What is Logistics?
Logistics refers to the process of transporting resources (inventory, equipment, people) from one location to another location. It is sometimes used interchangeably with supply chain management.
At a high level, logistics is made of a few components:
- Inbound transportation
- Warehousing
- Order fulfillment
- Outbound transportation
Inbound Transportation
Inbound transportation refers to the process of picking up goods (raw materials, inventory, goods sold from e-commerce sellers, etc.) from supplier or sellers. Goods can either be picked up directly from the suppliers/sellers or from a designated pickup point. Pickup points are commonly used when items are from multiple sellers in the same area in order to reduce costs.
Warehousing
Warehousing refers to the storage of products in the warehouse for future fulfillment. For example, in a Fulfilled by Amazon model, sellers can choose to place their products in an Amazon warehouse for convenience and other platform benefits. Fulfillment and inventory are managed by Amazon.
Order Fulfillment
Order fulfillment refers to the process of receiving, processing, and delivering the orders. When orders are received, goods can either be picked from inbound transportation or from the warehouse. In the case of the warehouse, workers will need to pick up goods from the bins in the warehouse. Once all the goods are picked, they are sorted by location and then prepared for outbound transportation.
Outbound Transportation
Outbound transportation refers to the process of delivering the goods to the other party. This could be to a distribution centre locally or overseas (in the case of crossborder logistics), or it could be to end consumers (in the case of e-commerce logistics).
First Mile versus Last Mile Delivery
First mile delivery is the delivery from multiple suppliers or sellers to a distribution or fulfillment centre. For example, the movement of goods from a brand like Unilever to the fulfillment centre of an e-commerce company like Lazada is considered as a first mile delivery.
Last mile delivery is the movement of products from the fulfillment center to the final customer. This involves delivery the goods to the doorstep or to a pickup point (e.g. convenience stores, post offices, etc.) designated by customers.
For large e-commerce players, fleet management is also important during last mile delivery as it involves multiple 3rd party logistics companies (3PLs). They might use a variety of 3PLs to fulfill all their orders on time, especially during large shopping festivals like 11.11 and Black Friday.
Bonded Warehouse
Bonded warehouses are commonly utilized in cross border logistics. Bonded warehouses allow businesses to store their products without the need to pay for custom duties. The goods that move within bonded or free trade zones will continue to have payments on duties and taxes deferred until it leaves the warehouse to enter a country’s open market.
These warehouses can be situated in Free Trade Zones (FTZ), such as the Electronic World Trade Platform (eWTP) hub in Digital Free Trade Zone (DFTZ) in Malaysia, or managed by the country’s customs.
Bonded warehouses in Free Trade Zones are useful for companies serving a regional customer base as it can also serve as a regional fulfillment center.
Chan Jing Wei 