It is inaccurate to use the terms shipping and logistics interchangeably. Although they both need to function optimally for the supply chain management system’s success, they differ in many respects. Shipping is restricted to transportation or shipping of goods, whereas logistics is an umbrella term that includes warehousing, material handling, and packaging.
Here, we give you a low-down on the fundamental differentiating factors between shipping and logistics.
What is Shipping?
Shipping is the transfer of a consignment from one place to another. It facilitates the smooth functioning of supply and demand distribution channels and usually includes the following key elements:
- Shipping policy, shipping labels, bills, freight bills, insurance, and commercial invoices
- Transportation via rail, road, air, or sea. Urgency, contents and budget usually determine the choice of carrier.
Types of Shipping:
Factors like shipment weight, density, fuel cost, and shipping mode work together to influence the type of shipping, which can be categorized into four types.
- Per product shipping: When an item requires additional handling, per product shipping helps you save money on unnecessary transactions.
- Flat-rate box shipping: When the fee is based on the box height and weight, it allows the shipping company to charge you based on the cartons’ quantity.
- Drop-shipping: For e-commerce stores that lack the resources to stock inventory, outsourcing the packing and shipping improves efficiency. It forwards the orders to its distributor, who then packs and ships the product to its destination.
- Freight shipping: It involves the transportation of cargo across the globe by land, sea, air, or rail.
What is Logistics?
It’s the management of implementation processes to enable the smooth flow of goods from source to destination.
The five crucial components of logistics are:
- Order processing: It’s a document that details the complete product description and buyer information. It also has all the other information previously agreed upon between the buyer and the supplier.
- Inventory control: It helps companies monitor each product’s availability, avoiding last-minute hassles to ensure that customers get their goods delivered on time.
- Storage and warehousing: Consumer demand and the manufacturer’s supply are not always in sync. Therefore, companies need to store goods in surplus at a warehouse to deal with the imbalance between steady supply and fluctuating demand.
- Packing: Efficient packing of a product plays a crucial role in its safe delivery.
- Transport: As a subset of logistics, transportation involves planning and controlling goods’ flow in a supply chain.
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