When it comes to ecommerce, warehouse and logistics facilities are often interchanged. While there may be some similarities and interrelationships, they are two distinct terms. As an ecommerce retailer, you need to understand the difference between each to help you make an informed decision.
Both warehousing and logistics are integral to supply chain management, but they are on different sides of the coin. Also, they are interconnected with each other. Before we learn how warehousing and logistics are related to each other, let us first take a look at their differences.
What is Warehousing?
What is Logistics?
Difference Between Warehousing and Logistics Management
- What They Deal With
Relation Between Warehousing and Logistics
Let’s get started.
What is Warehousing?
Warehousing is the process of storing products at a facility before they are sent for distribution. Depending on the business size, the warehouse could be in a rented space, such as in a basement or spare room. However, large businesses that can afford to buy a building often outsource warehousing to an agency or firm specializing in that function. This lessens their burden so they can focus on their core activities.
Warehousing usually involves receiving, storing, and distributing products. In some instances, warehousing may include the following functions:
1. Setting Up Warehouse and Equipment
In setting up your warehouse, you need to have separate spaces for receiving, unpacking, shelving, long-term storage, shipping and handling, and office work. By having separate areas for each activity, you can organize your daily activities and lessen the chances that inventory will not end up where they are not supposed to be. As for the warehousing equipment, this will depend on your business needs but you will need to have the following basic supplies and tools:
- Shelving units
- Computers and printers
- Picking carts
- Scale (For weight-sensitive items)
- Labeled bins
- Packing materials (tape, scissors, eCommerce packaging, bubble wrap)
- Packing tables
2. Receiving and Storing Stocks
Your warehouse should have the ability to receive or store stocks for short-term or long-term storage. If you do not have room for receiving and storing inventory,it will be easy for your supplies to pile up and prevent timely outbound work. A warehouse management system will help you scan each new box that arrives at your warehouse and properly record inventory.
3. Picking, Packing, and Shipping
Timely shipping out of orders is very important in an ecommerce business. It is one of the reasons customers will opt to stay loyal to your store or go elsewhere. Customers expect quick delivery of their orders from your end. If delivery is estimated to take longer than a week, 38% of shoppers will abandon their order. In addition, 69% of shoppers will not likely shop at a retailer if their order does not arrive within two days of the promised delivery date.
4. Addressing Errors and Inconsistencies In A Timely Fashion
There is no such thing as perfect logistics. You will always have a lot of unused stock, run out of packing materials, or experience order volatility with certain products. Warehousing allows you to track received stocks once it reaches your shelves. Investing in an inventory tracking system will help improve your efficiency in picking, packing, and shipping orders.
5. Maintaining Temperature-Controlled Products
This is extremely important if you sell perishable goods or food that needs to be controlled at a specific temperature. Eventually, your sales will grow, so you must ensure that your warehouse has the right equipment that meets or exceeds industry regulations.
What is Logistics?
On the other hand, logistics refers to managing the flow of raw materials and finished products from manufacturing to final delivery. It integrates information flow, production, inventory, security, materials handling, transportation, and warehousing. Logistics is usually divided into two parts:
- Inbound logistics. This refers to the movement of goods and raw materials into production facilities.
- Outbound Logistics. This refers to the transfer of finished products to the point of consumption. This is another term for order fulfillment.
Logistics refers to managing the flow of goods between the origin and destination point. It deals with the overall strategy and planning of the flow of goods from the warehouse to the endpoint. It is about the implementation and control of the movement of goods from the first step of raw materials all the way through to the delivery of goods to their destination. Logistics includes the following functions:
1. Storage, Warehousing, and Materials Handling
As an ecommerce owner, you need to ensure that there is a steady stream of stock that you can supply to customers at their demand. While manufacturers can operate at peak efficiency, customers do not demand goods in a similar manner as suppliers provide them. This is where having a facility for storing and handling materials.
Inventory is closely related to storage and warehousing. It has something to do with determining what stocks to hold, the location, and how much stock to hold. Inventory also pertains to controlling the flow of goods going into and out of the warehouse.
3. Packaging & Unitisation
Packaging involves the care and condition of a product. It is an essential element of storage and transportation. Packaging is vital for damage prevention, materials handling, and storage space optimization. Unitisation helps organize your inventory by consolidating several smaller units into larger units.
4. Information & Control
Information and control is vital in logistics. It will help you in forecasting demand and inventory. Armed with the proper information, you can decide on what stock needs to be replenished and stored in the warehouse. In addition, this will help with planning and organizing transport of stocks.
Transport in logistics includes all modes of transport such as road, train, ship, or air. Transport is important in moving goods from one stage to another within the supply chain. Depending on the type of product, some may not travel far while others may need to transfer to an overseas location.
Difference Between Warehousing And Logistics
While there is a connection between warehousing and logistics, the activities differ. Let us discuss these differences:
In warehousing, the main focus is on storing manufactured goods and raw materials before sales and distribution. It also focuses on receiving, storing, and distributing products. Warehousing involves the safe and secure storage of inventory.
Logistics, on the other hand, focuses on the effective movement of goods from one place to another. It involves properly managing the flow of goods between the point of origin and the end of the destination. The processes in logistics include inbound transportation, outbound transportation, handling, production, packaging, and inventory control.
In logistics, the handle is on the flow of products to address customer needs. It pertains to the flow of goods into and out of the warehouse. A major function in logistics is end-to-end consumer requirements, which could include goods availability and final delivery of products.
On the other hand, warehousing handles the physical control of finished goods or intermediaries. There has to be a system for checking goods at certain intervals to its storage, picking the order and handling returns.
What It Deals With
Logistics integrates material handling, information flow, inventory transportation, security of goods, and others. On the other hand, warehousing deals with stock management, receiving and dispatching of goods, inventory management, and others.
With logistics, you can look forward to reduced costs and improved efficiencies. In addition, you can expect better service while keeping costs at a minimum. Meanwhile, warehousing offers better inventory visibility, reduced business risks, optimized supply chain, and spot stocking.
The main objective of logistics is cost control for the businesses using the service. Meanwhile, warehousing aims to maximize profits by keeping operational costs manageable.
With logistics, the processes include storing goods at various locations. On the other hand, warehousing is all about unloading, storing, checking, receiving, and distributing merchandise or goods.
Connection Between Logistics and Warehousing
While they have differences, there is actually some connection between warehousing and logistics. It would be impossible to have one without the other. The successful delivery of your product lies in the two working together in tandem. So let us see how warehousing and logistics work together.
1. Inventory Control
Warehousing helps ensure seamless and efficient management of large inventories. It helps synchronize supply and demand in a dynamic market. Warehousing helps businesses manage their inventory in real time. Having a warehouse management system provides data such as the latest orders, shipments, or receipts as well as any movement in between.
2. Centralized Goods
Warehousing provides a central location for receiving, storing, and distributing goods. This will help reduce transportation expenses and increase the value of goods as products are readily available at the right place and time. It will also help with other activities such as order consolidation, assembling, mixing, and cross-docking of products under one roof.
3. Order Fulfillment
A warehouse is vital to order fulfillment which is one of the main activities in logistics. The warehouse will hold inventory while the logistics company will send orders to customers and retailers.
While warehousing and logistics are different in terms of their activities, it is hard to separate one from the other. By having warehousing and logistics working in tandem, you can be assured of safely storing and delivering your products and managing customer needs.
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