Distribution logistics: Definition, optimization, and main models

You know that merchandise you received fresh off the production lines? It got to you through distribution logistics.

What is distribution logistics?

Distribution logistics relates to all the goods management processes involved in moving products from production to customers. This business area covers storage, transportation, and delivery, including last-mile. Efficient distribution logistics requires supply chain planning, inventory control, warehouse optimization, and smart route selection.

The goals of distribution logistics are to speed up inbound and outbound operations, plan inventory strategically, cut costs arising from poor transportation and handling practices, and improve business productivity. With a well-implemented logistics infrastructure and specialized warehouse management system (WMS), businesses can gain a real competitive edge.

Key stages of distribution logistics

For an effective distribution process, companies should focus on these steps:

1. Storage. Goods arrive from suppliers or internal production lines. At this stage, product quality and quantity are inspected, recorded in inventory, and organized efficiently within the logistics facility or distribution center. A warehouse management system like Interlake Mecalux’s Easy WMS streamlines and enhances these processes.
2. Order processing. Once customer orders are received, product availability is verified. Warehouse pickers or automated systems then handle selection, packing, and assignment to the appropriate carrier for final delivery.
3. Shipping preparation. Before moving to the transportation stage of distribution logistics, goods are prepared to leave the warehouse. Products are labeled and provided with the necessary documentation for loading onto transportation vehicles. Easy WMS’s additional Multi-Carrier Shipping Software module organizes this process and automates communication with carriers.
4. Transportation. In last-mile distribution logistics, products leave the company’s or 3PL provider’s facility to reach their final destination. Delivery vehicles are tracked to ensure timely delivery under optimal conditions. The most efficient routes are prioritized, considering factors like distance, available time, costs, and the characteristics of the merchandise being transported.
5. Delivery. Finally, the products reach customers. In this last phase, items are unloaded, their condition is checked, and they are delivered to the consumer at the agreed time and location. In the case of reverse logistics, the customer returns the item to the company.

Distribution logistics models

The storage, delivery, and distribution models that organizations adopt to offer their services shape their market strategy. Different models can be used depending on the business type, each defining the company’s value proposition in the market. These are the most common ones:

• Consolidation. This involves grouping merchandise from various suppliers in a single center before completing shipments to multiple clients. It leverages vehicle space while reducing costs and travel distances.
• Staggered distribution. This is possible when buffer warehouses are available to receive finished goods from production lines temporarily. Subsequently, the merchandise is sent to regional warehouses serving geographical areas where shipments generally don’t require more than a day’s travel.
• Centralized model. This strategy involves directing the largest amount of inventory to a central warehouse. From there, a fleet of vehicles distributes parcels to customers in different zones.
• Decentralized model. In contrast, the decentralized model sends stock to nearby warehouses or branches. Although it requires greater infrastructure, it benefits from proximity to sales points.
• Cross-docking. Similar to the decentralized model, cross-docking distribution replaces nearby facilities with loading and unloading platforms. Instead of storing goods on racks, they are typically shipped again within 24 hours.
• Direct distribution network. In these networks, products are sent directly to end customers from production centers without being kept in a warehouse.

How to carry out distribution logistics

If your goal is to achieve efficient warehousing and distribution logistics operations, it’s essential to align every step in the process. Here are some tips for optimization:

• Understand your warehouse. Start by reviewing current activities to align facility performance with logistics needs. If warehouse modernization is in the cards, it’s advisable to consult a storage expert.
• Set priorities. To devise effective strategies, define specific objectives such as minimizing costs, reducing errors and returns, or shortening delivery times.
• Use performance indicators. Tracking and analyzing key metrics provide insight into successes and mistakes made in distribution logistics.
• Implement a WMS. Beyond collecting data from all processes, a warehouse management system like Interlake Mecalux’s Easy WMS can boost operational productivity by 60% and increase storage capacity by up to 40%.

Streamline your distribution logistics with Interlake Mecalux

Nowadays, logistics management needs to be as agile as possible. If you’re looking to speed up logistics processes and enhance communication among all stakeholders, get in touch with us. At Interlake Mecalux, we’re experts in automation and process control through our Easy WMS warehouse management system. At the same time, we provide visibility across large distribution networks with Easy DOM. Our company has been sharing its extensive intralogistics expertise since 1966. Let us put it to work for you.