and
Demand Gap – was conducted by transportation consultants, CPCS. It updates the
Canadian Trucking Alliance’s 2011 landmark report of the same name, which
predicted a driver gap of up to 33,000 drivers by 2020: “the new study’s base case
forecast calls for a shortage of 34,000 drivers by 2024 – reflecting an increase in
demand of 25,000 and a decrease in supply of 9,000. The shortage could increase
to 48,000 drivers based on plausible combinations of different trends that could
affect industry demand, labour productivity and occupational
attractiveness”(Canadian Trucking Alliance, 2016). Autonomous trucking
technology can not come quick enough. An increase in OTR services is imminent
and will be reflected in the availability and cost of consumer goods.

Read the updated report here.

Autonomous Truck Technology

CNBC. (2019, April 13). How Amazon demand drives autonomous truck tech
[Video]. YouTube. https://www.youtube.com/watch?v=vMXivgUGVn8&t=204s.

3.5 Breaking Down the Elements of Moving Freight

Understanding how to price a transportation move is not as straightforward as it
may seem. Several factors must be considered when establishing a pricing model.
First, every driver has a maximum number of driving hours and a maximum
number of on-duty hours set per day and per week. Federally regulated driver
rest time is mandated. All driving and rest hours must be recorded and
maintained in the driver’s logbook. In today’s trucking industry, many logbooks
are maintained electronically. Strategic decisions regarding driver configuration
and service hours need to be considered before setting a price for a
transportation move. Preceding the driver configuration decision is the challenge
of fully understanding each component of delivering freight. Underestimating
how the components of a freight move fit together and how to allocate a cost to
each segment could be the difference between operating profitably or the LSP
losing money.

Let’s break down the elements of a move.

Deadhead or bobtail: moving the tractor without a trailer. This is often done at
the beginning or end of a route. A truck or power unit is often parked in a
terminal. The terminal is where a driver’s day starts/ends. This is also known in
the industry as domiciled. A domicile is the service provider’s, the trucking
company’s, registered place of business. A trucking company could have many
terminals but only one domicile location.
Freight pick up (PUD): freight pick up and delivery. The freight pick up strategy will
depend on whether the load is priced as a live load, a drop and hook, or a
terminal drop off.
Live load: the driver backs into a dock with an empty trailer and waits while the
freight is loaded. During a live load, the truck stays connected to the trailer.
Drop and hook: the driver picks up a trailer of freight that has already been
loaded and is waiting in the customer’s yard.
Terminal pick up: the freight is loaded and transported by a PUD driver to a
terminal, where the load awaits a highway driver to move the freight to the
destination.
Bill of lading (BOL) preparation: The driver picking up a load of freight cannot
leave the loading facility until a bill of lading is prepared and issued to the driver.
For a service provider, it is important to understand the customer’s procedures
around bill of lading preparation. Every truck driver is bound by federally
regulated operating service hours, and waiting for paperwork will reduce the
number of hours a driver can be driving. There is a colloquialism in the trucking
industry: “if the wheels ain’t turnin, no one is earnin”. This can be interpreted as
any time wasted waiting for the bill of ladings or dock assignments is idle time and
needs to be accounted for in the pricing model.
Highway miles: After the freight is loaded and the BOL is prepared, the load is
now ready to be transported to the delivery location. Isolating the highway miles
from the PUD miles is a good business practice when pricing a move because the
highway miles are the prime revenue-generating miles for a service provider.
Freight delivery: Once the freight has reached the delivery location, the pricing
model should consider the delivery methodology. Will the freight be live
offloaded, dropped off in the customer’s yard, or will the freight be left in a
terminal?
Delivery instructions: The driver will wait for instructions at the delivery location
regarding the load. Details such as where to park the load or which dock will
receive the live load will be provided to the driver. Also, instructions on where to
drop off the required delivery paperwork would be provided.
Backhaul or deadhead: Once the freight is unloaded, the driver will either pick up
a return load (a backhaul load) from the vendor or deadhead to the following
trailer pickup location. If the driver is required to deadhead to the terminal, the
distance from the customer to the terminal is a critical component to the pricing
of that lane. Deadhead miles need to be considered into the costing model. If
they are missed, the lane can quickly turn unprofitable.
Figure 3.1

Elements of a Move Flowchart

Elements of a Move Flow Chart: Start at the terminal, then the reight pick up
location to the freight delivery location (headhaul) and then return to the
terminal (backhaul).

From Adzija, 2020.

Pricing an Over-The-Road (OTR) Move

As a service provider, ensuring both the headhaul and backhaul costs are
captured in the cost model can be a challenging task. The headhaul is the
movement of freight to the delivery location from the freight pick-up location.
The pricing of the headhaul move includes both the fixed and variable costs (see
Table 3.1). It also needs to include driving miles, waiting time, loading/unloading
time, and potential traffic congestion. One function of the route planning team is
to review the likelihood of securing a paid backhaul load.

Backhaul is the return of the truck, trailer, and driver to the point of origin
(terminal). If the freight contract stipulates that both the headhaul and backhaul
legs of a move are included in the route, pricing each leg of the lane becomes
easier. If, however, only the headhaul leg of the move is included in the contract,
then it is up to the service provider to figure out a way to return the driver, trailer,
and tractor to the point of origin of the load. To minimize lost revenue, trucking
service providers will price backhaul loads aggressively. Often carriers will cost the
fixed costs of a move in the headhaul and only price the variable costs in the
backhaul move. Ideally, from the service providers’ perspective, the ability to
return a load to the origination point by linking several headhaul moves would be
most profitable, but this is not always achievable.

Cost Per Mile, Cost Per Pound, Cost Per Hour or a Combination?

Most often, full truckloads are priced on a rate-per-mile basis. The service
provider needs to calculate a rate per mile for headhaul loads and a separate
rate-per-mile for the backhaul portion. Frequently trucking companies will
establish a required annual rate-per-mile that must be driven to break even.
Equipment utilization and rate-per-mile have an inverse relationship. As
equipment utilization increases and nears 100 percent, the required breakeven
rate-per-mile decreases.

Less than truckload (LTL) pricing per load is based on either the weight of the
freight, cubic size, or a combination of both. Often LTL loads include an element
of load consolidation, and as such, computing the required cost per pound
involves a material-handling element. Due to the complexity of coordinating the
elements of an LTL shipment, the cost is higher than a full truckload shipment.

Charging an hourly rate for trucking is often associated with a shunting service or
short PUD shipments.

Driver Configuration
Another decision point for the service provider is configuring the operator/driver
component of a move. A single driver configuration occurs when one driver will
complete the entire move from the point of origination, shipment pick up,
delivery, and return. The single driver stays with the equipment for the duration
of the move.

A slip seat move involves two or more operators. Each driver will operate the
equipment for a set time interval – usually based upon the maximum allowable
drive hours—and then a new driver will switch or relieve the previous driver.

Tandem or team drivers operate similarly to a slip seat move; however, both
drivers stay with the equipment in a team driver approach. One driver rests in the
cab while the other driver operates the truck in this configuration. Once driver A
has exhausted their hours, driver B continues the route, and driver A rests in the
cab or sleeper unit. An important note is that a tandem team is paid by the mile
as a whole; each driver is not paid separately by the mile.

Route Planning

For a trucking company, effective route planning is critical. The ability to link
headhaul and backhaul loads will maximize equipment utilization, revenue
generation, and operator compensation. “If the wheels aren’t turnin’, no one is
earnin'” applies here, meaning that freight needs to be moving from location to
location loaded, minimizing deadhead miles so that a service provider can
optimize revenue. The operation will lose revenue if a route has too many
deadhead moves or inefficient slip seat driver exchange locations.

Fleet Management and Equipment Consideration

One element that a service purchaser underestimates is the trailer requirements
of a service provider. Depending on the type of delivery agreement (drop and
hook or live unload), the number of trailers required to fulfill a delivery
requirement could fluctuate—the greater number of trailers required to service a
customer, the greater the equipment cost. The greater the equipment cost, the
greater the cost per mile charge required to break even. In a live unload/reload
scenario, the driver remains attached to the truck. In this type of delivery, one
trailer is sufficient to service the customer. However, if the contract calls for a
drop and hook delivery, a minimum of two trailers are required to service the
customer. If the contract also calls for dunnage delivery, the contract could
require three or more trailers to service the contract.

Understanding Lanes

When a logistics provider is responding to a request for a quote or invited to

provide a bid, the bid is often based on a delivery route, also known as a lane. A
service purchaser often specifies the delivery lane requirements. For example, if
an OEM requires a truckload of product picked up in Toronto, Ontario, Canada
and delivered to London, Ontario, Canada, that would constitute a lane. The lane
could be a return route or a single leg. A return route means that the service
provider would be required to pick up in Toronto, deliver to London and return to
Toronto – this could be classified as one complete turn. Assuming this is a live
unload, let’s look closer at this lane.

Example: Toronto to London and Return Lane

The origination of the load is Toronto resulting in 1 hour to load the trailer.
Delivery to London, Ontario is 2 hours. Freight unloading and dunnage reloaded
will take 1 hour. The return trip to Toronto will take another 2 hours, and
offloading the dunnage 1 hour. The route is completed.

The total time dedicated to the route is 7 hours with 4 hours of drive time.
Drivers have 11 hours of drive time available in a 14-hour time period (Ontario
Ministry of Transportation, 2021). Equipment is available for use 24 hours per
day. From a utilization perspective, this route would utilize a driver 36 percent
(4hrs/11hours) of available drive time. The equipment is only 30 percent utilized
(7 hours/24 hours). A driver utilization of 36% and equipment utilization of 30% is
mediocre. The service provider would look to their route planning and fleet
management team to add routes to this lane to maximize driver and equipment
utilization. If the service provider cannot add additional lanes to this route, the
cost per mile would need to be calculated based on the low utilization rates.
Often low utilization will result in a cost-prohibitive bid.

Window Times

A window time is a pre-arranged appointment to deliver or pick up freight.

Usually, a service provider only has a +/- 15 minute grace period to the window
time. If the truck driver misses the assigned window time, they will need to wait
until the supplier has dock availability. Waiting and delays are costly to a service
provider. Missed window times can be caused by suppliers not having a receiving
dock available at the prescribed window time. The service provider needs to
establish a fee schedule for delayed dock availability.

Chapter 5: Impact of E-Commerce - Electronic Commerce Outlines

5.1.Ethics, Morale & Technology 5.2.Ethical Aspects of ICT (Information and
Communication Technology) 5.3.Overall Impacts of E-Commerce
5.3.1Macroeconomic Impact
5.3.2Microeconomic Impacts
5.4.Specific Impacts of E-Commerce
___________________________________________________________________
________ 5.1...ETHICS, MORALE AND TECHNOLOGY Ethics Ethics refers to a set of
principles or values that guide human behavior and decision-making. It involves
distinguishing between right and wrong, and making choices that align with moral
standards. Ethical considerations involve examining the impact of technological
advancements on individuals, communities, and the environment. Morality
Morality is a broader concept that encompasses ethical principles and extends to
societal norms, cultural values, and personal beliefs. It provides a framework for
determining what is right or wrong, good or bad, and just or unjust. Morality
influences our ethical decision-making and shapes our behavior towards others.
Moral considerations involve evaluating the social, economic, and environmental
implications of technological innovations. Ethics and morality in ICT are essential
for guiding responsible and ethical decision-making in the use and development
of technology. By considering the ethical implications and moral considerations,
we can ensure that technology is used in a way that respects individuals, society,
and the environment. 5.2... ETHICAL ASPECTS OF (ICT) INFORMATION &
COMMUNICATION TECHNOLOGY Ethical aspects of ICT (Information and
Communication Technology) encompass various principles and considerations
related to the responsible use of technology. Some key ethical aspects include
information rights and duties, proprietary rights and duties, and accountability
and checks. --Information Rights and Duties Information rights refer to the rights
individuals have regarding the collection, use, and dissemination of their personal
information. These rights include the right to privacy, confidentiality, and control
over one's personal data. On the other hand, information duties involve the
responsibilities of organizations and individuals to handle and protect the
information they collect from others.
--Proprietary Rights and Duties Proprietary rights pertain to the legal ownership
and control of intellectual property, such as software, patents, and copyrights.
These rights grant individuals and organizations exclusive rights to use, reproduce,
and distribute their creations. Proprietary duties involve respecting and upholding
these rights, including obtaining proper licenses and permissions before using
someone else's intellectual property. --Accountability and Checks Accountability
in ICT refers to the responsibility of individuals and organizations for their actions
and decisions in the digital realm. It involves being answerable for the
consequences of one's actions, including the ethical implications. Checks, on the
other hand, refer to mechanisms and processes that ensure accountability, such
as audits, regulations, and ethical guidelines. 5.3...OVERALL IMPACT OF E-
COMMERCE 5.3.1...Macroeconomic Impact of E- commerce Electronic commerce,
also known as e-commerce, has had significant macroeconomic impacts across
various dimensions. Productivity E-commerce has the potential to enhance
productivity by streamlining business processes and reducing transaction costs.
Online platforms and digital technologies enable businesses to automate tasks,
improve supply chain management, and increase operational efficiency. Growth
The growth of e-commerce has been a driving force behind economic expansion
in many countries. By providing a platform for businesses to reach a global
customer base, e-commerce has opened up new markets and opportunities for
growth. Innovations E-commerce has spurred innovations in various sectors,
including logistics, payment systems, and customer experience. International
Trade E-commerce has transformed international trade by reducing barriers and
expanding market access. Online platforms enable businesses to reach customers
in different countries without the need for physical presence. This has facilitated
cross-border transactions and increased the volume of international trade.
Monetary Policy E- commerce also impact monetary policy. Overall, E-commerce
is expected to increase competition and reduce search and transaction cost. The
net effect will be lower prices. Menu Costs The cost associated with inflation,
namely menu costs (the cost of physically changing prices) could be dramatically
reduced with E-Commerce.
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5.4... SPECIFIC IMPACT OF E-COMMERCE E-commerce, has had a significant
impact on various aspects of business and society. Automation E-commerce has
led to increased automation in various business processes. For example, online
retailers use automated systems to manage inventory, process orders, and track
shipments. This automation improves efficiency and reduces the need for manual
intervention. Commoditization E-commerce has facilitated the commoditization
of products and services. Online marketplaces allow consumers to compare prices
and features easily, leading to increased competition and price transparency. For
instance, platforms like Amazon enable customers to compare prices from
different sellers and choose the best deal. Confidence E-commerce has improved
consumer confidence by providing secure payment options and reliable delivery
services. For example, the use of encryption technologies and secure payment
gateways has made online transactions more secure, increasing consumer trust in
e-commerce. Cost Structure(Traditional and Digital Economy) E-commerce has
altered the cost structure in both traditional and digital economies. Traditional
businesses incur costs related to physical stores, inventory management, and
distribution networks. In contrast, e-commerce businesses have lower overhead
costs and can operate with a leaner infrastructure. Dis-intermediation/ Re-
intermediation E-commerce has disrupted traditional distribution channels by
eliminating intermediaries. For example, direct-to-consumer brands can sell their
products online, bypassing traditional retailers. However, e-commerce has also
led to the emergence of new intermediaries, such as online marketplaces and
aggregators, which connect buyers and sellers. Economy of Attention E-commerce
has increased competition for consumers' attention. With numerous online
platforms and advertisements, businesses must compete to capture consumers'
attention. For example: social media platforms like Instagram and Facebook offer
targeted advertising options to businesses, allowing them to reach specific
audiences. Employment E-commerce has created new job opportunities while
also impacting traditional employment. For example, e-commerce has led to the
growth of jobs in areas such as digital marketing, logistics, and customer support.
However, it has also resulted in job losses in traditional retail sectors as
consumers shift towards online shopping.
Externalities E-commerce has both positive and negative externalities. On the
positive side, e-commerce reduces the need for physical transportation, leading
to lower carbon emissions. However, it also contributes to increased packaging
waste and energy consumption from data centers. Globalization E-commerce has
facilitated global trade by breaking down geographical barriers. For example,
businesses can sell their products to customers worldwide through online
platforms. This globalization of e-commerce has opened up new markets and
opportunities for businesses. Information Density E-commerce has increased the
availability and accessibility of information. Consumers can easily access product
details, reviews, and comparisons online. For instance, online marketplaces
provide detailed product descriptions, customer reviews, and ratings, helping
consumers make informed purchasing decisions. Intellectual Properties E-
commerce has raised challenges related to intellectual property rights. For
example, digital products such as e-books and software can be easily copied and
distributed illegally. E- commerce platforms need to implement measures to
protect intellectual property rights and combat piracy. Encouragement of
International Cooperation E-commerce has encouraged international cooperation
and collaboration. For instance, businesses can partner with suppliers,
manufacturers, and distributors from different countries to expand their reach
and offer a wider range of products. Pricing Transparency and Coopetition E-
commerce has increased pricing transparency, allowing consumers to compare
prices easily. This transparency has led to the emergence of "coopetition," where
businesses collaborate and compete simultaneously. For example, airlines may
collaborate with online travel agencies to reach more customers while still
competing on price. Volatility (Hollywood economics and Temporary monopolies)
E-commerce has disrupted traditional business models, leading to volatility in
industries. For example: the rise of streaming services like Netflix has disrupted
the traditional movie rental industry, impacting companies like Blockbuster.
Additionally, e-commerce has given rise to temporary monopolies. For example:
during the early days of e-commerce, companies like Amazon enjoyed a dominant
market position due to their first-mover advantage and extensive product
offerings.