If you work in the delivery industry, you've probably encountered the terms "logistics" and "distribution."
Although these words may appear interchangeable, they hold distinct meanings.
Think about the laptop or mobile device you're using to read this post.
Chances are, it was probably manufactured in a Chinese factory and subsequently transported across the sea to a central warehouse in the United States.
Shortly after, it moved from the central warehouse to one of many smaller warehouses dispersed throughout the country.
A last-mile delivery driver retrieved it from there and brought it to your doorstep.
The process involves orchestrating and ensuring the correct product reaches the designated customer. It needs to meet specified quantity and condition criteria, at the appropriate location and time, and for the agreed-upon price. That process is known as logistics.
On the other hand, distribution means physically moving a product from where it starts to the customer.
To put it simply, we'll explain the difference between distribution and logistics services (with examples) and how your business can improve both processes.
Logistics and distribution share a common goal: the efficient delivery of goods between various points.
Yet they handle distinct aspects of the supply chain management process.
Logistics involves planning and organizing the movement, storage, and inventory management of products.
Distribution focuses on streamlining the physical transportation of goods from production to the consumer.
Both processes encompass storage, warehousing, inventory management, and the oversight of goods flow and transportation. Yet they approach these tasks differently.
While logistics primarily involves organization, the distribution represents its physical manifestation.
Let's delve deeper to gain a clearer understanding of them.
Distribution involves ensuring that goods are accessible to consumers at purchase.
As an illustration, products may traverse from the manufacturer or supplier to the point of sale. That could be the checkout counter in a retail store, for instance. Or, it could be delivered to a customer's doorstep for online purchases.
Distribution essentially involves establishing a route for goods to travel from the manufacturer to the customer.
This route is known as the distribution channel, which generally takes the following form:
MANUFACTURER ➞ WHOLESALER ➞ RETAIL➞ CONSUMER
Distribution means figuring out the best ways to move a product through each stage.
Individuals involved in any of these stages may have responsibilities such as packaging, storage, order fulfillment, transportation of goods, and managing customer returns.
The primary goal of distribution is to find the most efficient and economical method for delivering goods to the customer.
Logistics includes the planning, management, coordination, and control of the movement of goods from point A to point B.
What specific tasks does it include in this work?
Logistics involves several aspects, including:
It covers the planning of shipping, warehousing, courier services, and transportation via road, rail, or air freight.
Types of logistics solutions in supply chain management include:
Another way to categorize these logistics systems is to divide them into inbound and outbound logistics.
Inbound logistics involves the management of supplies and raw materials in the production process.
Outbound logistics concerns itself with the transfer of finished goods from the manufacturing phase to the ultimate consumer.
Logistics encompasses both internal management within warehouses and external coordination with manufacturers, wholesalers, retailers, and delivery teams.
For example, retailers may synchronize their store computers with suppliers. This is done to facilitate ordering products and ensure timely delivery to the store.
Examples of Distribution and Logistics
Let's aim for clarity on distribution and logistics by exploring some examples.
The distribution system of the global beverage company Coca-Cola is quite intriguing.
Despite its presence in over 200 countries, the company's distribution model predominantly stays local.
Coca-Cola produces and distributes concentrate, beverage bases, and syrups to bottling centers across the globe.
These bottling companies use syrups and concentrates to produce Coca-Cola beverages and bottles by diluting them with water and carbonation.
Then, they package and distribute these products within the regions where they hold exclusive rights.
Coca-Cola collaborates with more than 225 bottling partners. It also operates 900 bottling plants globally.
Ultimately, local bottling firms distribute the beverage to consumers via grocery stores, restaurants, street vendors, vending machines, movie theaters, and amusement parks.
This distribution model is known as the franchise model. It offers several advantages for the Coca-Cola company.
By only selling syrups and concentrates to bottling partners, the company can safeguard its most valuable asset: its recipes.
Furthermore, it only bears the cost of transporting concentrates to bottling partners.
The bottling partners assume responsibility for transporting the final product to the market. That results in cost savings for Coca-Cola on last-mile delivery.
A considerable number of individuals shop for clothing over the internet.
Many fashion brands focus on meeting the needs of customers buying apparel online and delivering it to their residences.
Picking a dress off a store rack, wrapping it up, and sending it down the street may seem simple, but this type of business isn’t that easy.
So, how does an apparel company plan to deliver clothes quickly and efficiently?
Typically, this is what the process entails:
Distribution logistics, also referred to as sales logistics, involves the strategic planning, coordination, and implementation of the transportation of goods from the manufacturer to the consumer.
Involving various procedures in the movement and storage of goods, it encompasses:
Maintaining an accurate inventory enables businesses to fulfill online and retail orders promptly.
Additionally, it aids in averting backorders.
In essence, distribution management endeavors to achieve particular objectives, such as efficiently delivering goods to the market or customers, while minimizing costs and maximizing profits.
Two distribution channel types exist:
Some businesses may use both models at various stages of their distribution process.
The last-mile delivery of the eCommerce supply chain marks its conclusion. It entails physically delivering a product to the customer.
In general, the process follows these steps:
Yet, this process encounters obstacles.
Consider some of the challenges encountered in last-mile delivery:
Thankfully, distribution logistics offers a solution to streamline the final delivery process. It focuses on consolidating packages bound for a specific area into a single delivery vehicle, ensuring each parcel is allocated to its designated zone.
This approach aids in minimizing fuel consumption and expediting last-mile deliveries.
eLogii can enhance the last-mile delivery process through optimization. Interested in another approach to optimizing your last-mile deliveries?
Try eLogii route optimization software.
Our routing software facilitates the automatic management of driver schedules by generating the quickest and most efficient routes within minutes. That results in cost and time savings for your company.
Furthermore, you can track your team's progress throughout the day using our platform.
Additionally, eLogii enables you to provide customers with real-time delivery updates without inconveniencing your drivers.