What are logistics services? Have you ever wondered like that? Personally, even though I worked in the shipping industry for many years, and then moved to a logistics company, I still had a long time without a clear concept of this field.

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So what is logistics

?The combination of input and output logistics can be illustrated in the following diagram:

Logistics can be loosely translated as “logistics”, but perhaps until now Vietnamese does not have an equivalent term. We can accept the word logistics as a Vietnameseized word, similar to many other words that have been accepted in practice such as container, marketing…

Logistics history

Historically, the term logistics originates from the ancient wars of the Greek and Roman empires. At that time, warriors with the title “Logistikas” were tasked with providing and distributing weapons and necessities, ensuring conditions for soldiers to march safely from headquarters to another location. This “logistics” work is vital to the end of the war, when the sides find ways to protect their own supplies and find ways to destroy the other’s supplies. That process gradually formed a system that was later called logistics management.

During World War II, the role of “logistics” was further confirmed. The logistics arm of the American and allied troops proved to be more effective than that of the German army. The US military has ensured that weapons, ammunition, and supplies are supplied to the right place, at the right time, by the optimal methods. Thanks to the advantage in logistics, the US and its allies have many times prevailed in the war. Also during this time, many applications of logictics were developed and are still used today, although there have been more or less changes to suit the production and business environment.

Logistics in Vietnamese law

The term logistics has also been used officially in the Commercial Law 2005, and is transliterated (in a rather “funny” way) in Vietnamese as “logic”. Article 233 of the Commercial Law states that:

“Logistics service is a commercial activity whereby a trader organizes to perform one or more jobs including receiving goods, transporting, storing, storing, customs clearance, other paperwork, etc. customer consultation, packaging, marking, delivery or other services related to goods as agreed with the customer for remuneration.”

Academic definition

There are many academic definitions of the term logistics. According to the Association of Supply Chain Management Professionals (CSCMP), this term is quite fully defined as follows:

Distinguish from “Supply Chain”

If logistics is part of supply chain management as defined above, what is the rest? How to distinguish logistics and supply chain? In other words, how is logistics different from the supply chain?

For a basis of distinction, we return to the concept of “supply chain” also of the Association of Professionals in Supply Chain Management. Let’s see how they define it:

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“Supply chain management includes planning and managing all activities related to sourcing, purchasing, manufacturing, and all logistics management activities. To an important extent, supply chain management includes coordination and collaboration of partners on the same channel such as suppliers, intermediaries, service providers, customers. Essentially, supply chain management will integrate supply and demand management within and between companies. Supply chain management is an integrated function whose primary role is to connect business functions and key business processes within and across companies into an effective business model. high and sticky fruit. Supply chain management includes all of the logistics management activities mentioned above as well as those of production and promotes coordination of processes and activities of marketing, sales, product design, finance and information technology.”

If we compare the two definitions above, we can see the fundamental difference. The supply chain concept is broader and includes logistics and manufacturing. In addition, supply chain focuses more on purchasing activities while logistics deals with strategy and coordination between marketing and production.

What is

1PL, 2PL, 3PL, 4PL

?When it comes to logistics, you may often hear service companies that identify themselves as 3PLs (Third Party Logistics provider), that is, the company providing services. 3rd party logistics services. The question is: what is a 3PL if they are a 3rd party, what about the first (1PL), second (2PL), or fourth party (4PL) parties? Let’s take a look at each concept.

1PL: is the person who provides the goods, usually the shipper, or the consignee. Companies carry out their own logistics activities. The company owns the means of transport, factories, and stacking equipment unloading and other resources including people to perform logistics activities. These are the major logistics groups in the world with a global logistics network, with a suitable operating method for each locality.

2PL: is the actual carrier, such as shipping lines, airlines, truck carriers

3PL: is a person who provides total solutions for logistics services to customers, they often take care of part or all of the stages of the supply chain.

4PL: The term 4PL was first used by Accenture, and this company defines it as follows: “A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions.”

Example of logistics services

Below is an example of logistics service for May 10 company, extracted from a member’s post on Vietship forum named Dangerous Goods.

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Garment 10 Company manufactures and distributes clothes to all over the country and abroad, delivers goods to the place, to the selling price of wholesalers and retailers, recalls damaged and defective products, sells them, and sells them. liquidation of out-of-fashion goods, sale, promotion..v.v..

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The basic things they have to do every day are to make contracts, order fabrics, threads, buttons, buckles, nails, strings, etc. at home, abroad and will be in many different countries, many different cities (because It is not possible to buy all accessories in 1 country, 1 city because the price, design and quality in each place will have an advantage, each product will use a special accessory or a fabric according to according to the style of that order and will have to buy many types in many different cities, then fear wars, natural disasters, …)

Daily, weekly, and monthly operations will have pre-scheduled orders sent to transport companies (logistics companies) up to this hour, this day, this month, how much will Garment 10 company need? How many containers of Italian fabric, how many kilograms of Korean buttons, how many days are shipped from the factory in Bien Hoa to make order A, etc. Based on the order of garment 10, the transport company plans a plan. Plan and discuss with May 10 to decide what day to import what first, by which way, can combine or combine goods with other orders or other units, etc., the purpose is to save money maximum shipping for May 10, keeping up with the daily production schedule without losing a lot of storage costs (for this, the company May 10 cannot have conditions to combine goods, does not have a global agent system and has the plan to do well with the transport unit).

If everything goes well, no workers get sick, no electricity is lost, no rain, no storms, no earthquakes, no change in orders, designs, no excesses, no changes in prices, no changes. competition, change suppliers etc and so on…. then the transport company does that and collects money.

But, there will always be the word “but”, there will be times when one of the objective reasons brings, May 10 is forced to import raw materials urgently to be on time for production, this is the time when the transporters will have to offer the optimal solution for customers, go by Sea (LCL; FCL), Truck, Rail, Sea-Air or Air… So freight forwarding companies (logistics companies) have to participate more deeply in this. May 10’s business and production.

Manufactured goods will need a shipping company, a logistics company or a certain FWD company for a few clever brothers and sisters to come and say a few sentences right and wrong, lower the price, raise the commission to win the transportation but, again There is only one word “but”, competition is difficult, the company is doing transport for garment 10, they have to put code stamps, number each product, each box, each order, each shipment, and one number. Another step is to be omitted, they have to scan the code to have the goods data to put on the transport company’s network and to jointly manage the amount of goods and materials in/out with May 10.

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When the goods are ready to be released, how much is the plan to distribute domestically, how much abroad, how many products are in this store, how many products are in that store, the transport guys also have it, at this time, the The shipping company will plan to close the order, where to go first, there may be retail, container, set, Air cargo, but the airline guys or the shipping companies or you say there is a good contract to wait. but can compete (you can just do sub-contract) because the transport company has done many profitable stages, if they need to compete on price, they are ready to compete at a lower price and will use the services of the high cost carrier / better service than the cheap / poor service and moreover they have a bunch of tools that the direct carrier can never compete with then surely May 10 will not be able to leave the other package transport company and at that time the direct carrier will only hunt for you to do package transport for factories like May 10.

Goods are delivered to the port of destination and then the logistics company continues to do customs procedures, deliver the goods to the distribution warehouse or directly to each store ordering products or sales agents for May. 10…etc…

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The logistics company can collect money, record reports of consumption, inventory, exchange, warranty, request to ship more goods tomorrow, etc., for sewing 10 from then on May 10 has a production plan production, distribution, exchange, warranty, complaints to material suppliers, …. and notify the transport company of the transportation plan, this market is in need of this item, does not need the other, this market sells and moves to another market to clear the goods. Which order is still in stock, which order has been released to the market and located in which shop, which date is the sale, which promotion, and what kind. All, all of May 10’s products are located in any location, country, city, warehouse, and are managed by the transport company and updated daily with May 10. Even the companies Finding and expanding distribution markets in other countries, requests and feedback from sales agents, from market work, from customers of transportation companies can help May 10 always because of the transport company. they have a global system, knowing about local companies makes it easier to bridge trade.