Logistics is the function of making goods and other resources physically available for use as and when required.

This generally includes two basic activities of moving or transporting these resources, and storing them at different location till required for use or further transportation. Logistics as applied to business is broadly divided in three section - incoming logistics, in-plant logistic and out-bound logistics. The out-bound logistic is concerned with transportation of goods from a manufacturer to locations away from it. Mostly this is for the purpose of supplying the products manufactured to the customer. This aspect of logistics is also called distribution logistics. However the outbound logistics may also include other activities such as transportation of material from a plant to subcontractors for outsourced manufacturing. Retailing is one of the activities within the overall distribution function. Thus we can consider retail logistic as one part of the physical distribution systems. The terminology of logistics and the boundaries between difference logistics activities are not very clearly defined or fixed. However, we can say that retail logistics includes transpiration of goods to the points of retail sales and storage there. It also covers any additional activities for door delivery of goods to the customers.

Retail Logistics Basics - Part III

Published by Newsroom February 20th, 2009 in Newsbytes.

In the highly competitive retail marketplace, typified by changing consumer preferences, different formats as well as large geographical stores spread, the onus on retail logistics to ensure efficiency and cost margins is quite substantial. Hence, it would not be inappropriate to state that oftentimes the viability of a retail operation hinges as much on achieving efficient logistics and supply chain as it does on attaining success in the front end. The compulsion of retailers, which necessitate logistics function, can be summarised as follows:

seamless

To ensure perfect coordination among various entities involved in the supply chain such as suppliers, manufacturers and vendors.

To ensure that consumers get the right product at the right time and at the right place. To ensure that supply to retail stores geographies is seamless and consistent. across various

To be flexible in order to allow for changes in the product mix owing to changes in consumer demand. To constantly improve operating margins. To achieve profitable and operations in the long run. sustainable growth of retail

To achieve optimal inventory levels and reduce wastage of products. Components Traditionally, retail logistics had two major components transportation and storage. But with the increasing complexity of modern retail supply chains, the scope of logistics has also expanded beyond the traditional definition. An efficient retail logistics function has become a significant instrument for retailers to ensure competitive advantage, and its scope now includes plans and processes that allow the back end to effectively meet consumer demand. Currently, retail logistics is a holistic concept that involves coordinating the following main processes among others:

Inbound and outbound transportation Warehousing Packaging and labelling Shipment consolidation Tracking/Tracing the products

Inventory management Quality checking Planning for cost control On Point Retail Distribution Warehousing 5 Distribution of merchandise Reverse handling and flow of products (reverse logistics) The main processes and activities of retail logistics listed above are aimed at making sure that the shelves in a retail front-end store are never vacant and are filled with the right products at the right time and at the right place. Apart from maintaining an efficient supply chain, which keeps the stores filled with the correct products, it is also important that retail logistics increases operational efficiencies to allow retailers to run a viable retail operation. Delivery Models For decades, retail logistics has evolved through various models. Years ago, retailers and manufacturers had to rely on a traditional distribution channel composed of transporters, clearing and forwarding agents and stockists. Since mid-1990s, the emergence of alternative modern distribution channels has allowed retailers to choose from a range of logistics service providers to achieve an efficient storage and flow of products. As of now, there are four logistics delivery models that retailers can choose from:

Entirely self-managed logistics and warehousing network Partly outsourced to traditional service providers transporters, clearing and forwarding agents and stockists like

Partly or completely outsourced to third-party logistics service providers (otherwise known as PL players) Completely outsourced to fourth-party (otherwise known as 4PL players) logistics providers

Whilst the above four are broad delivery models available to manufacturers, retail chains and retailers, it has been observed through interactions with retailers and warehouse users during this study that oftentimes, hybrid models of distribution are preferred. For example, a retail chain may choose to manage the transportation of its goods while the warehousing may be outsourced to a PL provider. The first two models listed above are more or less selfexplanatory, while the following definitions further explain the 3PL and 4PL delivery models: 3PL A third-party logistics provider (3PL) is an entity that provides services to companies for some or all of their supply chain management functions. PL providers typically specialise in integrated warehousing and transportation services that can be scaled and customised to the clients needs based on market conditions and the demands and delivery service requirements for their products and materials. In India, a large number of professional 3PL players like DRS, Gati, DHL, OM Logistics, Indo Arya, Sical Logistics, Reliance Logistics, SafeExpress, Agility, M J Logistics, AS Cargo, Kuehne+Nagel, Panalpina, Expeditors and AFL among others have been providing services to retailers and other sectors for their logistics requirements. 4PL As retailing in India is expanding and reaching new heights in terms of both geographical coverage and volume of products, there is an emerging requirement for an integrating

logistics firm to assemble various resources, capabilities and technologies of its own as well as other companies to provide a complete logistics package to clients. Such firms are typically known as 4PL players. Typically, the resources used by a 4PL player are of other service providers, and its fundamental role is to manage all the PL players and other independent agencies employed for a logistics function, providing a turnkey logistics solution to retail chains and to other sectors. Whilst this model is quite prevalent in developed countries, the 4PL sector in India is at a nascent stage, with a few players emerging such as Future Logistics (which is a 4PL for Future Group). In order to better comprehend and appreciate the respective range of services under each of the outsourced delivery models, the table below is a compilation of the typical spread of services delivered under each respective model. It is pertinent to note that the table below is an indicative compilation based on the feedback received from meetings with logistics service providers and not a comprehensive listing of all possible logistics services. The organised PL sector in India has been consistently growing over the last few years, mirroring the growth witnessed in the retail logistics sector overall. The sector comprises of global as well as Indian companies that are ramping up their operations on a Pan-India level to cater to retail as well as other sectors. According to a Technopak study, the total outsourced logistics revenue in 00 was INR 1,151 billion, of which 5% or INR 58 billion was attributed to revenue gained from the PL sector. Revenue generated from retail 3PL was estimated at INR

billion. The retail PL revenue has been predicted to continue to grow at a CAGR of around 1 % for the next few years. The entry of large 3PL players has led to significant improvement and organisation within the retail logistics and modern distribution warehousing sector in the country. Over the years, the range of services of PL players has expanded to cover the service lines depicted in the table below. In some cases, it has been observed that PL players have even gone beyond their main service offerings to provide logistics network planning to clients as wel